    [Senate Hearing 109-960]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 109-960

                    S. 1265, THE DIESEL EMISSIONS REDUCTION
                                  ACT OF 2005

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

                                    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

                                   __________

                                 July 12, 2005

                                   __________

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

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

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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

                                 JULY 12, 2005
                               OPENING STATEMENTS

    Clinton, Hon. Hillary Rodham, U.S. Senator from the State of New
      York...........................................................     5
    Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...     2
    Isakson, Hon. Johnny, U.S. Senator from the State of Georgia.....     4
    Jeffords, Hon. James M., U.S. Senator from the State of Vermont..     6
    Lautenberg, Hon. Frank R., U.S. Senator from the State New
      Jersey, prepared statement.....................................    40
    Voinovich, Hon. George V., U.S. Senator from the State of Ohio...     1

                                   WITNESSES

    Cross, Michael, vice president, Cummins Inc., General Manager,
      Fleetguard Emissions Solutions.................................    26
        Prepared statement...........................................    46
    Keliher, Margaret, county judge, Dallas, TX......................    16
        Prepared statement...........................................    43
    Koncelik, Joseph P., Director, Ohio Environmental Protection
      Agency.........................................................    19
        Prepared statement...........................................    45
    Nastri, Wayne, Region IX Administrator, U.S. Environmental
      Protection Agency..............................................     9
        Prepared statement...........................................    40
    Nemser, Stuart, founder/chairman, Compact Membrane Systems, Inc..    32
        Prepared statement...........................................    79
    Regan, Timothy J., president, Emissions Control Technology
      Association....................................................    30
        Prepared statement...........................................    59
    Schneider, Conrad, advocacy director, Clean Air Task Force.......    28
        Prepared statement...........................................    50

                              ADDITIONAL MATERIAL

    Letters of Support for S. 1265, The Diesel Emissions Reduction
      Act of 2005....................................................    86
    Statements:
        Hemingway, Jon, president & CEO, Carrix, Inc.................    81
        McLennan, Staci R. Putney, director of Clean Air Programs on
          behalf of the Ohio Environmental Council...................    84

              S. 1265, THE DIESEL EMISSIONS REDUCTION ACT OF 2005

                                  ----------

                             TUESDAY, JULY 12, 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 2:30 p.m. in
    room 406, Senate Dirksen Building, Hon. George V. Voinovich
    (chairman of the subcommittee) presiding.
        Present: Senators Voinovich, Clinton, Inhofe, Jeffords,
    Isakson, and Carper.
        Senator Voinovich. Good afternoon.
        This hearing will come to order.

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

        This hearing is very special because a diverse, bipartisan
    group has come together to advance a policy that will
    significantly improve air quality in this Nation and impact
    better public health and our environment.
        I am pleased to showcase this collaboration today through
    this hearing on S. 1265, the Diesel Emissions Reduction Act of
    2005, which is cosponsored by several members of this
    committee, including Senators Carper, Inhofe, Jeffords,
    Isakson, Lieberman, Lautenberg, Obama, Murkowski, Clinton,
    Chafee and DeMint.
        Our witnesses represent the cross-section of environmental,
    industry and public officials who worked together to develop
    this legislation and I want to publicly thank them for all of
    the effort they have put in together to bring us to where we
    are today. It is rare for so many different members of
    organizations to agree on an issue, particularly when it can
    make a real difference.
        We will hear from Federal, State and local officials,
    including Ohio Environmental Protection Agency Director Joe
    Koncelik, an environmental group, an engine and control
    technology group and manufacturers. We unfortunately cannot
    have every supporter testify, so I ask unanimous consent to
    insert into the record letters and testimony from several
    groups, ranging from the Environmental Defense to Associated
    General Contractors of America, and the National Conference of
    State Legislatures into the record.
        The process for developing this legislation began last year
    when several organizations met with me. They informed me that
    the full benefit of the EPA's 2001 Highway and 2004 Non-road
    Diesel Engine rules will not be finalized until 2030 because
    the regulations address only new engines and the estimated 11
    million existing engines have a long life.
        They shared with me several successful grant and loan
    programs, such as those in California and Texas, that have been
    working on a voluntary basis to retrofit diesel engines. This
    intrigued me, especially because the Nation's 495 and Ohio's 38
    non-attainment counties need help to meet the new ozone and
    particulate matter air quality standards. We then formed a
    strong, diverse coalition and developed the Diesel Emissions
    Reduction Act of 2005.
        This bill will establish voluntary national and State-level
    grant and loan programs to promote the reduction of diesel
    emissions; it authorizes $1 billion over 5 years, $220 million
    annually for the retrofitting and replacement of diesel
    engines. This funding is fiscally responsible as diesel
    retrofits have proven to be one of the most cost-effective
    emissions reductions strategies. This is clear when you compare
    the cost effectiveness of diesel retrofits to current
    Congestion Mitigation and Air Quality Program projects.
        In other words, lots of projects are competing for Federal
    dollars, but there are very few that you can really get a good
    cost benefit. This program does that.
        Per ton of nitrogen oxides reduced its cost on average. In
    some of the other programs, this will cost $126,000 for
    alternative fuel buses, cost per ton of reducing nitrogen
    oxides; $66,000 for signal optimization; and $10,500 for van
    pool programs. We have heard about some of these. This is
    compared to $5,390 to repower construction equipment and $5,000
    to retrofit a transit bus. The bottom line is that if we want
    to clean our air to improve the environment and protect public
    health, diesel retrofits are one of the best uses of taxpayers'
    money.
        The Diesel Emissions Reduction Act of 2005 enjoys broad
    bipartisan support and was passed as an amendment to the Energy
    bill by a vote of 92 to 1. However, I think the bill is too
    important for us to wait until the Energy bill is signed into
    law. I urge this committee to act on this bill soon so that we
    can get it on the calendar and passed as soon as possible.
        I thank everyone for attending and look forward to hearing
    from the witnesses. I am very pleased that the chairman of our
    committee is here with us today, Jim Inhofe. Jim, I know you
    are busy working on the Conference Committee on the Highway
    bill. I am really honored that you took time from that schedule
    to come.
        Senator Inhofe. Thank you, Mr. Chairman.

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

        That is going on right now, and is the reason I won't be
    able to stay for the duration of this hearing, but I do
    appreciate your holding the hearing on the legislation to
    reduce diesel emissions. I am encouraged that this bipartisan
    legislation will have a considerable and cost-effective impact
    on our efforts to further an already significant progress we
    have made in improving air quality of the past few decades.
        You hear so much now about pollution and how bad things are
    that you don't realize that in the last 30 years, air pollution
    was at that time double what it is today. It has been a real
    success story and we need to build on those successes and
    certainly in the area of diesel engines, that is very
    important. Diesel engines are the core of the Nation's
    infrastructure. These engines power freight trucks, buses,
    tractors and a wide variety of other farm construction and
    specialty equipment. As you are aware, Mr. Chairman, they are
    even getting into diesel engines in aviation right now.
        On-road and off-road diesel engines rules were finalized in
    2001 and 2004 that will cut emissions by diesel engines
    dramatically--by more than 80 percent. So often you hear people
    say really good things aren't happening. The President had the
    act that would have mandated a 70 percent reduction in all
    three of the air pollutants and we were unable to get that
    finalized and I hope we will be able to do it.
        Having been a former mayor, as you, we don't want to do
    this with just Federal mandates. Certainly unfunded mandates
    are the greatest problem some of our cities produce. I think
    this is a good approach to it. The cost benefit ratio of 13 to
    1 of the Diesel Emissions Reduction Act simply makes sense. It
    authorizes $1 billion over 5 years, leverages an additional
    $500 million from matching State funds and will in addition
    reduce nitrogen oxides and cut particulate matter by an
    estimated 70,000 tons, so I am glad to be a cosponsor of this
    legislation and will work to try to make it a reality.
        [The prepared statement of Senator Inhofe follows:]

             Statement of Hon. James M. Inhofe, U.S. Senator from
                             the State of Oklahoma
        Mr. Chairman, thank you for holding this hearing on this
    legislation to reduce diesel emissions. I am encouraged that this
    bipartisan legislation will have a considerable and cost-effective
    impact on our efforts to further the already significant progress we
    have made in improving air quality over the last few decades.
        Just 30 years ago, air pollution was more than double what it is
    today. But we can no longer rely on the command-and-control approach
    associated with much of the Clean Air Act. Instead, we must look to
    solutions that get the biggest emissions reduction possible for every
    dollar spent. This legislation does just that.
        Diesel engines are at the core of our nation's infrastructure.
    These engines power freight trucks, buses, tractors, and a wide variety
    of other farm, construction, and specialty equipment. But as would be
    expected from such widespread use, these engines are responsible for a
    significant percentage of the mobile source nitrogen oxides.
        On-road and off-road diesel engine rules were finalized in 2001 and
    2004 that will cut emissions by diesel engines dramatically--by more
    than 80 percent--but these rules will not affect the millions of diesel
    engines already on the road. Many trucks are driven more than a million
    miles before they are retired.
        Nearly 500 counties are in non-attainment with the national ambient
    air quality standards for ozone and particulate matter. Yet existing
    diesel engines will continue to contribute to the problem despite the
    progress that has been made in developing new state-of-the-art clean
    diesel engines.
        What is needed is a cost-effective, voluntary program that builds
    on the successful state programs already underway to reduce pollution
    from these sources. Such legislation would help localities meet their
    clean air requirements and yield enormous health benefits at a fraction
    of the cost of what would be needed to obtain the same benefits through
    command-and-control regulations.
        The approach taken in this legislation is similar to that taken in
    an amendment to the Highway bill that I sponsored to promote clean
    school buses. The Diesel Emissions Reduction Act builds on existing
    state and local programs to retrofit and replace older engines so that
    localities have flexibility in coming into attainment. With the
    submission of State Implementation Plans fast approaching, enacting the
    legislation soon is crucial.
        By creating grant and loan funding to reduce diesel emissions, this
    legislation does not suffer from many of the shortcomings of the
    existing Clean Air Act. Whereas command-and-control mandates often are
    unnecessarily costly and ineffective at reducing emissions, this type
    of program directly targets cost-effective sources for cutting
    emissions.
        At a cost-benefit ratio of 13 to 1, the Diesel Emissions Reduction
    Act simply makes sense. It authorizes $1 billion over 5 years,
    leverages an additional $500 million from matching state funds and
    will, in addition to reducing nitrogen oxides, cut particulate matter
    by an estimated 70,000 tons. If we are to impose strict air quality
    requirements upon our localities, then we must acknowledge that these
    requirements will impose significant burdens on them. This legislation
    implicitly acknowledges this fact and assists these areas in meeting
    those obligations.
        I am glad to be a cosponsor of this legislation and look forward to
    hearing testimony today.

        Senator Voinovich. Thank you very much, Senator Inhofe.
        Senator Clinton, would you mind, Senator Isakson said he
    has to leave. Thank you.
        Senator Isakson.

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

        Senator Isakson. Thank you, Senator Clinton. I do apologize
    and I will try and return for most of the hearing but I do have
    to slip out for a second.
        I want to thank you, Mr. Chairman, for allowing me to be
    here today and for introducing S. 1265. I commend you and
    particularly your staff member, Brian, and the great work they
    did in drafting this legislation and bringing a true bipartisan
    bill to the U.S. Senate.
        In my State of Georgia, 28 of 159 counties are in non-
    attainment and most recently Catoosa, Walker and Muskogee fell
    in that category, not typical counties in that they are densely
    populated but typical because they have interstate highways
    running through them and tremendous truck traffic that goes
    through and generates an awful lot of diesel emission. That is
    why I am so proud to be a part of this legislation which
    creates incentives to deal with that exact problem.
        This legislation, which was drafted in cooperation with
    environmental, industry and public officials would establish
    voluntary, national and State-level grant and loan programs to
    promote the reduction of diesel emissions. Passage of the
    provisions included in this bill would help communities
    especially in my State of Georgia attain the air new quality
    standards, significantly improve the environment and protect
    the public health.
        I look forward to working with the chairman and the other
    members of the committee on the passage of this bill and thank
    the chairman for his leadership in doing so.
        [The prepared statement of Senator Isakson follows:]

              Statement of Hon. Johnny Isakson, U.S. Senator from
                              the State of Georgia
        Thank you, Chairman Voinovich, for holding this hearing. I would
    like to thank you for your efforts and the efforts of your staff,
    especially Brian Mormino, in the drafting of this well crafted
    bipartisan legislation. I am proud to be an original cosponsor of this
    legislation. My comments will be brief as I have another commitment.
        In my State of Georgia 28 of 159 Counties, including Walker and
    Catoosa Counties in the mountains, through Metro Atlanta, and down to
    Muscogee County and the Metro Columbus area, are in non-attainment for
    particulate matter. Twenty-two of 159 counties over the same geographic
    area are in non-attainment for ozone. In fact, about 60 percent of
    Georgia's population lives in a non-attainment area. We have impaired
    waters from high mercury levels and, in a State where we celebrate the
    outdoors, over half of Georgia's lakes and rivers have mercury-based
    fish consumption advisories.
        This legislation, which was drafted in cooperation with
    environmental, industry, and public officials, would establish
    voluntary national and State-level grant and loan programs to promote
    the reduction of diesel emissions. Passage of the provisions included
    in this bill would help communities, especially in my State of Georgia,
    attain the new air quality standards, significantly improving the
    environment and protecting public health.
        I am hopeful the Congress will pass the provisions included in this
    legislation, and pledge to work with you Mr. Chairman to make that
    happen. I apologize for not being able to stay for the duration of the
    hearing, but thank you for calling it.

        Senator Voinovich. Thank you very much.
        Senator Clinton.

    OPENING STATEMENT OF HON. HILLARY RODHAM CLINTON, U.S. SENATOR
                       FROM THE STATE OF NEW YORK

        Senator Clinton. Thank you very much, Mr. Chairman.
        Again, I really congratulate you for your leadership in
    developing and introducing the Diesel Emission Reduction Act of
    2005. It has been a pleasure to have my staff, yours and others
    work on this and it is a great testament to the ability to get
    things done when we can find common ground.
        My interest in this issue goes back to the beginning of my
    tenure in the Senate when I joined with former Congressman Amo
    Houghton and others to push for appropriations for the EPA's
    Clean School Bus USA Program. We were able to secure $5 million
    and then to build on that but it became very clear to me that
    most school districts were not going to be able to afford to
    buy new buses, yet the diesel emissions increasingly concerned
    them. Using technology now available was a win-win. It was
    cheaper, they could install it and they could cut emissions at
    the same time.
        Your bill goes just light years ahead of anything that we
    have been able to achieve beforehand. There are many reasons
    why this is significant legislation. Lots of times around here
    only the controversies get attention, but this has the
    potential to be such a positive step forward for everyone who
    cares about clean air, who cares about the manufacturing future
    of our country because this is technology that will really spur
    manufacturing here at home.
        The good news is we have a range of cost-effective
    technologies to reduce emissions from the existing diesel
    fleet. I am very proud that Corning, a New York manufacturer of
    global renown, is a leader in this area. Corning developed and
    produces the cellular ceramic particulate filters that are at
    the heart of diesel retrofit technologies. So this to me is a
    win-win not only for the environment but also for our economy.
        I am also concerned, however, Mr. Chairman, that we should,
    with the same bipartisan support that we used to add this to
    the energy legislation, go ahead with your plan of doing it as
    a separate bill to get it passed and try to get it implemented
    as soon as possible. Therefore, I would hope the Administration
    would reconsider their position and support the funding levels
    you set forth in the Act because there is a great need for us
    to move as quickly as possible to implement this technology.
        There is an additional related issue and that is going to
    be mentioned later in the testimony of Mr. Cross. The
    importance of sticking to the ultra-low, sulfur diesel fuel
    schedule and rule as currently written. Cummins and other
    engine manufacturers have invested billions of dollars in
    research and development of the next generation of clean diesel
    engines.
        I really applaud them because they have struck out and
    basically done what they thought was right and believe there is
    a market for this. Some of these engines will actually be
    produced in Cummins' plant in Jamestown, NY, but the engines
    can't meet the emissions standards that will take effect in
    2007 and beyond without the ultra-low, sulfur diesel fuel.
        I was concerned when EPA delayed implementation of the
    ultra- low, sulfur diesel rule by 45 days. I strongly disagree
    with this extension, but I am certain that it should give more
    than enough additional time for all parties in the fuel supply
    chain to meet the rule. After all, the deadline should not come
    as a surprise, it has been in the making for years now.
        I really hope in conjunction with passing this very
    important legislation as a stand alone bill, we can recognize
    the importance of the rule and put the Administration on notice
    that we should not permit any additional delays. This is
    something we can move on and as I said, it is not only a win
    for the environment, it is a win for American manufacturing.
        I for one believe we ought to incentivize American
    manufacturing, we ought to reward independent efforts like that
    of Corning and Cummins who are out there doing the work that
    will create technology, that will create jobs, that will create
    American exports.
        For all these reasons, Mr. Chairman, I am delighted to be a
    cosponsor and very grateful for your leadership on this
    important legislation.
        Senator Voinovich. Thank you, Senator Clinton.
        I agree with you in terms of the deadline and in terms of
    the impact of the rule going into effect. The manufacturers in
    this country have spent almost $2 billion in preparation for
    this rule. I think we should stick to the deadline that has
    been set.
        I also agree with you that in terms of the expenditure of
    money, particularly in light of the cost benefit, that this is
    a program that really should be supportive. I know there are
    some other things that they are not supportive of but if we are
    going to really make some headway in terms of reducing
    emissions, this is one of the best and probably one of the best
    investments they can make because not only will we get the
    money from the Federal Government but we calculate that another
    half billion dollars will be generated from the private sector
    or from local and State Government. So it is something we
    really need to put the pressure on and make sure the dollars
    are there to get it done.
        Senator Jeffords.

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

        Senator Jeffords. Senator Voinovich, thank you very much
    and thank you, Senator Clinton, for an excellent statement.
        I am pleased the subcommittee is holding a hearing today on
    S. 1265, the Diesel Emissions Reduction Act of 2005. I applaud
    the work of Senators Voinovich and Carper in this measure. I am
    also a cosponsor of this legislation because I believe that the
    Federal Government must do more to protect public health from
    toxic diesel emissions, particularly from the old diesel
    engines still in use today.
        This is bipartisan legislation and already included in the
    Senate-passed Energy bill by an overwhelming vote. Several
    thousand people are dying every year because of the exposure to
    diesel exhaust. This is especially true in higher urbanized and
    poorer areas of the country where people often have the least
    supportive public health and medical services. These are people
    who can least afford exposure to the hazardous mix of cancer
    causing agents and respiratory irritants.
        According to the study done by the Clean Air Task Force,
    ably represented by Mr. Schneider today, over two-thirds of the
    United States has a cancer risk greater than 100 in a million
    from diesel exhaust. Residents in 11 urban counties face a
    diesel cancer risk 10 times that high. There are millions of
    diesel engines operating on our highways, railroads and
    harbors, as well as generating emergency electricity, and
    moving non-road vehicles and equipment to build new roads and
    buildings. These engines are essential to our economic life.
        As other sources are being controlled, diesels are becoming
    a greater share of the air quality burden in many areas. They
    contribute significantly to non-attainment in the fine
    particulate matter or the PM2.5 standard. Some of
    the damage from existing diesels will decline as the Nation
    moves forward towards lower sulfur diesel fuel in late 2006.
    However, the existing millions of diesel engines will continue
    chugging along for years if not decades before they are
    replaced with cleaner, less polluting technology. That is why
    this bill is necessary.
        This bill authorizes $1 billion to retrofit these old
    engines and promotes development of cleaner technology. This is
    really just a drop in the bucket of what is necessary and what
    is warranted given the huge benefits to public health.
    Unfortunately, this Congress is poised yet again to cut the
    President's gradually dwindling budget request for diesel
    retrofit activities. Even the Clean School Bus Retrofit
    Program, which everyone supports, will barely get enough to get
    the wheels going around. A voluntary, incentive-based approach
    to the problem of diesel emissions is preferred by many.
        If the incentives are inadequate or unfunded, then it may
    be time to consider giving EPA or the States sufficient clear
    authority to impose higher emissions standards on the existing
    fuel of diesel engines. There is very little question that the
    benefits would outweigh the costs of such regulation. That fact
    is made even plainer by the growing scientific evidence that
    the current PM standard must be more stringent to protect
    public health.
        Finally, I would like to note for the record that EPA's
    very serious delay in proposing a rule for implementing the
    fine particulate matter standard is delaying the States'
    efforts to protect public health and achieve that standard.
    There is no excuse for this unacceptable delay. The States may
    well choose to adopt diesel retrofit efforts like those
    promoted by this bill, but EPA's tardiness in completing this
    important rule and guidance is slowing down clean technology
    development and delaying very significant health benefits.
        Today's diesel emissions are toxic and contribute to non-
    attainment. We should move to reduce them on every front.
        Thank you, Mr. Chairman.
        [The prepared statement of Senator Jeffords follows:]

           Statement of Senator James M. Jeffords, U.S. Senator from
                              the State of Vermont
        I am pleased that the subcommittee is holding a hearing today on S.
    1265, the Diesel Emissions Reduction Act of 2005. I applaud the work of
    Senators Voinovich and Carper on this measure. I am a cosponsor of this
    legislation because I believe that the Federal government must do more
    to protect public health from toxic diesel emissions, particularly from
    the old, polluting diesel engines that are in use today.
        This bipartisan legislation has already been included in the Senate
    passed Energy bill by an overwhelming vote. Several thousand people are
    dying every year because of exposure to diesel exhaust. This is
    especially true in highly urbanized and poorer areas of the country
    where people often have the least supportive public health and medical
    services. These are people who can least afford exposure to this
    hazardous mix of cancer causing agents and respiratory irritants.
        According to a study done by the Clean Air Task Force, ably
    represented by Mr. Schneider today, over two-thirds of U.S. counties
    have a cancer risk greater than 100 in a million from diesel exhaust.
    Residents of eleven urban counties face a diesel cancer risk ten times
    that high. There are millions of diesel engines operating on our
    highways, railroads and harbors, as well as generating emergency
    electricity, and moving non-road vehicles and equipment to build new
    roads and buildings. These engines are essential to our economic life.
        But, as other sources are being controlled, diesels are becoming a
    greater share of the air quality burden in many areas. They contribute
    significantly to non-attainment of the fine particulate matter or
    PM2.5 standard. Some of the damage from existing diesels
    will decline as the nation moves toward lower sulfur diesel fuel in
    late 2006.
        However, the existing millions of diesel engines will continue
    chugging along for years if not decades before they are replaced with
    cleaner, less polluting technology. That is why this bill is necessary.
    This bill authorizes one billion dollars to retrofit these old engines
    and promotes development of cleaner technologies. That is really just a
    drop in the bucket of what is necessary and what is warranted given the
    huge benefits to public health.
        Unfortunately, this Congress is poised yet again to cut the
    President's gradually dwindling budget request for diesel retrofit
    activities. Even the clean school bus retrofit program which everyone
    supports will barely get enough to keep the wheels going around. A
    voluntary, incentive-based approach to the problem of diesel emissions
    is preferred by many.
        But, if the incentives are inadequate or unfunded, then it may be
    time to consider giving EPA or the states sufficiently clear authority
    to impose tighter emission standards on the existing fleet of diesel
    engines. There is very little question that the benefits would outweigh
    the costs of such regulation. That fact is made even plainer by the
    growing scientific evidence that the current PM standard must be more
    stringent to protect public health.
        Finally, I would like to note for the record that EPA's very
    serious delay in proposing a rule to implement the fine particulate
    matter standard is delaying the states' efforts to protect public
    health and achieve that standard. There is no excuse for this
    unacceptable delay. The states may very well choose to adopt diesel
    retrofit efforts like those promoted by this bill.
        But EPA's tardiness in completing this important rule and guidance
    is slowing down clean technology development and delaying very
    significant health benefits. Today's diesel emissions are toxic and
    contribute to non-attainment. We should move to reduce them on every
    front.

        Senator Voinovich. Thank you very much, Senator Jeffords.
        Our first witness today is Wayne Nastri. Wayne is the
    Region IX Administrator for the U.S. EPA. Mr. Nastri, you have
    an interesting region, Arizona, California, Nevada and Hawaii.
    I know at least one of those States has some real pollution
    problems.
        Mr. Nastri. It also includes all the Pacific and 147
    environmental tribes, Mr. Chairman.
        Senator Voinovich. We appreciate that you are here and I
    would like to make clear to all the witnesses that we would
    like you to limit your statement to no more than 5 minutes. For
    members of the committee, I think we will try and have at least
    one round of questions. We do have several witnesses here today
    that have come long distances, so we want to make sure we give
    them adequate time to testify and then ask them questions.
        Mr. Nastri, thank you for being here. We look forward to
    your words.

