[Senate Hearing 109-1011]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 109-1011
 
IMPLEMENTATION OF THE EXISTING PARTICULATE MATTER AND OZONE AIR QUALITY 
                               STANDARDS

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

                                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

                               __________

                           NOVEMBER 10, 2005

                               __________

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


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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

                           NOVEMBER 10, 2005
                           OPENING STATEMENTS

Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..     4
DeMint, Hon. Jim, U.S. Senator from the State of South Carolina..     6
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...    10
Isakson, Hon. Johnny, U.S. Senator from the State of Georgia.....     9
Jeffords, Hon. James M., U.S. Senator from the State of Vermont, 
  prepared statement.............................................    46
Lautenberg, Hon. Frank, U.S. Senator from the State of New Jersey     7
Voinovich, Hon. George V., U.S. Senator from the State of Ohio...     1

                               WITNESSES

Moret, Stephen, president and CEO, Baton Rouge Area Chamber of 
  Commerce.......................................................    34
    Prepared statement...........................................   287
Olens, Sam, chairman, Cobb County Board of Commissioners, 
  Marietta, GA...................................................    30
    Prepared statement...........................................   192
Wehrum, William, Acting Assistant Administrator, Office of Air 
  and Radiation, U.S. Environmental Protection Agency............    12
    Prepared statement...........................................    48
    Responses to additional questions from:
        Senator Jeffords.........................................    60
        Senator Lautenberg.......................................    57
        Senator Lieberman........................................    54
Werner, James, director, Division of Air and Waste Management, 
  Delaware Department of Natural Resources and Environmental 
  Control........................................................    32
    Prepared statement...........................................   222

                          ADDITIONAL MATERIAL

Article, Daily Report for Executives, No. 215, Tuesday, November 
  8, 2005, Environment Industry Report Says Delaying Ozone 
  Deadline Would Reduce Impact of 8-Hour Standard................    37
Chart, Days in Violation of Ozone Standard in Atlanta............   195
Letters from:
    Diesel Emission Reduction Program Supporters.................    24
    National Governors' Association, National Conference of State 
      Legislatures, National Association of Counties, National 
      League of Cities...........................................    23
Lists:
    Major Mobile Source Pollution Control Measures Implemented in 
      Atlanta....................................................   219
    Major Sources EGU's in the CAIR Region that EPA Estimates 
      will not Have Both a Scrubber and a SCR in 2010, 2015 and 
      2020 under CAIR............................................62-185
Memorandum, Federal RFG Impact on the Atlantic Area..............   196
Presentation, National Association of Regional Councils 38th 
  Annual Conference, June 2004..................................199-218
Report, The Economic Impacts of Attaining the 8-Hour Ozone 
  Standard: Philadelphia Case Study, NERA Economic Consulting, 
  September 2005................................................230-286
Resolution by the ARC Requesting Legislative Relief and a Time 
  Extension from Federal RFG Requirements........................   196
Statement, Koncelik, Joseph P., director, Ohio Environmental 
  Protection Agency..............................................   291


IMPLEMENTATION OF THE EXISTING PARTICULATE MATTER AND OZONE AIR QUALITY 
                               STANDARDS

                              ----------                              


                      THURSDAY, NOVEMBER 10, 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 9:30 a.m. in 
room 406, Senate Dirksen Building, Hon. George V. Voinovich 
(chairman of the subcommittee) presiding.
    Present: Senators Voinovich, Inhofe, DeMint, Isakson, 
Carper, and Lautenberg.
    Senator Voinovich. The meeting will please come to order.

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

    Good morning and thank you all for coming. Today, we are 
discussing implementation of the existing particulate matter 
and ozone air quality standards. This is the second hearing on 
this important topic, as we held a similar one on April 1, 
2004, before EPA designated 495 counties across the Nation, 38 
in my State of Ohio, as in nonattainment for either one or both 
of the standards. As I stated at that hearing, this is not 
about the standards. They are what they are and the counties 
across the country need to meet them.
    Our focus must be on meeting standards in a way that does 
not further degrade our competitiveness. We are at a 
crossroads. The decisions and investments we make today will 
determine the competitiveness of the United States for future 
generations. While innovation and productivity has 
traditionally been the source of our Nation's preeminence, the 
gap between us and the rest of the world is closing quickly.
    Before it is too late, we must put forth a comprehensive 
vision of how we will remain competitive in the global economy. 
Of our challenges, none is more pressing than energy. I would 
like to refer to the fact that we need a second Declaration of 
Independence, energy independence. This entails a national 
commitment to become more independent of foreign sources of 
energy by harmonizing our Nation's energy, environmental and 
economic policies.
    All of these policies play an integral role in the 
implementation of our Nation's air quality standards. This was 
clearly stated by Cincinnati Chamber of Commerce President, 
Michael Fisher at the 2004 hearing.

    ``Our businesses face a confusing series of environmental 
laws and regulations that often lead to miscommunication, 
regulatory uncertainty, lost business investment and even 
higher energy costs. Simply stated, conducting business in an 
area designated as nonattainment is more complicated, more 
time-consuming and costly.''

    As a former Governor who brought all of Ohio's counties 
into attainment, I understand firsthand that these standards 
are an unfunded mandate on our State and local governments and 
we need to do all we can to help them come into compliance. The 
Federal Government needs to let communities know what is 
required of them, even though State implementation plans are 
due in June 2007 and April 2008, the particulate matter rule 
was only proposed this month and the second ozone 
implementation rule was finalized just yesterday.
    The EPA owes an explanation about this delay, because the 
States need these rules earlier. Is it a lack of manpower, or 
has the Agency simply been spending too much time on doing 
analysis of Senator Carper's bill and our manager's amendment 
on Clear Skies?
    Senator Carper. Time well spent.
    [Laughter.]
    Senator Voinovich. EPA's Clean Air Interstate Rule is a 
good effort to help by significantly reducing powerplant 
emissions. But it does not provide the full assistance needed 
by many areas such as those in moderate attainment, like the 
city of Cleveland, OH, where I was the mayor. I met with the 
Ohio EPA Director, Joe Koncelik, several times on this issue 
and would like to insert into the record testimony that he has 
provided. Without objection, it is ordered.
    [The referenced document follows on page 291.]
    Senator Voinovich. He continues to emphasize that the 
Cleveland area cannot attain, and this is an example of many 
other nonattainment areas in the country, the Cleveland area 
cannot attain the ozone standards by its deadline of 2010, but 
could by 2015. He states,

    ``Ohio believe that the current Federal approach to 
improving air quality lacks coherency. The federally mandated 
air pollution control programs are on much longer 
implementation schedules than the deadlines established by U.S. 
EPA for States to meet the 8-hour ozone standard. A better 
balance needs to be struck.''

    In other words, the implementation schedules go out beyond 
2010, but these communities that are not in compliance have to 
comply by 2010. A better balance is desperately needed in 
northeast Ohio and other areas where the economy is already 
struggling. The lack of coherency in our environmental, energy 
and economic policies is having a major impact, with 100,000 
jobs lost in the chemical industry and funding increases 
desperately needed for the LIHEAP program to help the poor.
    Simply put, the chickens have come home to roost. We 
compartmentalize our different policies, failing to recognize 
that like Paul's letter to the Romans, Chapter 12, we are all 
part of the same body. We must start looking at the bigger 
picture and understand that what we do in one area affects 
another area. Enacting multi-emissions legislation would 
provide certain reductions, unlike the legal challenges and 
delays we have seen with EPA rules, and harmonization between 
the attainment dates and Federal air policies would also avoid 
unnecessary harm.
    I thank EPA for their presentation recently to this 
committee on their extensive analysis of the proposals that I 
just referenced. EPA has also finalized new diesel fuel and 
engine regulations to substantially reduce diesel emissions. 
This is going to help nonattainment counties, because on-road 
and non-road diesel vehicles and engines account for roughly 
one-half of the nitrogen oxide and particulate matter mobile 
source emissions nationwide. However, the full impact will take 
time, because the rules address new engines and the estimated 
11 million existing engines have a long life.
    I am so very, very pleased that we were able to, working 
with members of this committee and several other members, to 
introduce the Diesel Emissions Reduction Act. We are hopeful 
that we can get that funded, because I think it is going to 
make a big difference for our country.
    I again thank everyone for attending. I look forward to 
hearing from the witnesses about what's being done or should be 
done to help States and localities. Due to the impact on our 
Nation's competitiveness this matter deserves serious 
attention. I mean, it deserves serious attention.
    I can tell you for sure, I have never seen my economy in my 
State so lousy as it is today. A lot of it has to do with 
energy. The largest natural gas cost that we've ever seen is 
just smashing in on the economy of our State. Somehow we have 
to get all this together. If other States are like mine, we're 
in trouble and we had better get our act together.
    [The prepared statement of Senator Voinovich follows:]
    Statement of Senator George V. Voinovich, U.S. Senator from the 
                             State of Ohio
    The hearing will come to order. Good morning and thank you all for 
coming.
    Today, we are discussing implementation of the existing particulate 
matter and ozone air quality standards. This is the second hearing on 
this important topic as we held a similar one on April 1, 2004 before 
EPA designated 495 counties across the Nation 38 in Ohio as in 
nonattainment for either one or both of the standards. As I stated at 
that hearing, this is not about the standards. They are what they are 
and counties across the country need to meet them.
    Our focus must be on meeting the standards in a way that does not 
further degrade our competitiveness. We are truly at a crossroads. The 
decisions and investments we make today will determine the 
competitiveness of the United States for future generations. While 
innovation and productivity has traditionally been the source of our 
Nation's preeminence, the gap between us and the rest of the world is 
closing quickly.
    Before it is too late, we must put forth a comprehensive vision of 
how we will remain competitive in the global economy. Of our 
challenges, none is more pressing today than energy. We need a Second 
Declaration of Independence energy independence. This entails a 
national commitment to become independent of foreign sources of energy 
by harmonizing our Nation's energy, environmental, and economic 
policies.
    All three of these policies play an integral role in the 
implementation of our Nation's air quality standards. This was clearly 
stated by Cincinnati Chamber of Commerce President Michael Fisher at 
the 2004 hearing: ``our businesses face a confusing series of 
environmental laws and regulations that often lead to miscommunication, 
regulatory uncertainty, lost business investment, and even higher 
energy costs Simply stated, conducting business in an area designated 
as nonattainment is more complicated, more time-consuming, and more 
costly.''
    As a former Governor who brought all of Ohio's counties into 
attainment, I understand firsthand that these standards are an unfunded 
mandate on our State and local governments. We need to do all that we 
can to help.
    The Federal Government needs to let communities know what is 
required of them. Even though State implementation plans are due in 
June 2007 and April 2008, the particulate matter rule was only proposed 
this month and the second ozone implementation rule was finalized just 
yesterday. EPA owes us an explanation about this delay because States 
need these rules earlier.
    EPA's Clean Air Interstate Rule is a good effort to help by 
significantly reducing powerplant emissions, but it does not provide 
the full assistance needed by many areas such as those in moderate 
nonattainment like Cleveland.
    I have met with Ohio EPA Director Joe Koncelik several times on 
this issue and would like to insert into the record testimony that he 
has provided. He continues to emphasize that the Cleveland area cannot 
attain the ozone standard by its deadline of 2010 but could by 2015. He 
states, ``Ohio believes that the current Federal approach to improving 
air quality lacks coherency. The federally mandated air pollution 
control programs are on much longer implementation schedules than the 
deadlines established by U.S. EPA for States to meet the 8-hour ozone 
standard. A better balance needs to be struck.''
    The lack of coherency in our environmental, energy, and economic 
policies is having a major impact on families and businesses--
especially in Northeast Ohio. We must start looking at the bigger 
picture and understand that what we do in one area affects another.
    Enacting multi-emissions legislation would provide certain 
reductions--unlike the legal challenges and delays we have seen with 
EPA--rules and harmonization between the attainment dates and Federal 
air policies so we avoid unnecessary harm. I thank EPA for their 
presentation recently to this committee on their extensive analyses of 
the different proposals. I hope that this now allows my good friend and 
Ranking Member to offer a counterproposal like Chairman Inhofe and I 
did so we can move forward.
    EPA has also finalized new diesel fuel and engine regulations to 
substantially reduce diesel emissions. This will help nonattainment 
counties because on-road and non-road diesel vehicles and engines 
account for roughly one-half of the nitrogen oxide and particulate 
matter mobile source emissions nationwide. However, the full impact 
will take time because the rules address new engines and the estimated 
11 million existing engines have a long life.
    That is why I introduced with several members of this committee the 
Diesel Emissions Reduction Act to establish voluntary national and 
State-level grant and loan programs to promote the reduction of diesel 
emissions. The easy part was getting this broadly supported bill passed 
as part of the energy bill--now we need to get it funded.
    I am pleased to report that an amazing coalition has come together 
to push for $200 million in fiscal year 2007 and for consolidating all 
of the diesel emissions reductions programs under this one. I would 
like to insert into the record letters sent to the President from the 
major State and local groups and over 200 environmental, industry, 
public, and labor groups.
    I again thank everyone for attending, and I look forward to hearing 
from the witnesses about what is being done or should be done to help 
States and localities. Due to the impact on our Nation's 
competitiveness, this matter deserves serious attention.
    Thank you.

    Senator Voinovich. Senator Carper.

