[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


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                            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?ususaUnited%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.
  

                                  
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