       STATEMENT OF WAYNE NASTRI, REGION IX ADMINISTRATOR, U.S.
                    ENVIRONMENTAL PROTECTION AGENCY

        Mr. Nastri. Thank you, Mr. Chairman and members of the
    subcommittee, it is a real pleasure to be here today
    representing my colleagues at EPA.
        Let me begin by saying we support the goals of the Diesel
    Emissions Reduction Act of 2005. As you noted in earlier
    statements, over 400 counties aren't in attainment for ozone
    with the new 8-hour standard. Over 200 counties aren't in
    attainment for the PM standards. The health effects of diesel
    exhaust, specifically fine particulate matter exposure, are
    well chronicled and well known. Addressing these risks is a
    priority for the Administration and is why we have developed
    strong standards for new diesel engines.
        In addition, the President has requested in his budget $15
    million for advanced diesel retrofits, $10 million for the
    Clean School Bus USA Program and $9 million for the CARE
    Program which is the Community Action for Renewed Environment
    dealing with localized toxics.
        Our strategy to address diesel emissions has been twofold,
    utilization of regulatory and voluntary programs. From a
    regulatory perspective, we have developed new regulations for
    on-highway and off-road engines that will become effective in
    2007 and 2014. These regulations apply to new vehicles and will
    provide cleaner fuels and cleaner burning engines and when
    fully implemented, will provide over $150 billion in health
    benefits.
        It is noted though the challenge that we face is that
    diesel engines are long-lived, having life spans of 20, 30 and
    even 40 years in some cases. There are approximately 11 million
    engines that are currently in use that emit high levels of
    pollution that can be reduced in terms of their emissions. We
    can do that through the use of newer control technologies and
    cleaner fuels.
        We are using voluntary programs to address these 11 million
    engines and we are doing it to achieve immediate emission
    reductions and benefits. Voluntary programs are among the most
    cost-effective strategies for addressing diesel emissions
    within existing fleets and provide a health benefit to cost
    ratio of up to 13 to 1.
        The National Clean Diesel Campaign has been devoted to
    aggressively reducing diesel exhaust through various control
    strategies with active involvement of our national, State and
    local partners. Programs such as EPA's, Voluntary Diesel
    Retrofit Program and SmartWay Transport Partnership have
    established several hundred projects that involve cleaner fuel,
    idle reduction and other environmental control strategies.
        We launched the National Clean Diesel Initiative. We
    determined that various sectors provide the best opportunities,
    those being port construction, freight and agriculture, in
    addition to the school buses being a top priority given the
    relative risk to children.
        Coming from the region, I believe the action is where the
    rubber hits the road and that is at the local level. In Regions
    IX and X in the west, we have developed the West Coast
    Collaborative. It is an ambitious public-private partnership
    that brings leaders from Federal, State and local governments
    together. It brings together the private sector and
    environmental groups from such States as Alaska, Washington,
    Oregon and California. We have also reached out to Canada and
    Mexico and Idaho and Arizona are now participating in this
    collaborative.
        In fiscal year 2005, we will implement 16 projects with
    $1.3 million in Agency funding and over $5.6 million in
    matching funding. We are able to generate a fourfold leveraging
    factor through these programs in order to bring about retrofit
    programs on diesel engines with PM traps, as well as looking at
    biodiesel additives to reduce NOx as well as looking at the
    implementation of LNG powered locomotives in the ports of Los
    Angeles and Long Beach.
        There are many other examples of regional collaboratives,
    the Midwest Clean Diesel Initiative, the Northeast Diesel
    Collaborative, as well as at the local level where we have the
    mid-Ohio Regional Planning Commission which also formed a
    Diesel Emissions Subcommittee, again with representatives from
    a broad variety of stakeholders.
        There are numerous programs in the States that have been
    very successful. California has the Carl Moyer Program where
    they have been able to actually bring about funding to reduce
    emissions and also Texas which you will hear more about later
    with their emissions reduction program. Washington set aside
    funding for their school bus emissions reductions.
        We have learned the lack of capital can be a significant
    obstacle to implementing these diesel emission reduction
    activities. We have also learned that Federal oversight helps
    target projects in those areas of need, it also makes sure of
    the air quality benefits and maximizes public health benefits
    as well. We have also learned that the program matching funds
    is an important incentive.
        As I said earlier, reducing emissions from older diesel
    engines is one of the most important air quality challenges
    facing the country. We have a good regulatory program in place
    that will help provide important clean air and health benefits
    for years to come. Through the use of voluntary programs like
    the National Clean Diesel Campaign and regional collaboratives,
    we can obtain immediate reductions and health benefits.
        Without a doubt, the technology is available and most
    importantly, there is broad support for these programs. While
    we support the efforts to reduce emissions, we are concerned
    that the funding authorization in this legislation exceeds the
    funding called for in the President's 2006 budget. Having said
    that, we certainly look forward to working with you and with
    members of the committee to address the public health goals of
    the legislation consistent with the fiscal constraints we must
    confront.
        Thank you again for your leadership on this important issue
    and affording me the opportunity to speak on behalf of the EPA
    today. That concludes my remarks and I am prepared to answer
    any questions.
        Senator Voinovich. Thank you very much, Mr. Nastri.
        I am sure you had to have your testimony reviewed by the
    Environmental Protection Agency. I would hope those of you in
    the field would do whatever you can to impress upon Mr. Johnson
    and the Administration, particularly those at OMB, that this is
    a reasonable sum of money and really if you look at it in terms
    of its adequacy, it is inadequate but it does move us down the
    road which is what we want to do.
        In your statement, you justify the need for this bill and
    for significant Federal investment and you state, ``Lack of
    capital can be an obstacle to implementing diesel emission
    reduction activities.'' I am not going to go into it but I know
    the position you are in. I am a deficit hawk and I believe in
    working harder and smarter. I have to tell you this legislation
    and the money we spend will allow us to work harder and smarter
    and do more with less. It is a very, efficient piece of
    legislation. Again, I hope you will talk to some of your
    administrative friends to see if we can't get the
    Administration's attention on this.
        You have a lot of counties, I am sure, in your region that
    aren't meeting probably the current emissions standards and are
    going to have a very difficult time meeting the new ambient air
    standards for ozone and particulate matter. They are going to
    need help.
        Mr. Nastri. That is correct.
        Senator Voinovich. This is a great way for them to get
    help, especially for some of your Governors when putting
    together their State implementation plans, being able to fold
    in this kind of voluntary program I think would help them a
    great deal in terms of achieving what we all want, to get their
    emissions to meet standards by 2010.
        EPA clearly has a lot of experience and in your testimony,
    you mentioned some lessons learned. These lessons are very
    important to this committee as we move forward with the
    legislation. Can you elaborate on what lessons are important to
    be included in Federal legislation and whether you think Senate
    bill 1265 includes them? Are there some things you think we
    should have in here that we don't?
        Mr. Nastri. I think the language you have is sufficient. I
    would say the things we always deal with from the lessons
    learned are issues of leadership, making sure you have someone
    committed to making sure people are at the table trying to
    actually negotiate what are the best projects, what are the
    best programs. You need commitment, you need to make sure
    because it is so difficult in the field to bring together all
    the parties to make them concentrate. Often you will have
    parties who come to the table and say, you can't do this and
    you can't do that. We need to make sure we provide leadership
    that says, this isn't a question about what we can't do, it is
    a question about what can we do. If the issue is funding, we
    need to make sure we can identify what those funding needs are.
        When we look at putting out the collaborative grants
    funding application, we get a demand that exceeds the funds we
    have by over tenfold. The fact we are able to leverage though
    in some cases up to fourfold, I think is a strong testament to
    the support we have from other parties that are willing to step
    up to the table and say, if EPA provides that leadership and is
    bringing together these different groups, then that is
    something we will take notice of and we want to be at the table
    participating.
        I think the other issues we have learned are you have to
    have a sustained education and outreach program. It is so
    important to go out to all the different States and different
    localities, whether they are in attainment or not, because you
    still have localized toxic issues you have to deal with.
        Those traits, leadership, commitment, education, outreach,
    are key, I think, examples or key ingredients of a successful
    program.
        Senator Voinovich. Could you give me an example of the four
    to one leveraging you talked about?
        Mr. Nastri. Within the region, we solicited funding. We had
    $1.3 million in funding and the Ports of Los Angeles and Long
    Beach, looking at other areas within the region, and they were
    able to utilize matching funds from various other program
    participants. For instance, the Ports of Los Angeles and Long
    Beach had separate pots set aside from settlements that they
    were able to utilize, that money in conjunction with our money
    which served as both seed and catalyst. We found we can
    leverage up to fourfold.
        There are other projects where we haven't been able to
    leverage as much and there are instances where we have only
    been able to leverage up to two-thirds. One of the key criteria
    we have always tried to establish is there has to be a level of
    matching funds. That demonstrates to us you have a broad
    stakeholder commitment. We think when you have that broader
    stakeholder commitment, you have a greater level of assurance
    of success. That is what we are looking for.
        Senator Voinovich. You might say this is the yeast that
    raises the dough?
        Mr. Nastri. It could be said, certainly.
        Senator Voinovich. Senator Jeffords.
        Senator Jeffords. You said there are 11 million engines in
    today's fleet and a substantial number of these engines are
    going to continue operating for the next 20 to 30 years. Given
    the huge health cost associated with these long-term sources of
    pollution, it would appear to make much more sense not to rely
    on an entirely voluntary system of reductions. Instead, we
    could give the EPA and the States clear authority and direction
    to control emissions from existing engines now rather than
    waiting for decades until the cleaner ones penetrate the fleet.
        What are your thoughts about that?
        Mr. Nastri. My thoughts are we have the authority to
    address the new engines. The question then becomes how do you
    regulate the in use engines. I think we actually do have
    authority to regulate in use engines at the time of repower or
    rebuild. The trouble with that though is oftentimes those are
    done at much different levels and it would become very
    difficult to actually enforce that type of action. What happens
    with vehicles, and I am sure others will be able to explain
    this better, but oftentimes fleets will simply sell their
    existing vehicles to someone else and acquire new vehicles.
    Those new vehicles will be run an additional 200,000 to 300,000
    miles before they are rebuilt.
        The level of resources available to do the repowers and
    rebuilds fall to those less able to do that. From an
    enforcement and compliance perspective, it would be very
    difficult for us to move forward. That is why we focused on the
    voluntary program where we can say to the smaller business
    owner-operators who may have one or two trucks operating, for
    instance in southern California where there are incentives that
    will make it more worthwhile for them to do the retrofit. If we
    had to regulate that and make them do it, a number of them
    would say we simply can't afford it. From our perspective, the
    voluntary program provides much more incentive and much more
    means to do that.
        Senator Jeffords. That is very helpful testimony.
        How will EPA address diesel exhaust in the soon to be
    proposed PM2.5 implementation regulations?
        Mr. Nastri. I am sorry, I don't know the answer to that. I
    can certainly make sure we provide you with the information.
        Senator Jeffords. When the Mexican trucks enter the United
    States right now, how is EPA making sure these trucks comply
    with the same Federal emission performance standards that
    trucks registered in the United States have to meet?
        Mr. Nastri. I will speak to what is going on in California
    and Arizona and we can provide further information from the
    broader region, particularly with regards to Texas.
        Right now, we are working very closely with the California
    Air Resources Board to develop means that would actually test
    those vehicles as they enter the United States. We are looking
    at performing emissions testing along the border trying to
    establish the inventory of those vehicles, looking at what
    vehicles would be capable of utilizing newer technologies or
    some of the newer fuels issues to reduce those emissions. At
    this point, I would say we are working closely with the State
    to identify both the inventory and the means we think will
    work. Once we have that defined, then I think we can come
    forward with a program, both at the State and local level in
    conjunction with support at the national level.
        Senator Jeffords. That is very helpful.
        You stated the Administration cannot support the
    authorization levels in this bill because they might create
    pressure to actually appropriate more money for diesel
    retrofits in the future. The benefits to cost ratio in that
    case may be as high as 13 to 1. Where else would the
    Administration rather spend the $1 billion authorized in this
    bill?
        Mr. Nastri. As Regional Administrator, I could think of
    several places in the region I would like to spend that money
    but from the national perspective, I think that is probably
    best answered by the Administrator.
        Senator Jeffords. Thank you. I guess that is an answer.
        Senator Voinovich. Senator Clinton.
        Senator Clinton. Thank you, Mr. Chairman.
        Mr. Nastri, I am somewhat confused by the Administration's
    position which as I understand you are representing today. The
    Diesel Emissions Reduction Act establishes voluntary national,
    State and local level grant and loan programs. This Act does
    not force anybody to do anything. It increases the resources
    available to incentivize people to move as quickly as possible
    to retrofitting diesel engines.
        I think the analysis of this legislation, which the
    chairman has very eloquently stated, the cost benefit is rather
    extraordinary. There are few pieces of legislation that have
    any chance of passing the Congress that have this kind of
    return for the dollars invested.
        I think it would be very helpful if the EPA and the
    Administration took another look at this because your own
    testimony says, ``There are endless prospects across the Nation
    to reduce diesel exhaust.'' The problem is we haven't invested
    the kind of dollars we need in order to put this on a fast
    track. I hope the Administration will take another look at this
    and support this legislation.
        It would certainly be a total environmental win and I
    believe a total economic win for the Administration and for the
    Congress. It would send a very strong message to the country
    about the seriousness with which we are dealing when it comes
    to diesel exhaust.
        I wanted to ask you on a slightly different note if you
    could enlighten the committee as to why the EPA has delayed the
    ultra-low sulfur diesel fuel rule?
        Mr. Nastri. I believe you are referring to the delivery of
    the fuel, correct, the distribution system, the 45-day
    extension recently granted?
        Senator Clinton. Yes.
        Mr. Nastri. The manufacturers still have to meet the
    requirements for the ultra-low sulfur fuel. The issue is one of
    distribution, so for the distribution channels to be cleared
    because what happens is through the pipelines you can have
    residue sulfur content. The residue sulfur content can
    contaminate the ultra-low sulfur fuel, so there are issues that
    have to be addressed before that is fully implemented.
        We did not take the extension lightly. It is something we
    took very seriously and we don't believe there would be any
    cause for another extension but is something that is certainly
    understandable. These are issues I have certainly seen at the
    local level in the regions among pipeline transfer issues
    fairly routinely.
        Senator Clinton. But it is your testimony that you don't
    believe another extension will be necessary beyond the 45 days?
        Mr. Nastri. That is correct.
        Senator Clinton. Thank you, Mr. Chairman.
        Senator Voinovich. Thank you.
        Senator Carper.
        Senator Carper. First, just a short comment.
        This past week during our recess, like most of my
    colleagues, I sought to cover my State which is something I
    always enjoy doing, getting to see a lot of people and
    reconnecting with the folks from one end of Delaware to the
    other. Among the other things we did was my family and I took
    off 3 days and we went to visit a number of schools with our
    oldest son who will be a senior in high school this year.
        Coming back from Connecticut and Massachusetts heading back
    to Delaware, coming onto I-95 through New York City approaching
    the George Washington Bridge, very slowly, in fact we
    approached it for hours.
        [Laughter.]
        Senator Carper. Until we finally got there. My wife pointed
    out on either side of the highway, the folks who live alongside
    I-95 which cuts right through New York City. She said, looking
    at all the trucks around us, the diesel trucks, the huge trucks
    and other vehicles literally lined up bumper to bumper for
    miles and she said, ``God, it would be awful to have to live
    here and put up with all that noise.'' I happened to look out
    our window and there were a bunch of kids playing on a
    playground, not 100 yards from where we were and I said, it is
    not the noise that would be hard to put up with, it is what
    these kids are breathing.
        I understand the Administration has concerns with the cost
    of this program which Senator Clinton suggests the cost
    benefits actually are quite good compared to other programs but
    sometimes we lose sight of the cost of the health impairment
    for those kids that we saw. It is not just the ones as we
    approached the George Washington Bridge, but kids or families
    living on either side of I-95 or other busy traffic roads in my
    own State or in Ohio, Vermont or any other State.
        I would just ask that as the Administration looks at an
    initiative like this, which you know enjoys strong bipartisan
    support, that there are benefits that also can be measured and
    that have a very positive effect not just on the bottom line in
    terms of health care costs, but in the quality of life of those
    kids.
        I guess I don't have a question but I would ask you to keep
    that thought in mind as the Administration formulates its own
    views as this legislation moves forward.
        Senator Voinovich. Thank you, Senator Carper.
        You always get to the jugular of an issue. One of my real
    concerns, and we have a study being paid for by the
    Environmental Protection Agency in Cincinnati at the University
    of Cincinnati Hospital, where they are actually measuring the
    impact of particulate matter emissions from diesel on children.
    The study has a long way to go, but they have looked at kids
    from birth to 6 months and then they will look at a year and
    start to do some examinations of those children, to see what
    impact this is having on their health and maybe their
    development.
        What really causes me some concern is the initial studies
    show their being that close to the highways is really having an
    impact on them. Then I think of all the developments that have
    been done in this country and I don't know if it is the case
    where you live, but in the midwest, if you drive around, go out
    of town on one of the interstates, you will find all kinds of
    development, condominiums being built right up next to the
    freeway. They have these sound barriers there but the fact is
    they are close enough for all these emissions that come up 24
    hours a day, they go up, over and drop down. Particulate matter
    I understand is up there and it comes down.
        I am thinking about all the people in this country right
    now being subjected to all this and some of them may not even
    know it. I think not only should we be concerned about this in
    terms of ambient air standards, but I think some of our
    developers around the country ought to be interested in moving
    pretty quickly on doing something about this issue.
        I mentioned this when the amendment was debated on the
    floor just before it was adopted, I think by 92 to 1 margin,
    the great thing about diesel engines, the ones on the highways
    these days, they last a long time. The bad news about diesel
    engines, the ones on the highway right now is they last a long
    time. If there is a relatively inexpensive way to make sure
    those diesel engines are putting out less nitrogen oxide and
    less particulate, I think we ought to think long and hard
    before we let this opportunity pass us by.
        Thank you.
        Senator Voinovich. Thank you.
        Mr. Nastri, I really enjoyed your testimony and your
    written testimony. Thank you very much. I hope all of our
    Regional Administrators are as effective as you are. Thank you
    for coming.
        Mr. Nastri. Thank you, Mr. Chairman. I will certainly
    convey your sentiments and thoughts to our Administrator. I can
    assure you that the people in the regions are doing the same as
    well.
        Senator Voinovich. Our second panel is: Margaret Keliher,
    county judge, Dallas, TX and up in my neck of the woods, we
    call them county commissioners. Then we have Joe Koncelik,
    Director, Ohio Environmental Protection Agency. Joe, it is nice
    to see you again. It seems in the last couple of months we have
    spent a lot of time together.
        Mr. Koncelik. It seems that way, Senator.
        Senator Voinovich. Judge Keliher, we would like to begin
    with you.

        STATEMENT OF MARGARET KELIHER, COUNTY JUDGE, DALLAS, TX

        Judge Keliher. I am the Dallas county judge. I am the
    presiding officer for Dallas County's Commissioner Court. I am
    also on the board of the Texas Environmental Research
    Consortium. I am a member of the North Texas Clean Air Steering
    Committee, a member of the Texas Clean Air Working Group and a
    member of the Regional Transportation Council's Committee for
    Clean Air.
        In light of all that, I am very proud and pleased to be
    here to support Senate bill 1265. Mr. Chairman, I also want to
    applaud you on your leadership for this very important
    legislation.
        Right now, the DFW area is not in attainment. We are a non-
    attainment area. Right now, we do not know what we are going to
    do to be able to clean up our air by the year 2010. We do know
    we need some help and we do know we are very pleased with this
    legislation.
        Also, as Dallas county judge, however, I am responsible for
    health care in Dallas County. Now in Dallas County, the busiest
    emergency room for children happens to be the Children's
    Hospital. The No. 1 problem in our hospital is respiratory
    problems for children. So this is an extremely important bill
    for all us, not only for environmental issues but as you all
    have been pointing out, also for health care reasons.
        As I will demonstrate in my testimony, Texas has worked
    already aggressively in trying to reduce emissions from diesel
    engines and from the non-road sector by passing and funding the
    Texas Emission Reduction Plan which I will refer to as TERP.
    Texas has taken the lead and demonstrated the effectiveness of
    an incentive-based plan to help reduce emissions such as Senate
    bill 1265 would do. Now, however, it is time for the Federal
    Government to step up and help assist us in these programs.
        We are, therefore, asking for some help to do some emission
    reductions from sectors such as the railroad sector. In 2001,
    the Texas Legislature established the TERP Program. In
    authorizing the bill, the TERP was intended to be used as a
    tool, ``to assure that the air in the State is safe to breathe
    and meet minimum Federal standards and to develop multi-
    pollutant approaches to solving the State's environmental
    problems.''
        We have extended through the Texas Legislature the TERP
    Program and its funding through the year 2010. The heart of the
    TERP Program is the Emission Reduction Incentive Grants Program
    which currently funds projects in 41 counties where the air
    quality violates or is close to violating the EPA standards.
    The principal goal of this grant program is to reduce NOx
    emissions with an implicit goal of reducing a combined 49 tons
    per day of NOx in the Houston, Dallas and Ft. Worth area. This
    program is currently funded to the tune of about $120 million
    to $140 million annually.
        As of June 8, 2005, approximately $192 million in TERP
    grant funding had been awarded to 732 projects. Over their
    lifetime, these projects are expected to reduce the NOx
    emissions by nearly 41,000 tons at a cost of approximately
    $4,700 per ton which as you have already pointed out, is one of
    the best uses of taxpayer dollars we could have. That does not
    take into account any of the health care costs.
        Our projects have ranged in size from being a few thousand
    dollars for replacement of a single piece of construction
    equipment, to over $11 million to retrofit and refueling some
    of the large fleet of transit buses.
        However, during the last legislative session in Texas,
    which I might add is kind of still going on, some of our
    legislators questioned the fairness of the funding structure of
    the TERP Program. Fifty million dollars per year of TERP
    funding comes from fees on diesel equipment that is sold or
    leased in Texas, yet some of the largest and most cost-
    effective grants have gone to reduce emissions from railroads
    who pay noting into the TERP system.
        Senate bill 1265 could help and assist Texas in providing
    funds to reduce the railroad engine emissions, while leaving
    State funds available to address reductions from the
    construction industry that participates in the funding of the
    TERP Program.
        Dallas and the DFW area's ozone pollution problem is
    different from that of Houston. Houston's is primarily
    industry. The DFW area, however, is primarily on-road/off-road
    mobile sources, the so-called federally preempted sources
    largely out of reach of State and local regulations. The Texas
    Commission on Environmental Quality estimates that in 2010
    after the implementation of our already existing control
    measures, non-road and off-road mobile sources will constitute
    32 and 38 percent respectively of our NOx emissions. There is a
    chart I put in my testimony that shows this 32 and 38 percent
    which combined means that 70 percent of our region's pollution
    is coming from federally preempted sources.
        This emissions break, needless to say, is especially
    staggering in light of the estimated pollution costs that may
    have to be made in order to comply with the 8-hour standard.
    Less than 2 weeks ago, the TCEQ informed us at our North Texas
    Steering Committee that we are going to have to reduce our NOx
    emissions in excess of 45 percent for us to be able to meet the
    clean air 8-hour standard by the year 2010. At this time, we
    are unsure how we are going to meet that standard. We need some
    help and we need some help from the Federal Government.
        While the TERP Program has been an effective tool in this
    regard, State funding has just not been enough to meet the
    lofty emission reductions that are being forecast by the TCEQ.
    Federal funds from this Act are needed to help us clean up some
    of the larger engines such as railroads for the DFW area to
    meet these clean air standards.
        The Texas Legislature just also added to TERP a program to
    help reduce emissions of diesel exhaust from school buses which
    as we know, may be some of the dirtiest air children breathe
    all day long. This Act could also, if implemented, complement
    the source of funding to enable programs such as the recently
    created Clean School Bus Program.
        We have had many successes from our TERP Program but one
    key lesson of the TERP is that meaningful financial incentives
    will lead private and public fleet owners to find ways to clean
    up their vehicles. In the case of the TERP, it is has certainly
    been true that if you build it, they will come.
        Senator Voinovich. Judge, could you wrap up your testimony?
        Judge Keliher. Yes.
        Another result of these financial incentives has been the
    development of the new emission control technologies which we
    have benefitted from. Let me wrap this up by saying I also want
    to complement the funding structure. I appreciate the 20
    percent of the funds being allowed to go to the State,
    especially those who already have programs and allow them to
    use those dollars where there are already set programs and also
    10 percent to be able to be matched from the States. I truly
    believe in match programs.
        I think as you have noted this is the best thing we could
    do with taxpayer dollars and I strongly support Senate bill
    1265.
        Senator Voinovich. Thank you very much, Judge. I hope you
    make sure your two Senators understand that too.
        Judge Keliher. I did with one of them this morning, so
    thank you.
        Senator Voinovich. Maybe you can work on your former
    Governor too.
        [Laughter.]
        Senator Voinovich. Mr. Koncelik.