 OPENING STATEMENT OF HON. THOMAS R. CARPER, U.S. SENATOR FROM 
                     THE STATE OF DELAWARE

    Senator Carper. Mr. Chairman, thank you for calling this 
hearing, and to each of our witnesses, thank you for joining 
us. I especially want to welcome Jim Werner, who heads up the 
Division of our Department of Natural Resources and 
Environmental Control, which deals with air and waste 
management. We look forward to his testimony in a few minutes, 
along with that of each of our other witnesses.
    How many counties does Ohio have?
    Senator Voinovich. Eighty-eight.
    Senator Carper. I think you said they are all in 
attainment?
    Senator Voinovich. They were in attainment. Under the new 
rules, 38 of them are not.
    Senator Carper. All right. We only have three counties in 
Delaware and none of our counties are in attainment for ozone. 
In Newcastle County, which is in northern Delaware, where most 
of our people live, is in nonattainment for particulate matter.
    When I was Governor, and we were Governor about the same 
time, those were great years.
    Senator Voinovich. Where?
    [Laughter.]
    Senator Carper. Not because we were Governor. They were 
good times for our country.
    In fact, he has heard me say this a million times, but when 
he was chairman of the National Governors Association, I was 
vice chairman, and when he was chairman of Jobs for America's 
Graduates, I was his vice chairman. Now that he is Chairman of 
the subcommittee, I am still his vice chairman. I am sort of 
getting tired of being second banana.
    [Laughter.]
    Senator Carper. But no, he is a good guy to be second 
banana to.
    But when I was Governor, in my State we wrestled, as 
Governor Voinovich did in his State with what we could do in 
our respective States to reach attainment. Unfortunately, while 
there were some steps that we could take to help ourselves, the 
main source of pollution in my State, my little State of 
Delaware, comes from beyond our borders.
    Today, we are going to discuss the progress that is being 
made across our Nation in reaching our clean air goals. It is 
important to remember that there are many places like Delaware 
that need areas upwind of us to clean up their air so that we 
can cleanup our own. The standards that we are going to discuss 
today were issued in 1997, as we know. Here we are in 2005, 
finally discussing implementing those standards. Now some are 
suggesting that we should delay implementing those standards 
even longer.
    I believe that we have waited long enough. Under our 
current schedule, the first marginal areas will be required to 
reach attainment in 2007. That is 10 years after the standards 
were set. Areas with even more severe pollution will be 
required to reach attainment between 2010 and 2021.
    I believe we have delayed clean air far too long, and it is 
time to start seriously addressing it.
    Over the past 10 years, we have learned more and more about 
the significant effects on public health from ozone and 
particulate matter pollution. The longer we postpone reducing 
this pollution, the longer we suffer. According to EPA's Web 
site, these national ambient air quality standards are, I think 
this is a quote, ``are set to protect public health, including 
the health of sensitive populations such as asthmatics, 
children and the elderly.''
    I know a lot of people want to discuss the costs associated 
with attaining those standards, and meeting them is going to be 
hard. I appreciate those concerns. But the cost of protecting 
the public health is far less than the cost of breathing dirty 
air.
    Last, I would like to assert that many of the costs 
associated with reaching attainment can be averted if State and 
local officials are given enough time to develop their 
implementation plans. States have a broad range of tools to use 
to develop our SIPS. The more time that we are given the more 
creative we can be.
    Yesterday EPA finalized its rules to provide States with 
the guidance needed to meet the ozone air quality standards. 
They have yet to finalize their guidance for States to meet the 
particulate matter standards.
    I believe EPA has taken too long getting these rules in 
place. I know there are extenuating circumstances. But I hope 
that EPA will prove useful and give States the tools necessary 
to meet the current attainment deadlines.
    Thanks very much, Mr. Chairman.
    Senator Voinovich. Thank you.
    Senator DeMint.

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

    Senator DeMint. Thank you, Mr. Chairman. I appreciate the 
opportunity to speak, and I appreciate our witness, Mr. Wehrum.
    I want to ventilate just a little bit, if I can. I warned 
our witness that I was somewhat frustrated, because as I travel 
around the State and the country, increasingly I hear from 
businesses the question, do you even want us to do business in 
the United States of America. It is almost like we are putting 
signs on our beaches, go do business somewhere else. With our 
litigation system, our taxation system and particularly our 
regulatory system, we are making it increasingly difficult for 
America to be competitive in a global economy.
    There is no Agency that comes up more than the EPA. I have 
heard often in my State that a company that wants a new 
distribution center or a new plant could be producing in China 
before they even got a permit to break ground in my State. That 
sometimes involves the EPA, Army Corps, or other agencies.
    The quality of our air is certainly important, but the 
quality of life involves having a job and being able to make a 
living. I think our agencies have to recognize that you are 
competing as an Agency to be the most efficient regulatory, 
environmental regulatory agency in the world. I just have deep 
concerns about the implementation of the standards. In my 
hometown of Greenville, SC, the EPA has decided that the area's 
compliance with particulate matter, they have decided that we 
are not out of attainment but unclassifiable.
    I understand that we are the only area in the country that 
is called unclassifiable. It is because they are using a 
monitor that does not have the 3 years of data and so instead 
of leaving us in attainment, they said we were unclassifiable. 
The siting of the monitor itself is not even according to the 
EPA guidelines, according to experts. We have been looking at 
this for months and years. We have had regional EPA people come 
in, and they have agreed with us. They have agreed the monitor 
is likely to be out of compliance.
    Instead of working with us, they cite all of the regulatory 
processes that they have to go through, which means they can't 
help us. But they are willing to listen to everything we have 
to say.
    A designation like this to an area like ours, where we were 
heavily textile, we are trying to recreate jobs and attract new 
industry, it just puts a veil of uncertainty over the whole 
area. Who wants to move in a place that might be closed down by 
the Federal Government for development? As we look for 
businesses all over the world, the EPA is holding us back.
    I have a large coalition of businesses in the upstate who 
are willing to do whatever is necessary to fix the problem. 
There is no resistance there. But the problem is, you can't 
tell us what the problem is. We don't know what the pollution 
is. We don't know where it is coming from.
    There is no way that increasing the standards is a 
constructive measure. It would be if you could tell us what the 
problem is, so that we could address it. But your measures are 
only punitive. They are not constructive. They are not 
collaborative, because you can't come and say, here's how to 
fix the problem. So no matter how much time we spend, no matter 
how much money we spend, there is no reason to have a 
measurement system if it is not designed to improve the quality 
of the environment.
    So I have deep, deep reservations about moving ahead with a 
standard which has no constructive value. I appreciate the 
intent of the EPA. But to put more people out of business and 
out of work, using a system that is not improving the 
environment, it is just hurting people and diminishing our 
future, makes absolutely no sense. There is no excuse to use 
procedures and to say that we have to do this because of that, 
when you can change the procedures and if you can't tell us 
what we need to change so that we can have America as a good 
place to do business, with clean air and clean water.
    Thank you, Mr. Chairman.
    Senator Voinovich. Thank you, Senator DeMint.
    Senator Lautenberg.

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

    Senator Lautenberg. Thanks, Mr. Chairman.
    We are kind of at a crossroads here, at least in our 
discussion thus far. That is that to figure out what it is that 
our mission is going to be. I listened respectfully to my 
colleagues, to the Chairman, to be concerned about jobs and 
business, I am concerned about that. I come out of the business 
world, and I know what it means to have people working and to 
be producing revenues.
    I have, for instance, a grandchild who has asthma. When I 
hear him wheezing and I see the panic that crosses his face as 
he reaches, tries to find an inhaler, and my daughter when he 
goes to play games, he is 12 years old, and he is athletic, the 
first thing she does is look for the nearest emergency clinic 
in case he needs help. There is no price in my view that 
wouldn't be worth paying to relieve him and the millions of 
other children who are affected.
    So I want to say that our mission, though it has been 
described differently, is not to kill business. It is not to 
get jobs exported out of our country. It is, we are talking 
about health benefits. We have to have these two things 
coincide in some way to be effective. We have to be concerned 
about what happens with the health of our people, described as 
vulnerable parts of the population.
    Think about what business responsibilities are. Because no 
one can say that business is bad in America. Look at what the 
oil companies just produced. Incredible numbers. Does that mean 
that therefore we ought to ignore their responsibility to help 
us keep the air clean or the water clean? Absolutely not.
    I know when we see the hot weather and emissions from 
automobiles and other sources combine to create high levels of 
ozone, we know what follows, and that is lots more hospital 
admissions with children. Do we tell these kids, well, you 
can't play outdoors on summer days, the air is going to make 
them sick? That's not right. It shows how important it is to 
implement these new health standards for our air.
    Particulate matter in the air is even worse than ozone. It 
kills thousands of people each and every year. When I was a 
boy, my father took me to the silk mill where he worked. He 
said he wanted to introduce me to the fact that he thought that 
was dangerous, it was a place where your health might be in 
danger. My father died when he was 43, he got sick when he was 
42 and suffered with cancer. My father was a health faddist, 
even in those days.
    So when I look at what we have to do to protect the health 
of our people, I look at it with a balance, and it isn't simply 
to say, well, OK, Supreme Court said unanimously that the EPA 
rules were within the realm of reality and need not be changed, 
but rather to be enforced. That is not happening. That is my 
principal concern. It is not, again, intended to be at the 
expense of business or jobs. No, not at all.
    I see other things that accompany this that have to do with 
our national policy on whether or not we shortcut revenues that 
are developed in our country that could be invested in things 
and instead are distributed to those who need it the least, and 
many who don't even want it.
    So we have to get on with meeting reality, and that is, the 
health benefits must be attended to as promptly as we can. It 
is not, say, here is better health and here is the end of the 
jobs in whatever county or whatever town. There are lots of 
jobs around. We don't want to lose those, however, that we 
have.
    When I dial the credit card company and I get a voice 
accented much different than that which I traditionally hear, 
and I know that I'm some place in India, and people are very 
pleasant, but somebody is not working who would have had that 
in this country that would have that job otherwise. That has 
little to do with our environment. It has to do with our 
capacity to compete.
    When I see what General Motors is talking about now, and 
how close they might be to a bankruptcy condition, I say, where 
is the leadership in our companies? Well, I don't want to take 
us too far astray. But I would suggest that we had better look 
very, very closely at the implementation of standards that have 
been developed by EPA and approved by the court and get on with 
figuring out ways how two do that without penalizing the 
industrial sector of our economy.
    Thanks, Mr. Chairman.
    Senator Voinovich. Thank you, Senator Lautenberg.
    Senator Isakson.

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

    Senator Isakson. Thank you, Chairman Voinovich. I 
appreciate the perspective former Governors like yourself and 
Senator Carper bring in terms of dealing with clean air. I 
particularly appreciate the perspective that those who are 
actually on the ground in the local communities doing it bring.
    I am very pleased to welcome Commission Chairman Sam Olens, 
who will be on our second panel. He is the chairman of the 
County Commission in my home county and the chairman of the 
Metropolitan Atlanta Planning Agency, the Atlanta Regional 
Commission. Atlanta has been a poster child for the Clean Air 
Act for many years. So I think he will bring a great 
perspective, and he brings great experience to this particular 
hearing.
    As I have stated in previous hearings, 60 percent of my 
State lives in nonattainment. Twenty-eight counties strung from 
the rural counties of Catoosa and Walker County in the 
mountains of northwest Georgia through metropolitan Atlanta 
down to Muskogee and Columbus, GA have been classified as 
nonattainment. Sixty percent of the population of our 
particular State, 5 million people. Air quality is a 
significant topic in our State, and it is appropriate that the 
committee talk about it today.
    While it is not directly relevant, I guess, to this 
hearing, I would say I am sorry we haven't yet passed Clear 
Skies. Because I think a lot of the things you will hear today 
in the discussions regarding the existing standards and others 
could have been met better by local communities with the type 
of legislation and the type of matrix that was presented by the 
Clear Skies legislation.
    In the interest of time, and in the interest of Mr. Wehrum 
and the others who are here to testify, I will reserve the rest 
of my remarks for questions, and I thank you very much, Mr. 
Chairman, for holding this hearing.
    [The prepared statement of Senator Isakson follows:]
   Statement of Hon. Johnny Isakson, U.S. Senator from the State of 
                                Georgia
    Thank you Chairman Voinovich. I want to commend you and your staff 
for calling this oversight hearing, and for your leadership and your 
persistence on this issue. I would like to welcome Sam Olens to the 
committee. Sam is testifying in our second panel, and is County 
Commission Chairman in my home county of Cobb. He also is the Chairman 
of the Atlanta Regional Commission, which is the Metropolitan Planning 
Organization (MPO) for 18 counties within the 20+ county Atlanta 8-hour 
ozone and fine particulate matter nonattainment areas.
    I have stated this in previous hearings but it bears repeating 
again: 60 percent of my State of Georgia's population lives in a 
nonattainment area. That is over 5 million people. 28 of 159 of our 
counties, including Walker and Catoosa Counties in the mountains, 
through Metro Atlanta, and down to Muscogee County and the Metro 
Columbus area, are in nonattainment for particulate matter. 22 of 159 
counties over the same geographic area are in nonattainment for ozone. 
This hearing is very timely, as air quality is an issue that Georgians 
in my State deal with every day.
    While it is not the topic of the hearing today, in my view a fix 
for these problems would have been passage of the Clear Skies bill. I 
am hopeful that we, as a committee, can come together and bring to the 
floor that legislation which in my opinion is better than current law.
    In the meantime, I will stop here so that we can get to our 
witnesses. I look forward to hearing from the panels, thank Chairman 
Voinovich for his leadership to date, and yield back the balance of my 
time.

    Senator Voinovich. Thank you very much.
    I am glad that the Chairman of our committee has joined us 
today, Senator Inhofe.

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

    Senator Inhofe. Thank you, Mr. Chairman. First of all, I 
appreciate your doing what you are doing. Long before Senator 
Voinovich came to the Senate, when he was Governor of Ohio, he 
was considered to be one of the real leading experts in air 
issues and actually came and testified before our committee as 
Governor.
    I am going to make this very short. I do think it is worth 
saying that something people forget, particularly some of the 
extremists, environmentalist groups that over the last 30 
years, air pollution has been cut by more than one half. We 
have had the statistics as to how many more miles are driven 
and all that. Yet it has been successful, and we should be 
proud of these accomplishments.
    It disturbs me that some of the environmentalist lobbies 
tend to minimize and obscure this fact. Because I realize these 
achievements have not been accomplished without cost. Hundreds 
of billions have been spent. Economies have been slowed and 
jobs have been lost to achieve these pollution cuts. The burden 
that many have paid should not be minimized nor what they have 
accomplished.
    Today, we will hear testimony on two very important air 
quality standards. We will hear testimony on the large number 
of counties that have been designated as nonattainment with 
these standards. While coming into attainment will be 
relatively painless for a few, many areas will experience 
tremendous hardships through slower growth and job 
contractions. For instance, a recent study in Philadelphia 
found that the burden could be enormous. It was conducted by 
the NERA Economic Consulting, a respected firm that does work 
for Government, private sector and the environmental 
communities, and found that meeting its 2010 ozone-attainment 
deadline will lead to a $3 billion reduction in economic output 
in the Philadelphia region in 2011. By 2020 the annual cost to 
the region would be staggering, growing to as much as 60,000 
fewer jobs, $8 billion in reduced output and $6 billion in 
reduced disposable income.
    The study also found that simply moving the deadline to 
2015 would lower the costs to the local community to $100 
million per year and a thousand fewer jobs. This underscores 
that it is important not only what goals we set, but how we 
achieve these goals.
    Mr. Chairman, as a former Mayor, I recognize how important 
it is that mandates imposed through Federal law are achievable 
and flexible in design. I am concerned that such is not the 
case here. As Ohio EPA Director Joe Koncelik points out in 
written testimony, northeast Ohio could barely come into 
attainment by its deadline, even if it shut down all its 
industry and de-populated the area. Given these realities, a 
regulatory deadline appears to be arbitrarily inflexible.
    The Clear Skies legislation that has been blocked by this 
committee would address these issues. We have more analyses on 
multi-emission legislation than we have ever had for any Clear 
Air bill since the Clean Air Act originally passed. In fact, we 
have more information than we did even on the original Clean 
Air Act.
    I hope that with the latest analysis conducted by the EPA, 
we receive a serious proposal to move forward with legislation 
to further our Nation's clean air progress while building 
common sense into the way we achieve it. Thank you very much 
for holding this most significant committee hearing, Mr. 
Chairman.
    [The prepared statement of Senator Inhofe follows:]
      Statement of Senator James M. Inhofe, U.S. Senator from the 
                           State of Oklahoma
    Thank you for holding this subcommittee hearing, Mr. Chairman. This 
hearing will provide us with a better understanding on how we are 
meeting our Nations clean air goals as well as the challenges ahead.
    Progress on cutting air pollution is one of the Nation's 
environmental success stories. Over the last 30 years, air pollution 
has been cut by more than half. Emissions of each of the six criteria 
pollutants identified in the Clean Air Act have been dramatically cut. 
In fact, one of them--lead--has virtually been eliminated.
    We should be proud of these accomplishments. It disturbs me that 
the green lobby tends to minimize and obscure this fact because I 
realize these achievements have not been accomplished without cost. 
Hundreds of billions have been spent, economies have been slowed, and 
jobs have been lost to achieve these pollution cuts. And the burden 
that many have paid should not be minimized, nor what they have 
accomplished.
    Today, we will hear testimony on two very important air quality 
standards. We will hear testimony on the large number of counties that 
have been designated as nonattainment with these standards. And while 
coming into attainment will be relatively painless for a few, many 
areas will experience tremendous hardship through slower growth and job 
contractions.
    For instance, a recent study of Philadelphia found that the burden 
could be enormous. Conducted by NERA Economic Consulting--a respected 
firm that does work for government, private sector and environmental 
community--found that meeting its 2010 ozone attainment deadline will 
lead to a $3 billion reduction in economic output in the Philadelphia 
region in 2011. By 2020, the annual cost to the region would be 
staggering--growing to as much as 60,000 fewer jobs, $8 billion in 
reduced output, and $6 billion in reduced disposable personal income.
    The study also found that simply moving the deadline to 2015 would 
lower the cost to the local economy to $100 million per year and 1,000 
fewer jobs. This underscores that it is important not only what goals 
we set, but how we achieve those goals.
    As a former mayor, I recognize how important it is that the 
mandates imposed through Federal law are achievable and flexibly 
designed. But I am concerned that such is not the case here. As Ohio 
EPA Director Joe Koncelik points out in written testimony, Northeast 
Ohio could barely come into attainment by its deadline even if it shut 
down all of its industry and depopulated the area. Given these 
realities, the regulatory deadlines appear arbitrarily inflexible.
    The Clear Skies legislation that has been blocked in this committee 
would address these issues. We have more analyses on multi-emission 
legislation than we have ever had for any clean air bills since the 
Clean Air Act originally passed. I hope that, with the latest analysis 
conducted by EPA, we receive a serious proposal to move forward with 
legislation to further our Nation's clean air progress while building 
common sense into the way we achieve it.
    Thank you.

    Senator Voinovich. Thank you, Mr. Chairman.
    I just got the statistics. Since 1970, GDP, gross domestic 
product, is up 187 percent, vehicle miles traveled is up 171 
percent, energy consumption is up 47 percent and the population 
is up 40 percent. At the same time, emissions of the six 
criteria pollutants are down 54 percent.
    Senator Inhofe. That is amazing.
    Senator Voinovich. So the fact of the matter is that the 
air is getting cleaner, not dirtier, and the real issue today 
is, how do we harmonize our, in my opinion, our environmental 
laws with our energy and with our economy. That is the 
challenge, I think, that we all have coming before us, 
particularly with the economy right now that we are confronted 
with in the United States.
    We really are lucky to have Mr. Wehrum here today. He has 
been before us before, and we thank you for your courtesy and 
efforts. We are anxious to hear what you have to say, and I 
think you know what the rules of the committee are, if you can 
limit your statement to 5 minutes, we would appreciate it. Your 
entire statement will be put into the record.

 STATEMENT OF WILLIAM WEHRUM, ACTING ASSISTANT ADMINISTRATOR, 
  OFFICE OF AIR AND RADIATION, U.S. ENVIRONMENTAL PROTECTION 
                             AGENCY