     STATEMENT OF JOSEPH P. KONCELIK, DIRECTOR, OHIO ENVIRONMENTAL
                           PROTECTION AGENCY

        Mr. Koncelik. I am Joe Koncelik, Director of the Ohio
    Environmental Protection Agency. Thank you for allowing me to
    address this important legislation to help improve our air
    quality by reducing emissions from existing diesel engines. As
    the focus of the discussion has been today, this a critical
    piece of this legislation which helps States address existing
    diesel engines.
        The legislation is significant for two reasons. First, it
    is going to help States meet the new Federal deadlines for
    ozone and fine particle standards. It does by addressing those
    sources of emissions. The States just do not have the tools to
    address existing diesel engines. As my counterpart from Texas
    discussed, a lot of these sources are either federally
    preempted by standards that apply to them, it is very difficult
    for the States to develop independent State regulations that
    will reduce emissions from existing diesel sources.
        We need reductions from these sources in order to meet the
    new Federal standards. These new Federal standards present a
    significant challenge to areas of Ohio, particularly the
    Senator's hometown, Cleveland, OH and many other areas around
    the country such as Atlanta, GA, New York, Milwaukee,
    Philadelphia which will have a tremendously difficult time
    meeting the new Federal standard for ozone and fine particles.
        In Ohio, we have 33 non-attainment counties for ozone and
    another 27 non-attainment counties that don't meet the fine
    particle standard. The non-attainment is in part due to diesel
    engine emissions, so we need to reduce emissions from those
    sources in order for us to help meet these Federal air quality
    standards.
        Are there Federal programs that help address emissions?
    Yes. As discussed this morning, there are U.S. EPA new diesel
    engine rules and a fuels program that will help reduce diesel
    emissions by 80 percent by the year 2030. That is the key date,
    25 years from now. The reason it takes so long is because those
    rules are addressing new engines as they come onto the road and
    they rely on turnover of the existing fleet in order to get
    their reductions.
        The simple fact is the States need much faster reductions
    than those provided by the Federal Government under their
    current rules. The latest deadline the State of Ohio has to
    meet the ozone or the fine particle standard is 2010 not 2030.
    So we have to meet the standards 20 years sooner than the
    relief that will be provided by the Federal program. Somehow we
    have to develop ways to address the 11 million existing diesel
    engines on the road in order to get reductions to help us meet
    that challenge. I think this bill helps close that critical
    gap.
        One of the reasons it is harder for States to address
    diesel engines is these are sources of pollution that don't
    remain fixed in one location, similar to industrial sources.
    Industrial sources, States can develop individual permit
    requirements or regulations to get reductions from those
    sources. Diesel engines on trucks and construction equipment
    not only move around within a State's borders but they cross
    those borders.
        In some cases, States are prevented by the commerce clause
    from developing independent regulations that would get
    reductions from those sources. We need some kind of national
    program such as that provided by this legislation that allows
    the flexibility of a national retrofit program. That is the
    only logical answer to get the reductions we will need from
    this category of sources.
        I am also pleased that 20 percent of the money will be sent
    to the States to help build programs. Like many other States,
    we have a school bus diesel program that will help leverage
    that money and we will be able to get to more school districts
    in Ohio.
        I do want to mention the other point of this legislation
    which is helpful. The tremendous economic impact cannot be over
    stated that the new Federal standards are going to have on
    States and the difficulty those States will have meeting these
    Federal standards. It is estimated in Ohio that billions of
    dollars in new costs for industry and consumer controls are
    going to be necessary to meet those standards.
        In some cases the ozone and fine particulate standards are
    simply unrealistic. I think that is what my counterpart from
    Texas has discovered and we have discovered in Ohio. For an
    area like Cleveland, you cannot meet the standard by 2010.
    There is no localized reduction program we can develop that
    will help us meet the standard by that deadline.
        We need regional programs, national programs that will get
    us the reductions we need. We need innovative approaches and
    this is one of those approaches that will help us achieve those
    reductions, and reduce the economic burden that the States are
    facing in compliance costs to meet these Federal deadlines.
        I want to commend Senator Voinovich and Senator Carper
    along with the cosponsors for this bipartisan effort to clean
    up our air and improve public health. We strongly support this
    legislative initiative.
        Senator Voinovich. Thank you very much.
        Judge one of the things that you brought to our attention
    is the pollution you are getting from railroads and finding
    ways to pay their fair share as part of the program. Do you
    think that there is enough flexibility in this legislation that
    would allow the EPA to look at that. Thirty percent of this is
    the States and 70 percent is CPA but do you think the language
    we have in the legislation is adequate in the event that you
    suggested that to the EPA, that the money could be spent to
    help with that problem?
        Judge Keliher. I would have to look back at the language to
    see if that portion of it would but if not, we could certainly
    use it as part of the 30 percent that is provided to the
    States.
        Senator Voinovich. What are some of the lessons that other
    States could learn from putting your program in place? One of
    the things I think once this goes into effect, as you know the
    20 percent will be divided among all of the 50 States. Many of
    them may not take advantage of it and some will but how
    difficult was it for you to put this program in place? You said
    you started in 2001?
        Judge Keliher. Right. Needless to say, dollars are always
    tight, so I will tell you we have been at the legislature
    continuing to fight for the dollars to be allocated to these
    programs. However, as you pointed out, it has been so cost-
    effective, it has been one of the most cost-effective things we
    have been able to do to help clean up the air, so as the
    program has gone on and I think Texas could certainly be looked
    at as a pilot for this program, as the program has gone on and
    shown how effective it can be, it has been well worth the
    taxpayer dollars.
        In response to your question of what can we learn, one of
    the things if you had it to do over is a little better outreach
    to some industries to get them to participate in the programs.
    However, with the funding we have now, we have not been lacking
    participants for the programs.
        Senator Voinovich. In other words, there is X percent of
    the dollars for the programs made available to industrial
    polluters. They can make application for those funds?
        Judge Keliher. Actually, most has been construction and
    what we have been doing with our grants programs. If they make
    application, we evaluate them based on certain points. Based on
    that, they get the grant dollars.
        Senator Voinovich. What kind of cost benefit ratio do you
    have? Mr. Nastri, set examples of four to one. Say I am a
    business, I come in and I take advantage of the program, how
    much money do they have to put into the program?
        Judge Keliher. There are different measures and I don't
    know the exact answer to that because there are different
    scales depending on what kind of entity they are, if you are a
    lower income compared to another industry. I don't quite know
    the answer to that but I could find out and give you some of
    the specifics of the particular program in Texas.
        Senator Voinovich. I would like that very much but the
    bottom line is even though it may not be that much, you have
    enough people who want to go in the program that you don't have
    enough money to satisfy that?
        Judge Keliher. We have turned down people every time we
    have gone out with a call for projects. We have had to turn
    down people who have submitted a request.
        Senator Voinovich. I would really be interested in seeing
    what the leverage is in terms of the private sector.
        Judge Keliher. I will do that and also give you kind of how
    they scale them and what the evaluation process is.
        Senator Voinovich. When I was Governor of Ohio, we had this
    50/50 where you encouraged the private sector to reduce their
    seven most toxic emissions. The purpose was to get the top 100
    emitters to come into the program. They voluntarily came into
    it and they were given flexibility. It wasn't command and
    control, it was we would just like you to come into the
    program. I was amazed, almost all of them came in and then we
    got others not on that top list of 100 that said, ``Yes, we
    want to participate.'' Each year we would honor and recognize
    those doing the best job.
        There is a sense in this committee for some reason that a
    lot of private sector people really aren't interested in
    cleaning up their emissions. My experience has been just the
    opposite of that. I have a lot of faith in the private sector.
    There are some bad people out there, sure, but the overwhelming
    people I come in contact with are good citizens. Would you care
    to comment on that?
        Judge Keliher. We have had extreme success with our TERP
    Program. We have not been, I will tell you, as successful with
    the program of letting individuals bring in their car. We have
    a program where we have dollars for that. I think a lot of that
    has been lack of knowledge of the program and our poor
    advertising of the program.
        In looking at how these dollars will be spent, we will have
    to look at some of the dollars for administrative costs and
    advertising for these programs, whereas on the TERP Program
    where it is much more business and fleet oriented, we have not
    had any problem at all having companies take advantage of this
    program.
        Senator Voinovich. Do you have a voluntary emissions
    program or is it mandatory for automobiles?
        Judge Keliher. It is mandatory.
        Senator Voinovich. Pipe testing?
        Judge Keliher. It is mandatory in the non-attainment
    portions of the State.
        Senator Voinovich. We have the same thing in Ohio. In fact,
    the Legislature just passed legislation that in order to get
    their license plates, they have to do an emissions check. I
    think Mr. Koncelik, they are going to pay for it, the State is
    going to pay for it because people resist it. The problem I
    think is so many don't understand that is one of the most
    reasonable ways as part of your State implementation plan that
    you can help reduce emissions.
        Judge Keliher. I do have to tell you we have a program
    right now that we have started where they tell us approximately
    10 percent of the vehicles are causing 80 percent of the
    problem, so your natural reaction is go get those 10 percent of
    the vehicles. We started a program of trying to find those 10
    percent of the vehicles and are doing a pretty good job. Some
    of that is becoming a bit more mandatory to make them get their
    cars tested.
        Senator Voinovich. Senator Carper.
        Senator Carper. Mr. Koncelik, how long have you been in
    your current post?
        Mr. Koncelik. I have been the director since January but
    prior to that, I was the assistant director for the last 6
    years.
        Senator Carper. How long in your current position?
        Mr. Koncelik. As Director of Ohio EPA, I have been in that
    since January so 6 months.
        Senator Carper. How long have you lived in Ohio?
        Mr. Koncelik. All my life.
        Senator Carper. Where did you go to school?
        Mr. Koncelik. Ohio State, a good Buckeye.
        Senator Voinovich. The only two Buckeye graduates in the
    Senate.
        Senator Carper. In the time you have lived in Ohio, who do
    you see that stands out as a great Governor.
        [Laughter.]
        Mr. Koncelik. That is a tough question. I would of course
    have to say Senator Voinovich really comes to mind, but of
    course, my current boss, Governor Taft, is a fine Governor.
        Senator Carper. We thank you for sharing him with all of
    us.
        I want to come back to you, Judge. I think that is so neat.
    We have a levy court in central Delaware for members who lead
    county government but our levy court members are called
    commissioners. We have in other parts of our State, county
    councils, so we call them councilmen and councilwomen but the
    idea of calling the folks who do that judge, they would love
    that.
        Judge Keliher. In the State of Texas, because of the Texas
    Constitution, instead of county government, they are all set up
    exactly the same, so in some of the counties, the county judge
    actually tries cases, so they are actually a judge which is not
    true in Texas. However, you do not have to have any kind of
    legal requirements to be county judge, so you have judges with
    no legal experience who are hearing cases. I used to be a real
    judge though before I took this fake judge position.
        Senator Carper. Can real judges in your State marry people?
        Judge Keliher. Yes.
        Senator Carper. Can county judges marry people?
        Judge Keliher. I can marry people, pronounce dead or have
    you committed.
        [Laughter.]
        Senator Carper. In that order?
        Judge Keliher. Is there a difference?
        Senator Carper. In our State, the Governors nominate with
    the advice and consent of the Senate people who serve as
    judges. All of our judges in Delaware can marry people. Our
    magistrates, who we call justices of the peace, can marry
    people. The Mayor of Wilmington can marry people. When I was
    elected Governor, I thought since the people I was appointing
    could marry people, I thought I could marry them as well. My
    first year as Governor, I married about 40 couples and then
    found out I couldn't do that.
        [Laughter.]
        Senator Carper. And we never told any of them.
        [Laughter.]
        Senator Carper. Some of them are going through life
    blissfully happy and some of them are miserable. How can I get
    out of this, and they are not even married?
        [Laughter.]
        Senator Carper. I might be stretching that a bit.
        A serious question I want to ask goes back to trains and
    reducing emissions from diesel powered locomotives. Here in the
    northeast corridor, if we run a train carrying freight from
    Washington, DC up to Boston, MA, for every 1 ton of freight
    that we move from here to Boston, MA it uses about 1 gallon of
    diesel fuel. Think about that. Move 1 ton of freight by rail
    from Washington, DC to Boston, MA, we can do it for 1 gallon of
    diesel fuel, which is pretty impressive. That says very good
    things about the potential for reducing our reliance on foreign
    oil, especially as we think of the prospect of mixing soy bean
    oil with our diesel fuel and helping a bit on the emissions
    side and also reducing our reliance on imported oil.
        I want to come back to the issue of emissions from those
    diesel powered locomotives. You talked a bit about that. I
    visited with one of your railroads, Burlington Northern in
    Santa Fe, which is headquartered in your State I think in Ft.
    Worth, and spent some time with them. Just talk to us a little
    bit more about the emissions problem you are experiencing in
    Texas because we have it in other places too, certainly in my
    own State, that relates to diesel powered locomotives
    particularly on the freight side.
        Judge Keliher. I serve on an advisory committee called TERP
    which actually does a lot of the research for where our
    emission problems are. In going through the studies, it became
    apparent that a lot of the emissions we actually had were
    coming from the locomotives. I have to tell you that was
    somewhat of a surprise to me because I don't think of us as
    having that many locomotives to tell you the truth, so it was
    surprising to me to see the numbers that came up.
        That is why even with the TERP Program, even though we
    cannot get the locomotives to help fund the TERP Program, we
    have found that to be the most cost-effective use of our
    dollars, to be able to use those to help with the locomotive
    emissions.
        Senator Carper. Mr. Koncelik, anything you would like to
    add to that on the railroad side, particularly the freight
    side? Keep in mind, when AMTRAK runs out of the northeast
    corridor between Boston and New York, they are using
    electricity but when they are out of the corridor, they are
    operating on the freight railroad tracks, including Burlington
    Northern and Santa Fe and they use diesel powered locomotives.
    Any thoughts with respect to diesel powered locomotives and
    what we can or ought to be doing and how this particular
    proposal might affect and improve their emissions level?
        Mr. Koncelik. I think the fact there is flexibility built
    into this legislation, I am always an advocate for giving the
    authority to the States to be able to use that money wherever
    it can be most effective because each States' issues may vary.
    We may have a bigger diesel truck, construction equipment
    problem than a locomotive problem where another State may have
    a locomotive problem. The nice aspect about this legislation is
    the 20 percent that can go to the States, the States can then
    say let us target what our biggest issue is and let us tailor
    it to our biggest issue.
        Senator Carper. Those are my questions. Thanks to both of
    you.
        Senator Voinovich. I would like to make a couple other
    comments. Mr. Koncelik, I would like to underscore something
    you testified to.
        First of all, I would like to say you have been very
    effective because Kay Bailey Hutchinson is an original sponsor
    of this legislation.
        Judge Keliher. Yes, thank you.
        Senator Voinovich. See if you can get John Cornyn to do the
    same.
        Judge Keliher. I am going to. Thank you.
        Senator Voinovich. Good.
        I would like to remind us all that the American Association
    of Railroads has endorsed this legislation which is good. Maybe
    we can take advantage of it.
        Mr. Koncelik, you state that this bill has economic
    benefits in addition to the air quality and public health
    benefits. This is a very important point that I think many of
    my colleagues don't understand. That is that the new air
    quality standards are going to have a major negative effect on
    the economy of our Nation and States.
        Could you elaborate because Senator Carper and I tried to
    negotiate the Clear Skies legislation for some time and
    hopefully we might still be able to do that here but the fact
    is I got the impression that Clear Skies was going to take care
    of the problem. I was absolutely shocked, Senator Carper, when
    I sat down with Mr. Koncelik and he told me, listen you can
    pass this legislation and this business about us coming into
    compliance is nonsense. I would like you to comment on that a
    bit and how you think this legislation might help you in
    putting together the State implementation plan.
        Mr. Koncelik. I would be happy to, Senator.
        First, to be absolutely clear, we are a strong supporter of
    Clear Skies as the Senator knows. The issue we discussed was
    the emission reductions from power plants that will help the
    States. It was the legislation at the end that talked about
    amending the Clean Air Act and allowing States more flexibility
    as far as the time they have to comply with the new standards,
    the transitional language attached to that piece of
    legislation.
        That is the piece that makes it critically important to the
    States like Ohio. There are so many other areas and you can
    look at the major metropolitan areas, any area designated
    moderate, non-attainment for ozone, that is Philadelphia, New
    York, Cleveland, Chicago, Atlanta. U.S. EPA did a very
    effective job of modeling on a national level the benefit of
    programs like Clear Skies or CAIR or these new diesel
    standards. U.S. EPA did not take a more localized look and take
    an area like Cleveland or Philadelphia and say, what would it
    take for that area to be able to attain these standards.
        The States have now done that work and that is the work
    that has led to such a huge level of concern on our part and
    some of our other States in similar situations. For instance,
    in Cleveland, we cannot develop a plan to reduce emissions in
    the Cleveland area to meet the 2010 deadline it faces under the
    ozone standard.
        In fact, we did an emission run where we zeroed out all
    emissions from industrial sources in Cleveland, almost
    depopulating, a hypothetical, depopulate, shut down all
    industry, we still wouldn't reach the 2010 deadline. That
    highlights the dramatic nature of how those deadlines are only
    going to be met through Federal programs such as Clear Skies,
    such as Federal diesel rule.
        Not to go too long on this, but a good example of it is the
    one I talked about in our testimony, the Federal new diesel
    engine rule is a substantial tool to reduce emissions but in
    their cost benefit analysis, they decided on a full
    implementation date of 2030. The States are facing a deadline
    of 2010, that is 20 years earlier. That diesel emission rule is
    not going to substantially help the States meet the deadlines.
        So the States are feeling squeezed right now because many
    of these Federal programs, CAIR has as a 2015 deadline, the
    diesel program has a 2030 deadline, the other clean fuels
    programs have deadlines in the 2020 to 2030 range. Those are
    too long. The States have a 2010 deadline.
        What I have said is there seems to be a lack of a coherent
    strategy right now at the Federal level with the tools and the
    reduction programs they have for utilities and power plants,
    cars and vehicles are all on much longer schedules than the
    deadlines they are holding the States to.
        As the Senator knows, we have been very active in pointing
    out this needs to change. We need to have some way of
    addressing this to give more flexibility to the States. Options
    are Clear Skies with its transitional language helps us, also
    Representative Barton's language in the Energy bill helps
    States in that situation and this legislation helps because it
    gets at emissions that the States otherwise can't get to.
        Senator Voinovich. Thank you very much.
        Senator Carper.
        Senator Carper. Just a comment or two in closing before our
    next panel.
        I don't have a perfect recollection of the language favored
    by Congressman Barton in this regard, but just remember there
    are always downwind States and to the extent the States who are
    upwind, States or localities are going to give you a little
    more time to comply, for the folks downwind on the receiving
    end of the emissions from those particular communities given
    extensions, there is a question about how fair is it to those
    downwind States who have been making the tough decisions, doing
    everything they can to come into compliance.
        Second, my understanding is the folks in Ohio, particularly
    your Agency and the people who work with and for you have been
    very much involved in the formulation of this legislation that
    Senator Voinovich and I have introduced. If that is a correct
    understanding, I just want to send a special thank you to you
    and your team.
        The last point I would make deals with the level of
    emissions of nitrogen oxide and ozone that come from utility
    plants as compared to those which come from cars, trucks and
    vans that we drive. My understanding is the level of emissions
    that come from cars, trucks and vans is roughly twice the
    magnitude of that which comes from our utility plants.
        To the extent we are going to make progress near term,
    while we wrestle with this other legislation Senator Voinovich
    and I have been trying to broker a compromise or a consensus.
    In the near term one of the best things we can do with nitrogen
    oxide, hopefully we all will agree, including the
    Administration, the best thing we could do for all those
    millions of diesel powered vehicles that are going to be on the
    road for a long time, to the extent we can get them some help,
    whether buses, school buses, trucks, locomotives, we will all
    be better for it.
        Thank you for your help on this and Judge, great to see
    you.
        Judge Keliher. Thank you very much.
        Senator Voinovich. Thank you for being here.
        Our third panel consists of: Michael Cross, vice president,
    Cummins Inc., and general manager, Fleetguard Emissions
    Solutions; Conrad Schneider, advocacy director, Clean Air Task
    Force; Timothy J. Regan, president, Emissions Control
    Technology Association; and Stuart Nemser, founder, chairman,
    Compact Membrane Systems, Inc.
        We are happy to have you here. Mr. Marmino, my staff person
    on this I think has spent some time with each of you to try and
    cover various sections of this legislation so we see each facet
    of it. Mr. Cross, we will start with you. Thank you for being
    here.

       STATEMENT OF MICHAEL CROSS, VICE PRESIDENT, CUMMINS INC.,
            GENERAL MANAGER, FLEETGUARD EMISSIONS SOLUTIONS

        Mr. Cross. Thank you for having me.
        I have a full statement I would like to submit for the
    record.
        Senator Voinovich. I want all witnesses to know your full
    statement will be made a part of the record.
        Mr. Cross. Good afternoon, I am Mike Cross, vice president
    of Cummins Inc., also general manager of Fleetguard Emissions
    Solutions, a subsidiary of Cummins.
        I am honored to testify here today in strong support of the
    Diesel Emissions Reduction Act of 2005. I would like to focus
    on four main points today. First, new diesels are getting
    cleaner and the Diesel Emissions Reduction Act will help reduce
    emissions from the existing diesel population. Second,
    retrofits with after treatment devices and engine replacements
    can cost effectively clean up these in-service diesels and
    provide immediate benefits to the environment.
        Third, the bill will support State and community efforts to
    achieve the new National Ambient Air Quality Standards. Fourth,
    ultra-low sulfur diesel fuel is essential to realizing the full
    benefit of the Diesel Emissions Reduction Act and to achieving
    enormous reductions from new diesel powered vehicles.
        Cummins and the rest of the diesel industry have been
    making huge strides in emissions performance. In 2001, EPA
    issued and the Bush administration approved a rule to make on-
    road diesel vehicles even cleaner. On this chart, you can see
    three steps required by the new on-road rule which will lead to
    dramatic reduction of oxides of nitrogen, NOx and particulate
    matter from 1998 levels. The first step came in October 2002,
    the second step will come in 2007 and the third step in 2010.
        To comply with the first step, Cummins was the first in our
    industry to introduce a complete line of EPA compliant engines.
    In 2007, using ultra-low sulfur diesel fuel and advanced
    technologies, PM emissions will decline by 90 percent and on
    average NOx will decline by more than 50 percent from 2004
    levels. By 2010, both NOx and PM emissions will have declined
    by 90 percent from today's levels and our engines will be near
    zero emissions. New diesels are clearly getting cleaner and
    cleaner.
        However, according to EPA the full benefits of these rules
    for new engines will not be realized until 2030 because of the
    durability of the 11 million engines already in service which
    will last for hundreds of thousands of miles over a lifetime of
    up to 30 years. The Diesel Emissions Reduction Act deals with
    the emissions from the engines currently in service by putting
    in place a mandate free and flexible system to help States and
    communities address the new, more stringent ambient air quality
    standards.
        Through retrofits some of the technology that will be used
    on 2007 engines can be applied to older engines in order to
    significantly reduce emissions. The retrofits that can be
    funded through this Act involve replacing the muffler on
    existing vehicles with an advanced catalytic device or system
    that will significantly reduce emissions. As you can see on
    this display board, retrofits have been and can be applied to a
    broad range of applications such as school buses, transit
    buses, refuse haulers and regional and line haul trucks.
        A key to enabling this new technology is ultra-low sulfur
    diesel fuel. There has been discussion that some parties would
    like to alter or delay the ultra-low sulfur diesel fuel
    standard. The White House and EPA have assured our industry
    that they are fully committed to going forward with the fuel
    standards and the regulations.
        On behalf of our industry, Cummins requests that Congress
    make every effort to ensure these ultra-low sulfur diesel fuel
    standards are not compromised because new, high technology
    diesel emissions systems rely on ultra-low sulfur diesel fuel
    and any change in the 15 ppm standard would undo EPA's rules
    and severely hamper the effectiveness of the Diesel Emissions
    Reduction Act.
        To summarize, Cummins strongly supports the Diesel
    Emissions Reduction Act. Retrofits and engine replacements are
    cost-effective approaches to dealing with the emissions from
    the 11 million diesel engines in service today and will
    complement the aggressive on-highway rules for new engines
    which will continue to be implemented through 2010.
        Thank you, Mr. Chairman. I would be happy to answer any
    questions.
        Senator Voinovich. Thank you, Mr. Cross.
        Mr. Schneider.

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

        Mr. Schneider. Mr. Chairman, Senator Carper, good
    afternoon. My name is Conrad Schneider, advocacy director of
    the Clean Air Task Force. We are a national environmental
    advocacy organization dedicated to restoring clean air and
    healthy environments through scientific research, public
    education and legal advocacy.
        We appreciate the opportunity to testify here in support of
    the Diesel Emissions Reduction Act of 2005 and in particular,
    Mr. Chairman, I want to commend you for the leadership you have
    shown in bringing the bill to this point and also to your
    staff. You convened a group of stakeholders, including
    industry, fleet owners, local, State and Federal Government
    officials and environmental organizations to hammer out the
    details of this legislation.
        You worked to assemble a nearly unprecedented group of
    cosponsors including Senator Carper, Senator Inhofe, Senator
    Jeffords, Senator Clinton and Senator Isakson on this committee
    and others. In less than a week after the bill's introduction,
    you offered it as an amendment to the Senate Energy bill where
    it passed by a vote of 92 to 1.
        Now you are continuing the full court press to see if the
    bill can be added to the Transportation bill presently in the
    Conference Committee. Let us keep this momentum going on this
    important bill because enactment and full funding of the bill
    will do so much good for air quality and for public health in
    this country.
        So many air pollution issues are ones not so visual. Diesel
    is a very visual one, so I will use some charts. The U.S. EPA
    and the California Air Resources Board and the International
    Agency for Research on Cancer list diesel exhaust as a probable
    human carcinogen. It is one of the top air toxic risks that we
    face in this country. The good news is, as you have heard,
    there is something we can do about it.
        The next slide is a map of the United States that displays
    the health risks due to diesel. We have heard a lot about EPA's
    new engine rules that will be fully effective by 2030 for both
    highway and off-road vehicles. In their regulatory impact
    analysis, EPA estimated those regulations ultimately will save
    20,000 lives in terms of reduced, premature deaths in 2030.
        This is a map that shows you where the concentration of the
    current premature deaths as a result of diesel are. Not
    surprisingly they are where the greatest concentration of
    diesel vehicles and engines are today. This is really the key
    map that you should look at from a health risk perspective
    because the first question in any hearing is, why should we do
    this? This is why and both of you have spoken to the health
    issues.
        The second issue related to health is attainment of the
    ambient air quality standards. This is a map that shows the
    areas in non-attainment for PM2.5, the fine
    particles, to keep it simple because if we did ozone it would
    be 400 counties, this is 225 counties. As mentioned, the Clean
    Air Interstate Rule that was finalized by EPA and hopefully
    will be going forward, will help. That will disappear as a
    result of the Clean Air Interstate Rule but there are areas
    that will stay in non-attainment including many in Ohio as you
    heard.
        The new engine rules deliver their ultimate punch a little
    too late to be able to help the States in this regard. This
    bill through diesel rebuilds, repowerings, replacement and so
    forth, provides funding that, will be a cost-effective strategy
    for States seeking other strategies to come into attainment. It
    may take more than just this but it will take at least this
    type of effort to be able to make it.
        In this slide, the top line is the emission reduction curve
    that will come as a result of the new engine rules. With this
    bill, we are talking about accelerating and steepening that
    curve. As you can see, by 2010, there is only about a 10
    percent reduction with the attainment dates at that time. We
    are talking about trying to put this issue on a steeper curve
    through aggressive retrofits that are funded so that by 2010,
    2015, 2020 we will see a significant additional difference.
        The punch line of this in terms of the health risk is that
    there are tens of thousands of additional lives that could be
    saved if we do this. The area in the middle of that graph
    represents hundreds of thousands of avoided asthma attacks,
    tens of thousands of emergency room visits and hospitalizations
    and avoided premature deaths as well. That is really what we
    are doing with this bill.
        The Clean Air Task Force and our State affiliated groups
    are involved around the country including in Ohio at the Mid-
    Ohio Regional Planning Commission slogging through the day-to-
    day details of how you put together a State Implementation
    Plan. One of the obstacles that group has run into, and this
    has been replicated all over the country, is money, especially
    for cash-strapped cities and States for their fleets. We are
    talking about transit buses, waste haulers, and school buses.
    The private sector may need to carry their share but for the
    public sector, we are talking about an unfunded mandate. It is
    unlikely that those types of fleets will be fully retrofitted
    without a bill of this type.
        Last, I want to show you two slides. They show the good
    news about what can be done. The first one shows a school bus,
    and you may be able to see there is a researcher with a monitor
    standing near the tailpipe.
        I wish I could show you the video of this because it shows
    the bus moving out from a curbside as the children are being
    unloaded. They are measuring the emissions as the bus goes by
    and you may have experienced the puff of black smoke that comes
    up as the bus accelerates from the curb. That graph shows the
    level of particulate matter being experienced right there. This
    is a conventional school bus running on conventional diesel
    fuel today.
        When that same bus is retrofitted with a filter and run on
    the ultra-low sulfur diesel fuel that we have been discussing
    that will be available next year if we stay the course, look at
    the line. The particulates from that school bus have been
    virtually eliminated. That is the type of solution that the
    money in this bill can provide. It is cost-effective and it
    will save lives.
        Thank you very much.
        Senator Voinovich. Thank you, Mr. Schneider.
        Mr. Regan.