    Mr. Wehrum. Thank you, Chairman Voinovich, Chairman Inhofe, 
members of the committee. I appreciate the opportunity to speak 
with you today about the work EPA is doing in partnership with 
States and local governments to reduce air pollution across the 
country.
    The Clean Air Act has given us important and effective 
tools for improving the quality of the Nation's air. Key among 
those tools are the National Ambient Air Quality Standards, 
designed to protect American public health and the environment 
from the most pervasive of pollutants.
    These common pollutants include ozone and fine particles, 
which I will focus on today. With your permission, Mr. 
Chairman, I also would like to submit a longer statement to the 
record.
    Senator Voinovich. Without objection, so ordered.
    Mr. Wehrum. At ground level, ozone is unhealthy to breathe, 
posing the greatest risk to children, asthmatics and adults who 
are active outdoors. Ozone can aggravate asthma, inflame the 
linings of the lungs and reduce a person's ability to breathe 
as easily and deeply as normal. Repeated exposure over time may 
permanently damage lung tissue. Studies also show an 
association between ozone exposure and mortality.
    Exposure to fine particles, those smaller than 2.5 microns, 
is associated with an even wider range of health effects, 
including aggravated asthma and chronic bronchitis, irregular 
heartbeat, nonfatal heart attack and premature death in people 
with heart or lung disease.
    The prevalence and seriousness of these health effects led 
EPA to revise the standards for both ozone and fine particles 
in 1997. While litigation slowed implementation, we are now 
moving forward to bring cleaner air to nonattainment areas 
across the country. As this chart shows, deadlines for reducing 
ozone pollution range from 2007 to 2021, depending on the 
severity of the area's problem. The dates for meeting fine 
particle standards range from 2010 to 2015.
    It is a tight schedule, and we are aware that certain areas 
are concerned about meeting the standards on time, as Senator 
DeMint and others have pointed out today. Let me assure you 
that EPA is committed to assisting States and nonattainment 
areas as they develop their implementation plans, and helping 
them to identify reasonable controls for reducing emissions.
    I will also note there is a process for both standards by 
which areas can seek additional time or request a later 
attainment date.
    We know from experience that bringing areas into attainment 
requires a combination of Federal and State programs and in 
some cases local measures as well. After the 1990 Clean Air Act 
amendments, EPA designated 101 areas as nonattainment for the 
old ozone standards, the 1-hour standards. Today, nearly 80 
percent of those areas meet the standards, an accomplishment 
made possible by ingenuity and hard work by State and local 
governments, industry and citizens and support from EPA in the 
form of regulations that have reduced ozone regionally and 
across the Nation.
    We envision new successes with the 8-hour ozone and fine 
particulate standards. Just 5 years from now, an estimated 82 
percent of the current nonattainment areas for the 8-hour ozone 
standard will attain the standards, thanks to a suite of EPA 
regulations to reduce emissions from cars, buses, trucks, 
construction equipment, fuels and powerplants.
    Our modeling also shows that 18 of the 39 current PM-
2.5 nonattainment areas will meet standards by 2010, 
thanks to many of these same programs, including CAIR, EPA's 
market-based Clean Air Interstate Rule. CAIR will build on the 
approaches used in our highly successful acid rain program to 
dramatically reduce powerplant pollution.
    I will note, as Senator Inhofe and Senator Voinovich have 
both noted, the Administration, and I will speak for the 
Administration, continues to prefer to reduce emissions from 
powerplants through multi-pollutant legislation such as Clear 
Skies, which would be permanent and would apply nationwide. In 
addition to regulatory and legislative approaches, our strong 
voluntary programs will help States as they implement the ozone 
and fine particle standards.
    We have seen some shining examples of these programs as 
part of our national Clean Diesel Campaign, which is reducing 
pollution through voluntary efforts such as idling reduction 
and diesel retrofits. Mr. Chairman, I would like to thank you 
for the leadership you have shown through the Diesel Emissions 
Reduction Act of 2005.
    While all these programs, regulatory and voluntary, will 
help nonattainment areas make significant progress toward 
meeting the standards, some States and communities will have to 
take additional local measures. EPA has been working closely 
with States to help them identify actions that will help. My 
written testimony outlines the scope of our efforts to assist 
States by providing technical information, analytical tools, 
training and guidance. For example, we have been supporting 
States that are developing non-traditional approaches to 
reducing emissions that contribute to ozone and PM.
    Within the past 2 years, we have issued guidance to help 
States take credit for measures such as energy efficiency, 
truck and locomotive idling reduction, airport emissions 
reductions and commuter programs. We are also working with 
State officials to develop a menu of options to reduce fine 
particle pollution.
    Experience has taught us that reducing pollution is 
challenging, no doubt about that. Meeting fine particle and 8-
hour ozone standards will be no different. We have also learned 
that we have a much better chance of success if we work as 
partners across all levels of government. EPA remains committed 
to this important partnership and to improving the quality of 
our Nation's air.
    Thank you very much. It is truly an honor and a privilege 
to be here today. I would be happy to answer any questions you 
might have.
    Senator Voinovich. Thank you very much, Mr. Wehrum.
    I would like to remind the committee members that we are 
going to have a round of 5-minute questioning. I would like to 
begin, Mr. Wehrum.
    You state that EPA has moved forward with a host of 
regulations to present regional solutions to help counties come 
into attainment. However, this is not enough for some areas. 
Ohio EPA, and I have made reference to Mr. Koncelik, states in 
his testimony, and you have already heard it, about the fact 
that we could shut down all the industries and have the people 
move out, and we wouldn't achieve the 2010 requirements.
    Throughout my career, I have found that it does a 
tremendous amount of good to get everyone together, get on the 
same page and develop solutions. Working with Senator Carper 
and other members of this committee, we were able to sit down 
with an extremely diverse group that never all agree on 
anything to develop the Diesel Emissions Reduction Act that you 
mentioned in your testimony. It can be done.
    Would you be willing to work with me, Ohio EPA and other 
stakeholders like the Northeast Ohio Area Coordinating Agency 
and the Ohio Environmental Council that represents our 
environmental groups to determine how and when compliance for 
air quality standards can be achieved in Cleveland?
    Mr. Wehrum. Absolutely yes, Senator. As I noted in my 
comments and from my personal experience, it often takes the 
efforts, the input, the energy, and the ingenuity of many 
stakeholders to find and implement the solutions to tough air 
pollution problems like those faced by the city of Cleveland. I 
can assure you that U.S. EPA will participate in this effort, 
will bring the assistance that we are able to bring and seek 
the (solutions and hopefully implement those solutions) that 
will allow Cleveland to attain by its specified deadline.
    Senator Voinovich. Thank you.
    You are familiar, and you mentioned it, the legislation 
that we passed in terms of retrofitting diesel engines. As you 
know, one of the provisions consolidates all of the various 
programs that deal with reducing diesel emissions into kind of 
one basket. There is a lot of concern out there about, is that 
going to happen. Does the Agency plan to consolidate all diesel 
emissions reduction programs under this one, under DERA?
    Mr. Wehrum. Senator, I can tell you we fully support the 
legislation. We will take the steps necessary to satisfy the 
obligations of the legislation.
    With regard to levels of funding, which I think is part of 
your question, we think these diesel reduction programs are 
enormously important and can bring great air quality benefits. 
Certainly a priority for the Agency, and we will certainly make 
it a priority in our budgeting process.
    Senator Voinovich. Has anybody ever calculated if that was 
fully funded what impact it would have in terms of reducing 
emissions?
    Mr. Wehrum. Not to my knowledge, Senator, but no doubt the 
benefits would be substantial.
    Senator Voinovich. The last thing I would like to get at 
is, when we had Administrator Leavitt here in April 2004, he 
talked about the State implementation plans would be due in 
February 2008, fine particle that is. EPA intends to propose a 
rule, that's June, that would describe the minimum elements 
required for fine particle SIPs, State Implementation Plans, 
and intends to finalize this rule later this year or early in 
2005.
    As you know, EPA only proposed this rule earlier this 
month. I am not going to ask you to explain why it has taken so 
long. The question is, when are we going to get this finished 
up so that States know exactly what it is that they are going 
to have to do in order to comply?
    Mr. Wehrum. Senator, as you point out, we just recently 
proposed that regulation. I believe we are on track to 
promulgate the final implementation rule likely by mid-2006. 
The deadline for submitting PM2.5 implementation 
plans will be April 2008. So if we stay on the schedule I just 
described, that will provide well over a year for States to 
understand the parameters of the rule and be able to build that 
into their planning efforts.
    Senator Voinovich. Well, I would respectfully suggest that 
had we done it earlier, it would have been a lot easier for the 
States. Senator DeMint is talking about not knowing which end 
is up trying to comply with it. I think the sooner we know what 
the rules are, the better off we will all be.
    I mentioned I want to sit down with you and others to 
figure out how we are going to deal with northeastern Ohio. We 
have to know what the rules are. So what you are telling me 
today is that you will finalize the particulate matter 
implementation rule when?
    Mr. Wehrum. I believe we will be able to get the rule done 
by the middle of next year. It is possible it may take a little 
bit longer than that. But what I can tell you is, this rule is 
a priority for me and it is a priority for the Agency. We will 
move it along as expeditiously as we can, Senator.
    Senator Voinovich. OK. The SIP for that is due when?
    Mr. Wehrum. April 2008. I will point out, Senator, these 
implementation rules are important, and I don't intend to 
minimize the importance. They will provide valuable information 
and guidance for States that will be useful and needed for the 
preparation of approval of SIPs.
    I would like to make the point that much of what must be 
done to prepare an approvable SIP is already understood and 
already known. The State commissioners and those responsible 
for air programs have a vast amount of experience, because we 
have been implementing SIP-based programs for many, many years 
under the Clean Air Act.
    So again, I am not going to minimize the importance of 
these implementation rules. There is work being done and there 
is much work that can be done. When I look at the picture, I 
have confidence that the schedules we are talking about for 
doing the implementation rules will in fact provide reasonable 
periods of time for these rules to be rolled into the SIP 
planning efforts.
    Senator Voinovich. What I am going to do is ask Mr. 
Koncelik what impact it is having on his decisionmaking, 
because the rule will be delayed until next year, after June 
some time. So what you are saying is that probably they have 
enough information that they can go ahead and put a plan in 
place. So I am going to be interested to hear from them as to 
whether or not, or perhaps one of our witnesses in the second 
panel can help us with that.
    Senator Carper.
    Senator Carper. Thanks, Mr. Chairman.
    Mr. Wehrum, good to see you. Thank you for being here and 
for your work that you and your colleagues at EPA are doing.
    I have a real quick question, and I will ask you to answer 
it briefly. There is a standard that has been, I think, 
promulgated for ultra low-sulfur diesel fuel. My recollection 
is that a standard kicks in, is it in October of next year?
    Mr. Wehrum. That is correct, Senator.
    Senator Carper. Some of us worked pretty hard to get 
included in the Energy bill a variable tax credit that 
incentivizes the production and the purchase of low-emission, 
high fuel efficient diesel-powered cars, trucks and vans. That 
variable tax credit kicks in on January 1 of this coming year. 
I think it is a tax credit that is worth up to about $3,400.
    If you look to Europe, you see the introduction of a lot of 
vehicles, almost half the vehicles that will be purchased in 
Europe, cars, trucks and vans, are diesel-powered. They have 
very low sulfur diesel fuel. They like diesel-powered vehicles, 
low-emission diesel-powered vehicles because of the good fuel 
economy, lower CO2 emissions and performance as 
well.
    I understand that the standard for ultra low-sulfur diesel 
fuel is being delayed by maybe 45 days. Is that here in this 
country next year?
    Mr. Wehrum. Senator, the standard that you are referring to 
is part of a suite of standards directed at reducing emissions 
from what we call the ``on-road'' diesel vehicles, things like 
tractor-trailer rigs that travel on the highway. That standard 
is a combination of fuel requirements and engine technology and 
control requirements. As you point out, they are all slated to 
come into effect late next year.
    Right now, the regulation requires, on the fuel side, a 
sequence of deadlines that begins with the refineries and then 
moves to the distributors and then finally moves to the retail 
outlets that will actually sell this fuel to the truckers and 
the like. Just yesterday or the day before, the Administrator 
signed a direct final rule and of course a final proposal to 
extend the second and the third of the deadlines that I just 
described.
    So we are still holding refiners to the original deadline 
of June of next year to begin producing the low-sulfur fuel. 
But those in the distribution chain, up through the retail 
level, had concern that once that low-sulfur fuel began to be 
distributed through the system that it would take longer to 
flush out the higher sulfur fuel that is currently in use--
longer than we had originally anticipated when we promulgated 
the regulations.
    So we are taking action to extend the deadlines for the 
distributors and the deadlines for the retail sales. But at the 
end of the day, that is not going to delay implementation of 
the rule. Again, this will be a combination of fuel with the 
vehicle technology and this technology will begin to be 
introduced at the end of next year and the fuel will be there 
when the vehicles are introduced.
    Senator Carper. Good. I just hope that this one delay, I 
think it is fairly brief, is it 45 days?
    Mr. Wehrum. That is correct.
    Senator Carper. I hope that is all we need and that we can 
go forward. We are leaning on the folks who make cars, trucks 
and vans to make low-emission diesel fuel powered vehicles 
highly energy efficient, and I just want to make sure that 
there is fuel out there for people who buy those vehicles to 
use them in their cars, trucks and vans.
    You were kind to comment on the work that Senator Voinovich 
and others of us have done on the diesel retrofit legislation. 
It has been a pleasure to work with him and others on that. We 
also want to thank EPA for working with us in this area. There 
is an old saying, it all comes down to money. In the end, we 
have to come up with the appropriations. It is all well and 
good that we have authorized this. I think most people think it 
is a terrific program. But now we have to make sure it is 
funded so it can go forward.
    In 2002, all of the litigation holding up the new National 
Ambient Air Quality Standards was completed, and EPA was free 
to move forward with the implementation of those standards, as 
you know. It is my understanding, I might be wrong, but it is 
my understanding that once a national standard is set, that EPA 
and the States take a series of steps to achieve those 
standards. Those areas are being designated and classified in 
attainment or nonattainment. EPA issues rules for 
implementation that include minimum elements for State 
implementation plans.
    Using this guidance, States like Delaware develop and 
submit for approval our SIPs through EPA that show how we will 
reach attainment by the promulgated deadlines. However, in my 
view, EPA has been very slow in developing this guidance. I 
realize there are extenuating circumstances.
    But yesterday, a full 3 years after the litigation was I 
believe settled, EPA finalized its rules to provide States with 
guidance needed to meet the ozone air quality standards. They 
have yet to finalize their guidance for States to meet 
particulate matter, I believe.
    Could you just explain to us why it has taken so long to 
develop these standards, and when we can expect to see the 
guidance for particulate matter?
    Mr. Wehrum. Senator, the implementation rules are a part of 
a suite of many other determinations and regulations that are 
necessary to implement the ambient air quality standards. In 
the case of ozone, we divided our implementation rules into two 
pieces and promulgated the first part of the implementation 
rule that had the most basic information, but the most 
important information at the time that we did the designations. 
We knew that was important. We made it the highest priority and 
we got it done.
    The second part of the ozone implementation rule, as has 
been pointed out, was proposed along with the first part. We 
just finalized within the last couple of days.
    In the case of PM, the proposed implementation rule was 
signed in September, just a month or a couple of months ago. In 
response to the question the Chairman asked, it is our belief 
that we will finalize that regulation by the middle of next 
year or perhaps somewhat later. As I have indicated, we realize 
this rule is a priority and we will move expeditiously in 
completing it.
    All I will say, and I will emphasize again, these rules are 
important. We will get them done as expeditiously as we can. 
But we at EPA have not been sitting on our hands, and those in 
the States have not been sitting on their hands. There is much 
work that can be done, and is being done, to prepare for the 
SIPs.
    Part of why we, for example, did not finalize the ozone 
implementation rule until the last couple of days is because we 
placed a priority and much emphasis on completing the Clean Air 
Interstate Rule. That is enormously important to us and I 
believe enormously important to the members of the committee, 
because it in a single stroke provided millions of tons of 
reductions of SO2 and NOx from powerplants that are 
affecting nonattainment areas throughout the eastern parts of 
the country. That regulation alone, in conjunction with other 
Federal regulations that are on the books are by themselves 
going to solve the nonattainment issues that many areas face.
    In addition, while the implementation rules are important, 
there is a wide range of other guidance that we develop and 
other tools that we develop and make available. In my written 
testimony, in the appendices, it includes three lists that give 
you some indication of the other activities that we have 
undertaken over this period of time.
    So again, from an overall standpoint, my belief is we are 
making much progress. There is much work that can be done and 
is being done. The implementation rules either have been or 
will be completed within a period of time that will reasonably 
make them available for use in formulating the final SIPs 
submissions.
    Senator Carper. Thank you very much.
    Senator Voinovich. Senator DeMint.
    Senator DeMint. It is a little frightening that a rule is 
so complex, that it takes that long to do, that we are going to 
ask our cities and States to comply with it. It is frightening 
to me.
    I would just like to ask a question, and again I appreciate 
your being here, I don't intend any disrespect. But as you 
know, there are many uncontrollable variables as it relates to 
air pollution. Many things related to geography, coastal areas 
will have a different set of circumstances than a foothills 
area like mine that might have weather inversions. An area like 
mine where two major interstate highways criss-cross, where the 
measuring devices are in close proximity to heavy traffic 
between Charlotte and Atlanta.
    We have no control of the weather, the geography, the 
Federal highways, other things that affect pollution. We are 
having difficulty getting data so that we can respond, we can 
take the measures necessary to continue to clean our air.
    My question to you is, how do you feel that it is right to 
even be talking about increasing the standards when you still 
have cities like my home town of Greenville that don't have 
enough data now to deal with the designation that we already 
have, enough data to determine what measures we need to take to 
improve the air, and you are already moving to increase a 
standard that you have not yet told us how to meet the other 
one?
    Mr. Wehrum. Senator, that is an excellent question. I will 
digress a moment and just say that I appreciate the input and 
the view that you bring and the other members of the committee 
bring. It is important to the Agency to hear concerns such as 
the ones you are expressing, so that we understand the 
perspective that you have and can integrate that perspective 
into the steps we take to help people meet the standards that 
are on the books right now. So I thank you for that.
    With regard to review of the current standards, this is a 
situation where the Clean Air Act is quite specific. It 
requires EPA to consider or reconsider all existing standards 
on a 5-year schedule, rotating schedule. So under the 
requirements of the Clean Air Act, we had an obligation to 
review the 8-hour ozone standard and PM2.5 standard 
by 2003, because those standards were enacted in 1997.
    We failed to meet that deadline and as a result of that 
failure, we were sued. As a result of that lawsuit, we now have 
revised, legally enforceable deadlines for completing the 
review of the standards. Most importantly for us, in the case 
of the fine particle standard, it calls for us to propose some 
action by December 20 of this year and to take a final action 
by September of next year.
    Senator DeMint. Does that review include at all your 
ability to deliver constructive data to the areas that you want 
to respond to it? Review is not just your ability to enforce. 
But does that review include considerations as I mentioned?
    Mr. Wehrum. In short, no, Senator. The 1997 standards were 
litigated up to the Supreme Court. The Supreme Court made it 
quite clear that our consideration of the standards and the 
possible need to adjust them needs to be based on assessment of 
potential impact on human health and the environment.
    Senator DeMint. So it has nothing to do with your ability 
to do your part of the job. It only relates to municipalities 
who are supposed to meet a standard that you haven't told them 
how to meet yet.
    Mr. Wehrum. I will just say, Senator, that when we are 
reviewing standards, we are obligated to focus on the human 
health impacts and possible environmental impacts.
    Senator DeMint. Thank you, Mr. Chairman.
    Senator Voinovich. Thank you. Senator Isakson?
    Senator Isakson. Thank you very much for being here.
    You said in your statement that 80 percent of the 
communities that will be, that are nonattainment will have met 
attainment by 2015. Was I hearing that right?
    Mr. Wehrum. Yes, Senator.
    Senator Isakson. How do you know that 20 percent won't?
    Mr. Wehrum. We don't know that they won't, but the 
statements in my testimony were based on work that was done in 
conjunction with the Clean Air Interstate Rule that I have 
talked about a couple of times during my testimony. Just 
looking at that regulation and other existing Federal and State 
programs that are just on the books right now, we see 
tremendous improvement over the next few years because of the 
reductions that will be achieved.
    That doesn't mean we have made a determination that the 
other areas will not meet the standard. What it does mean is 
additional steps are going to have to be taken, probably 
locally in those areas, to get them over the line and into 
clean air.
    Senator Isakson. Does it also probably mean that 20 percent 
of the communities that are in nonattainment can't get out of 
nonattainment because of circumstances beyond their control?
    Mr. Wehrum. No, Senator.
    Senator Isakson. Are you familiar with the Walker and 
Catusa County, GA case?
    Mr. Wehrum. Yes, Senator.
    Senator Isakson. For the benefit of the committee, and I 
think somewhat similar to Senator DeMint's question, Walker and 
Catusa are rural, northwest Georgia mountain communities. They 
were placed on nonattainment. The source of a great deal of the 
pollutant has been traced back to forest fires in Alaska. They 
also have a major interstate going through.
    They entered into a compact, a voluntary compact with EPA, 
but still were placed in nonattainment. The reason I ask the 
question is, just like some of the things that Senator DeMint 
said, there are certainly some places, there are two counties 
in Georgia that there is nothing they can do currently to get 
out from under nonattainment. They can't do anything to get out 
because of circumstances beyond their control.
    How many other places would there be like that in the 
country, would you think?
    Mr. Wehrum. I don't know the answer to that particular 
question. But with regard to the two counties that you have 
identified and are concerned with, I would like to elaborate.
    Senator Isakson. Please.
    Mr. Wehrum. The concern about the air quality in those 
areas as raised by local officials in those areas is that fires 
in upwind areas and in some cases areas that are fairly distant 
upwind were having such an impact on the air quality that it 
caused those areas to be in nonattainment where they otherwise 
wouldn't as a result of local and other regional emissions.
    We have had a policy for some time at the Agency, an 
exceptional events policy, we call it, that allows for an 
assessment in situations like this as to whether the impacts in 
fact are occurring such that those types of events are causing 
nonattainment. Where the data indicate that that is the case, 
we can set aside those data and they are not used for making 
attainment or nonattainment determinations.
    What I can tell you about your particular situation is, or 
the situation in those counties, is that the data has been 
offered to the Agency. The data is under consideration. We had 
initially, as you point out, made a designation of 
nonattainment. But the area has sought reconsideration of that 
determination and we will work hard to consider the information 
that is brought forward and make the best decision we can based 
on the data that are available.
    Senator Isakson. I appreciate that. I am aware of the 
appeal, and I know that you are reevaluating it. I went up 
there in August. It is about an hour and a half from my home. I 
went up there to see it. If you ride into those communities and 
you look at the density of population and you look at the type 
of employment, which is not industrial based or major pollutant 
contributing based, and then you look at its proximity to 
another State's metropolitan area and the data they submitted 
with regard to the forest fires, it raised the question to me 
that that's not the only place in the United States that a 
small, rural community could end up falling under a designation 
that it then could not get out from under through any efforts 
of its own volition.
    So I appreciate that review, and I would appreciate your 
answer really quickly.
    I have another question. EPA is requiring Atlanta to start 
using a federally reformulated gasoline. My understanding is 
the current gasoline sold in Atlanta is a low-sulfur gasoline 
and the designated gasoline--I think there is a lawsuit over 
this issue. The designated gasoline that now they are going to 
be required to sell actually is a larger polluter than what 
they are doing now.
    How do we have results that are designated to improve air 
quality that the mandated gas to be sold actually is a worse 
pollutant than what currently is being sold? Or am I wrong? And 
I could be wrong.
    Mr. Wehrum. Well, the situation in Atlanta, you are 
absolutely correct that that area has its own local fuel 
standards that were adopted to improve air quality and approved 
by EPA. The additional fuel requirement, what we call a 
reformulated gasoline, is a result of the designation that they 
received under the prior 1-hour standard. So there were 
graduated levels of nonattainment and when Atlanta reached a 
certain level, the law required that reformulated gasoline be 
applied in that area.
    The city and the State asked EPA to waive certain aspects, 
we have the ability to waive the oxygenate piece of that. There 
was controversy, and it led to litigation. Our determination 
was stayed by the Fifth Circuit and that is pretty much where 
the situation stands.
    What I can tell you is this is an issue we have been 
following very closely and trying to work closely with the 
officials in the area. We haven't reached final resolution, but 
I am hoping that in the very near future that we can get there.
    Senator Isakson. I know I am running over, but I want to 
thank you for your forthright answers to both of those 
questions, and just point out, Mr. Chairman, the importance of 
this hearing and the importance in us. Because if I heard 
everything right, in a very respectful way, to a certain extent 
you are saying your hands are tied by the law itself.
    I am putting words in your mouth, so I will take the 
criticism. Did I hear that wrong?
    Mr. Wehrum. No, Senator, the law is quite specific about 
the obligations that are applied at various points in time. We 
are attempting to maneuver through the various requirements in 
a way that gets what everybody views as a sensible result.
    Senator Isakson. Thank you very much for your service.
    Senator Voinovich. Thank you.
    Mr. Wehrum, we really appreciate your being here today and 
we look forward to working with you and having those 
regulations finalized. Thank you very much.
    Mr. Wehrum. Thank you, Mr. Chairman. Thank you, Senator 
Carper and Senator Isakson.
    Senator Voinovich. Our second panel, we have Sam Olens, who 
is chairman of the Atlanta Regional Commission. We are very 
happy to have you here with us. Jim Werner, who is the director 
of Delaware's Division of Air and Waste Management, good friend 
of Senator Carper's and Stephen Moret, who is the president and 
CEO of the Baton Rouge Area Chamber of Commerce.
    Senator Isakson. Mr. Chairman, can I say a word about Mr. 
Olens before he testifies?
    Senator Voinovich. You sure can.
    Senator Isakson. I want to acknowledge Mr. Olens in my 
remarks. Sam is a dear friend of mine and has a great resume, 
he is a great public servant. Just recently, he did quite an 
outstanding thing. He passed a one cent local option 5-year 
sales tax to raise $1 billion for transportation improvements 
in the community that I live in, which is the third largest 
county in the State of Georgia.
    A lot of his leadership in the deployment of those funds 
are aimed at traffic mitigation and those things that we can do 
in a positive way in construction that themselves contribute to 
the lessening of pollutants. So we are fortunate to have 
someone here who not only knows the words but he knows what 
they mean and he is doing it on a daily basis. He is a great 
public servant in Georgia and I welcome him here today.
    Senator Voinovich. Thank you all for being here.
    Before your testimony, I want to ask unanimous consent that 
the letters from major State and local groups and over 200 
environmental, industry, public and labor groups asking that 
the fiscal year 2007 budget include $200 million for the Diesel 
Emissions Reductions Act and that all other diesel emissions 
reduction programs be funded under the DERA bill be included in 
the record.
    [The referenced information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Carper. Mr. Chairman, before our witnesses speak, 
could I just say, we welcome you all. I am especially pleased 
that Jim Werner could be here. He was born in Delaware, grew up 
in Delaware, but he has gone on to work in environmental 
control areas in various areas, especially I think, in 
Missouri. He has worked in the U.S. Department of Energy, he 
has as a consultant advised the NGA.
    So he really has a breadth of experience, and we are 
fortunate he came home to Delaware a year or two ago to take on 
the responsibility to head up our Air and Waste Division within 
the Department of Natural Resources. It is a real pleasure to 
welcome him today. Thank you for coming.
    Mr. Werner. Thank you, Senator.
    Senator Voinovich. It is the local people that make the 
difference.
    Mr. Olens.

    STATEMENT OF SAM OLENS, CHAIRMAN, COBB COUNTY BOARD OF 
                  COMMISSIONERS, MARIETTA, GA

    Mr. Olens. Thank you. Good morning, Chairman Voinovich, 
Ranking Member Carper, members of the committee. I would like 
to begin my testimony by specifically recognizing my U.S. 
Senator, Senator Isakson. Senator Isakson has been my State 
House representative to the State legislature, my State 
Senator, my Congressman and now my Senator. There is no one in 
Georgia in public service that I admire more than Senator 
Isakson.
    Thank you for allowing me to be here today. I am Sam Olens, 
chairman of the Atlanta Regional Commission, and I am pleased 
to be here with you this morning to testify on behalf of the 
ARC and share with the committee our experiences in 
implementing Federal particulate matter and ozone air quality 
standards. The ARC is the designated MPO for Atlanta and has 
primary responsibility under the Clean Air Act for ensuring 
transportation conformity.
    Atlanta was first designated as a nonattainment area for 
the 1-hour ozone standard in 1990. Over the past 15 years, we 
have made significant progress in improving our regional air 
quality. This resulted in attainment of the 1-hour ozone 
standard in 2004, something that many people doubted could ever 
be achieved. This significant achievement occurred as a result 
of two things. No. 1, the concerted and collaborative effort in 
the region to implement effective, innovative pollution control 
measures, and No. 2, significantly improved relationships 
between the various agencies, businesses, industries and other 
stakeholder groups that have a role in ensuring clean air in 
our State and in our region.
    Our success has occurred in spite of unprecedented growth, 
numerous legal challenges and implementation of new air quality 
standards and provisions that have greatly impacted our 
planning process. We still have a long way to go, however. 
Twenty of the counties in our region are now designated as 
nonattainment under the 8-hour ozone standard, with a portion 
of two other counties also designated nonattainment under the 
Federal PM2.5 standard. We continue to deal with a 
number of significant issues related to air quality planning.
    Of particular concern just mentioned seconds ago by Senator 
Isakson is the pending appeal in the 11th Circuit Court of 
Appeals concerning the Clean Air Act requirement to implement 
RFG for the 1-hour ozone standard. Technical analysis has shown 
that this fuel blend will actually contribute an extra 1 ton 
per day in the 13-county core area of VOCs and 11.5 tons a day 
of additional NOx if we are required to use this RFG. This is a 
classic example of a well-intended Federal standard being 
implemented uniformly without consideration or flexibility 
given to the State and local governments to meet their unique 
conditions.
    The ARC, along with our State Air Quality Agency, EPD, 
requested legislative and Agency relief. We specifically 
requested a waiver of 2 years from this requirement. But that 
was not granted. Conflicts, such as the pending litigation, 
create uncertainty in the modeling process and inconsistency in 
the planning process and make it very difficult to develop an 
accurate emissions inventory.
    Similarly, we are frustrated with the continued delay in 
the release of rules and guidance documents that direct 
implementation of the new standards. Much of the burden of 
implementing the new standards could be alleviated if 
rulemaking and guidance were provided in a timely manner. The 
efforts of MPOs and States who are trying to meet the statutory 
deadlines for conformity, attainment, etc., must be recognized.
    These deadlines are fixed by law, yet dates to receive 
rules and guidance continually slip months, even years, past 
promised timeframes. This makes future compliance to implement 
the new standards all the more difficult, and needs to be 
addressed as we move forward.
    Our success in Atlanta was achieved through a partnership 
with Federal, State and local authorities, businesses, industry 
and other stakeholders. It took years to implement, required 
difficult choices and shared sacrifices by all. We are just now 
seeing the benefits of the collective hard work. The new 
standards will require a change to our process, additional and 
significant resource expenditures, and additional complexity to 
an already complicated transportation planning process.
    When implementing the new standards, it is important that 
the Federal Government work in the true spirit of a partnership 
and provide the very same flexibility to MPOs and States that 
our Federal partners themselves expect.
    The most important lesson we learned in our 15-year 
struggle to reach attainment status is the ability to maintain 
flexibility and control in implementing pollution control 
measures. We must have the ability to implement innovative, 
proactive measures to improve air quality in our own unique 
region.
    Chairman Voinovich, you have already shown great leadership 
in this area through introduction of the Diesel Emissions 
Reduction Act of 2005. This legislation is a perfect example of 
providing nonattainment areas the opportunity and flexibility 
they need to design programs to fit their own unique needs. 
This is exactly what we need more of in areas such as Atlanta 
and where our focus needs to be.
    In conclusion, we accept and are actively preparing for the 
challenges and growth that our region will face in the years to 
come. It is anticipated that we will have another 2.3 million 
people in our region over the next 25 years, which will bring 
us to a little over 6 million. We acknowledge that 
environmental standards play an important role in how we manage 
and cope with this growth.
    To ensure that new standards are implemented efficiently, 
we must have support from Federal partners in providing us 
effective guidance and the means by which to meet clean air 
standards in a manner suitable to our unique region.
    Mr. Chairman and members of the committee, we look forward 
to working with you and others as we collectively implement air 
quality standards that protect our citizens from poor air 
quality. Once again on behalf of the ARC, I thank you for this 
opportunity to present our views, and I am happy to answer 
questions you might have. Thank you.
    Senator Voinovich. Thank you, Mr. Olens.
    Mr. Werner.