      STATEMENT OF TIMOTHY J. REGAN, PRESIDENT, EMISSIONS CONTROL
                         TECHNOLOGY ASSOCIATION

        Mr. Regan. First of all, I want to thank you for taking
    leadership on an issue which frankly will have a profound
    effect on the economy and on clean air.
        My name is Tim Regan. I represent the Emission Control
    Technology Association. I am also the senior vice president of
    Corning Inc. Our members have been on the cutting edge of
    emission control technology for mobile sources for over 35
    years. We invented basically the core of the catalytic
    converter.
        This particular device has had a profound effect on the
    economy. Since 1975, it has reduced about 1.5 billion tons of
    pollution from American air, to about 3 billion worldwide. So
    it has had a very significant, profound effect on clean air and
    we expect the same kind of results to come out of diesel
    emission control technologies we are developing today including
    retrofits. We expect a significant benefit.
        We support your bill not just because of the benefits I
    have just described but also because it is good for health and
    it is also very good economics.
        Before I get into that, let me explain a bit about our
    industry and our technology. We are called after treatment. We
    are called after treatment because we treat the exhaust after
    it is burned from the engine. We can take exhaust which has
    harmful substances likes nitrogen oxides and hydrocarbons and
    turn them into harmless substances like nitrogen, water and
    carbon dioxide.
        With respect to diesel, we can also filter out the fine
    particulate matter which is today seen as the primary threat to
    human health which is very significant.
        I have a couple devices here I want to share with you. The
    first is called a diesel oxidization catalyst. That device has
    the surface area of four football fields, pretty significant.
        This device can very effectively neutralize the carbon
    monoxide and hydrocarbons that are in diesel exhausts. It can
    achieve very significant reductions on the order of 90 percent
    on carbon monoxide, with respect to hydrocarbons we are talking
    about 60 to 90 percent; and somewhere on the order of 20 to 50
    percent with respect to particulate matter. This device is very
    cost-effective. This particular device costs somewhere between
    $400 and $1,000 per device installed on a vehicle.
        The second device I have is a diesel particulate filter.
    This focuses on the particulates emitted from a diesel exhaust.
    You don't see these in gasoline exhaust. You see these in
    diesel. This particular device can take out over 90 percent of
    the particulates. That is real important because as already
    indicated particulates are the primary health risk with respect
    to diesel exhaust.
        This device, too, is very cost-effective. The cost,
    according to our members, of this particular device installed
    on a vehicle is somewhere on the order of $5,000 to $7,000 per
    device. In addition, these devices are very durable. They have
    been demonstrated to last about 450,000 miles on a vehicle.
        To demonstrate vividly what this technology can do, I'd
    like to bring to your attention this beaker which contains all
    the soot that is produced by a transit bus that runs for a full
    day on the streets. This technology will remove almost all of
    this soot from the exhaust which I think demonstrates the
    significance of the technology.
        With respect to your bill, obviously it has tremendous
    health benefits. I don't want to get into those because my
    colleagues have already done it.
        EPA estimates the economic benefits of your bill at about
    $20 billion. But here is sort of an interesting statistic to
    get some sense for how significant this is. Fine particulate
    matter is the most significant threat to human health. It is so
    significant that it is about 22 times more harmful than carbon
    monoxide and is about 8 times more harmful than nitrogen
    oxides.
        Any time you can do anything to reduce emissions or clean
    up emissions from diesel, you are having a significant effect
    on human health, something which obviously is the primary
    economic benefit associated with this bill.
        There are economic benefits associated with your bill, its
    cost effectiveness.
        We just did a study which took a look at the cost
    effectiveness of diesel retrofits relative to other
    technologies invested in by the States under the so-called CMAQ
    program. We estimated the cost of diesel retrofits at about
    $5,300 a ton of emission reduction and that is the highest
    point on the estimate compared to about $126,000 a ton for an
    alternative fuel vehicle like a bus. You can see that retrofits
    are about a 25 times improvement over alternative fuel buses in
    terms of cost. Retrofits are very, very cost-effective.
        The other economic benefit associated with your bill is the
    return on the investment. With respect to your bill, I think
    EPA estimated there is a 1 to 13 cost benefit ratio. With
    respect to the diesel rule in 2007, it is 1 to 16. And, with
    respect to the Clean Diesel Initiative, it is 1 to 24.
        Finally, the third economic benefit is the fact it
    generates investment. Our members plan to invest $1.8 billion
    in this technology; that is, to develop the technology, to
    manufacture the technology, and to commercialize it. In the
    case of Corning, the company I work for, we will spend $350
    million and generate about 300 new high paying jobs in
    manufacturing in Corning, NY. In addition, we are exporting
    this. We are exporting it to China.
        Mr. Chairman, I think you have a great idea here. I think
    it has great, great benefits in terms of health care and great
    benefits in terms of economics. I commend you both for moving
    forward with it and taking a leadership position.
        Thank you very much.
        Senator Voinovich. Thank you, Mr. Regan.
        Mr. Nemser, I understand you are from the great State of
    Delaware?

    STATEMENT OF STUART NEMSER, FOUNDER/CHAIRMAN, COMPACT MEMBRANE
                             SYSTEMS, INC.

        Mr. Nemser. The great State of Delaware.
        Thank you very much for the opportunity to speak here
    today. I am Stuart Nemser, Founder and Chairman of Compact
    Membrane Systems. I am here to provide the committee with my
    company's view concerning S. 1265, the Diesel Emissions
    Reduction Act of 2005 and its potentially very positive
    impacts.
        CMS is a spinoff of DuPont in Delaware. We currently employ
    20 people. I believe the Diesel Emissions Reduction Act will be
    very helpful for companies like mine to commercialize our
    developing technologies. Under the emerging technology
    provision of S. 1265, the EPA could allocate 10 percent of
    funds towards the development and commercialization of emerging
    technologies. These funds are to be used to retrofit, repower
    or replace a diesel engine for a bus, truck, marine engine or
    locomotive. In addition, S. 1265 requires that the EPA
    establish a program to promote the use of these retrofit
    technologies.
        We began working on our diesel technology because we
    realized the same need you realized, Senators, the need to
    reduce the pollution from existing fleets of diesel engines.
    EPA's new regulations will require new diesel engines to use
    low sulfur fuel and reduce emissions by 2007. This has focused
    the diesel engine companies more on developing new technologies
    to incorporate in new engines, not how to address the problem
    of pollution coming from older diesel engines.
        Diesel engines last a long time, as many have said, upwards
    of 30 years. In order to reduce air pollution emissions
    existing diesel engines need to be retrofitted with after
    treatment pollution control devices to achieve sufficient
    reductions, thus the purpose of your bill and our business
    opportunity. Retrofitting will be a most cost-effective way and
    pay for itself in a relatively short period of time.
        CMS diesel membrane systems reduce NOx emissions, one of
    the most difficult diesel emissions to contend with by about 50
    percent with no need to introduce and widely distribute
    hazardous chemicals throughout our country. We plan to have
    completed field demonstrations on a locomotive and a ferry in
    the next 18 months. If funds are available, we would then apply
    to have the EPA or CARB address and certify each platform. That
    may direct the question you asked about locomotives, Senator
    Carper.
        Air Liquide/MEDAL, the largest industrial gas company in
    the world, actively supports this CMS program and encourages
    the passage of S. 1265. They have a written letter expressing
    their support of S. 1265 which I ask, Mr. Chairman, be
    submitted to the record.
        [The referenced document can be found on page 87.]
        Mr. Nemser. Air Liquide/MEDAL is likely to be the supplier
    of the commercial membrane modules for this program.
        The development of new technologies is critical to the long
    term goal of developing the most cost-effective measures for
    reducing harmful emissions. Without the funding S. 1265 would
    provide, emerging technologies from companies like ours will
    continue to struggle to fully develop into functional
    prototypes ready for commercial application.
        Related to our aging diesel fleet with only a limited
    number of prototypes seeking production, key decision makers
    will be more inclined to delay implementation of emissions
    reduction technology or favor technologies that are already
    certified and therefore have lower initial costs but may have
    significantly higher long term costs. If this is allowed, this
    latter approach permits continued pollution and ensuing health
    problems.
        At CMS we feel we are on the cusp of full
    commercialization. Unfortunately, certification of specific
    engine platforms is very expensive. Also, cost of prototype
    systems and manufacturing are significantly higher at the early
    stages than in the later stages of commercialization. Without
    the funds your bill contemplates for emerging technologies, it
    will be difficult for CMS to pursue our diesel emissions
    program in a timely and cost-effective manner.
        I understand and appreciate that your bill is not a
    research bill. The focus of your bill is to get pollution
    control equipment on the street to clean up the air. Hopefully
    or however, I applaud your vision to realize there are a lot of
    possibilities to do more with development of new technologies.
    I am looking forward to competing for these funds and giving my
    company an opportunity to help advance diesel engine technology
    in this country.
        CMS and other companies will be able to pursue the best
    technologies to reduce emissions not only in new engines but
    also in existing engines if S. 1265 is passed. This Act will
    allow our company and others to drive forward emerging
    technologies to be available in the short term while allowing
    us to meet our long term financial and regulatory goals.
        Passage of S. 1265 will be a significant step in the right
    direction towards controlling the harmful effect of NOx,
    particulate matter and sulfur dioxide on the environment. We at
    CMS fully support this bill and the financial assistance it
    will afford emerging technologies to develop and become
    certified with the EPA and CARB.
        The diesel emissions problem is a national problem that is
    in need of Federal legislation and funding. I urge you to pass
    the Act on behalf of CMS, Delaware and the Nation.
        Thank you very much.
        Senator Voinovich. Thank you, Mr. Nemser.
        Mr. Cross, I think some might not understand why this
    legislation is needed since the sulfur content of diesel fuel
    is being lowered.
        Mr. Cross. Ultra-low sulfur diesel.
        Senator Voinovich. One of the things that came up when I
    was in Dayton last week was the issue of this low sulfur fuel
    on vehicles that are old and need to be retrofitted. Are we
    going to have any kind of benefit from the low diesel fuel on
    vehicles that are not retrofitted and what kind of benefit will
    we get from those that are retrofitted versus the new vehicles
    you will have coming on the road?
        Mr. Cross. The first part of your question asked about the
    benefit of ultra-low sulfur diesel fuel on engines in service.
    There is an immediate benefit even when that engine is not
    retrofitted with an emissions control device.
        The amount of the benefit depends on the type of fuel that
    was in use prior to the adoption of ultra-low sulfur diesel.
    Our estimates are in the range of 3 to 7 percent reduction in
    particulate matter merely by adopting ultra-low sulfur fuel.
    While that doesn't sound like a huge amount, when applied to
    the millions of diesel engines in service, that amount quickly
    adds up to a very significant amount of PM reduction.
        The second part of your question was about ultra-low sulfur
    diesel and how it enables retrofit technology and the kind of
    benefits we can get there. The key point is that ultra-low
    sulfur diesel enables the retrofitting of existing engines with
    devices like those Mr. Regan pointed out. A diesel particulate
    filter can reduce the PM by 85 percent, reduce carbon monoxide
    by up to 90 percent as well as harmful hydrocarbons.
        The key there is ultra-low sulfur diesel enables the
    retrofits in many cases. Without it, some devices just won't
    work.
        Senator Voinovich. How does it compare with the new
    vehicles that will come on the road next year, a retrofitted
    truck versus a new truck on the road?
        Mr. Cross. It depends on the starting point of the
    emissions from the existing vehicle. Say it was an engine
    originally certified at 0.1 grams of particulate matter, the
    verification of these devices is to achieve 85 percent
    reduction so you could end up with a vehicle that is at 0.015
    grams of particulate matter per break horse power hour. That
    compares to the 2007 standard which is at 0.01, so you are
    getting very close to the 2007 levels of PM if you can make
    ultra-low sulfur fuel available and through the funding
    available in the Diesel Emissions Reduction Act, promote the
    adoption of retrofits.
        Senator Voinovich. From a layman's point of view that the
    retrofitting of these 11 million vehicles out there is going to
    be not equal to a new vehicle on the road using this ultra-low
    sulfur fuel, but it is pretty darn close?
        Mr. Cross. With those engines that were put in service at
    the 0.1 grams, they get very close.
        Senator Voinovich. When did those vehicles come out?
        Mr. Cross. Per that chart, I believe it was part of the
    1994 standard to 0.1 gram, so engines that were put in service
    since 1994.
        Senator Voinovich. Senator Carper.
        Senator Carper. First of all, to all of you, welcome. Thank
    you for being our partners in many cases in developing this
    legislation. I certainly applaud Senator Voinovich, those on
    his staff and everyone involved in bringing us to this point in
    time.
        I especially want to welcome Stuart Nemser to this panel
    and this hearing. We are delighted that you are here and proud
    of what your company is doing.
        I have a couple of specific questions for Mr. Nemser but
    before I ask those, let me ask a question about whether it is
    possible to make money for a private sector company to develop
    products to sell in this country and in other countries? Is it
    possible to do good and do well at the same time by virtue of
    the technologies that you are developing?
        Mr. Regan. In our case, it certainly is. The United States
    has led the world in terms of emission reductions. We were the
    first with the catalytic converter and we are moving ahead with
    tightening those regulations. Every time we tighten them we
    have to develop a new product.
        In our case, we are exporting these products today. These
    diesel particulate filters are being exported to Europe and
    Japan. We are exporting the core of the catalytic converter to
    China. This has been an industry which in the United States
    that is on the cutting edge. We make it here so it does pose
    itself as a very good expert for the United States. We are
    still in the lead.
        Senator Carper. Mr. Cross, did you want to add to that?
        Mr. Cross. I would agree there is the opportunity to make
    money. It is becoming very competitive. The investments
    required to get ready for the next round of emissions
    regulations are very expensive but there are opportunities to
    make money in the retrofit business and we hope also as we
    release excellent products for 2007.
        Senator Carper. A couple of questions for Mr. Nemser.
    First, can you give a little more detail about your membrane
    technology that you developed?
        Mr. Nemser. Basically, the membrane module looks similar to
    this except there is a part out here and the air from the
    turbocharger of a diesel engine regularly goes directly to the
    engine, it goes through our membrane device, oxygen enriched
    there comes out as bled off and cool nitrogen enriched air is
    then fed directly to the engine at the original pressure, 30
    pounds of pressure. So the preferential permeation of oxygen
    allows us to feed nitrogen enriched air to the engine which
    significantly reduces the NOx emissions.
        Since people have talked about sulfur, I would say since
    this is at the front end, our capability and performance is not
    dependent on the sulfur level in the fuel. So we are going to
    give 50 percent reduction in NOx whether it is high sulfur fuel
    or low sulfur fuel.
        Senator Carper. How easy is it to install or retrofit using
    the technology that you have developed?
        Mr. Nemser. It is fairly easy. If there is room and in most
    cases there is room, it sits between the turbocharger and the
    inlet to the engine itself. We have successfully retrofitted
    locomotive engines, marine engines, on-road engines and some
    diesel generator sets. There are some cases, diesel generators
    in particular, if there isn't room between the turbocharger and
    the engine, it is difficult but most of the market there is
    room which is why we have been successful in retrofit to date.
        Senator Carper. What kinds of applications do you foresee
    for your technology? Mention them again.
        Mr. Nemser. Locomotives, marine, off-road and diesel
    generators. We like applications that are high power and high
    temperature, all applications with the possible exception of
    on-road which has too much variation in operation, it would be
    the hardest of the group for us to meet.
        Senator Carper. How long will the EPA or the California Air
    Resources Board certification process take? Do you have any
    idea?
        Mr. Nemser. From where we are now, we have about 12 to 18
    months to be ready for that. We estimate the actual
    certification would take probably in the 3 to 6 months time
    frame once we had the data to move forward.
        Senator Carper. How far are you through that process for
    both EPA and the California Air Resources Board?
        Mr. Nemser. Related to this application, we are working
    with them on some other applications, but related to diesel
    retrofits, we have not approached them at this point. We are
    presently working with a locomotive company and a marine
    application. To date we have been at one cylinder and now we
    are going to full scale engines fourth quarter this year, first
    quarter of next year.
        Senator Carper. I have no idea what it costs to go through
    these certification processes. Can you share with us what it
    might cost?
        Mr. Nemser. Our estimate at this point to get us ready for
    certification would be probably $750,000 and the actual
    certification will probably be closer to $350,000 to $500,000,
    taking 3 to 6 months.
        Senator Carper. How do you know that it is worth that
    expense?
        Mr. Nemser. The answer is we expect to go into that with
    our partners, the locomotive company and the marine company. I
    don't think we have done that analysis at this point, the risk
    reward. If that can be subsidized, it is going to make the
    analysis that much easier.
        Also, I think, and I am speculating, obviously, it will
    further incentivize our locomotive and marine partners to
    participate because right now we are focused on new engines
    with them in 2008 and 2010 and are encouraging them in the
    retrofit and this will help.
        Senator Carper. Thank you.
        Mr. Schneider, is there anything else you want to share
    with us that has come to mind listening to the comments of your
    colleagues?
        Mr. Schneider. Just one thing. There are 11 million
    existing engines on the road but it would be wrong to think of
    the money from this bill or any approach to them as being a 1
    size fits all type of approach. It may mean looking very
    carefully at which engines get priority for clean up and I
    think the program in this bill was set up to do that.
        The ranking criteria I think are well thought out. Like we
    were just discussing with E-Check, a small percentage of diesel
    vehicles may be responsible for a big percentage of the
    pollution. To the extent we can find the sweet spot like that
    in this, we may be able to do more with less money.
        So the notion of necessarily having to go out and put a
    $7,000 retrofit on 11 million vehicles, if you do that math, it
    looks pretty grim but I don't think the picture should really
    look like that. I think it is going to be more specific than
    that and probably less costly than that.
        Senator Carper. All right. Thanks to each of you whether
    you happen to be from Delaware, Ohio or any other place. We
    appreciate your collaboration and presence here today. Thank
    you.
        Senator Voinovich. Is there anyone else who would like to
    comment?
        I have technology money, 10 percent, is that a big deal?
        Mr. Nemser. To me, it is.
        Mr. Schneider. To me as well.
        Senator Voinovich. Mr. Regan, you have spent how much money
    on the research?
        Mr. Regan. We are further along than my friend from
    Delaware in terms of developing the technology. So we have
    already been through all the certification processes for on-
    road vehicles and the problem we are having right now in terms
    of off-road equipment is getting them done. There are some
    testing issues EPA has to go through, and we are sort of in the
    queue.
        We are not at the point where we are sort of working on
    technology that hasn't been proven. There have been over 1
    million units of this stuff already sold. It has been proven.
        Senator Voinovich. So the 10 percent is more valuable?
        Mr. Regan. It is more valuable to the smaller company.
        Senator Voinovich. Do you think it is a good idea to have
    it out there?
        Mr. Regan. Absolutely. We always have to try to figure out
    how to improve. We have to obsolete ourselves or we are not
    going to succeed.
        Senator Voinovich. We have been kicking around Kyoto and
    global warming and a lot of things before this committee.
    Senator Carper and I had a chance to meet with Tony Blair a
    month or so ago, and talked to him about moving forward with
    some effort to deal with some of the environmental problems.
        It was interesting the Judge talked about the people going
    to their emergency rooms. I see that big black area in my part
    of the world and I wonder if they are experiencing the same
    thing as folks coming in and is it attributable to respiratory
    problems. I was in China a couple months ago, and they have a
    horrendous problem over there.
        If you were President of the United States or Tony Blair
    and you had that situation, what would you do to try and get
    the world's attention to doing something practical about
    dealing with it? Forget about global warming, talk about NOx,
    SOx, mercury because we know mercury is moving and the estimate
    is 20 percent of the mercury in the Great Lakes comes from
    Asia. What would you do?
        Mr. Regan. I work for a technology company. We have been
    around 152 years. The reason we have succeeded is we are
    constantly trying to go to the new frontier. I think we need to
    have a really significant technology initiative. We can get
    more efficient. DOT estimates if we could convert one-third of
    our fleet of cars to diesel, we would reduce our consumption of
    imported oil by one-third.
        So there are things that can be done and we can have a
    focused technology effort, if we had a man in moon effort to
    try to figure out how we will use technology to become more
    efficient, to use what we are using today but use it more
    efficiently so we use less.
        Senator Voinovich. Would you get the top polluters together
    at a table and start talking about some kind of new initiative?
        Mr. Regan. How I would get the top polluters? I don't know
    if you want to call them polluters, but I would get those
    companies involved in these emissions and the companies doing
    technology innovation in a room and start talking about how we
    can collaborate to solve the problem.
        Too many times there is a concern about the cost associated
    with investment in these technologies. But you know it is not a
    zero sum game. This stuff all stays within our economy or we
    export it. This means for every dollar of cost we spend of
    emissions control equipment there is some other job created for
    the production of new technology and new equipment to clean up
    the environment.
        I think we need to get everybody in the room, both the
    technology folks and the folks that want to clean up their
    stacks and figure out how to do it most efficiently. The
    solutions are there. You have a technology component in your
    bill. You are trying to push the edge. We have to push the
    edge.
        Senator Voinovich. Mr. Schneider.
        Mr. Schneider. I will take a shot at that. We need to do
    all of it and carbon dioxide is very tough. You all just had a
    close encounter on that in the Senate with the Energy bill and
    everybody had a little different approach to it. It says a lot
    about the Senate that it has come along to the point where
    there is a Hagel approach, a Bingaman or National Commission on
    Energy Policy approach, and there is a McCain-Lieberman
    approach and so forth. It is very good for that to happen. I am
    one of those who hopes something will mature from that even
    post-Energy bill.
        Carbon dioxide is a sticky wicket. It is hard to solve that
    problem and it is going to take a long time in getting the
    benefits because carbon dioxide is resident in the atmosphere
    for many years. If we believe the climate scientists that we
    listen to about the graveness of the problem, we need to act
    quickly and decisively and do something that will make a
    difference.
        One of the witnesses said if we zeroed out emissions in
    Cleveland, we wouldn't see a benefit or reach whatever. We
    could do a thought experiment like that about carbon dioxide
    and wouldn't see the benefits for some time. We have to do it,
    put probably most of our attention in that direction, but it is
    not the only pollutant that has an effect on the climate. Ozone
    is one that has an effect on the climate and methane is
    another. Those are things that are part of the Kyoto process,
    part of the IPCC process.
        One of the ones not talked about as much, we are talking
    about here today which is soot, the same black carbon that
    comes out of a diesel engine is a warming agent, a climate-
    forcing, warming agent in the atmosphere. That science is not
    as well established as some of the other. I don't know if you
    have ever had a presentation by Jim Hansen from NASA but he is
    quite outspoken on this point and there are others as well and
    the IPCC lists black carbon as a major climate forcing warmer.
        So getting diesel soot and other forms of black carbon soot
    out of the atmosphere will have a climate benefit. It is a
    little known twofer that is in this bill or any type of policy
    measure that is going to address the emissions of black carbon.
        In the first world or the developed world or whatever you
    want to call it, that is primarily a diesel issue and in the
    less developed nations, it may be biomass burning or some other
    sources that are going to be most important. There is a lot of
    scientific work yet to do to be able to put fine numerical
    targets on the carbon dioxide equivalence of soot.
        One of the things I would urge you to think about is that
    there are some measures that could be done more along the lines
    that we are doing, hopefully getting this bill done, the Diesel
    Emissions Reduction Act, that could bring more immediate
    benefits in terms of climate because this black carbon is
    resident in the atmosphere for a much shorter period of time.
    That means if we get it out of the atmosphere, the cooling
    effect will come much quicker.
        So it is not a very complicated scientific matter, everyone
    understands that black carbon absorbs heat and warms the
    atmosphere, but it is hard to put a number on and I would urge
    you to give your attention to it because it might be a
    worthwhile avenue to explore.
        Senator Voinovich. I am glad to hear your perspective on
    it. This idea of getting all the technology people together to
    see where we are, we want to become less reliant on or self
    sufficient and we have talked about fuel cells and I read all
    kinds of things about that but people say it is 10 to 15 years
    before it.
        Somehow I believe if they really wanted to do it quicker,
    they could, if the money was there to do it. It gets back to
    simply thinking, and we have had this problem since I have been
    in the Senate, that we have four pollutants, four emissions or
    whatever it is and we have a big debate about the fourth one
    and there are still the other 3. It seems to me that if we
    could get folks together to talk about, yes, the fourth one is
    the problem but we also have these others and try to get them
    to things about some of those, that we would be moving the ball
    down the field.
        I am really concerned, being in China, you read the stuff,
    you talk about problems here, they have really significant
    problems and environmental groups are starting to pop up even
    though they supposedly have to get licensed to go to NGOs, they
    are starting to move to other places. People are starting to
    get concerned about it. I think sitting down and looking at
    some practical things we can start to do as a multi-country
    thing would be really helpful.
        Quite frankly, I think it would allow us to take some of
    the technologies you have and sell it. We might find other
    places have some good stuff that we could use also. So you get
    everybody out there working on it and you get a global
    marketplace for it, I think we could see some real progress
    made in these areas.
        In terms of the climate change, a lot of that stuff, if we
    just start to move on it, I would like to see us move down the
    road. That is why I like this bill a lot because I know it is
    practical, it is good from a cost benefit point of view. If you
    put the money in, you know you will get a return on your
    investment.
        I think that is what we really need to do, look at all the
    stuff that is being advanced and put a dollar figure on it and
    figure of the things out there, what are going to be the most
    effective in terms of reducing emissions and then figure that
    is where we should be putting our energy to make a dent in
    this.
        I thank you all for being here today. Hopefully the folks
    in the Senate and the House will see the wisdom of this and we
    will work on the Administration to come up with some money for
    this program because it is a modest investment with great
    return. I am hopeful somebody will see that.
        Thank you.
        [Whereupon, at 4:45 p.m., the subcommittee was adjourned.]
        [Additional statements submitted for the record follow:]

               Statement of Frank Lautenberg, U.S. Senator from
                            the State of New Jersey

        Mr. Chairman, thank you for holding this hearing and giving
    us an opportunity to discuss this important bill.
        I'm proud to be a cosponsor of S. 1265, the Diesel
    Emissions Reduction Act of 2005.
        I want to speak to you today as a grandfather because one
    of my 10 grandchildren has severe asthma.
        If you know a child who suffers from this disease, it
    breaks your heart to have to tell them that they can't go
    outside and play on certain days because the air isn't safe.
        And even if you don't know anybody with asthma, you know
    that something is wrong when it isn't safe to breathe the air.
        There are 11 million diesel-powered vehicles in the United
    States. These vehicles account for about half of the most
    dangerous types of air pollution--fine particulate matter and
    nitrogen oxide, which leads to ozone.
        Almost all of New Jersey exceeds the safe standards for
    both of these substances. Nationally, 65 million Americans live
    in areas where they are exposed to excessive levels of
    particulate matter--and 111 million are exposed to unsafe
    levels of ozone.
        Children are especially affected, because their lungs are
    still developing. High levels of particulate matter have been
    associated with crib death, and ozone increases hospitalization
    for asthma.
        Exposure to these substances isn't just harming young
    lungs--it's literally killing thousands of people.
        A study for the Clean Air Task Force estimates that 21,000
    people will die prematurely each year from exposure to
    particulate matter soot from diesel vehicles.
        The same study projected that another 27,000 people would
    suffer heart attacks because of diesel pollution, and that 2.4
    million work days would be lost due to illness.
        Diesel exhaust also contains 15 known or suspected
    carcinogens.
        Obviously we need to do whatever we can to curtail
    pollution from diesel engines.
        Most of EPA's rules and regulations deal with new diesel
    engines. We have technology to retrofit old engines, which can
    last as long as 20 years.
        This is a great bill because it will clean up those diesel
    engines that are already on the road, spewing pollution into
    our air every day.
        As a grandfather, I want to thank Senator Voinovich,
    Senator Carper, and all the cosponsors of this bill as well as
    the witnesses who are here today in support of it.
        Thank you Mr. Chairman.
                                    ------

    Statement of Wayne Nastri, Region IX Administrator, U.S. Environmental
                               Protection Agency