STATEMENT OF JAMES WERNER, DIRECTOR, DIVISION OF AIR AND WASTE 
   MANAGEMENT, DELAWARE DEPARTMENT OF NATURAL RESOURCES AND 
                     ENVIRONMENTAL CONTROL

    Mr. Werner. Thank you, Mr. Chairman and Senator Carper. 
Thank you for the opportunity to appear before you today. I 
want to also introduce my colleague, Ali Mirzakhalili, who is 
our air quality manager for the State of Delaware, who has been 
through the wars on coming into compliance.
    As you noted earlier, Senator, we remain in nonattainment 
for ozone, even though we have met the 1-hour standard, we now 
face the challenge of meeting the 8-hour standard.
    Delaware's situation is essentially a downwind State. The 
Senator earlier referred to the situation where even if 
everybody depopulated and we shut down industry, they would 
still be in non-compliance. That is more or less our situation. 
So we can't do it alone. But we have an enormous opportunity to 
do things. And that would really be the theme, the bottom line 
that I would leave you with today, is first, allow States to do 
what States can do best, and don't ignore the health benefits 
by staying on with the deadlines.
    Let me at the outset again add my thanks to the leadership 
of both Senator Voinovich and Senator Carper in their work on 
the Diesel Emissions Reduction Act. We add our support to the 
recommendation of the Administration to include within its 
fiscal year 2007 budget request the $200 million requested. We 
will be looking with keen interest that first week of February 
whether or not that request is included in the fiscal year 2007 
budget.
    I am going to talk today about first, health effects, the 
ozone standard, PM fine and then last the CAIR role. The first 
thing that we need to keep in mind or remind ourselves is 
really the health benefits. A lot has been mentioned about that 
already. In Delaware, we recently released a study in 
conjunction with our Division of Public Health on the asthma 
burden, noting that in Delaware, the number of cases of asthma 
is increasing, which adds a tremendous burden to individuals, 
families, communities and businesses.
    We feel like we have been here before. I myself was 
involved a bit in the analysis on what was called the 
Unfinished Business Report in the 1980's, later with the 
Science Advisory Board, analyzed further at OIRA, the White 
House OMB Office did a similar review, identifying that clearly 
the criteria air pollutants control far outweighed the costs 
for that. This is not to say we can ignore the standard.
    In fact, I would very much emphasize that we all have to do 
our part in streamlining permitting, looking for the most cost-
effective measures to reduce the contaminants. We are doing 
exactly that. We just completed what we call the value stream 
mapping process, which is a business tool to streamline our 
permitting process. We are going to continue this effort to 
improve the bureaucratic efficiency by using an air forum 
process to continually hear from the regulated community 
specific mechanisms we can do to reduce costs, but not 
necessarily delay or compromise any of our air quality 
benefits.
    So again, the health costs have been proven over and over 
again to be far exceeding the implementation costs.
    Let me go quickly to ozone. The ozone issue is perhaps 
Delaware's biggest issue, again mainly from the upstream 
sources that cook in the air and end up on our doorstep. It is 
a little frustrating that the changing sciences has resulted in 
a changing goal line, but for many of us, we saw that coming in 
the 1970's and 1980's when the science showed us that it was 
chronic exposure to ozone, not the episodic 1-hour. So it is 
not as if this is a surprise that we deal with the 8-hour 
standard.
    It was as early as 1996 that we knew the benefits far 
outweighed the costs. We were engaged vigorously in the Ozone 
Transport Commission efforts and would offer for consideration 
the OTC CAIR PLUS proposals that offer a variety of measures 
that we could implement. I am also pleased to announce today 
that just in the past few days, our Secretary, John Hughes, 
signed a start-action notice which puts into motion the gears 
for the so-called 3-PLUS 1P, it is a multi-pollutant bill that 
looks at both the NOx, SOx and mercury, but also recognizes our 
commitment on carbon dioxide controls as part of the regional 
greenhouse gas initiative in the northeastern States. It is not 
broadly all the greenhouse gases, it is just CO2.
    But again to reemphasize the theme for today, Delaware's 
solutions for Delaware's problems and issues. In particular, 
let me just highlight one, and we have a whole list in our 
written testimony, lightering. This is not an issue that comes 
up in Oklahoma or Missouri. But we have supertankers coming in 
off the Atlantic Ocean that have to remove part of their load, 
from a million gallon tanker to a 350,000 gallon barge to be 
able to come up the river into the variety of refineries. We 
have two refineries in Delaware, one of which is one of the few 
refineries that handles sour crude, with high levels of sulfur. 
The lightering is essential to prevent oil spills, lighten the 
load.
    Without any controls, we are talking about 2,000 tons of 
VOCs. We have worked out, I think, a win-win solution where 
they are doing essentially the vapor recovery. I think it is a 
real good example of coming up with a local solution to a local 
problem that we need the flexibility to do.
    The PM fine rule is the next big challenge we have. Again, 
the regulatory efforts are chasing the science. We know the SIP 
is going to be an extraordinary challenge for us, not made 
easier by the delay in the implementation rule. We are still 
optimistic that we will be able to move forward.
    But certainly delays in the name of harmonization will be a 
tremendous problem for us. Again, we are in nonattainment for 
that already in our northern most populous county. I see the 
red light on, so let me go right to CAIR, which is of course 
the most recent effort. It is a good rule, very important for 
us particularly given our downwind State. But it is not enough. 
The coverage doesn't take care of the issue of the deadlines or 
perhaps not stringent enough.
    But certainly it is clear that any legislation that would 
essentially duplicate the CAIR requirements really does not 
help Delaware in this situation. Even with CAIR, we don't make 
it to the deadline.
    In conclusion, there are certain rules that we should 
render unto EPA, as somebody referred to Caesar earlier, and 
certain issues you should render unto States. Please don't 
hobble the States' ability to address the unique problems and 
be creative in doing that.
    With that, I will be happy to answer any questions, and 
again, thank you for the opportunity to appear before you.
    Senator Voinovich. Thank you very much.
    Mr. Moret.