        Mr. Chairman, and members of the subcommittee, I appreciate
    the opportunity to come before you today to testify about the
    Diesel Emissions Reduction Act (S. 1265) and the diesel
    emission reduction activities of the Administration.
        As the Regional Administrator for Region 9 of EPA, I am
    responsible for protecting public health and the environment in
    Arizona, California, Nevada, Hawaii, the Pacific Islands and
    147 federally recognized tribes in the Pacific Southwest. I am
    pleased to be here representing my colleagues at EPA to convey
    that reducing diesel emissions is one of our top priorities. In
    my tenure as Regional Administrator, I have focused a great
    deal of my personal energy on this topic. By working together
    with the States and other partners, we are successfully
    piloting a comprehensive program on the West Coast to reduce
    these harmful emissions. My experience has shown me that there
    are endless prospects across the nation to reduce diesel
    exhaust. I welcome the opportunity to share my experience and
    to highlight the diesel program activities that the Agency has
    fostered.
        Emissions from older diesel engines pose a significant risk
    to our nation's health as they contain more tiny particles
    called ``fine particulate matter.'' Of the many air pollutants
    regulated by EPA, fine particle pollution is one of the
    greatest threats to public health and a significant challenge
    for the Agency. Studies in the peer-reviewed literature have
    found that these microscopic particles can reach the deepest
    regions of the lungs. Exposure to fine particles is associated
    with premature death, as well as asthma attacks, chronic
    bronchitis, decreased lung function, and respiratory disease.
    Exposure is also associated with aggravation of heart and lung
    disease, leading to increased hospitalizations, emergency room
    and doctor visits, as well as the continuous use of
    medications. Addressing these risks is a priority for the
    Administration. That is why EPA established strong standards
    for new diesel engines. In addition, the President's fiscal
    year (FY) 06 budget request includes $15 million for advanced
    diesel retrofits through the Clean Diesel Campaign and $10
    million for Clean School Bus USA program. Recently,
    Administrator Johnson said, ``New diesel technology holds great
    promise for improving air quality across the nation.'' For
    these reasons, Mr. Chairman, we appreciate your holding this
    hearing on diesel emissions reduction strategies.
        Mr. Chairman, as you know, many areas of the country are
    designated as nonattainment and do not meet the National
    Ambient Air Quality Standards (NAAQS). Recently, EPA designated
    over 400 counties as out of compliance with the 8-hour ozone
    standard and over 200 counties as out of compliance with the
    fine particulate matter standard. Diesel exhaust contains both
    particulate matter and nitrogen oxides (NOx), which contribute
    to ozone (or smog), and to fine particle pollution. In
    addition, diesel exhaust is a likely human carcinogen.
        As I mentioned, EPA has published stringent regulations for
    both on-highway engines and off-road engines that will take
    effect between 2007 and 2014 and will achieve over $150 billion
    in health benefits when fully implemented in 2030. Diesel
    engines, however, can last upwards of 20-30 years and EPA's
    regulations only apply to new engines and vehicles. There are
    approximately 11 million engines in today's fleet that continue
    to emit high levels of pollution that can be reduced through
    the installation of new control technology.
        Building on the successes of EPA's regulatory and past
    voluntary efforts to reduce emissions from diesel engines, EPA
    has created the National Clean Diesel Campaign to aggressively
    reduce diesel exhaust across the country through various
    control strategies and the active involvement of national,
    state and local partners. In addition to implementing our
    current and proposed stringent mobile source regulations for
    new engines, the National Clean Diesel Campaign also supports
    voluntary emissions reductions from the existing fleet of
    mobile engines. Voluntary emissions reductions are one of the
    most cost-effective strategies to address diesel exhaust from
    the existing fleet. Retrofit programs that include cleaner fuel
    use, add-on control technology, engine replacement, and idle
    reduction can provide a health benefit to cost ratio of up to
    13 to 1. I am also pleased to say that we will be issuing
    guidance to states on how to calculate the emissions benefits
    from diesel retrofit programs so that they can use the credits
    for their State Implementation Plans (SIPs).
        Over the last 5 years, EPA has brought forward a number of
    very successful voluntary programs all designed to reduce
    emissions from the diesel fleet. In conjunction with state and
    local governments, public interest groups, environmental
    organizations and industry partners, EPA has established a goal
    of reducing emissions from the over 11 million diesel engines
    in the existing fleet over the next 10 years.
        EPA's Voluntary Diesel Retrofit and SmartWay Transport
    Partnership Programs have established several hundred projects
    that involve cleaner diesel, idle reduction and other
    environmental control strategies across the country, achieving
    emissions reductions now that will yield benefits for years to
    come. Many states, well ahead of EPA's requirements, are using
    ultra-low sulfur diesel fuel that reduces harmful particulate
    matter emissions and enables the use of add-on control
    technology. These projects are serving as examples of
    innovative, cost-effective models for diesel emissions
    reduction. In total, hundreds of partners nationwide are
    successfully implementing cleaner diesel projects, resulting in
    a foundation for the Agency's efforts to reduce diesel
    pollution and protect human health and the environment. In
    addition, to help our stakeholder communities identify viable
    retrofit technologies, the Agency has established a technology
    verification program that serves a testing and evaluation
    function for new, innovative emissions reductions technologies
    poised to enter the market.
        When we launched the National Clean Diesel Campaign in
    2005, we analyzed the in-use fleet and determined general
    sectors, specifically ports, freight, construction and
    agricultural, as the best opportunity to obtain significant
    emission reductions. This sector-based strategy has helped us
    target our resources. In addition, we identified school buses
    as a top priority because children are especially at risk from
    air pollution as they breathe 50 percent more air per pound of
    body weight than adults. Recurrent childhood respiratory
    illness is a risk factor for increased susceptibility to lung
    disease later in life.
        A critical part of the National Clean Diesel Campaign is
    the work being done at the state and local level. Several of
    EPA's regions have initiated collaborative efforts to address
    these emissions locally. For example, in the West, EPA's
    Regions 9 and 10 spearheaded the West Coast Collaborative, an
    ambitious public-private partnership that brings together
    leaders from Federal, State and local government, the private
    sector and environmental groups in California, Arizona, Oregon,
    Idaho and Washington, Alaska, Canada and Mexico committed to
    reducing diesel emissions along the West Coast. In FY (05), the
    Collaborative will implement 16 projects totaling over $1.3
    million in EPA funds and over $5.6 million in matching funds
    from Collaborative partners to retrofit diesel construction
    equipment with particulate matter traps, develop a biodiesel
    additive that reduces NOx and implement a liquefied natural gas
    powered locomotive system that services the nation's two
    biggest ports in Los Angeles and Long Beach, to name a few.
        In addition, the Midwest Clean Diesel Initiative, the
    Northeast Diesel Collaborative and the Mid-Atlantic Diesel
    Collaborative have all initiated efforts to reduce diesel
    emissions in their respective areas of the country. These
    initiatives have convened stakeholders meetings and educational
    workshops and have implemented significant collaborative diesel
    emissions reductions projects.
        Over the last few years, we have held several grant
    competitions that provide funding assistance to a variety of
    stakeholders interested in reducing diesel emissions. Support
    for these voluntary programs has been overwhelming. Grant
    solicitations are met by demand ten times greater than
    available resources and winning grant programs have leveraged
    an average of 2 to 4 times additional resources. For example,
    the West Coast Collaborative requests for proposals for $1.3
    million attracted almost $14 million in funding requests and
    finalists leveraged over $4 for every federal dollar granted.
        We know states such as California, with the Carl Moyer
    Program, and Texas, with the Texas Emission Reduction Plan
    (TERP), can be creative and are quite effective in providing
    funding opportunities for reducing diesel emissions. In
    addition, the State of Washington has set aside funding to
    reduce emissions from its school bus fleet over the next
    several years. Finally, Mr. Chairman, I know you're aware of
    this but perhaps others are not: the Mid-Ohio Regional Planning
    Commission (MORPC) has formed a diesel emissions subcommittee
    with representatives from industry, environmental
    organizations, State and local government, and a host of other
    stakeholders that are looking into innovative ways to provide
    funding to reduce diesel emissions. Needless to say, the topic
    of reducing emissions from the existing diesel fleet is at the
    forefront of mobile source environmental control discussions.
        From these various programs, we have learned some important
    lessons. Lack of capital can be an obstacle to implementing
    diesel emission reductions activities, especially for small
    businesses. EPA has found that Federal oversight will help
    target projects that are cost-effective, are located in areas
    with air quality needs and maximize public health benefits,
    among a host of other factors. We have also found that state
    utilization of matching funds acts as an incentive to maximize
    diesel emission reductions.
        Mr. Chairman, reducing emissions from older diesel engines
    is one of the most important air quality challenges facing the
    country. Even with more stringent heavy-duty engine standards
    set to take effect over the next decade, over the next twenty
    years millions of older diesel engines will continue to emit
    large amounts of pollution which contributes to serious public
    health problems. In addition, cost-effective technologies exist
    today and cleaner fuels are being deployed throughout the
    country. As I mentioned earlier, there is broad stakeholder
    support for reducing diesel emissions. Although the
    Administration supports efforts to reduce emissions from both
    new and existing diesel engines, we are concerned that the
    funding authorized in this legislation goes well beyond the
    funding for such efforts called for in the President's 2006
    budget. Like similar authorizations that go well beyond the
    President's budget, we cannot support the authorization levels
    in this bill as they could create pressure to appropriate those
    levels in the future. However, we look forward to working with
    you to address the public health goals of the legislation
    consistent with the fiscal constraints that we all must
    confront.
        I want to thank you, Mr. Chairman, and your colleagues for
    your leadership on this important issue. This concludes my
    prepared statement. I would be happy to answer any questions
    that you may have.
                                    ------

       Statement of Judge Margaret Keliher, Dallas County Commissioner's
                               Court, Dallas, TX
                                  introduction
        Good afternoon, I am Margaret Keliher, Dallas county judge, head of
    the Dallas County Commissioner's Court. I am on the Board of the Texas
    Environmental Research Consortium, I am a member of the North Texas
    Clean Air Steering Committee, I am a member of the Texas Clean Air
    Working Group and a member of the Regional Transportation Council's
    Committee for Clean Air.
        I am pleased to be here today to express support for Senate bill
    1265, The Diesel Emissions Reduction Act of 2005. Mr. Chairman, I
    applaud your leadership in developing this important legislation.
        The Dallas-Fort Worth (DFW) region faces a very challenging task in
    developing a plan to meet the 8-hour ozone ambient air quality
    standard. Preliminary air quality modeling by the Texas Commission on
    Environmental Quality shows that the DFW ozone nonattainment area will
    not attain the 8-hour ozone standard without significant reductions
    from Federally preempted sources, especially in the nonroad sector.
        While Texas has worked aggressively to reduce emissions from in-use
    diesel engines through the highly successful Texas Emission Reduction
    Plan (TERP), which provides grants for diesel engine retrofits or
    replacements, the State funding is inadequate to support all of the
    necessary projects to ensure clean, healthy air for our residents.
    Federal funding for these emission reduction projects would be a
    welcome and timely addition to our toolkit.
             overview and success of the texas emission reduction
                                  plan (terp)
        In 2001, the Texas Legislature established the Texas Emissions
    Reduction Plan (TERP). According to its authorizing legislation, Senate
    bill 5, the TERP was intended as a tool to ``assure that the air in the
    State is safe to breathe and meets minimum federal standards; [and to]
    develop multi-pollutant approaches to solving the State's environmental
    problems--'' Originally authorized through 2008, the TERP was just
    extended by our Legislature through 2010.
        The centerpiece of the TERP is the ``Emissions Reduction Incentive
    Grants Program,'' which funds projects in 41 counties where air quality
    violates or is close to violating EPA standards. The principal goal of
    this grant program is to reduce smog-forming nitrogen oxide (NOx)
    emissions, with an explicit goal of reducing a combined 49 tons per day
    in the Houston and Dallas/Fort Worth areas, and another 7 tons per day
    in other counties. Eligible projects include new purchases,
    replacements, repowers, retrofit technologies, infrastructure, and
    qualifying fuels. Since 2003, program funding has been roughly $120-140
    million annually.
        As of June 8, 2005 approximately $192 million in TERP grant funding
    has been awarded or committed to 732 projects through seven competitive
    solicitations. Over their lifetime, these projects are expected to
    reduce NOx emissions by nearly 41,000 tons at a cost of roughly $4,700
    per ton, which is very cost-effective when compared to other control
    options. Projects range in size from a few thousand dollars for
    replacement of a single piece of construction equipment to $11 million
    for the retrofit and fueling of a large fleet of transit buses. The
    executive summary of the biannual review of the TERP is attached.\1\
    ---------------------------------------------------------------------------
        \1\ Please note that while the summary data presented in this
    paragraph includes projects recommended for funding in the first round
    solicitation of fiscal year 2005, these projects are not included in
    the attachment.
    ---------------------------------------------------------------------------
        The popularity of the TERP is evidenced by the 560 applications
    received in the latest round of grant solicitations, which ended on
    July 1.
          the dfw area needs federal help to meet clean air standards
        In comparison to more industrialized areas of the country, like
    Houston, the DFW area's ozone pollution problem is disproportionately
    influenced by emissions from on-road and nonroad mobile sources--the
    so-called federally preempted sources that are largely out of the reach
    of State and local regulations. The Texas Commission on Environmental
    Quality estimates that in 2010, after the implementation of existing
    control measures, nonroad and onroad mobile sources will constitute 32
    percent and 38 percent, respectively, of smog-forming nitrogen oxide
    (NOx) emissions in the region (see Exhibit 1). Thus, 70 percent of our
    region's pollution comes from Federally preempted sources.
        This emissions breakdown is especially staggering in light of the
    estimated pollution cuts that may have to be made in order to comply
    with the 8-hour ozone standard by 2010. Just last month, the TCEQ told
    the North Texas Clean Air Steering Committee that an additional 45
    percent cut in NOx emissions might be required in the region. This
    preliminary forecast worried many of us in the room because only 30
    percent of the total, remaining NOx emissions in our region in 2010
    will come from sources that can be directly regulated by the State.
        Consequently, our region needs assistance from the Federal
    Government to reduce emissions from federally preempted sources. While
    the TERP has been an effective tool in this regard, State funding will
    not be enough to meet the lofty emission reduction targets being
    forecast by the TCEQ. And it should be noted that TERP funds are
    divided among various regions of Texas--in fact the DFW area only
    received roughly one-third of the TERP funds awarded to date. Federal
    funds from the Diesel Emission Reduction Act would be a welcome
    supplement to the TERP, which would allow us to partner with more
    diesel fleet owners to clean up their fleets.
        One other area where the Federal Government could help is by
    swiftly, adopting emission standards for federally preempted sources.
    For example, we appreciate recent proposal of emissions standards for
    new stationary diesel engines. The sooner that EPA adopts standards for
    these engines and others, such as those used in locomotives, the sooner
    that the DFW area will realize air quality benefits and be able to
    efficiently incorporate the resulting pollution reductions in on-going
    air quality planning and management efforts.
      the diesel emission reduction act can help make the terp even better
        As mentioned above, even though the TERP has proven to be a good
    model for an effective incentive program, its funding is not sufficient
    to support all of the possible projects to reduce harmful exposure to
    diesel air pollution. Clearly, much more could be done.
        For example, the Texas Legislature just added to the TERP a program
    to reduce emissions of diesel exhaust from school buses, which can
    build up to unhealthy levels inside the bus cabins where children
    travel to and from school. However, in a difficult budget year, the
    Legislature was not able to provide a secure funding stream. The Diesel
    Emission Reduction Act, if enacted, could serve as complementary source
    of funding to enable programs like the recently created Clean School
    Bus Program to flourish.
         how the diesel emission reduction act can stimulate innovation
        One key lesson of the TERP is that meaningful financial incentives
    will lead private and public fleet owners to find ways to clean up
    their vehicles and equipment. In the case of the TERP, it has certainty
    been true that ``if you build it, they will come.'' With the
    possibility of federal funding within reach, I expect many communities
    and businesses will devise increasingly more innovative and efficient
    programs to control diesel emissions.
        Another result of providing financial incentives has been the
    development of new emission control technologies. By increasing public
    investment for diesel emission reductions, the Diesel Emission
    Reduction Act will further stimulate technological innovation by
    ensuring a reliable for new control devices and, over time, help reach
    the efficiencies of scale necessary to drive down costs.
     the diesel emissions reduction act will encourage more state programs
        Twenty percent of the funds appropriated to DERA will be
    distributed directly to States that apply for them. In addition, 10
    percent of the funds are made available to serve as a match to State
    funding. These two provisions create an incentive for other States to
    develop comprehensive diesel emission reduction program and contribute
    to their funding. I am sure that these states, prompted by the
    opportunities provided by DERA will learn, like Texas has, the valuable
    role that diesel retrofits can play as part of a State or localities
    overall plan to achieve healthy air.
        In addition, the State Grant and Loan component of DERA is not
    intrusive or prescriptive. It leaves the decisions on how best to
    implement the State grant and loan program to the State. This allows
    all States to tailor their State grant and loan program to their
    specific needs, given their current air quality conditions, emissions
    inventory, and other complementary emission reduction efforts. The
    flexibility is especially helpful for States like Texas. States, like
    Texas, that have already developed their own programs will not have to
    spend time and energy redesigning their existing programs to fit anew
    mold.
                                   conclusion
        Senate bill 1265, the Diesel Emissions Reduction Act, will help
    speed the transition to a cleaner fleet of diesel vehicles and help all
    Americans, including residents of the DFW Metroplex, breathe easier.
    Thank you for the opportunity to come before you today.
        [See exhibit on page 70.]
                                     ______

         Statement of Joseph P. Koncelik, Director, Ohio Environmental
                               Protection Agency
        Senator Voinovich, Senator Carper, members of the subcommittee, I
    am Joe Koncelik, director of the Ohio Environmental Protection Agency.
    Thank you for allowing me to address this important legislation to help
    improve air quality throughout our nation by reducing emissions from
    existing diesel engines.
        This legislation is significant for two reasons. First, the
    emission reductions it would provide will help communities comply with
    the new ozone and fine particle air quality standards. Second, these
    are not reductions that States can achieve individually on the kind of
    broad basis that this bill makes possible.
        Diesel emissions significantly contribute to both ozone and fine
    particle air quality problems. Ohio faces substantial challenges in
    meeting these new standards, particularly in Senator Voinovich's
    hometown, Cleveland. In all, Ohio has 33 counties that don't meet the
    8-hour ozone standard and all or part of 27 counties that don't meet
    the fine particle standard.
        U. S. EPA's rules for new diesel engines and fuels will help in the
    long run. By 2030, they will reduce diesel emissions as much as 80
    percent from 2000 levels. But we must meet the new air quality
    standards well before 2030, at the latest 2010. Therefore, EPA's rules
    will not be a substantial factor in helping us meet our attainment
    deadlines because we need reductions must faster. In addition, the
    federal rules do not address the 11 million diesel engines already in
    use. Rather, the federal rules rely on new diesel engine standards that
    will achieve reductions only as new vehicles are put into service.
    States, such as Ohio, that are facing significant challenges in meeting
    the federal clean air standards cannot wait for 20 or more years for
    vehicle fleet turnover to occur, we need reductions now to help us
    attain the standards. This bill helps to close that critical gap.
        Another reason this bill is so important is that states have a
    harder time regulating diesel engines than other traditional sources of
    pollution, such as industrial sources. On-road diesel equipment moves
    from place to place, indeed from State to State, making it very
    difficult for states to effectively regulate these sources of
    pollution. A national retrofit program is the only logical answer. Even
    off-road equipment such as construction machinery changes location,
    taking its pollution impact with it. A patchwork of State laws
    attempting to achieve emission reductions from existing diesel engines
    is impractical. This nationwide program, which still allows States to
    customize to meet their needs, is ideal.
        Of course, I am pleased that the bill would allocate at least 20
    percent of annual funding to the States to set up their own grant or
    loan programs for diesel retrofit. Ohio EPA is currently developing a
    grant program to retrofit school buses, funded by a portion of the
    penalties that companies pay for violating environmental laws. The
    potential synergy between that program and the Diesel Emissions
    Reduction Act of 2005 is exciting. By using our own program as a match
    for federal funds, we can extend the reach of both, targeting areas
    where we need the most air quality improvement, and improving both air
    quality and children's health.
        In addition to providing air quality and public health benefits,
    this legislation also supports Ohio's economic recovery. Unless we are
    able to get meaningful reductions from vehicle emissions, we will have
    to make more stringent demands on industry. Ohio is already facing
    expensive new pollution controls and regulations in order to meet the
    new federal standard for ozone and fine particles that will reach into
    the billions of dollars. These costs come at a time in Ohio when we are
    trying to rejuvenate our economy. Ohio remains very concerned about the
    impact of the strict deadlines imposed by U.S. EPA to meet the ozone
    and fine particle standards. The current deadlines are in some cases
    unrealistic and could chill economic growth in the state. We need
    innovative approaches that will accelerate pollution reductions without
    adding to the significant compliance costs the State already faces.
        Existing diesel engines will continue to make up the majority of
    the diesel fleet for many years to come. That is as it should be.
    Certainly an Environmental Agency would not advocate scrapping
    perfectly functional equipment. At the same time, waiting for the
    vehicle fleet to turn over delays the benefits of EPA's requirements on
    new engines and fuels. The retrofit program in this bill is the best of
    both worlds.
        I commend Senators Voinovich and Carper, along with the cosponsors,
    for this bi-partisan effort to clean up our air and improve public
    health. We strongly support this legislative initiative.
                                     ______

       Statement of Michael Cross, Vice President, Cummins Inc., General
                    Manager, Fleetguard Emissions Solutions
                                  introduction
        Cummins strongly supports the Diesel Emissions Reduction Act of
    2005. There are 4 major points that Cummins would like to present to
    the committee:
        1. New diesels are getting cleaner, but are very durable and the
    population that is in service today will be in use for years to come.
        2. Retrofits of after treatment devices in the exhaust and engine
    replacements can clean up these in-service diesels and provide cost
    effective, immediate benefits to the environment.
        3. The Diesel Emissions Reduction Act will support state and
    community efforts to achieve the new national ambient air quality
    standards (NAAQS) by funding cost effective retrofits and engine
    replacements that provide the greatest benefit to the environment--
    particularly in environmentally sensitive and areas of high
    populations.
        4. Ultra low sulfur diesel fuel is essential to realizing the full
    benefits of the Diesel Emissions Reduction Act and to achieving
    enormous reductions in older and newer diesel-powered engines.
                               about cummins inc.
    The Company
        Cummins Inc., a global power leader, is a corporation of
    complementary business units that design, manufacture, distribute and
    service engines and related technologies, including fuel systems,
    controls, air handling, filtration, emission solutions and electrical
    power generation systems. Headquartered in Columbus, IN, (USA) Cummins
    serves customers in more than 160 countries and territories through its
    network of 550 Company-owned and independent distributor locations and
    more than 5,000 dealer locations. With more than 28,000 employees
    worldwide, Cummins reported sales of $8.4 billion in 2004. In 2005,
    Cummins was ranked #1 for corporate ethics by Business Ethics magazine.
    Cummins Vision: Making people's lives better by unleashing the Power of
            Cummins
        That simple, yet ambitious, statement serves as the guiding vision
    for Cummins and its 28,000 employees. The Company takes pride in
    manufacturing engines, generators, filters and related products that
    serve the varied needs of its customers worldwide. To do that, Cummins
    unleashes the power of its employees: Their energy and commitment make
    it possible for the Company to maintain a leadership position in the
    markets it serves. Cummins also recognizes that with its role as a
    corporate leader comes a responsibility to help improve the communities
    in which employees work and live. It is a responsibility the Company
    brings to life through its actions and the activities of its employees.
      new diesels are getting cleaner and cleaner, but older diesels are
           extremely durable and will be in service for years to come
        Diesel engines truly are the workhorse of the American economy. EPA
    has finalized diesel fuel and new engine regulations that will reduce
    diesel emissions from new diesel buses and freight trucks by 99
    percent, and non-road equipment by more than 80 percent from 2000
    levels. EPA's 2001 On-highway and 2004 Non-road Diesel Engine rules
    will greatly improve the environment and protect public health, but,
    according to EPA, the full benefits will not be realized until 2030
    because of the durability of the 11 million engines already in service.
    A diesel engine used to power school buses, trucks, railroads,
    agriculture processes and emergency response vehicles will last for
    hundreds of thousands of miles over a lifetime of up to 30 years.
        The Diesel Emissions Reduction Act addresses the issue of emissions
    from the higher-emitting engines that are currently in service and is
    an effective complement to EPA's rules for new engines. Some of the
    technology that will be used on these new engines, along with ultra low
    sulfur diesel fuel, can be applied to older engines in order to
    significantly and immediately reduce various amounts of oxides of
    nitrogen (NOx) (a precursor to ozone), hydrocarbon and particulate
    matter (PM) emissions from these sources. The Diesel Emissions
    Reduction Act will enable the application of this technology to today's
    in-service population and make a significant positive impact on the
    environment.
    Retrofitting older engines with current emission reduction technology
            has an immediate, positive impact on the environment
        Aftertreatment exhaust devices (commonly referred to as diesel
    retrofit devices or ``retrofits'') provide enormous benefits to air
    quality through significant emission reductions. Because older engines
    emit more particulate matter and oxides of nitrogen than newer engines,
    applying this technology to older vehicles can provide an even greater
    positive impact than when applying the technology to newer, lower
    emitting diesels.
        Retrofits provide an immediate positive impact on the environment
    by reducing emissions from diesel-powered vehicles. Many of these
    emission-reduction devices are direct replacements for the existing
    vehicle muffler; other systems are more extensive (Attachment I). When
    an emission reduction device is installed, the benefits are immediately
    recognized. Depending on the pre-retrofit engine emissions levels, the
    duty cycle of the application and the type of retrofit device that is
    applied, retrofits can provide significant reductions in PM, NOx,
    carbon monoxide and hydrocarbons. Here are some examples. When a diesel
    oxidation catalyst is applied, particulate matter will be reduced by at
    least 20 percent, and carbon monoxide and hydrocarbons will be reduced
    by at least 70 percent. When a diesel particulate filter is applied, at
    least 85 percent of PM and 90 percent of carbon monoxide and
    hydrocarbons will be reduced. When Lean NOx catalysts and diesel
    particulate filter combinations are applied, at least 25 percent NOx
    and 85 percent PM are reduced (Attachment II). Many of these retrofit
    technologies exist today and have been in service for many years and
    can be confidently applied to engines that are in service. We do not
    have to wait until lower emitting engines are purchased in new vehicles
    to realize the benefits of applying this technology.
    Re-powering existing vehicles with newer, cleaner engines is also a
            viable, cost-effective approach to improving the environment
        There are some older engines that are not ideal candidates for
    retrofits. Re-powering those vehicles with new engines can be a more
    appropriate solution to reducing emissions. The Diesel Emission
    Reduction Act would also support re-powering existing diesels with
    either new or re-manufactured engines. Re-manufactured engines, such as
    Cummins ReCon engines, can be a cost-effective alternative. Factory re-
    manufactured engines and parts are not just repaired or rebuilt. These
    engines are re-manufactured to the original engine specifications.
    Every part is completely torn down and each component goes through a
    controlled process, which includes cleaning, inspection, salvage, new
    part replacement, re-assembly and testing. The Cummins re-manufacturing
    business was the first in the engine industry and Cummins has remained
    a leader in the re-manufacturing industry by meeting rigorous quality
    standards required of our customers. In all cases, our re-manufactured
    engines meet--and sometimes exceed--the emissions standards of the
    original engine specification.
    Diesels continue to get cleaner and cleaner, and by 2010 will produce
            almost negligible amounts of NOx, PM and Hydrocarbons
        From the inception of the Clean Air Act in the 1970s to the
    present, Cummins has reduced the NOx emissions by 90 percent and PM
    emissions by 73 percent from our heavy-duty, on-highway engines in the
    United States. Similar reductions of NOx and PM emissions have also
    been demonstrated in Europe and Asia.
        In 2001, EPA moved forward with its rule to make heavy-duty trucks
    and buses run even cleaner. This rule requires reductions in PM and NOx
    in three steps in 2004 (pulled ahead to 2002), 2007 and 2010. By
    October 2002, Cummins had introduced the first complete line-up of
    engines to comply with EPA's 2004 step-down in emissions. EPA's
    emissions requirements will change dramatically for heavy-duty trucks
    between 2007 and 2010. Using ultra low sulfur diesel fuel and advanced
    technologies, NOx and PM from on-highway diesel engines will decline by
    90 percent from 2004 levels. Specifically, NOx must be reduced from the
    current 2.5g grams/hp-hr to 0.2-grams/hp-hr by 2010. The particulate
    standard will drop to 0.01-g/hp-hr PM beginning in 2007.
        As Cummins develops products for 2010, our goal is to meet or
    exceed the emissions targets while retaining the performance, fuel
    economy and reliability desired by our customers.
                       the diesel emissions reduction act
        The Diesel Emissions Reduction Act establishes voluntary national
    and state-level grant and loan programs to promote the reduction of
    diesel emissions. The legislation authorizes $1 billion over 5 years
    ($200 million annually). The bill directs that 70 percent of the funds
    are distributed by EPA, 20 percent of the funds go directly to states
    to develop retrofit programs, and the additional 10 percent is
    available as an incentive for states to match the federal dollars.
        The Diesel Emissions Reduction Act recognizes the clean air
    challenges ahead of states and communities and puts in place a mandate-
    free and flexible system to help address these challenges. In order to
    help states and communities meet the more stringent national ambient
    air quality standards, the Diesel Emissions Reduction Act establishes a
    voluntary diesel retrofit initiative to facilitate the reduction of
    emissions from our older diesel fleets. This program builds on proven
    state and local programs that have used new technology to ``retrofit''
    or replace older engines. In doing so, cost-effective emissions
    reductions can be provided for these fleets, and environmental benefits
    can be immediately realized.
        In the near future, states must revise or develop state
    implementation plans (SIP's) to reduce PM and ozone emissions in order
    to meet the new national ambient air quality standards. These states
    and communities must have the opportunity and flexibility to design
    programs to fit their own needs. The Diesel Emissions Reduction Act
    will be a critical tool to help states bring areas into attainment by
    encouraging the retrofitting or replacement of diesel engines currently
    in service.
        Under this legislation, the Federal and state government
    authorities awarding the grants will see a wide range of proposals on
    how to address air quality challenges. The proposals will specifically
    quantify emission reductions, the geographic area that will be
    impacted, population densities and whether there are private or state
    funds available to match government funds. This legislation recognizes
    that there is not a common emission reduction solution that it best for
    every circumstance. There are a number of technologies that can be
    implemented to modernize existing diesel fleets. Furthermore, the bill
    recognizes retrofitted aftertreatment systems and remanufactured or new
    engine replacement as applicable options for funds.
        Cummins also strongly supports the provisions in the bill that help
    bring tomorrow's technologies into the marketplace. There are many
    emerging technologies under development that may provide more dramatic
    reductions in emissions or may prove to be more cost-effective than
    current technologies. The bill provides a mechanism to utilize these
    emerging technologies on a controlled basis, providing certain
    conditions are met.
        The Diesel Emissions Reduction Act represents a sound use of
    taxpayer dollars. Diesel retrofits have proven to be one of the most
    cost-effective emissions reductions strategies. Retrofits can provide
    immediate emission reductions after installation, and can be
    particularly important in metropolitan areas where high volumes of
    heavy-duty trucks and equipment are in service and/or where major
    construction projects are underway for long periods of time. According
    to EPA, the Diesel Emissions Reduction Act would leverage existing
    funding, and if fully utilized, could result in a reduction of
    approximately 70,000 tons of PM over 30 years. EPA estimates that 70
    percent of those reductions come in the first 10 years of the program,
    and 94 percent come in the first 20 years.
        The ultimate goal in environmental policy is a ``win-win;'' that
    is, a policy solution that cleans the environment and allows the
    economy to flourish. The Diesel Emissions Reduction Act will not only
    clean the air, but allow the economy to flourish by preserving and
    increasing domestic manufacturing jobs that produce after treatment
    devices, engines and other emissions reductions alternatives.
        Cummins wants to congratulate Senators Voinovich and Carper on
    their efforts to unite our industry with the environmental community on
    this legislation. This legislation serves as a model for finding
    solutions to environmental problems. It is our hope that the process
    that Senators Voinovich and Carper put together to craft this
    legislation, can also serve to advance the use of high technology clean
    diesel power. With the enormous strides in emissions reductions and the
    dramatic fuel-efficiency benefits, clean diesel should be given serious
    consideration as a key component to a national energy policy. When
    using ultra low sulfur diesel fuel, SUVs in 2007 have the potential to
    experience a fuel efficiency increase greater than 30 percent (over a
    gasoline-powered vehicles) and meet EPA's Tier II emissions standards.
                 ultra low sulfur diesel fuel is key to it all
        Ultra low-sulfur diesel fuel is essential to realizing the full
    benefits of the Diesel Emissions Reduction Act, meeting EPA's 2007 and
    2010 standards and helping clean up older, non-retrofitted diesel
    engines.
        To meet EPA's regulations and the marketplace's demands, the diesel
    industry has and will continue to invest billions to advance cleaner
    burning and more fuel-efficient engines. To achieve reductions in the
    existing and future fleets, we must develop highly integrated systems,
    which include engine and aftertreatment technologies. These
    technologies will result in near zero emissions by 2010. A key to
    enabling this new technology is ultra low-sulfur diesel (ULSD) fuel.
    That is, diesel fuel with a sulfur content of 15 parts per million
    (ppm). There has been discussion that some parties would like to alter
    or delay the ULSD fuel standard. The White House and EPA have assured
    Cummins that they are fully committed to going forward with the fuel
    standards and the regulations. Cummins requests that Congress make
    every effort to ensure these ultra low sulfur diesel standards are not
    compromised. Because new, high-technology diesel emissions systems rely
    on ultra low sulfur diesel fuel, any change in the 15 ppm standard
    would undo EPA's rules and severely hamper the effectiveness of the
    Diesel Emissions Reduction Act.
        There is a strong correlation between the sulfur level in diesel
    fuel and PM emissions from diesel engines. All engines that use 15 ppm
    sulfur diesel fuel will emit less PM. For new engines produced after
    2007, the 15 ppm cap fuel allows the efficient use of particulate
    filters reduce emissions by up to 90 percent from 2004 levels. For
    engines currently in service, the 15 ppm fuel reduces PM emissions
    immediately and allows the use of retrofit devices. Consequently,
    without 15 ppm fuel, the expected emissions reductions from the clean
    diesel engine rule are in jeopardy, and it will be even more difficult
    for states to achieve attainment with ambient air quality standards.
    Lack of 15 ppm diesel fuel would also severely hamper the effectiveness
    of the Diesel Emissions Reduction Act. For example, the diesel
    particulate filter (a popular retrofit option) used on the Washington
    Metropolitan Transit Authority bus, which was present at the unveiling
    of this legislation in June, will eliminate 90 percent of particulate
    matter, carbon monoxide and hydrocarbon emissions. But it requires
    ultra low sulfur diesel fuel for the technology to operate effectively.
        In 2001, EPA published and President Bush approved an unprecedented
    final rule implementing clean diesel engine and fuel regulations. Those
    rules require engine manufacturers to invest billions of dollars to
    implement both PM and NOx aftertreatment technologies to achieve an
    overall 90 percent reduction in diesel engine emissions. As was and is
    recognized, those technologies and emission limits are only achievable
    with the corresponding requirement to reduce the sulfur content of
    diesel fuel to 15 ppm or less (down from 500 ppm).
        During that 2001 rulemaking process, engine manufacturers argued
    that the sulfur content of diesel fuel should be at or near zero.
    However, as a compromise, engine manufacturers ultimately agreed to a
    15 ppm cap. Without a maximum 15 ppm cap, engine manufacturers could
    not have successfully implemented aftertreatment technologies required
    to meet the stringent new exhaust emission levels in place for model
    year 2007.
        There is no longer enough time to develop, test, manufacture and
    implement a new strategy based on increased sulfur levels in the fuel.
    Engine manufacturers have invested billions of dollars in new
    technology to meet the clean diesel engine standards, and the
    technologies selected are based on having 15 ppm cap sulfur fuel
    available. Any increase in the sulfur cap level required by the
    regulation will invalidate a basic assumption used by engine
    manufacturers and aftertreatment equipment providers in their design
    and development efforts to develop compliance strategies. EPA provided
    a long lead time to give all affected industries time to comply. Engine
    manufacturers have done their part by engineering and developing
    systems needed to meet the standards.
        Recently, EPA offered a 45-day extension to the transition period
    to introduce ultra low sulfur diesel (from September 1, 2006 to October
    15, 2006) into the market. EPA is expected to issue a direct final rule
    in the near future. With this extension, Cummins believes that every
    party involved in this rule has had more than ample time to plan and
    invest in complying with their portion of EPA's rule. Cummins now looks
    forward to reaching 2007 so the environmental benefits of EPA's rule
    can be achieved.
                                   conclusion
        Cummins again congratulates Senators Voinovich and Carper for their
    leadership on this legislation and thanks Senators Inhofe, Clinton,
    Jeffords, Isakson, Ombama, Lautenberg, and Alexander for their support.
        Cummins strongly supports the Diesel Emissions Reduction Act of
    2005. While diesels are getting cleaner and cleaner, diesels are very
    durable and the population that is in service today will be in use for
    years to come. Retrofits and re-powers can clean up these in-service
    diesels and provide cost effective, immediate benefits to the
    environment. The Diesel Emissions Reduction will support state and
    community efforts to achieve the new national ambient air quality
    standards (NAAQS) by funding cost effective retrofits and replacements
    that provide the greatest benefit to the environment--particularly in
    environmentally sensitive and areas of high populations. Ultra low-
    sulfur diesel is essential to realizing the full benefits of the Diesel
    Emissions Reduction Act and achieving enormous reductions in older and
    newer diesel-powered engines.
        Cummins looks forward to working with you in helping older diesel
    engines run cleaner and ensuring the availability of ultra low sulfur
    diesel fuel, so that America can benefit from using clean and fuel
    efficient advanced diesel technologies.
                                     ______

        Statement of Conrad G. Schneider, Advocacy Director, Clean Air
                                   Task Force
                                  introduction
        Mr. Chairman, members of the subcommittee. Good afternoon. My name
    is Conrad Schneider, Advocacy Director of the Clean Air Task Force.
    CATF is a national environmental advocacy organization dedicated to
    restoring clean air and healthy environments through scientific
    research, public education; and legal advocacy. We appreciate the
    opportunity to testify in support of the Diesel Emissions Reductions
    Act of 2005. In particular, I want to commend you Mr. Chairman, for the
    leadership you have shown in bringing the bill to this point.
        You convened a group of key stakeholders (including industry; fleet
    owners; local, State, and Federal Government officials; and
    environmental organizations) to hammer out the details of this
    legislation. You worked to assemble a nearly unprecedented group of
    cosponsors including Senators Inhofe, Jeffords, Clinton, and Isakson on
    this committee. Less than a week after the bill's introduction, you
    offered it as an amendment to the Senate Energy bill where it passed by
    a vote of 92 to 1. Now, you are continuing the full-court press to see
    if the bill can be added to the Transportation bill presently in
    Conference Committee.
        Let's keep the momentum going on this important bill because
    enactment and full funding of this bill will do so much good for air
    quality and public health in this country.
                why we need to clean up existing diesel engines
    A. Health Effects of Diesel Exhaust
        U.S. EPA, as part of its regulatory impact analyses (RIAs) for the
    new highway and non-road diesel engine rules found that together the
    rules would avoid approximately 20,000 premature deaths in the year
    2030. Using EPA's Science Advisory Board-approved, methodology, that
    also has been reviewed and affirmed by the National Academy of Sciences
    (NAS), CATF contracted with EPA's own air quality consulting firm, Abt
    Associates, to determine the toll, in terms of adverse health effects,
    from diesel particles today. Abt Associates found that fine particle
    (PM2.5) pollution from diesels shortens the lives of 21,000
    people each year. This includes 3,000 early deaths from lung cancer.
    Tens of thousands of Americans suffer each year from asthma attacks
    (over 400,000), heart attacks (27,000), and respiratory problems
    associated with fine particles from diesel vehicles, equipment and
    vessels. These illnesses result in thousands of emergency room visits,
    hospitalizations, and lost work days. Together with the toll of
    premature deaths, the health damages from diesel fine particles will
    total $139 billion in 2010--3 years after EPA's new engine rules begin
    to phase-in. This map displays the health risk across America due to
    diesel fine particle pollution nationally in 1999.
    [GRAPHIC] [TIFF OMITTED] 37294.001

        Based on CATF's analysis, nationally, diesel exhaust poses a cancer
    risk that is 7.5 times higher than the total cancer risk from all other
    air toxics combined. In the U.S. the average lifetime nationwide cancer
    risk due to diesel exhaust is over 35 times-greater than the level U.S.
    EPA considers to be ``acceptable'' (i.e., one cancer per million
    persons over 70 years of exposure.)
        CATF estimates that reducing diesel fine particle emissions by 75
    percent by 2020 could save a cumulative total of tens of thousands of
    lives beyond the projected benefits of EPA's new engine regulations.
    For details of CATF's diesel health report, please see: www.catf.us/
    goto/dieselhealth.
    B. Diesel Emission Reductions will be Critical to Attainment of the
            PM2.5 Standard in Many Areas
        EPA, earlier this year, finalized nonattainment designations for
    the PM2.5 National Ambient Air Quality Standard (NAAQS). In
    all, EPA designated 225 counties where nearly one hundred million
    people live as failing to meet federal air quality standards for fine
    particles (see map).
    [GRAPHIC] [TIFF OMITTED] 37294.002

        By 2010 these areas will have to implement mandatory measures to
    reduce PM2.5 as part of their State Implementation Plans
    (SIPs) and have measured 3 years of air that meets, these standards.
    EPA's new engine rules will have just begun to result in their first
    emission reductions by that time--too late to provide much assistance
    to States and municipalities needing to find faster reductions for
    their plans due in 2007. Reductions from existing diesel engines
    through retrofits, rebuilds, and repowerings can provide cost-effective
    tons of PM2.5 removed and help these areas achieve, timely
    attainment
    C. Climate Impacts
        Soot from diesels also has an impact on the climate. Black carbon
    absorbs heat in the atmosphere and is a major contributor--and
    potential solution--to Global Warming. Reducing diesel black carbon
    could provide an immediate climate benefit.
                 state diesel initiatives--the need for funding
        CATF knows that EPA's rules governing emissions from new diesel
    engines slated to go into effect starting in 2007 will mean significant
    reductions in diesel emissions over time. However, other than providing
    for cleaner fuel, these rules do nothing to reduce emissions from
    diesel engines in service today. Because of the durability of the
    diesel fleet, today's engines will be running for years and even
    decades to come. CATF's policy goal is to accelerate the benefits of
    EPA's new engine rules by finding ways to cut emissions from the
    existing diesel fleet.
    [GRAPHIC] [TIFF OMITTED] 37294.003

        To reach this goal, CATF is working with campaigns in over a dozen
    States seeking State and local solutions to reduce diesel emissions.
    The State lead organizations and their coalition partners are pursuing
    reductions from the whole suite of diesel engines depending on the
    greatest contributors to their local air quality problems: trucks,
    buses, ports, trains, etc.
        To cite one example, CATF is working with the Ohio Environmental
    Council in a stakeholder process in Columbus, OH sponsored by the Mid-
    Ohio Regional Planning Council (MORPC) to develop a set of
    recommendations on how to include diesel reductions in the area's
    PM2.5 State Implementation Plan. What is, perhaps, the most
    critical common issue that has arisen in this process (and all the
    other States in which we work) is the lack of funding for retrofits.
    This is especially true for fleets owned by cash-strapped
    municipalities and States such as transit buses, school buses, and
    waste haulers. Currently, U.S. EPA has a paltry amount of money each
    year to award to fleet owners willing voluntarily to seek emissions
    reductions. Other small amounts of money have been available as a
    result of the settlement of lawsuits with the government. A handful of
    States have passed measures providing limited funding for diesel clean
    up. In California, the Carl Moyer program and in Texas the Texas
    Emissions Reduction Program (TERP) provide money to clean up
    construction equipment used in public works projects. New Jersey just
    this summer passed legislation funding the retrofit of a few specific
    public fleets. The money available, today is just a drop in the bucket
    of what is needed to improve public health and help areas facing
    nonattainment achieve healthy air standards.
                                 how dera works
        The Diesel Emission Reductions Act of 2005 (DERA) establishes the
    funding for a federal grant and loan program that will be administered
    through a partnership between the federal government and state
    governments. The amount of funding we seek is $200 million per year for
    5 years, for a total of $1 billion.
        All categories of diesel engines and fleets are eligible to apply
    for the funds including: construction, transit, school bus, ports,
    agricultural, and stationary engines.
        All effective solutions to diesel emission reduction are eligible
    to compete for funds including the suite of verified retrofits, engine,
    rebuilds and repowerings, engine replacement, and idle reduction
    programs, etc.
        The program will have two parts, a State program that will
    administer 30 percent of the funds; and a national program that will be
    administered by U.S. EPA that will allocate 70 percent of the funds.
    Under the State program, states will have broad flexibility to design
    their own programs. DERA allocates 20 percent of funds to States to
    develop retrofit programs with an additional 10 percent available as an
    incentive for State's to match the federal dollars being provided. Each
    State's share will determine by combination of number of States that
    apply and the State's population.
        The national program will allocate 70 percent of the total funds.
    The national program will be administered by EPA For the national
    program, not less than 50 percent of the funds will be awarded to
    publicly-owned fleets to demonstrate public-sector leadership on the
    issue and help cash-strapped states and municipalities reduce their
    fleet's emissions: Awards will be made to maximize public health
    benefits per dollar on the basis of competitive bids. Ranking criteria
    include: fleets in nonattainment areas, and Class I areas; fleets in
    areas with high population density; fleets in areas with
    disproportionate impact from the diesel fleet; and the expected life of
    the retrofit technology.
        U.S. EPA estimates that this billion, dollar program would leverage
    an additional $500 million, resulting in a net benefit of almost $20
    billion with a cumulative reduction of about 70,000 tons of particulate
    matter. This yields a 13 to 1 benefit-cost ratio [i.e.,
    $20B:$1.5B=13:1].
       dera funds will buy technology proven to virtually eliminate fine
                    particles emissions from diesel engines
        The funds awarded under DERA will go to a variety of diesel clean
    up projects determined through a competitive process. Any solution that
    proves its worth can qualify for funding. Let me describe some school
    bus emissions monitoring that CATF performed in conjunction with
    researchers at Purdue University. In Chicago, Atlanta, and Ann Arbor,
    Michigan, CATF measured levels of PM2.5 inside and outside
    school buses following actual bus routes. In the photograph,
    researchers equipped with monitors are measuring PM2.5
    levels at the curbside as a school bus pulls away after children are
    dropped off.
    [GRAPHIC] [TIFF OMITTED] 37294.005

    [GRAPHIC] [TIFF OMITTED] 37294.006

                                   conclusion

        In summary, CATF enthusiastically supports full funding and
    enactment of the Diesel Emission Reductions Act of 2005. We believe it
    will, make a significant contribution towards improving the nation's
    air quality. Thank you for your commitment to this important matter. I
    would be happy to answer any questions you may have.
                                     ______

          Statement of Timothy J. Regan, President, Emissions Control
                             Technology Association
                                  introduction
        Mr. Chairman, my name is Tim Regan. I'm the President of the
    Emissions Control Technology Association (``ECTA''). I'm here to thank
    you for taking the leadership on the diesel retrofit issues.
        ECTA represents the companies that have been at the cutting edge of
    mobile source emissions control technology for three and a half
    decades. Our members invented and developed the core, specifically the
    substrate and the catalyst, of the catalytic converter.
        They call our technology ``aftertreatment'' because it performs a
    chemical conversion or a filtering function to the emissions produced
    by the engine. In essence, the technology acts like a small chemical
    plant that neutralizes the nitrogen oxide (``NOx''), carbon monoxide
    (``CO''), and hydrocarbons (``HC'') in gasoline exhaust. In the case of
    diesel ingines, it goes one step further by burning the fine
    particulate matter (``PM2.5'').
        Our technology has had a profound positive impact on the
    environment both here and abroad. Since 1975, the catalytic converter
    has removed 1.5 billion ton of pollution from American skies and 3
    billion tons worldwide.\1\ As the catalytic converter is the precursor
    to diesel retrofits technology, we are confident that similar profound
    results will be generated by the deployment of diesel retrofits.
    ---------------------------------------------------------------------------
        \1\ See Corning Press Release citing the Manufacturers of Emission
    Control Association (``MECA'') (February 15, 2005),
    ``http:www.corning.com/environmentaltechnologies/media-
    center/press-releases/2005021501.aspx.
    ---------------------------------------------------------------------------
        In light of this confidence, we strongly support S. 1265,the Diesel
    Emissions Reduction Act of 2005. It will accelerate deployment of
    diesel retrofit technology, which is good for human health and good for
    the economy. Obviosly, these are 2 compelling reasons to support your
    bill.
        Before I explain why we believe this to be the case, I'd like to
    tell you a little bit about our industry and our technology.
                            industry and technology
        Your bill will accelerate the deployment of diesel emissions
    reduction technology on public fleets throughout the Nation. This
    technology covers engine rebuild, engine replacement, and exhaust
    aftertreatment, which is commonly referred to as diesel retrofits. My
    discussion today will focus on the diesel retrofit technology developed
    and produced by ECTA's members.
        Diesel retrofit technology involves several levels of development
    and manufacture. First, a substrate material must be developed and
    manufactured to provide the foundation for the catalyst and to impart
    filtration. This substrate can consist of either a ceramic or a metal
    material. It can be used for a diesel oxidation catalyst (``DOC''), a
    diesel participate filter (``DPF''), and a lean-NOx catalysts (``LNC'')
    which can all be applied to diesel engines.
        At a second level, the substrates are frequently coated by a
    catalyst manufacturer with a high-surface area material onto which a
    catalytic material is applied. These catalysts, combined with the
    exhaust heat absorbed by the substrate create a chemical reaction. In a
    diesel application, this chemical reaction converts harmful carbon
    monoxide, hydrocarbons, and particulate matter into harmless water and
    carbon dioxide. In the case of LNC, the chemical reaction converts
    nitrogen oxides to nitrogen and oxygen.
        A DOC performs a catalytic reaction similar to that of an
    automotive catalytic converter. It is the most cost-effective diesel
    retrofit technology for removing up to 90 percent of the carbon
    monoxide, 60 percent to 90 percent of the hydrocarbons, and 20 percent
    to 50 percent of the particulate matter from diesel exhaust.\2\ It
    costs approximately $400 to $1,000 per device depending on the
    application.\3\
    ---------------------------------------------------------------------------
        \2\ See Diesel Technology Forum, ``Cleaner Air, Better Performance:
    Strategies for Upgrading and Modernizing Diesel Engines'' (May 2003)
    , Figure
    4, pg. 5.
        \3\ See Manufactures of Emission Control Association (``MECA''),
    ``Retrofitting Emission Controls on Diesel-Powered Vehicles'' (March
    2002). .
    ---------------------------------------------------------------------------
        A DPF is either coated with the catalytic material or not coated
    depending on the application. It is composed of a porous material which
    filters over 90 percent of the fine particulate matter from the diesel
    exhaust.\4\ Diesel pariculate matter takes the form of solid carbon
    particles and unspent fuel and lube oil. The DPF can be regenerated
    using the heat from the exhaust or auxiliary heat to burn the trapped
    particulates. If it is coated with the catalytic material, it also
    reduces carbon monoxide and hydrocarbons. Although more expensive than
    a DOC, a diesel particulate filter is very cost-effective because it
    addresses the primary threat to human health in diesel exhaust. It
    costs approximately $7,500 per device.\5\
    ---------------------------------------------------------------------------
        \4\See supra footnote 2.
        \5\See supra footnote 2, p. 1.
    ---------------------------------------------------------------------------
        Diesel retrofit technologies are elegant from an engineering point
    of view because they are passive in nature and require little, if any,
    maintenance. They occasionally need to be cleaned of ash that comes
    from the lube oil. These devices have been demonstrated to last over
    450,000 miles on some retrofit applications.
        At a third level, the diesel oxidization and the diesel particulate
    filter are secured in a metal canister which provides protection and
    durability. The canister is installed on the exhaust system of a diesel
    vehicle.
        Diesel particulate filter systems will be required equipment under
    the EPA's 2007 Heavy Duty Diesel Rule (``2007 Rule'') for on-road heavy
    duty vehicles produced in model year 2007 and beyond. Under regulation
    that will go into effect beginning in 2010, devices which are currently
    in development in our industry will reduce nitrogen oxide from diesel
    exhaust by more than 90 percent from today's levels. These include
    nitrogen oxide traps, selective catalytic reduction, and other
    technologies.
        Now I'd like to turn my attention to the reasons why we support
    your legislation.
                          clean air and health impact
        Unfortunately, diesel engines have received a ``bad rap''. As they
    say, ``my daddy's dirty diesel''. This may have been true 10 years ago
    because diesel engines produced comparatively higher levels of PM and
    NOx than gasoline-powered vehicles. Substantial progress has been made
    in reducing diesel emissions over the last decade. Diesel engines
    manufactured today emit 83 percent less particulate matter and 63
    percent less nitrogen oxide than they did in 1988.5
        This is not to say that additional improvement cannot be made in
    diesel emissions. The new 2007 Diesel Rule will require even farther
    reduction of particulate matter and nitrogen oxides. These new
    regulations will reduce both PM and NOx emission by 98 percent from
    their 1988 levels.\6\
    ---------------------------------------------------------------------------
        \6\ Id.
    ---------------------------------------------------------------------------
        These air quality improvements can significantly enhance human
    health. We measure these health effects by estimating the economic
    welfare associated with reduced levels of sickness and mortality risk
    arising from improved air quality. Studies have been done that estimate
    the health cost of diesel and other mobile source emissions.
        These estimates are extremely complex because they require
    estimating emissions generated by motor vehicles, estimating human
    exposure to air pollutants, relating these changes to physical health
    effects, and relating these health effects to changes in economic
    welfare. Essentially, we must estimate the value of illness and
    mortality risk.
        While the absolute levels of these estimates are clearly open to
    challenge, there is a broad consensus that diesel emissions cause or
    aggravate respiratory problems and chronic bronchial conditions such as
    asthma. In diesel exhaust, particulate matter measured below the 2.5
    micron level is particularly troublesome as a matter of human health.
    As indicated in Figure 1, the health effects of PM2.5 have
    been measured as high as $109,000 per ton compared to $11,332 per ton
    for NOx, $718 per ton for volatile organic compounds, and $50 per ton
    for carbon monoxide. In other words, PM2.5 is over 2000
    times more harmful than carbon monoxide.
    [GRAPHIC] [TIFF OMITTED] 37294.032