STATEMENT OF STEPHEN MORET, PRESIDENT AND CEO, BATON ROUGE AREA 
                      CHAMBER OF COMMERCE

    Mr. Moret. Senator Voinovich, members of the committee, I 
am delighted to be here with you.
    Senator Voinovich, I have a special affinity for your State 
of Ohio. Two years ago there I met a wonderful young lady who 
is now my wife, so it has a special place in my heart.
    My organization, the Baton Rouge Area Chamber of Commerce, 
is made up of over 1,500 businesses throughout the Greater 
Baton Rouge area. They range from small Mom and Pop shops to 
large multi-national corporations like the Shaw Group. But 
certainly the vast majority are small business owners.
    As the voice of the Baton Rouge area business community, we 
promote economic and community development for our area. If you 
were to sum it up, our single overriding goal is to make the 
Baton Rouge area a better place in which to work and live.
    Fifteen years ago, after passage of the Clean Air Act 
amendments of 1990, we were designated as a nonattainment 
region for ozone, in fact, a serious nonattainment area. We 
have taken that very seriously for a number of reasons. 
Certainly the obvious ones are the legal and economic 
implications. But in addition to that, we want the Baton Rouge 
area to be a place that attracts talented professionals from 
around the country. So from a business perspective, the quality 
there is very important to us.
    I think perhaps most importantly from a personal level, we 
live there. Our families live there, our children live there. I 
myself have a young son, so this is something that is very 
important to me personally.
    Our community has worked very diligently over the last 15 
years in concert with our State Department of Environmental 
Quality and the EPA to improve the air quality and particularly 
to focus on the ozone issue. We have enacted laws and 
regulations to limit emissions of ozone precursors, VOC and 
NOx.
    We have installed a wide range of pollution control 
equipment, some of it mandated, some of it voluntary. We have 
implemented vehicle inspection programs, raised fees, performed 
transportation studies, performed a range of modeling analyses 
and spent hundreds of millions of dollars addressing this 
issue.
    In short, we have done everything that the Clean Air Act 
and the EPA have either required and/or suggested.
    I am pleased to say that the results have been nothing 
short of tremendous, significantly in excess of State and 
Federal requirements. Just to give you a couple of examples, 
industrial VOC emissions in the Baton Rouge area have declined 
by 66 percent since 1990. Emissions of NOx emissions have 
declined by half, by 53 percent. Although we haven't to this 
point actually come into compliance with the NAAQS, we have 
missed it only by one to two parts per billion, a very, very 
small number, and a number which we believe is generated to a 
large extent from air transport issues connected with the 
Houston metro area.
    Unfortunately, members of the committee, at the same time 
that we have been making a great deal of progress, we have also 
had to address some overly prescriptive elements of the Clean 
Air Act that we think have made it actually more difficult for 
us to come into compliance while at the same time creating 
perhaps unnecessary economic sanctions against our area. I want 
to give you just a couple of examples.
    First of all, reformulated gasoline, or RFG. A strict 
interpretation of the Clean Air Act would suggest that we would 
have to implement RFG in the Baton Rouge metro area as a result 
of the attainment designation that we were at that point. Yet 
we have found, and I don't think that the EPA opposed this 
assessment, that not only would the implementation of RFG 
create a great economic cost to our region, in fact, around 
$150 million a year, but it would actually make the air quality 
worse, not better. It would actually make the ozone problem 
worse.
    The second example that I would share with you is that as 
we have made a transition from the 1-hour standard to the 8-
hour standard which is considered more protective of human 
health, we have still had to fight an issue in which there are 
some groups that have suggested that should have to implement 
penalties associated with the 1-hour standard, even though we 
are now in only marginal nonattainment with the 8-hour 
standard.
    Some of these penalties, broad-based penalty fees and 
permitting obstacles would really cripple our economy without 
having a direct impact on the root cause of the ozone problem. 
In fact, we have estimated the costs to be in the range of $300 
to $500 million per year.
    On these two issues alone, that has really forced us to put 
together a coalition of industry and community groups to 
essentially pursue legal actions to try to address these 
somewhat unworkable aspects of at least the implementation of 
the Clean Air Act. Even though we expect both of these issues 
will ultimately get resolved in a reasonable way, it has taken 
a lot of time and attention off of what we really want to focus 
on, which is improving the air quality in the Baton Rouge area.
    In the wake of Hurricane Katrina, which has brought tens of 
thousands of new population to our area and challenges facing 
the Baton Rouge area, it has made it even more difficult. Of 
course, I believe, Senator Voinovich, as you mentioned earlier, 
the sky-high prices of natural gas have created a huge 
challenge for our regional economy, which is based very much on 
the petrochemical industry. It is really a bedrock of our 
regional economy.
    This is our community. We care about our community, we care 
about the quality of the air. This is important to us well 
beyond any Federal requirement.
    Nevertheless, we welcome the accountability. But we ask 
that you provide that accountability in a way that gives us the 
flexibility to do the right thing for air quality and the right 
thing for our community. Thank you.
    Senator Voinovich. Thank you very much.
    I think we can all agree that our Nation's air quality is 
improving. We have heard from EPA about the upcoming emission 
reductions under Federal programs such as CAIR, low-sulfur 
fuels and cleaner engines. Later on I would really like to hear 
from Mr. Werner about the fact that, in terms of CAIR helping 
and even the multi-pollution legislation in the Clear Skies, 
and why that wouldn't help you, if I heard correctly.
    Our State and local witnesses confirm that these Federal 
programs are critical to improving local air quality. These 
Federal programs, however, achieve their full emissions 
reductions in 2015 as opposed to the EPA attainment deadline of 
2010. Given the timing, I find interesting, and Senator Inhofe 
made reference to it, it was in the Daily Environmental 
Reporter, he said a study in the Philadelphia area concluded 
that meeting the current ozone deadline would cost the local 
economy 42,000 jobs versus a loss of only 1,000 if the deadline 
was harmonized with new Federal emissions programs. Moreover, 
the current deadline would result in a decline in gross 
regional product of $5.5 billion for Philadelphia area versus 
three-tenths of a billion for a harmonized deadline.
    The difference in estimated State tax revenues also is 
striking: $273 million lost under the current deadline versus 
$6 million under the more harmonized deadline. I ask unanimous 
consent that the article be included in the record.
    [The referenced material follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Voinovich. Mr. Moret, it seems that harmonizing 
ozone attainment deadlines with these Federal emission 
reduction programs would significantly lessen the compliance 
burden for Philadelphia. Would that be your conclusion with 
your experience in Baton Rouge?
    Mr. Moret. Senator Voinovich, that would be our conclusion. 
I am not intimately familiar with that study, but certainly 
that general sentiment is one that resonates very much in the 
Baton Rouge area. When we look at the planned actions of our 
industrial community, of DEQ and of some of the things that 
were referred to earlier that are coming down from the EPA, we 
think they will have a very significant impact on our ability 
to make it this last little mile to come into compliance with 
the NAAQS for ozone. So that is consistent with our experience.
    Senator Voinovich. One of the things that has come out in 
the testimony is the evaluation of the health benefits versus 
the cost of reaching them. I think, Mr. Werner, you made 
reference to the fact that you have been able to really capture 
those costs. I sure would be interested in getting a copy of 
how you went about capturing those costs.
    What I heard from you was that the costs, the cost savings 
from moving forward with these standards would be health cost 
benefits that would far outweigh the cost of going forward with 
the improvement in reducing our emissions. Did I hear that 
right?
    Mr. Werner. What I referred to is not specifically an 
analysis that I personally or the State was able to do, but 
rather to really decades of studies performed by a variety of 
people, including EPA, the National Academy of Sciences, the 
White House Office of Management and Budget, Office of 
Information and Regulatory Affairs that tried to valuate the 
reduced health burden from air pollution controls.
    In science, when you see reproducibility results, it adds 
more confidence to the results. That is really what we have 
seen, is a variety of methodologies, a variety of studies by a 
variety of people all coming up with the same conclusion. The 
criteria air pollutant control clearly has benefits that far 
outweigh the costs in virtually every study that has been 
conducted.
    Senator Voinovich. Have you done a study of your own in 
regard to this?
    Mr. Werner. No, these are very large, multi-million dollar, 
multi-year studies that no, I personally didn't do. I served in 
a consulting firm where we had several hundred people working 
at it. I was just one analyst of many contributing to that 
effort.
    Senator Voinovich. But you based it on these national 
studies made by respected organizations and then kind of 
extrapolated it to your area, is that basically it?
    Mr. Werner. I am not saying specifically Delaware. I was 
referring to all those other studies that I just mentioned.
    Senator Voinovich. I am just talking about Delaware.
    Mr. Werner. I don't have any specific data about Delaware.
    Senator Voinovich. But your conclusion is that the cost of, 
the health benefit costs would far outweigh, a reduction in 
health benefit costs would far outweigh any kind of compliance 
costs?
    Mr. Werner. In Delaware, that's a relatively easy one, 
given that many of the costs would be imposed on upwind 
sources, and the benefit would be accrued to our own citizens. 
So that makes it an even easier analysis.
    I might add with the NERA study, if I could, sir, that we 
haven't had a chance to fully evaluate it. But that is a study 
that of course has not been published in a peer-reviewed 
scientific journal, undergoing the same sort of vigorous peer 
review you normally see. It does consider just the costs. But 
it completely lacks any consideration for the benefits.
    It also avoids the simple point that is really a matter for 
lawyers and the legislation, that there is really an 
opportunity to get an extension if the State of Pennsylvania 
wanted to. That might be something worthwhile, looking into the 
State of Pennsylvania's plans for finding the most cost-
effective mechanisms.
    Senator Voinovich. But you are not going to be able to 
comply by 2010?
    Mr. Werner. Right now, the modeling shows that we will not. 
We are going to make every effort. I guess the point is, 
whatever happens between now and 2010, it is certainly on the 
glide path, it is on the same path for getting to later 
compliance for whatever the rules and implementation are.
    Senator Voinovich. Have you evaluated what impact not being 
in compliance will have on, or the expectation that you won't 
reach it in 2010 will have on your economic vitality in terms 
of the businesses?
    Mr. Werner. No, we haven't. I would hate to speculate. 
Certainly that is a consideration.
    Senator Voinovich. I'm sorry?
    Mr. Werner. I said, no, we have not. Certainly that is a 
consideration, but it is a hypothetical right now.
    Senator Voinovich. Senator Carper.
    Senator Carper. Thanks, Mr. Chairman. I want to start, if I 
could, with Jim Werner. You have mentioned this, I think a 
couple of us have mentioned this as well, but I just want to 
return to it again. In your testimony, you describe many of the 
actions that our State has taken to reduce our air pollution. 
You have mentioned again just in your last exchange with 
Governor Voinovich that even with these actions, it is still 
tough for us to be in attainment if the upwind States continue 
to postpone their deadlines or are allowed to postpone their 
deadlines.
    Did you want to add anything further on that?
    Mr. Werner. There is an enormous concern about the 
potential that upwind States could delay their deadline. We 
think that's just essentially kicking the can down the road. 
All of our efforts, and I list a whole range of efforts from 
architectural and industrial maintenance, coatings, painting, a 
whole range of efforts, and we are working hard to find the 
most creative and cost-effective solutions. Despite all that 
effort, if upwind States didn't do their part, we simply cannot 
meet the attainment deadlines. Extending the deadlines would 
just make it harder.
    Senator Carper. In the context of national pollution 
programs, when I say national pollution programs I am thinking 
of some what we contemplate here before this committee like 
Clear Skies or the Clean Power Act and the Clean Air Planning 
Act. In the context of national pollution programs like those, 
how important is it, do you think, to maintain State and local 
authority to address residual pollution?
    Mr. Werner. I think it is absolutely critical, sir, 
respectfully. It is, as I said, a team effort. There have to be 
the Federal programs for particularly large sources, the large 
powerplants. There are big issues that have yet to be 
addressed, a lot of diesel work that you are providing 
leadership on. We have to have the ability to do our own 
controls. I mentioned our efforts on lightering for tanker VOC 
reduction.
    If I could, I would like to come back to the relationship 
with the contemplated legislation on Clear Skies. I didn't mean 
to suggest, Senator Voinovich, at all, that it wouldn't be 
useful. It was simply a concern that whatever is done in that 
area we would just as that care be taken, no pun intended, that 
we make sure that it really has value added beyond CAIR, that 
there are a variety of multi-pollutant legislation bills 
considered.
    Some have more consideration than not for different sources 
and deadlines. We just hope and ask that you make sure that it 
really has value added for all the States as a small downwind 
State.
    Senator Voinovich. Have you ever looked at it in terms of 
your State, in terms of the levels and how those levels would 
be better than, say, CAIR, or what levels would help you?
    Mr. Werner. There are certainly some that are better than 
others. I would be remiss if I didn't say that we like Senator 
Carper's among the legislation.
    Senator Carper. God bless you.
    [Laughter.]
    Senator Voinovich. We are anxious to have Senator Carper's 
proposals, so we can negotiate something. I am anxious to do 
it, because I really believe that we would be far better off 
with legislation than we are with the CAIR rules that are 
already being questioned and lawsuits filed and all kinds of 
other things.
    Mr. Werner. Yes, absolutely.
    Senator Voinovich. That's been--we have an environmental 
policy by litigation, just go back to 1997, 2005, here we are. 
So I'm stepping on your time.
    Senator Carper. That's OK.
    Let me ask one if I could of Mr. Olens. You mentioned your 
great admiration for Senator Isakson. I would just say that 
those of us in Delaware have a real high regard for him, too, 
and thanks for sharing with us.
    You said in your testimony that in Georgia you were not 
hearing that attainment deadlines associated with new standards 
are a concern. I think that's what you said. If we are hearing 
anything, it is that we need to address those standards in a 
timely manner.
    Do you feel, even with the late release of EPA's guidance 
to States that you will be able to prepare an adequate SIP?
    Mr. Olens. Senator, we won't meet the 8-hour ozone standard 
in 2007. We are looking at 2010. We will then reclassify from 
marginal to moderate. The delays clearly adversely affect 
implementation.
    We have a great partnership between the MPO and the EPD, 
which is the State equivalent of the EPA. After 15-plus years 
of dealing with these issues, we are more ahead of the game 
than regions that are for the first time dealing with 
nonattainment issues. There is the good news with the bad news, 
after you have been doing this 15 years, you have a lot of the 
control measures, you have a lot of the policies in place.
    With regard to the PM2.5 standard, we have no 
expectation that that will be easy, either. Delaying the rules 
adversely affects this too. What I stated in the introductory 
report was that we will do our best between the MPO and the 
State to get there. Keep in mind in January 2004, we 
reclassified from serious to severe under the 1-hour ozone 
standard. So the idea of having the Atlanta Journal reference 
that we went from marginal to moderate doesn't have the same 
negative connotation to me as the front page that said 
reclassification to severe under to the 1-hour ozone standard.
    So we are ahead of other regions with regard to having been 
through this process. But clearly the delays with rules and the 
delays with implementing controls adversely affects all of us. 
It is my expectation that, for instance, with the 8-hour ozone 
standard, we won't meet 2007 and we will go to moderate and 
hopefully will meet it in 2010.
    Senator Carper. All right, thanks very much. Again, our 
thanks to each of our panelists. We appreciate very much your 
testimony today, but also your service to our State and to our 
respective States. Thank you.
    Senator Voinovich. Senator Isakson.
    Senator Isakson. Sam, in your testimony you said if we have 
learned anything over the last 15 years, it is that flexibility 
is important in terms of reaching the appropriate solutions in 
terms of pollution. We must have the ability to implement 
innovative, proactive measures to improve our own air quality. 
Do you have any suggestions for us as to what we can do as a 
Congress or what the EPA as an agency can do to provide that 
flexibility?
    Mr. Olens. For instance, you heard today, Senator, from 
both the gentleman from Baton Rouge as well as myself, that EPA 
didn't grant us the 2-year waiver for the RFG. It is 
nonsensical that we are being asked to use fuel that will 
actually worsen our air, rather than improve our air. In fact, 
the fuel that I believe Senator Voinovich referenced earlier, 
or Senator Carper, that takes effect in October 2006, that low-
sulfur is once again not as clean as the low-sulfur we 
currently use in our State.
    So once again, we need you to provide that flexibility 
where EPA looks at the uniqueness of each region and lets us do 
what actually improves the air best in our region, rather than 
a one-size-fits-all scenario. So I really think flexibility, as 
you referenced it, is the main key for all of us.
    Every region is different, and we have to be given that 
flexibility. Whether it is through the rulemaking, whether it 
is through the actual Clean Air Act, there doesn't appear to be 
sufficient flexibility now to really do what needs to be done.
    Senator Isakson. I want the record to reflect that Sam had 
no idea I was going to ask that question, I had no idea what 
his answer would be, and I have never met Mr. Moret from Baton 
Rouge, but I want to read a sentence from your testimony.
    ``However, it is important to note that the existence of 
judicial proceedings was the only avenue available to EPA under 
the Clean Air Act to review the use of reformulated gas in 
Baton Rouge.'' I think that, combined with the answer that 
Commissioner Olens gave, is the message to all of us that the 
Clean Air Act has the Agency's hands tied, which in turn ties 
the hands of the local community. In this particular case, the 
unintended, because it would have never been intended, 
consequence of Federal action is to require two areas to sell a 
gas that pollutes worse than the gas they are selling now. That 
doesn't make any sense to anybody.
    Furthermore, the courts end up being the ultimate arbiter 
of plans and flexibility and proposals to clean up our air. 
With all due respect to the judiciary, and for that matter to, 
I will use myself as an example, I read my briefing papers on 
this last night, and you get into even a simplified explanation 
of NOx, SOx, particulate matter, things to the seventh power, I 
mean, it's impossible to understand. I wonder how nine men and 
women in black robes in a court can have any better luck with 
it.
    So I think the lesson that we are hearing from these 
gentlemen is that it is very important that we in Congress give 
the Agency the directions, but also the flexibility to work 
with the communities on those things that by virtue of nature, 
location or proximity affect their ability to be in attainment. 
That's where we have tied the hands of the Agency statutorily, 
which in turn has tied the hands of local communities that are 
trying to do their thing.
    I would submit to you also it is probably the reason that 
our previous witness could tell you that in 2015 80 percent 
would comply and 20 percent wouldn't. Because they pretty much 
know because of the rigidity of the situation how little 
flexibility there is and how some people are not going to be 
able to comply no matter what happens. So that was not a 
question, that was a statement, but I had to throw that in 
since these two gentlemen said exactly the same thing.
    I yield back.
    Senator Voinovich. Thank you, Senator Isakson.
    I too was perplexed, and as I recall, I think that under 
the law, not only can they mandate reformulated gasoline but 
they can also mandate emissions testing, too, if you are in a 
moderate attainment area.
    Did I hear correctly that somebody talked about a waiver? 
Could the EPA grant a waiver from the RFG for a couple of 
years?
    Mr. Olens. Senator, we requested a 2-year waiver, and it 
was declined.
    Senator Voinovich. OK, so the point is that, the testimony 
was that they had to go to the RFG, but you are telling me that 
the EPA does have the flexibility that they could waive that 
for 2 years, is that correct?
    Mr. Olens. Yes, sir.
    Senator Voinovich. So I was just thinking, Senator Isakson, 
maybe we need some law, but if they have that right to do 
that--the lack of flexibility is something that all three of 
you would agree needs to be really looked at in terms of the 
Environmental Protection Agency.
    [Witnesses nod in the affirmative.]
    Have you calculated the impact on your economy of being in 
non-compliance? You say you are not going to meet the deadline 
of 2010. What implications does that have in your community in 
terms of jobs?
    Mr. Moret. Senator, the impacts are on multiple levels. 
There are impacts of being in nonattainment from the 
perspective that many manufacturing facilities, many of them 
cleaner manufacturing facilities like automobile assembly 
plants, often will not consider our area because of the 
permitting challenges.
    Senator Voinovich. In other words, the fact is that, as I 
found this as Governor, that is why I worked so hard to get us 
into attainment, because my conclusion was that if it looks 
like you are not in attainment, people that you would like to 
bring to your community just fly over you, they ignore you.
    Mr. Moret. That is absolutely right.
    Senator Voinovich. The next issue would be expansion of 
businesses. Why don't you get into that a little bit?
    Mr. Moret. If you think about how companies make site 
selection decisions, it is really first a site elimination 
process, and looking at factors that might make a community an 
unattractive place in which to invest. We know many examples 
that the Baton Rouge area, because of its nonattainment 
designation, even though we are only in marginal nonattainment 
by a very, very small amount, that we have lost out on many 
large clean projects that otherwise would have gone to our 
area.
    On the other hand, I mentioned to you earlier the issue of 
the transition from the 1-hour standard to the 8-hour standard. 
Under the 1-hour standard, we were slated to have up to $100 
million a year in penalty fees for our local and regional 
industry. Very significant restrictions on permitting, 
expansion projects and so forth.
    So we actually, before Hurricane Katrina, had identified 
this as actually the single biggest economic threat facing the 
Baton Rouge area. The structure of that set of requirements and 
penalties is such that it would have had an impact, we 
estimate, of around half a billion dollars a year drain that 
really would have never gone away, on top of the challenge that 
is already faced by a community like ours of having a 
nonattainment label, if you will, on your community.
    Senator Isakson. Mr. Chairman, can I just interject?
    Senator Voinovich. Go ahead.
    Senator Isakson. One of the important points about the 
economic consideration is not choosing dollars over health, but 
economic development provides the resources that allow 
communities to meet the challenges financially to improve the 
quality of the air. You actually have, again unintended, but 
actual consequence, as Stephen has said here, of industries, 
non-polluting industries, flying right over you and going 
somewhere else. We actually, if we aren't careful, can promote 
outsourcing by virtue of an overly regulatory environment 
without the flexibility to meet the standards.
    Nobody in here has said anything other than they all want 
to be compliant. Everybody wants clean air, and every community 
in America has cleaner air than it had at the time the Clean 
Air Act was passed. We are moving in the right direction. I 
think we are now at the critical point where in the absence of 
flexibility and in the absence of some reasonable approaches, 
we could take areas hardest hit and actually reduce the 
resources they will have available to them to comply with the 
act and put them in a very static economic condition which 
would even compromise that further. So your point is well taken 
and the testimony today I think has reflected exactly that 
result if we are not careful.
    Senator Voinovich. The other interesting thing is that, 
this gets into the whole issue of carbon. Back when I was 
Governor, the options to go other places were less than they 
are today. So if I am a business person and I can locate a 
facility somewhere, in the old days it was competition among 
jurisdictions in the United States.
    But the competition now has changed dramatically. If I am a 
businessman and I can put a plant in China and I can come up 
with lower costs and I don't have the environmental costs that 
I have if I am in the United States, I don't have the health 
care costs that I have, my energy costs are lower, I finally 
conclude, I'm leaving. It seems to me that if we don't start 
looking at--that gets back to this whole concept of harmonizing 
energy, environment and the economy. There has to be some 
compromise made here, because I have been here, this is my 7th 
year, it just seems like groups are going different directions. 
The only major improvement I have seen is on this retrofitting 
of diesel engines, we got the groups together.
    But unless there is some kind of coming together, a 
compromise, I just see that we are going to lose more and more 
jobs in this country to other places. We won't have the money 
to buy the technology that we need to further move forward with 
doing a better job of taking our missions.
    So there just has to be some type of balance here. I get 
back to Mr. Werner, you were talking about the health care 
benefits. I just asked my staff, I would really like to see how 
that works out in terms of the costs that are involved. You 
talked about asthma, the Senator from New Jersey always brings 
up asthma.
    I remember testifying, I think before this committee, back 
when I was Governor on the whole issue of asthma and what 
causes asthma. We said, ``well, it's the air that people are 
breathing.'' Some of the experts say that if you did a better 
job of cleaning places, the health code, and putting an air 
conditioner in someone's house, you would do more to help their 
asthma than if you spent all the money to reduce the emissions 
in the air on the outside.
    So the point is that, some of these things have to be 
worked out. There is some balance that has to be struck in 
order for us to take care of our health needs, for sure. But we 
also have to pay attention to what our economic needs are also, 
or we are going to be in deep trouble.
    Mr. Werner. Senator, if I could please.
    Senator Voinovich. Yes.
    Mr. Werner. I well appreciate the concerns about costs. 
Again, we are the people who sit across the table every day 
talking with our colleagues and our neighbors who have to run 
businesses. One of the things that we hear is it is not so much 
the costs of the control equipment, but really the costs of the 
uncertainty and the costs of delay. That is why we are working 
so terribly hard to improve the efficiency, because we again 
hear that directly. Maybe that is slicing it too finely, what 
the type of costs we are considering.
    We hear, we don't mind putting in the controls, but we want 
to know clearly what do you need and we want to have a permit 
relatively quickly, so we can move ahead. It gets back to the 
notion of harmonizing, perhaps adding on to your concern. So 
that as they are constructing, they are looking at schedules 
for building or expanding or something, they have a schedule 
that includes the environmental considerations and not as an 
add-on, oh, by the way, you put it into the overall scheduled 
things you are doing. Those are the bigger costs, it is really 
not so much of whether we comply or we clean the air but how we 
do it and having the flexibility and a harmonized solution. 
Again, I just hope the word harmonization doesn't result in 
just simply delays overall.
    Senator Voinovich. I think that one of the things that was 
in our Clear Skies legislation was that if you had communities 
like Baton Rouge that were moving along and that would be in 
compliance by 2015, say, for example, that the draconian 
provisions of the Act wouldn't come down on their back. Right 
now, 2010 comes along and boom, it happens.
    The other thing that I think was good about it is that 
everybody knew exactly what the rules would be, it would be in 
legislation so that the power companies, and I know you are 
concerned about ozone transport, would know full well, here's 
the deal and they would move forward. They are talking about 
investing $50 billion and doing some stuff that maybe some of 
them should have done before but they didn't do it because of 
questions about new source review. We cleared up new source 
review issues.
    I honestly believe if we can eliminate these uncertainties 
as we did with the acid rain provisions of the Clean Air Act, 
at least we knew what they were, I think we would be much 
better off. We have had the same thing with the issue of 
carbon, we have to have carbon controlled in our pollution 
control legislation.
    I hear from the Adirondack Council and other places, they 
say, ``look, while you guys are just kind of pish-poshing 
around, we are still seeing the acid rain here.'' Do NOx, SOx, 
do mercury, work out some kind of a compromise on carbon, but 
let's get moving. Let's get it done, we're waiting.
    I just want to say thank you very much for your being here. 
We appreciate the perspective that you brought to the 
committee. Senator Isakson, do you have any other questions?
    Senator Isakson. No. Thank you, Mr. Chairman, for holding 
the hearing.
    Senator Voinovich. Thank you very much for being here.
    [Whereupon, at 11:26 a.m., the subcommittee was adjourned.]
    [Additional statements submitted for the record follow.]
     Statement of Senator James M. Jeffords, U.S. Senator from the 
                            State of Vermont
    The National Ambient Air Quality Standards are the cornerstone of 
the Clean Air Act. Their implementation is a matter of life and death 
for millions of Americans.
    The EPA itself has stated that ``batteries of scientific studies 
have linked particulate matter, especially fine particles . . . with a 
series of significant health problems, including premature death.''
    Researchers at Harvard University have concluded that approximately 
70,000 Americans die prematurely as a result of air pollution. The 
primary cause of these deaths is fine particulate matter, which is 
emitted from sources such as powerplants, diesel fuel combustion and 
other sources. However, recent evidence also indicates that ozone 
contributes to premature mortality as well.
    Other health effects, such as increased risk of stroke, increased 
asthma, and other respiratory symptoms requiring hospitalization are 
also caused by air pollution.
    The National Ambient Air Quality Standards for Particulate Matter 
and Ozone are necessary to protect against these effects and to protect 
public health ``with an adequate margin of safety.''
    Although EPA recognized these facts in 1997 and set appropriate 
standards, we remain on the threshold of implementing such standards.
    The fact that we have taken nearly a decade to move forward is a 
shameful fact. Tens of thousands of Americans have suffered in the 
meantime and will continue to suffer, or even die, each year that we 
delay.
    There are many reasons for these delays, but we must not forget 
that industry challenged these standards and EPA was forced to go all 
the way to the Supreme Court to defend them. Now many of these same 
parties seek to further delay implementation of the standards.
    Since the Supreme Court decision in 2001, EPA has moved very slowly 
to develop the rules that States need to implement these standards.
    EPA has only yesterday finalized its complete set of ozone 
implementation rules and only last month did it propose a PM 
Implementation Rule--after that rule sat at the Office of Management 
and Budget for nearly a year. That leaves us without a complete set of 
implementation rules more than 8 years after the standards were first 
set.
    At the same time, we have seen numerous attempts to substantially 
weaken the Clean Air Act. These include changes to New Source Review 
that allow legions of large polluting sources to continue emitting 
without controls, changes to the mercury rules that allow toxic levels 
of mercury to be emitted and traded, and a host of implementation rules 
that postpone key local controls until 2015 or beyond.
    The net result of these policies is that millions of Americans will 
continue to suffer the ill effects of air pollution, including 
premature death, for many years to come.
    It is high time that we implement the standards that the Supreme 
Court unanimously upheld nearly 5 years ago. It is high time that EPA 
provides States with the tools they need to continue cleaning up the 
air. It is high time that EPA stopped looking to undermine key 
provisions of the Clean Air Act and seek to enforce those requirements 
to the full extent of their abilities.
    There may be some at this hearing that believe we need additional 
time to implement these standards and that we should put priority on 
keeping the costs of air pollution control as low as possible in the 
short term. To them I say we cannot afford those delays. We cannot 
afford to continue to expose our citizens to increased death and 
chronic health effects from air pollution. All of the EPA analyses show 
that the benefits of controlling these pollutants greatly outweigh the 
costs of clean-up.
    During the 1990s we made substantial progress in cleaning up the 
air during a period of great economic growth. That record demonstrates 
that we can have a healthy economy and clean air at the same time. I am 
not willing to sacrifice the health of millions of Americans based on 
the faulty premise that clean air costs jobs. Clean air creates jobs 
and saves lives.
    Others may say we need certainty of requirements before we can 
begin to take action. To them I say there is no certainty in strategies 
of delay and waiting for others to reduce, there is only certainty in 
committing now to getting the job done and requiring everyone to do 
their part.
    We should also recognize that areas that fail to control local 
sources of pollution and that are waiting for national and regional 
measures to work are consigning both their own citizens and the 
citizens of areas downwind to additional health effects. Vermont is 
such a downwind State. Last summer, schools in my State were forced to 
postpone sports events due to air pollution, most of which came from 
outside the State.
    EPA's plan would be for States like Vermont to continue to receive 
dirty air from other States for many years to come. That result is 
unacceptable.
    This is no time to contemplate further delay. We need to move 
forward as quickly as possible in implementing these standards. We need 
additional reductions well beyond those proposed by EPA. Even under 
EPA's plans, many will continue to breathe unhealthy air after 2020. At 
that point, the Clean Air Act will be half a century old.
    I believe we must work harder to realize the promise that this 
committee made in the original Clean Air Act of 1970, when it directed 
that we would attain Clean Air standards ``as expeditiously as 
practicable'' and that we would ``protect public health with an 
adequate margin of safety.''
    That promise, which remains in the law today, cannot be kept by 
plans that allow millions of Americans to breathe unhealthy air for 
decades to come.
    Finally, I want to note that we continue to allow dangerous 
emissions of greenhouse gases into the atmosphere and our continued 
delay in that regard risks untold consequences, to human health, to our 
environment and to the well-being of mankind as a whole. That situation 
must change, and it must change soon, if we are to fulfill our 
obligation to leave this world in better shape than when we found it.
                                 ______
                                 