        Using these tools, EPA has estimated the health benefits of diesel
    emission reduction technology to be quite significant. For example, EPA
    estimates that the 2007 Rule will generate $66 billion in health
    benefits annually when the new vehicles have significantly penetrated
    the fleet after the year 2020.\7\ This equates to about one half of one
    percent of the entore U.S. economy in 2005. This is pretty significant
    when you consider the fact that a three percentage point growth in the
    economy is believed to be quite robust.
    ---------------------------------------------------------------------------
        \7\ See Environmental Protection Agency, (July 7, 2005) ``2007
    Heavy-Duty Highway Final Rule''
    ---------------------------------------------------------------------------
        These health effects are generated under the 2007 Rule by the
    deployment of diesel emission technology en new vehicles. The Rule does
    nothing to reduce emissions from the existing 11 million diesel-powered
    vehicles on the road today.\8\ Because diesels are so durable, existing
    vehicles in the fleet will not be fully replaced until 2030.\9\ Hence,
    the need for diesel retrofits to reduce emissions on in-use vehicles
    during the balance of their useful life. The accelerated deployment of
    this technology on existing vehicles as authorized by S. 1265 will
    realize tremendous health benefits in the short and medium term.
    ---------------------------------------------------------------------------
        \8\ See Senator Voinovich Press Release (June 16, 2005) http://
    voinovich.senate.gov/news--center/record.cfm?id=238996&>
        \9\ Id.
    ---------------------------------------------------------------------------
        This reality is starkly reflected in the President's FY06 budget
    proposal for a new Clean Diesel Initiative to finance demonstration
    projects for diesel retrofit technology. This small investment is
    estimated in the President's budget to generate $360 million in health
    benefits.\10\ We hope the Congress will appropriate the funds for this
    new program.
    ---------------------------------------------------------------------------
        \10\ See Environmental Protection Agency, ``The Budget for Fiscal
    Year for 2006'', pg. 289.
    ---------------------------------------------------------------------------
        Most importantly, significant health benefits will be generated
    from the fill implementation and funding of S. 1265. As the committee
    is well aware, EPA estimates that $1.5 billion investment in diesel
    retrofits generated by S. 1265 will reduce diesel particulate matter
    pollution by 70,000 tons and generate over $20 billion in health
    benefits.\11\
    ---------------------------------------------------------------------------
        \11\ See supra footnote 8.
    ---------------------------------------------------------------------------
        It is particularly important that we capture these benefits today
    because so much of the Nation is currently exceeding National air
    quality standards for PM2.5 as well as other criteria
    pollutants. EPA estimates that nearly 100 million people in the country
    reside in non-attainment areas for fine particulate matter.\12\ Since
    mobile source emissions account for 15 percent of all fine particulate
    matter pollution in the country and such pollution is deemed most
    threatening of the criteria pollutions,\13\ the accelerated deployment
    of diesel retrofit technology will contribute significantly toward
    achieving attainment and enhancing human health.
    ---------------------------------------------------------------------------
        \12\See Environmental Protection Agency, AirData (November 2004)
    http://www.epa.gov/air/data/nonat.html?ususaUnited%20States.
        \13\See Transportation Research Board of the National Academies'
    National Research Council, (April 2002) ``The Congestion Mitigation and
    Air Quality Improvement Program: Assessing 10 Years of Experience'',
    Figure 2-1, pg. 44.
    ---------------------------------------------------------------------------
                                economic impact
        In addition to the important health effects associated with S.
    1265, the bill also will have a very positive impact on the economy in
    several ways. First, it will accelerate deployment of diesel retrofit
    technology which has proven to be a very cost-effective means for
    achieving air quality improvement.
        As indicated in Figure 2, we estimate that diesel retrofit
    technology is one of the most cost-effective means for improving air
    quality compared to other methods used under our interstate highway
    transportation statutes.
    [GRAPHIC] [TIFF OMITTED] 37294.007

        These estimates show that diesel retrofits cost at most a mere
    $5,300 per ton of pollution reduction compared to a mid-point estimate
    of $126,400 for an alternative fuel bus. Only emission inspection and
    maintenance at a mid-point estimate of $1,900 per ton beats diesel
    retrofits. The analysis that supports these estimates is attached as
    Exhibit 1 for the committee's convenience.
        As indicated in Figure 3, our estimates are verified by analysis
    done by the Diesel Technology Forum which estimates diesel retrofits at
    about $5,000 per ton of emission reduction.
    [GRAPHIC] [TIFF OMITTED] 37294.033

        The second economic benefit associated with the deployment of
    diesel retrofits is reflected by the extremely favorable cost benefit
    associated with investment. As indicated, the President's budget
    proposal reflects a $360 million return on a $15 million investment
    under the new Clean Diesel Initiative.\14\ This is a 24 to 1 benefit-
    cost ratio. As the members of the committee are well aware, EPA further
    estimates that the cost-benefits ratio for S. 1265 is 13 to 1.\15\
    ---------------------------------------------------------------------------
        \14\ See supra footnote 11.
        \15\ See supra footnote 8.
    ---------------------------------------------------------------------------
        The third economic benefit is the investment that has been,
    generated by the members of the Emissions Control Technology
    Association and others in the industry. It is estimated that our
    industry is investing over $1.8 billion to optimize and commercialize
    advanced diesel emission technologies to meet the requirements of
    existing EPA regulations and retrofits.\16\
    ---------------------------------------------------------------------------
        \16\ See MECA press release, (March 16, 2004), ``Motor Vehicle
    Emission Controls Industry Continues to Make Necessary Investments to
    help meet EPA's 2007 and Later On-Road HDDE Standards''.
    ---------------------------------------------------------------------------
        This investment will generate good-paying manufacturing jobs in the
    United States. For example, Corning Incorporated, a leading
    manufacturer of ceramic substrates for diesel oxidization catalysts and
    diesel particulate filters, plans to invest over $350 million in
    research, development, and manufacturing and to generate ever 300 new
    high-paying jobs in manufacturing.\17\ This is important job creation
    in Western New York that is sorely in need of new economic growth.
    ---------------------------------------------------------------------------
        \17\ Interviews with Corning executives.
    ---------------------------------------------------------------------------
        Finally, new diesel emissions reduction technology generates growth
    through exports. The United States leads the world in mobile source
    emission reduction technology. As such, we are exporting catalytic
    converters, diesel oxidization catalysts and diesel particulate filters
    around the world, including China.
                                   conclusion
        Mr. Chairman, in closing, I'd like to congratulate you again on
    your leadership. The prompt enactment and funding of S. 1265 is good
    for human health and good for the economy for all the reasons that I
    have described. On behalf of the ECTA members, I can assure you that we
    will do everything in our power to help achieve enactment and funding.
    [GRAPHIC] [TIFF OMITTED] 37294.037

    [GRAPHIC] [TIFF OMITTED] 37294.008

    [GRAPHIC] [TIFF OMITTED] 37294.038

    [GRAPHIC] [TIFF OMITTED] 37294.039

    An Analysis Prepared for the Emission Control Technology Association by
         Robert F. Westcott, Ph.D., Economic Consultant, Washington, DC
    Cleaning the Air: Comparing the Cost Effectiveness of Diesel Retrofits
                           vs. Current CMAQ Projects
                                    Exibit 1
                               executive summary
           A key goal of U.S. air pollution programs, including the
    Congestion Mitigation and Air Quality (CMAQ) program created in 1990,
    has been to clean the air in cities to improve public health and lower
    medical costs. But while the CMAQ program has emphasized reductions of
    carbon monoxide, hydrocarbons, and ozone, recent research finds that
    the top air pollution problem in urban areas today is fine particulate
    matter, which is particles with a diameter of 2.5 micrometers or less
    (PM2.5).
           This pollutant, PM2.5, is a primary airborne
    threat to human health today costing more than $100,000 per ton in
    health costs. Researchers estimate that PM2.5 is 2 to 25
    times as harmful to human health as nitrous oxide, more than 100 times
    as dangerous as ozone, and 2000 times as dangerous as carbon monoxide
    on a per ton basis.
           Diesel engine exhaust is a source of PM2.5
    emissions in urban areas. Approximately one third of these diesel
    emissions are due to on-road vehicles and about two thirds are due to
    off-road equipment, such as construction equipment.
           Diesel retrofit technology is currently available that
    is highly effective at reducing PM2.5 emissions. Diesel
    oxidation catalysts (DOCs) are well suited for retrofitting older off-
    road vehicles and diesel particulate filters (DPFs) are highly
    efficient at reducing these pollutants where new low sulfur diesel
    fuels are available, as is already the case in most urban areas.
           From the point of view of cost effectiveness, diesel
    retrofits are superior to almost all current CMAQ strategies, including
    ride-share programs, van-pool arrangements, HOV lanes, traffic
    signalization, bike paths, and all strategies that attempt to modify
    behavior (like encouraging telecommuting.) Most of these CMAQ
    strategies cost $20,000 to $100,000 per ton equivalent of pollutant
    removed, and some cost as much as $250,000 per ton removed.
           Under conservative assumptions, diesel retrofits cost
    only $5,340 per ton equivalent of pollutant removed. In fact, among all
    CMAQ strategies, only emission inspection programs appear to exceed the
    cost effectiveness of diesel retrofits.
           Expanding the range of CMAQ projects to include diesel
    retrofits for construction equipment and off-road machinery in urban
    areas could be a highly effective way to spend public monies. More than
    100 million Americans live in areas of the country where
    PM2.5 levels exceed the EPA's guidelines.
                                   background
        Cleaning the air to improve human health and lower medical costs
    has been an objective of U.S. government policy since at least the
    Clean Air Act of 1970. Concerns about poor air quality, especially in
    urban areas, led to the creation of the Congestion Mitigation and Air
    Quality (CMAQ) Program in 1990, which has set aside a portion of
    transportation monies for the past 15 years to fond innovative projects
    to reduce carbon monoxide, hydrocarbons, nitrous oxides, and smog in
    so-called non-attainment areas.\18\ Vehicle emission inspection
    programs, high-occupancy vehicle (HOV) travel lanes, van pool programs,
    park-and-ride lots, and bike paths are examples of CMAQ projects.
    ---------------------------------------------------------------------------
        \18\ The EPA has formal criteria for the definition of non-
    attainment areas, but generally these are the large U.S. cities.
    ---------------------------------------------------------------------------
        There has been significant progress in the past 35 years in
    reducing carbon monoxide and hydrocarbon emissions and smog.
    Scientists, however, have been able to identify new airborne health
    risks whose costs are now becoming more fully appreciated. Notably,
    particulate matter (PM) has been found to have especially pernicious
    health effects in urban areas. Increasingly it is becoming understood
    that diesel engine emissions in urban areas, both from on-road trucks
    and buses and from off-road construction and ether equipment, are a
    significant source of fine particuiate matter pollution. This leads to
    a number of questions:

          What is the current assessment of the top health risks
    from air pollution from mobile sources in urban areas?
          What is the role of emissions from diesel engines?
          How does diesel retrofit technology to clean engine
    emissions after combustion compare with current CMAQ projects in terms
    of cost effectiveness?
          Are CMAQ funds currently being deployed in the most cost-
    effective manner possible?

        This paper examines these questions by reviewing the recent
    scientific, environmental, economic, and health policy literature.
                       the health costs of air pollution
        In the 1960s and 1970s the key health risks from air pollution were
    deemed to come from carbon monoxide, hydrocarbons (or volatile organic
    compounds, VOCs), nitrous oxides (NOx), and smog, and early clean air
    legislation naturally targeted these pollutants.\19\ During the past 10
    years or so, however, researchers have identified new pollutants from
    mobile sources that have particularly harmful health effects,
    especially in urban areas. Top concern today centers around particulate
    matter, and especially on fine particulate matter. Fine particulates,
    with a diameter of less than 2.5 micrometers (PM2.5), can
    get trapped in the lungs and can cause a variety of respiratory
    ailments similar to those caused by coal dust in coal miners. A
    significant portion of PM2.5 emissions in urban areas come
    from off-road diesel equipment. According to analysis by the California
    Air Resources Board, on-road engines account for about 27 percent of PM
    emissions in California and off-road equipment is responsible for about
    66 percent of PM emission.\20\
    ---------------------------------------------------------------------------
        \19\ Catalytic converters installed on all cars since the mid
    1970's, for example, have targeted these pollutants.
        \20\ Risk Reduction Plan to Reduce Particulate Matter Emissions
    from Diesel-Fueled Engines and Vehicles, California EPA Air Resources
    Board, October 2000, p. 1.
    ---------------------------------------------------------------------------
        Analysis by Donald McCubbin and Mark Delucchi published in the
    Journal of Transport Economics and Policy evaluates the health costs of
    a kilogram of various air pollutants, including CO, NOx,
    PM2.5, sulfur oxides (SOx), and VOCs.\21\ These researchers
    estimate health costs from such factors as, hospitalization, chronic
    illness, asthma attacks, and loss work days for the U.S. as a whole,
    for urban areas, and for the Los Angeles basin. For urban areas, they
    find the range of health costs per kilogram of CO was from $0.01 to
    $0.10, NOx was from $1.59 to $23.34, PM2.5 was from $14.81
    to $225.36, SOx was from $9.62 to $90.94, and VOCs was from $0.13 to
    $1.45. Taking the mid-points of these estimates, a kilogram of
    PM2.5 therefore was nearly 10 times more costly from a
    health point of view than a kilogram of NOx, more than 150 times more
    costly than a kilogram of VOCs, and more than 2000 times more costly
    than a kilogram of CO. On a per ton basis, a ton of PM2.5
    causes $109,000 of health costs, a ton of NOx costs $11,332, a ton of
    VOCs costs $718, and a ton of CO costs $50 (Chart 1).
    ---------------------------------------------------------------------------
        \21\ McCubbin, Donald and Mark Delucchi (1999), The Health Costs of
    Motor-Vehicle-Related Air Pollution, Journal of Transport Economics and
    Policy, September, Vol. 33, pp. 253-86.
    [GRAPHIC] [TIFF OMITTED] 37294.034

                    effectiveness of diesel retrofit filters
        Given the high health costs of PM2.5 significant effort
    has gone into the development of technological solutions to deal with
    the problem. The best technologies involve the use of post-combustion
    filters with a catalyzing agent, which together trap and break down
    dangerous pollutants before they are emitted into the air. All new
    diesel tracks will be required to use these technologies by 2007
    according to U.S. EPA rales, and off-read equipment will have to use
    these technologies by 2010. (Rules require 95 percent reductions in
    emissions of several pollutants, as well as a 97 percent cut in the
    sulfur levels in diesel fuel.)\22\ However, given that the lifespan of
    a diesel engine can be 20-30 years, it will take decades to completely
    turn over America's diesel fleet. Therefore, by lowering emissions from
    older diesels, retrofits are an effective path to cleaner air over the
    next few decades.
    ---------------------------------------------------------------------------
        \22\ ``EPA Dramatically Reduces Pollution from Heavy-Duty Trucks
    and Buses, Cuts Sulfur Levels in Diesel Fuel,'' Environmental News,
    EPA, 12/21/00.
    ---------------------------------------------------------------------------
        Diesel retrofit filters are highly effective at their chief
    function: preventing dangerous pollutants from ever entering the air.
    Diesel oxidation catalysts (DOCs), at $1,000 to $1,200 per retrofit,
    reduce PM by about 30 percent and can work with current higher sulfur
    diesel fuels. This yields a large benefit when installed on older,
    higher-polluting vehicles. In addition to their PM reducing
    capabilities, these filters also can cut the emission of carbon
    monoxide and volatile hydrocarbons by more than 70 percent.
        Diesel particulate filters (DPFs), which generally cost $4,000-
    $7,000 per engine, are far more efficient. They are specifically
    targeted at keeping more dangerous PM out of the air than are DOCs. In
    fact, they can reduce PM2.5 pollution from each vehicle by
    more than 90 percent, yielding an enormous cut in emissions over the
    life of the diesel engine, even, when installed on newer, cleaner
    diesel vehicles. An additional requirement of DPFs, however, is that
    the vehicle must run on newer very low sulfur fuels. High sulfur fuel
    leads to sulfate emissions from the filter due to the very active
    catalysts needed to make the filters function properly. Thus, DPFs are
    most effective as a solution for vehicles in urban areas--such as
    construction equipment and urban fleets--where very low sulfur fuels
    are already available.\23\
    ---------------------------------------------------------------------------
        \23\ Very low sulfur diesel fuel will be available nationwide by
    2006.
    ---------------------------------------------------------------------------
        These technologies are not new or experimental; they are already in
    use around the world. There are two million of these technologies
    already at work in heavy-duty diesel vehicles worldwide. Further, there
    are 36 million DOCs and 2 million DPFs in use on passenger vehicles in
    Europe alone, where these technologies are currently being used,
    reaping cost-effective health benefits over the long term.
                                the cmaq program
        The CMAQ program is the only federally funded transportation
    program chiefly aimed at reducing air pollution.\24\ Its historical
    purpose has been twofold: to reduce traffic congestion and to fund
    programs that clean up the air Americans breath. Within its air quality
    mission, it is designed primarily to help non-attainment areas (mainly
    polluted urban zones) reach attainment for air quality standards under
    the Clean Air Act.\25\ Historically many CMAQ projects have tried to
    change travel and traffic behavior in order to achieve its goals. These
    transportation control measures (TCMs) have been designed both to
    reduce traffic congestion as well as improve air quality. An example is
    a bicycle path. Designed to reduce the number of drivers on the road,
    bike paths could, in theory, achieve both goals. Further examples are
    van-pools, ridesharing and park and ride programs, and HOV lanes: all
    current CMAQ projects. Other projects have addressed emission
    reductions directly, as for example, through funding for state
    automobile emission inspection programs.
    ---------------------------------------------------------------------------
        \24\ Transportation Research Board of the National Research
    Council: The Congestion Mitigation and Air Quality Improvement Program:
    Assessing 10 Years of Expweience (2002) p. 1.
        \25\ ibid, p. 1.
    ---------------------------------------------------------------------------
        As a condition for reauthorizing the CMAQ program in 1998, the U.S.
    Congress required that a detailed 10-year assessment of the program be
    conducted. This review was performed by the Transportation Research
    Board of the National Research Council and was completed in 2002. This
    review found that CMAQ has been less than successful in reducing
    congestion and suggested that the most beneficial way for CMAQ to use
    its funds is to focus on air quality.\26\ It also found that TCMs were
    less cost-effective than measures to directly reduce emissions, such as
    through inspection programs.
    ---------------------------------------------------------------------------
        \26\ ibid, p. 13
    ---------------------------------------------------------------------------
        Furthermore, the study suggested that CMAQ's focus within the
    domain of air quality is misplaced. CMAQ programs have targeted the
    gases considered the most dangerous pollutants for many years, like
    hydrocarbons, carbon monoxide, and nitrous oxides. While these gases
    pose recognized health and environmental risks, recent work has shown
    that the dangers of these substances pale in comparison to the danger
    of fine particulate matter.\27\ In the words of the study, ``Much
    remains to be done to reduce diesel emissions, especially particulates,
    and this could well become a more important focus area for the CMAQ
    program.'' \28\ Further, discussing the fact that diesel-related CMAQ
    programs could be the most cost-effective, the study states, ``had data
    been available on particulate reductions--the ranking of strategies
    focused on particulate emissions--would likely have shown more
    promising cost-effectiveness results.'' \29\
    ---------------------------------------------------------------------------
        \27\ibid p. 13.
        \28\ibid p. 74
        \29\ibid p. 131
    ---------------------------------------------------------------------------
           comparing the cost effectiveness of diesel retrofits with
                              other cmaq projects
        Given that PM2.5 emissions from diesel engines are a
    leading health concern, that effective technology exists today to clean
    the emissions of off-road diesel equipment used extensively in the
    middle of American cities (non-attainment areas), and that the CMAQ 10-
    year review highlights the possible use of CMAQ funds for diesel
    retrofit projects, it is logical to compare the cost effectiveness
    these diesel retrofits with current CMAQ projects. The CMAQ Program:
    Assessing 10 Years Experience (2002) estimates the median cost per ton
    of pollutant removed for 19 different CMAQ strategies and these
    estimates provide the comparison base. Published estimates for diesel
    retrofits are compared with these estimates.
        As a first step in comparing the cost effectiveness of pollution
    reduction strategies, it must be noted that the CMAQ cost effectiveness
    estimates are presented as ``cost per ton equivalent removed from
    air,'' with weights of 1 for VOCs, 4 for NOx, but 0 for
    PM2.5.\30\ Relying upon the McCubbin and Delucchi health
    cost estimates, however, even weighted NOx should be considered mere
    damaging than VOCs. That is, even though 0.25 ton (the 1:4 ratio above)
    of NOx removed counts as the CMAQ equivalent of one ton pollution
    removed, it has a higher health cost than a ton of VOCs ($11,332/4 =
    $2,883 for NOx vs. $718 for VOCs). As a second step, conservatively
    assume that all CMAQ projects remove the more damaging pollutant (NOx).
    This still means that a ton of PM2.5 reduction would be
    worth at least 9.45 tons of regular CMAQ reductions ($109,000 for
    PM2.5/$11,332 for NOx).
    ---------------------------------------------------------------------------
        \30\Importantly, the study's PM2.5 weight of 0 does not
    reflect PM2.5's health costs, but rather that fact that
    standards have not yet been set for it by the U.S. EPA. As the CMAQ 10-
    year review says, ``PM2.5 is generally regarded as the
    pollutant with the most pernicious health consequences, though to date
    standards have not been promulgated for its regulation for both
    measurement and economic reasons.'' (p. 295).
    ---------------------------------------------------------------------------
        Diesel retrofits are estimated to cost $50,460 per ton of
    PM2.5 removed by the California Air Resources Board
    (CARB).\31\ This estimate is very conservative and substantially higher
    than that cited by industry sources. Using the CARB cost estimate,
    diesel retrofits cost $5,340 per ton equivalent of air pollution
    removed ($50,460/9.45), based upon the CMAQ definition of ton
    equivalent and on the conservative assumption that CMAQ projects remove
    the most damaging pollutant reviewed. If a less conservative and more
    realistic assumption is used--that CMAQ projects remove a mix of NOx
    and VOCs--then the cost-effectiveness of diesel retrofits becomes
    substantially more favorable, and could be as low as $332 per ton of
    CMAQ pollutant removed.
    ---------------------------------------------------------------------------
        \31\ California Air Resources Board, ``Staff Analysis of PM
    Emission Reductions and Cost-Effectiveness,'' Sept. 6, 2002.
    ---------------------------------------------------------------------------
        This analysis means that diesel retrofits for construction
    equipment are highly cost-effective when compared with current CMAQ
    strategies. As shown in Table 1 and Chart 2, some CMAQ strategies cost
    more than $250,000 per ton of pollutant removed (teleworking), and many
    are in the $20,000 to $100,000 per ton range (traffic signalization,
    park and ride lots, bike paths, new vehicles, etc.). The only current
    CMAQ project category that exceeds the cost effectiveness of diesel
    retrofits is emission inspection programs.
        Other studies also conclude that diesel retrofits are highly cost-
    effective compared with current CMAQ projects. The Diesel Technology
    Forum compared the benefits and costs of CMAQ projects with diesel
    retrofits for transit buses (for NOx pollution reduction) and concluded
    that retrofits are a better use for CMAQ funds than any other typical
    CMAQ project, with the exception of inspection and maintenance programs
    and speed limit enforcement.\32\ Also, the California EPA's Air
    Resources Board has estimated that diesel retrofits have a benefit of
    between $10 and $20 for each $1 of cost.\33\ The U.S. EPA, in its
    justification for new on-road diesel rules in 2007 and off-road rates
    in 2010 estimates the benefits for diesel particulate filters at
    roughly $24 for each $1 of cost.\34\
    ---------------------------------------------------------------------------
        \32\ ``The Benefits of Diesel Retrofits,'' Diesel Technology Forum.
    See http://dieselforum.org/retrofit/why--ben.html.
        \33\ ``Perspectives on California's Diesel Retrofit Program,''
    California EPA, Air Resources Board, presentation by C. Witherspoon,
    June 3, 2004.
        \34\ See, for example, ``2007 Heavy-Duty Highway Final Rule,'' U.S.
    EPA, May 2000, which can be found at http://www.epa.gov/otaq/
    deisel.htm.
    [GRAPHIC] [TIFF OMITTED] 37294.035

    [GRAPHIC] [TIFF OMITTED] 37294.036

                                  conclusions
        The top air pollution problem in U.S. urban areas today is almost
    certainly PM2.5, which is estimated to cost more than
    $100,000 per ton in health costs. A major source of PM2.5
    emissions in urban areas is diesel engine exhaust. Approximately one
    third of these diesel emissions are due to on-road vehicles and about
    two-thirds are due to off-road equipment. Off-road equipment in urban
    areas is a particular problem, because it gives off exhaust at ground
    level, frequently near large groups of people.
        Diesel retrofit technology is currently available that is highly
    effective at reducing PM2.5 emissions. DOCs are well suited
    for retrofitting older off-road vehicles and DPFs are highly efficient
    at reducing these pollutants where new low sulfur diesel fuels are
    available, as is already the case in most urban areas.
        From a cost effectiveness point of view, diesel retrofits are
    superior to almost all current CMAQ strategies, including ride-share
    programs, van-pool arrangements, HOV lanes, traffic signalization, bike
    paths, and all strategies that attempt to modify behavior (like
    encouraging teleworking.) Only emission inspection programs exceed the
    cost effectiveness of diesel retrofits based upon conservative
    assumptions. Expanding the range of CMAQ projects to include diesel
    retrofits for construction equipment and off-road machinery in urban
    areas could be a highly effective way to spend public monies.

                               List of References
        California EPA Air Resources Board, Risk Reduction Plan to Reduce
    Particulate Matter Emissions from Diesel-Fueled Engines and Vehicles,
    October 2000.
        California EPA Air Resources Board, ``Staff Analysis of PM Emission
    Reductions and Cost-Effectiveness,'' September 2002.
        Diesel Technology Forum, ``The Benefits of Diesel Retrofits,'' (See
    http://dieselforum.org/retrofit/why--ben.html.)
        Environmental Protection Agency, ``2007 Heavy-Duty Highway Final
    Rule,'' May 2000. (See http://www.epa.gov/otaq/diesel.htm.)
        Environmental Protection Agency, ``EPA Dramatically Reduces
    Pollution from Heavy-Duty Trucks and Buses, Cuts Sulfur Levels in
    Diesel Fuel,'' Environmental News, December 2000.
        McCubbin, Donald and Mark Delucchi, The Health Costs of Motor-
    Vehicle-Related Air Pollution, Journal transport Economics and policy,
    September 1999, Vol. 33, Part 3, pp. 253-86.
        South Coast Air Quality Management District (SCAQMD), ``Multiple
    Air Toxics Exposure Study (MATES-II), Final Report, July 2000.
        Transportation Research Board of the National Resources Council,
    The Congestion Mitigation and Air Quality Improvement Program:
    Assessing 10 Years of Experience, 2002.
        Witherspoon, C. ``Perspectives on California's Diesel Retrofit
    Program,'' California EPA Air Resources Board, June 2004.
                                     ______

    Statement of Stuart Nemser, Founder/Chairman, Compact Membrane Systems,
                                      Inc.
        Chairman Voinovich, Senator Carper, members of the committee, I
    thank you for giving me the opportunity to speak here today. I am
    Stuart Nemser, Founder and CEO of Compact Membrane Systems in Delaware.
    I am here to provide the committee with my company's views concerning
    S. 1265, the Diesel Emissions Reduction Act of 2005, and its
    potentially very positive impacts.
        Compact Membrane Systems (CMS) is a spin-off company of E.I. DuPont
    Co., based in Delaware. We currently employ 20 people. CMS has
    successfully commercialized one family of membrane products which
    enhance production of ultra-pure water for the semi-conductor field and
    a second family of products which are used to improve the reliability
    of electrical transformers. We are now developing a family of membrane
    products for reducing NOx emissions from diesel engines.
        I believe the Diesel Emissions Reduction Act will be very helpful
    for companies like mine to commercialize our developing technologies.
    Under the Emerging Technology provisions of the Diesel Emissions
    Reduction Act, the EPA could allocate up to 10 percent of funds every
    year towards the development and commercialization of emerging
    technologies. These funds are to be used to retrofit, re-power, or
    replace a diesel engine for a bus, medium-duty or heavy duty truck,
    marine engine, or locomotive. In addition, S. 1265, requires that the
    EPA Administrator establish a program to promote the use of these
    retrofit technologies. It is my hope that my company will be able to
    take advantage of this provision very soon.
        We began working on our diesel technology because we realized the
    same need you realized, Senators: the need to reduce the pollution from
    the existing fleet of diesel engines. EPA's new regulations will
    require new diesel engines to use low-sulfur fuel and reduce emissions
    by 2007. This has focused the diesel engine community more on
    developing new technologies to incorporate in new engines, not how to
    address the problem of pollution coming from older diesel engines.
    Diesel engines last a long time, many running for 25-30 years. In order
    to reduce air pollution emissions, existing diesel engines need to be
    retrofitted with after-treatment pollution control devices to achieve
    sufficient reductions, thus the purpose of your bill and our business
    opportunity.
        Our diesel membrane system reduces nitrogen oxide, one of the most
    difficult diesel emissions to contend with, by as much as 50 percent
    and with no need to introduce and widely distribute hazardous chemicals
    throughout our country. CMS membranes are ideal for many retrofit
    situations as they can be placed between the existing turbo-charger and
    engine. Since the membrane system is installed at the front end of the
    engine's system and only needs atmospheric air as the feed, our control
    technology does not need any special cooling systems or particular
    levels of sulfur in the fuel.
        Our membrane products work best on high-load and high-power diesel
    engines, so our primary focus has been locomotives, marine engines, and
    power generators. CMS has made great progress to date including
    demonstrations of the membrane technology on highway trucks, locomotive
    engines, power generators, and marine engines. We plan to have
    completed field demonstrations on a locomotive and a ferry in the next
    18 months. If funds are available we will then apply to have the EPA or
    California Air Resource Board (CARB) certify each platform. Air Liquid/
    MEDAL, the largest industrial gas company in the world, actively
    supports this CMS program and encourages the passage of S. 1265. They
    have written a letter expressing their support of S. 1265, which I ask,
    Mr. Chairman, be submitted to the record. Air Liquid/MEDAL is likely to
    supply the commercial membrane modules for this program.
        These diesel engines are both heavy NOx emission emitters and have
    very long diesel engine lifetimes. Thus they represent attractive
    applications under Act S. 1265. Reduction in these diesel NOx emissions
    will be good for states like Delaware that suffer from severe ozone air
    quality problems and the Nation as a whole. In addition retrofitting
    existing diesel engines with energy and emissions improvement
    technologies will extend the life of the engines and in most cases pay
    for itself in a relatively short amount of time.
        The development of new technologies is critical to the long-term
    goal of developing the most cost-effective measures for reducing
    harmful emissions. Without the funding the Diesel Emissions Reduction
    Act would provide, emerging technologies from companies such as ours
    will continue to struggle to fully develop into functioning prototypes
    ready for commercial application. Related to our aging diesel fleet,
    with only a limited number of prototypes seeking production, key
    decision makers will be more inclined to delay implementation of
    emission reduction technology or favor technologies that are already
    certified by EPA or California Air Resource Board and therefore have
    lower initial costs but may have higher long term costs. If allowed,
    this later approach permits continued pollution and ensuing health
    problems.
        At CMS we feel we are on the cusp of full commercialization, and
    are currently working with our customers to begin larger
    demonstrations. Unfortunately, certification of specific engine
    platforms is very expensive. Also, at our pre-commercial stage, costs
    of prototype system manufacture are significantly higher than at the
    later commercial stages. Without the funds your bill contemplates for
    emerging technologies, it will be difficult for CMS to pursue our
    diesel engine program in a timely and effective manner.
        I understand and appreciate that your bill is not a research bill.
    The focus of your bill is to get pollution control equipment on the
    ground and cleaning up the air. However, I applaud your vision to
    realize that there are a lot of possibilities to do more with the
    development of new technologies. I am looking forward to competing for
    these funds, and giving my company an opportunity to help advance
    diesel engine technology in this country. CMS and other companies will
    be able to pursue the best technologies to reduce emissions not only in
    all new engines, but also in existing engines if the Diesel Emissions
    Reduction Act is passed. The Act will allow our company and others to
    drive forward emerging technologies to be available in the short-term
    while allowing us to meet our long-term financial and regulatory goals.
        Passage of the Diesel Emissions Reduction Act will be a significant
    step in the right direction toward controlling the harmful effect of
    NOx, particulate matter, and sulphur dioxide on the environment. We at
    Compact Membrane Systems fully support this bill and the financial
    assistance it will afford emerging technologies to develop and become
    certified with the EPA and the California Air Resources Board. The
    diesel emissions problem is a national problem that is in need of
    federal legislation and funding, and I urge you to pass the Act on
    behalf of Compact Membrane Systems, Delaware, and the entire nation.
    Thank you.
                                     ______

           Statement of Jon Hemingway, President & CEO, Carrix, Inc.
        Chairman Voinovich, members of the subcommittee, and staff, thank
    you for the opportunity to submit these comments as you consider S.
    1265, a bill that will make grants and loans available to States and
    other organizations to improve air quality by reducing emissions from
    diesel engines. We find S. 1265 to be very encouraging and support its
    enactment. This legislation represents a comprehensive, first-time
    opportunity for the Federal Government to work with non-profit
    organizations or other qualified entities identified in the bill to
    improve air quality at our nation's ports by facilitating the phase out
    of obsolete diesel engines.
        With your permission, I would ask that the following comments be
    included in the hearing record.
                                  carrix, inc.
        My name is Jon Hemingway, and I am the President & CEO of Carrix,
    Inc., a Seattle based corporation and the parent company of SSA Marine
    and other affiliated entities. Carrix reflects the breadth of service
    offerings that the company and its affiliates are able to provide our
    customers around the world. While the roots of the company lie in
    marine terminal services, we have capabilities that extend across all
    aspects of transportation gateway solutions such as RMS (Rail
    Management Services), the world's largest operator of intermodal rail
    terminals and Tideworks, one of the world's leading supplier of marine
    terminal software solutions that help companies maximize terminal
    operations and gain unprecedented efficiencies.
                                ssa marine, inc.
        SSA Marine operates more cargo terminals at seaports than any other
    privately held company in the world. Our operations and its diversity
    of cargo, volumes and commercial models and ports are unprecedented in
    our industry. We are also the largest marine terminal operator in
    Southern California, a non-attainment area that I will soon address.
        SSA Marine provides a full spectrum of services associated with
    marine and rail terminal operations. We offer our customers flexible
    and comprehensive expertise.

        The breadth of the company's service offerings include:

              Terminal management
              Stevedoring
              Rail yard operations
              Project development management
              Technology system design, installation and training
              Equipment procurement
              Marketing support
              Trucking
              Warehousing
              Off-dock yard operations
              Feasibility studies
                     the ports of los angeles & long beach
        SSA Marine is the largest terminal operator in the United States
    with several terminals in the Ports of Los Angeles and Long Beach, the
    largest gateway for international trade to the United States.
        To provide members of the subcommittee a better appreciation of the
    magnitude of these ports, the Port of Los Angeles encompasses 7500
    acres, 43 miles of waterfront and includes 26 cargo terminals,
    including dry and liquid bulk, container, break-bulk, automobile, and
    other facilities. Last year, marine terminal operators moved a record
    breaking 7.4 million containers through the port.\1\
    ---------------------------------------------------------------------------
        \1\Estimates and Information from the Port of Los Angeles.
    ---------------------------------------------------------------------------
        The Port of Long Beach is also one of the nation's busiest
    seaports, and it too is a leading gateway for trade between the United
    States and other trading partners. Approximately 5.7 million containers
    moved through the port last year. In fact, container throughput has
    increased by 175 percent since 1990.\2\
    ---------------------------------------------------------------------------
        \2\Estimates and Information from the Port of Long Beach.
    ---------------------------------------------------------------------------
        In short, the ports of Long Beach and Los Angeles would represent
    the world's fifth busiest port complex in 2004 if combined, just behind
    Hong Kong (21.9 million containers), Singapore (20.6 million), Shangai
    (14.6 million), and Shenzen (13.7 million).
        Fifty to seventy percent of the freight coming into these two ports
    is in transit to United States destinations outside of the immediate
    port region and the state of California.\3\ This fact perhaps best
    underscores the important contribution California ports provide the
    nation as they act as a significant gateway for the foreign commerce of
    the United States.
    ---------------------------------------------------------------------------
        \3\Estimates from the Port of Long Beach and from SCAG study on
    elasticity of port demand, Spring 2005.
    ---------------------------------------------------------------------------
        Given the growing volume of containers managed at these ports and
    the number of truck moves per day at marine terminals, port pollution
    and air quality represent a growing concerning within the port
    community. We share that view. Many marine terminal operators have
    already initiated individual efforts to replace obsolete, and retro fit
    more current, diesel engines used at their terminals, and while
    additional assets might need to be replaced, they are not the primary
    source of air pollution at ports.
        Solutions to satisfactorily curb pollution from trucks at ports
    have heretofore proven to be somewhat elusive. Diesel engines in on-
    the-road trucks operating primarily within ports represent a measurable
    pollution source, and we believe the federal government shares a degree
    of responsibility to identify and fund a satisfactory resolution to
    this problem. We further believe a voluntary, incentive-based
    initiative is the most cost-effective, expedient, near-term strategy
    that will provide measurable results. The last thing we want is a
    burdensome, punitive requirement that will unfairly burden drivers.
        As I will explain, port truck drivers are enormously important to
    the efficient movement of containers and represent a critical component
    to the supply chain.
         international trade, the supply chain, and port truck drivers
        The Ports of Los Angeles and Long Beach are what we refer to in the
    industry as ``landlord'' ports, meaning they lease facilities to marine
    terminal operators (MTO's), which are private entities.
        MTO's have a contractual obligation with the ocean carrier to
    provide a wide array of services that include loading and off loading
    international containers from vessels. Imported containers taken off
    ships are typically transferred to trains (when marine terminal
    operators provide on-dock rail capability) or they are put on a chassis
    where they will be trucked to a distribution center or inland rail
    depot. They would then be railed to there destination.
        The trucking services necessary for port operations are
    predominately provided by independent owner operator drivers. These
    drivers are retained by and ultimately provide trucking services to the
    cargo interest (or shippers), the entity that has title to the contents
    of the container.
        By and large, port trucker drivers (or drayage drivers, as they are
    referred to in the industry) are generally not employees of the MTO.
    Inasmuch as they are independent companies, marine terminal operators
    do not dictate the year, model, engine, or type of truck used by
    drivers calling their terminals.
        It is especially important for the subcommittee to understand that
    port truck drivers are predominately people who have recently
    immigrated to the United States, are characterized by low income
    earning power, and generally lack the financial capability to change
    out obsolete truck engines and finance new, more efficient models
    without federal and/or state assistance. This is one reason why S. 1265
    is timely and much needed.
        The cost and process to enter the port trucker driver market is
    easy and relatively inexpensive. Independent owner-operator drivers are
    sometimes operating trucks that have been sold and/or acquired three or
    four times prior to that power unit finding its way to the port.
        As short haul units, these trucks can therefore include the oldest
    and dirtiest engines and are the last to be scrapped after the trucks
    useful life. As you undoubtedly suspect, these power units have a much
    higher level of NOx and PM level than more modern trucks. Therefore,
    trucks such as these, and to some extent other off-the-road diesel
    engines used by terminal operators, represent a portion of port
    pollution commonly identified (the ship being the other component).
        In our opinion, replacing the older, dirty trucks driven by many
    owner operators involved in port activity has by far the highest impact
    on air quality per dollar spent of any of the mitigation measures under
    consideration by our industry and policy makers. Given the diverse
    ownership and deregulated nature of port trucking, a voluntary,
    incentive based federal assistance program will offer the public the
    most practical and expedient way to see a measurable and immediate
    opportunity to reduce port air pollution at relatively modest cost.
                       technical suggestions to the bill
        We would recommend the following technical changes to enhance the
    intent and understanding of S. 1265:
        Section 2, Definitions, Eligible Entity, Subpart (3) (A)--add to
    the following text a port authority or regional, State, local, or
    tribal Agency with jurisdiction over transportation or air quality;
    and--
        Public port agencies can play a useful and important regional role
    on matters affecting transportation. Enacted by state governments, many
    of port authorities are governed by an elected and/or appointed body,
    such as a port commission. They may or may not necessarily fall under
    the definition of a State Agency with jurisdiction over transportation,
    and we therefore believe it would be helpful to clarify this matter by
    adding them to the bill.
        Section 3, Subpart (a)(2)--add to the following text--diesel
    emission exposure, particularly from fleets, off the road equipment
    used in ports, or trucks operating in areas designated by the
    Administrator as port air quality areas.
        Section 3, Subpart (b)(2)--add to the following text--the
    Administrator shall provide not less than 50 percent of funds available
    for a fiscal year under this section to eligible entities for the
    benefit of public fleets or fleets calling public property such as port
    authorities.
        Section 3, Subpart (c)(2)(b), Inclusions--add--the quantity of air
    pollution produced by the diesel fleet, off the road equipment use in
    ports, or diesel trucks owned and operated by independent drivers call
    ports served by the eligible entity.
        Section 3, Subpart (c)(3)(c)(iii)--add--that receive a
    disproportionate quantity of air pollution from a diesel fleet
    including on and off the road diesel engines used in ports--rail yards,
    and distribution centers.
        Section 3, Subpart (d)--add a new section identified as (c)
    incremental costs associated with a new vehicle if a retrofitted engine
    is not cost-effective.
        Section 3, Subpart (d)(2)--delete in its entirety. This section of
    the bill is particularly confusing, appears counterproductive to the
    intent of the bill, and would appear to facilitate litigation.
        Section 4(c) (3) (A)--add at the end of the sentence--matching
    contributions may include cash, in-kind services, or plant and
    equipment associated with enacting this program.
                         ssa marine support for s.1265
        SSA Marine and the National Association of Waterfront Employers
    (NAWE) of which SSA Marine is a member, have been diligently working to
    identify legislation such as this program. We are very encouraged by S.
    1265 and support its enactment.
        Improvement to the air quality of port communities is an important
    endeavor. Meaningful change in interstate and international cargo
    transport cannot occur without federal coordination and assistance so
    that progress can be made among private industry and federal, state,
    and local authorities.
        With S. 1265 being enacted, the nation's seaports have the first-
    time opportunity to see the benefits of what we hope will be a
    successful, incentive based program that promises to have measurable
    results that will improve air quality, particularly at the ports of Los
    Angeles and Long Beach. We think this is an important measure to
    continue the vital role these ports play to our nation's trade while
    mitigating adverse impacts on local communities.
        Thank you for the opportunity to submit these views. We would
    encourage members of the subcommittee, full committee, or staff to see
    firsthand some of the things one of our terminals and see what marine
    terminal operators are doing to minimize truck congestion.
                                     ______

     Statement of Staci R. Putney McLennan, Director of Clean Air Programs
                       of the Ohio Environmental Council
        The Ohio Environmental Council (OEC) appreciates the opportunity to
    submit this written testimony to the committee, and thanks Senator
    Voinovich for submitting the testimony into the record. The mission of
    the Ohio Environmental Council is to inform, unite, and empower Ohio
    citizens to protect the environment and conserve natural resources. The
    Ohio Environmental Council works across the state to unite Ohio's
    conservation and environmental community to keep watch of Ohio's air
    and water quality, take action to better environmental policies, and
    make change for a greener tomorrow.
        The Ohio Environmental Council is pleased to offer its hearty
    support for the Diesel Emissions Reduction Act of 2005. This landmark
    legislation will help clean-up one of Ohio's and the nation's largest
    sources of dangerous air pollution: diesel engines.
        This legislation is significant for two major reasons. First,
    emissions from heavy-duty diesel engines contribute to poor air
    quality--threatening public health, degrading our natural environment,
    and contributing to failure to meet federal clean air standards.
    Second, the U.S. EPA's clean diesel rules only address newly
    manufactured engines, leaving us with a large proble--namely 11 million
    existing engines which will not turnover for a few more decades.
        Fortunately, a broad coalition recognizes these issues and has come
    together to support the Diesel Emissions Reduction Act of 2005. The
    Ohio Environmental Council is happy to be part of such a diverse group
    of stakeholders championing this bill, including industry, the
    environmental community, air pollution control officials and State and
    local governments.
        Diesel exhaust can be more than just unpleasant; it can be
    hazardous to people's health. According to U.S. EPA, diesel exhaust not
    only contains ozone and fine particulate precursors, but over 40
    chemicals listed as hazardous air pollutants (HAPs), some of which are
    known or probable human carcinogens including benzene and formaldehyde.
    In fact, numerous studies have suggested that pollution from diesel
    engines contributes to serious public health impacts including asthma
    attacks, respiratory disease, heart attacks, cancer and preventable
    deaths. A recent report by the Clean Air Task Force, which used U.S.
    EPA's own methodology, determined that diesel particulate pollution
    contributes to an estimated 20,000 preventable deaths in the U.S. each
    year. Ohio ranked 8th in the nation for health impacts from diesel
    pollution with 769 preventable deaths, over 14,400 asthma attacks and
    nearly 84,000 lost work days each year.
        Unlike other sources of air pollution, diesel emissions are of
    particular concern because they are released at ground-level where they
    are easily inhaled by people. Some populations are more at risk than
    others, such as children, the elderly and people with respiratory
    ailments. Children breathe in 50 percent more air per pound of body
    weight than an adult, making their developing lungs particularly
    vulnerable to the effects of air pollution. The average school bus ride
    time for a student is 1 hour each school day. Other populations who
    live near intersections, truck and bus depots, highways or construction
    sites are also at increased risk. Occupationally exposed workers such
    as truck and bus drivers may spend as much as 8 or more hours each day
    around operating diesel engines. All of these populations feel the
    effects of diesel emissions regardless of whether or not they also live
    in a county failing federal air standards.
        Diesel exhaust also degrades our natural environment, contributing
    to acid rain, haze and climate change. Black carbon from diesel
    emissions may have a significant global warming impact, perhaps similar
    to that of carbon dioxide. But, black carbon has a shorter life span in
    our atmosphere which means reductions in these emissions may provide a
    more immediate climate benefit.
        Emissions from diesel engines are a serious contributor to poor air
    quality. One-third of Ohio's counties, urban and rural, are failing
    federal clean air standards for ozone and fine particulates, pollutants
    to which diesel engines are significant contributor. Much of the nation
    faces a similar burden with an estimated 65 million people living in
    areas exceeding the fine particulate standard and 111 million people
    living in areas exceeding the 8-hour ozone standard. States have a
    limited time span to recommend plans and adopt strategies for meeting
    these important standards. This legislation could assist such areas
    with financial incentives to reduce emissions from fleets helping them
    achieve attainment by the required deadlines.
        Diesel engines are long-lived, efficient pieces of machinery,
    making them the workhorses of industry. Yet, it is this very reason
    that diesels can be such a problem for air quality planners and the
    public--they last for decades, operating at outdated emissions
    standards. It is this ``legacy fleet'' that is of concern. There are
    over 11 million existing diesel engines at work today. U.S. EPA's new
    diesel rules establish emissions standards for newly produced engines,
    but have little effect on existing engines besides reductions in the
    sulfur content of diesel fuel. The air quality and public health
    benefits of the new clean diesel rules for on-road and off-road engines
    may help in the long run, but will fall short of helping states meet
    the 2010 timelines for attainment. This legislation could help fill
    that gap by providing a dedicated funding source and the incentives
    necessary to assist in efforts to reduce emissions from the existing
    fleet of diesel engines today.
        The Ohio Environmental Council has worked with various stakeholders
    over the years on clean diesel initiatives, from school district fleet
    managers to policymakers to planning organizations. One theme is
    resoundingly similar; there is a distinct lack of funding available to
    help fleets begin clean-up projects. Cash-strapped school districts and
    transit authorities have little extra revenue to focus on retrofits,
    despite the benefits to the riders and community. They need assistance
    in the form of grants, loans and other incentives so they can begin
    these projects to help protect public health and meet air quality
    standards.
        Unlike many complex environmental problems, cleaning up diesel
    engines has a very clear solution. Fleets can employ the Four-R's of
    diesel clean-up: retrofit with pollution controls, replace older
    engines, refuel with cleaner fuels and reduce idling to achieve as much
    as 90 percent reductions in emissions. States and local communities and
    fleets could greatly benefit from the Federal and State-based grant and
    loan programs generated by the Diesel Emissions Reduction Act of 2005.
    The state portion of the program is vital to provide incentives for
    states to create their own dedicated programs to reduce diesel
    emissions.
        U.S. EPA estimates the Diesel Emissions Reduction Act of 2005 could
    leverage an additional $500 million, resulting in a net benefit of
    almost $20 billion with a cumulative reduction of nearly 70,000 tons of
    particulate matter. The benefit-cost ratio of such a program is 13 to
    1.
        The Ohio Environmental Council supports the full funding and
    enactment of the Diesel Emissions Reduction Act of 2005. This program
    could make a significant contribution to improving the nation's, as
    well as Ohio's, air quality--protecting public health and our natural
    environment.
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      20/20 Vision, American Bottom Conservancy, American Lung
     Association, American Lung Association of New York State,
         Inc., Breakthrough Technologies Institute, Center for
    Neighborhood Technology, Clean Air Task Force, Clean Water
        Action New England, Environmental Defense, Environment
        Northeast, Group Against Smog and Pollution, League of
      Conservation Voters, Manufacturers of Emissions Controls
          Association, Natural Resources Defense Council, Ohio
     Environmental Council, Sierra Club, Southern Alliance for
       Clean Energy, Union of Concerned Scientists, U.S. PIRG,
                                              Valley Watch Inc.

                                                         June 20, 2005.
        Dear Senator,
        The undersigned groups are writing to express their support for the
    Voinovich/Carper bill, S. 1265, the Diesel Emissions Reduction Act of
    2005.
        As you know, diesel engines emit nearly 40 toxic substances, smog-
    forming oxides of nitrogen, and fine particulate matter. These
    pollutants are associated with serious health effects including, heart
    attacks, asthma attacks, cancer, reduced lung function, and premature
    death. The U.S. Environmental Protection Agency's regulations
    establishing new standards for diesel buses and freight trucks and new
    nonroad diesel equipment will slash diesel emissions by more than 80
    percent from 2000 levels, ultimately saving 20,000 lives a year in
    2030.
        But because these Federal standards apply only to new diesel
    engines and because diesel engines are so durable, the high levels of
    pollution from existing diesel sources will persist throughout the
    million-mile lifetimes of the engines in service today. EPA estimates
    that 11 million existing diesel engines can benefit from retrofitting
    and modernization to further reduce pollution. S. 1265 provides pivotal
    funding through national and state-level grant and loan programs for
    the voluntary retrofitting of diesel engines, giving nonattainment
    areas another tool to help them restore healthy air.
        Senate bill 1265, the Diesel Emissions Reduction Act, will help
    speed the transition to a cleaner fleet of diesel vehicles and help all
    Americans breathe easier. The undersigned groups urge you to support
    this bill.
                Sincerely,

                        Tom Z. Collina, Executive Director, 20/20 Vision;
                                Kathy Andria, President, American Bottom
                                Conservancy; Paul G. Billings, Vice
                                President National Policy & Advocacy;
                                American Lung Association; Peter M.
                                Iwanowicz, Vice President and Chief Policy
                                Officer, American Lung Association of New
                                York State, Inc.; Bill Vincent, General
                                Counsel, Breakthrough Technologies
                                Institute; Jacky Grimshaw, V.P. Policy,
                                Transportation & Community Development,
                                Center for Neighborhood Technology; Conrad
                                G. Schneider, Advocacy Director, Clean Air
                                Task Force; Cynthia Luppi, Organizing
                                Director, Clean Water Action New England;
                                Mark MacLeod, Director, Special Projects,
                                Environmental Defense; Michael D. Stoddard,
                                Deputy Director and Attorney, Environment
                                Northeast; Rachel Filippini, Executive
                                Director, Group Against Smog and Pollution,
                                (GASP); Tiernan Sittenfeld, Director,
                                Policy and Lobbying, League of Conservation
                                Voters; Dale L. McKinnon, Executive
                                Director, Manufacturers of Emission
                                Controls Association; Richard Kassel,
                                Director, Clean Fuels & Vehicles Project,
                                Natural Resources Defense Council; Staci
                                Putney McLennan, Director of Clean Air
                                Programs, Ohio Environmental Council; Nat
                                Mund, Senior Washington Representative,
                                Sierra Club; Anne Gilliam, Diesel Campaign
                                Coordinator, Southern Alliance for Clean
                                Energy; Michelle Robinson, Washington
                                Director, Clean Vehicles Program, Union of
                                Concerned Scientists; Emily Figdor, Clean
                                Air Advocate, U.S. PIRG; John Blair,
                                President, Valley Watch, Inc.