Statement of William Wehrum, Acting Assistant Administrator, Office of 
           Air and Radiation, Environmental Protection Agency
    Thank you Mr. Chairman and members of the Environment and Public 
Works' Subcommittee for the opportunity to speak with you today about 
implementing the National Ambient Air Quality Standards (NAAQS) for 
fine particles and ground-level ozone.
    There is no doubt that emissions of key pollutants into the air are 
going down in the United States. America's air is the cleanest in three 
decades. Emissions have continued to decrease even as our economy has 
increased more than 150 percent. Since 1970, the aggregate total 
emissions for the six pollutants [Carbon Monoxide (CO), Nitrogen Oxides 
(NOx), Sulfur Dioxide (SO2), Particulate Matter (PM), 
Volatile Organic Compounds (VOCs) and Lead (Pb)] have been cut from 
301.5 million tons per year to 138.7 million tons per year, a decrease 
of 54 percent. Total 2004 emissions were down 21.5 million tons since 
2000, a 13.4 percent reduction.
    The Clean Air Act has been a critical driver of that success. The 
goal of the Clean Air Act is to bring all areas into attainment with 
national air quality standards, so that the air is healthy to breathe 
for residents of every neighborhood, town, city and county. The Clean 
Air Act provides us with the structure for achieving that goal as 
expeditiously as practicable. In addition to setting the air quality 
standards, EPA establishes national emissions standards for certain 
important sources, such as motor vehicles, and requires States to 
control interstate pollution transport.
    The Act requires States to take the lead role in studying the 
unique air pollution problems in their areas and in crafting State 
Implementation Plans that contain strategies for solving them. EPA 
assists the States by providing technical support, for example, on 
emission reduction measures and costs. Together, we will find an 
appropriate mix of national, regional, State, and local measures to 
bring all areas into attainment with the national standards.
    The record of the Clean Air Act demonstrates that the structure 
outlined in the law is sound. For example, we designated 101 areas as 
nonattainment for the 1-hour ozone standard. Seventy-nine of them have 
met that standard. The story is similar for particulate matter smaller 
than 10 micrometers (PM-10) and carbon monoxide nonattainment areas. 
Eighty-seven areas were designated nonattainment for PM-10 in the early 
1990s. Sixty-four now meet that standard. For carbon monoxide, air 
quality in all of the original 43 nonattainment areas now meets the 
NAAQS. Even in cities that have not attained the 1-hour ozone or PM-10 
standards, the number of days above the standards is down 
significantly. By any measure, this is a success story.
    EPA has put in place national and regional pollution control 
programs that will go a long way toward assisting the States in solving 
the fine particle and ozone nonattainment problems. Our modeling 
indicates that by 2010, 18 of the 39 areas currently not attaining the 
fine particle standard will come into attainment with the regulatory 
programs already in place, including the Clean Air Interstate Rule, 
Clean Diesel Rules and other Federal measures even assuming no 
additional local controls are adopted. Four more PM2.5 areas 
are projected to attain the standards by 2015 based on the 
implementation of these programs.
    The story is also good for ozone. 104 of the 126 current 8-hour 
ozone nonattainment areas will attain the NAAQS by 2010 because of 
national mobile and stationary source control programs. By 2015, 
modeling shows that only 10 8-hour ozone nonattainment areas will 
remain.
    These EPA programs are an excellent example of where Federal and 
regional programs can assist the States in meeting their obligation to 
attain national air quality standards. For areas that will still be out 
of attainment with the ozone and PM2.5 standards, States 
will need to take additional local steps to reduce ozone and fine 
particles from other sources. In many cases, this burden will be 
lighter due to Federal programs.
    Today, I would like to give you an overview of the fine particle 
and ozone problems, some of the key national rules that will help 
reduce levels of these pollutants, and ways in which EPA is assisting 
the States as they develop plans to achieve these air quality 
standards.
                 fine particle and ozone health effects
    Americans will realize significant health benefits when all areas 
of the country meet the 8-hour ozone and fine particle standards. 
Ground-level ozone continues to be a pollution problem in many areas of 
the United States. Ozone (a major component of smog) is a significant 
health concern, particularly for people with asthma and other 
respiratory diseases, and children and adults who are active outdoors 
in the summertime. Ozone can exacerbate respiratory symptoms, such as 
coughing and pain when breathing deeply. Ozone may reduce lung function 
and inflame the linings of the lung. Ozone has also been associated 
with increased hospitalizations and emergency room visits for 
respiratory causes. Repeated exposure over time may permanently damage 
lung tissue.
    Ozone is rarely emitted directly into the air but is formed by the 
reaction of volatile organic compounds (VOCs) and NOx in the presence 
of sunlight. Ground-level ozone forms readily in the atmosphere, 
usually during hot summer weather. VOCs are emitted from a variety of 
sources, including motor vehicles, chemical plants, refineries, 
factories, consumer and commercial products, other industrial sources, 
and biogenic sources. NOx is emitted from motor vehicles, powerplants, 
and other sources of combustion. Changing weather patterns contribute 
to yearly differences in ozone concentrations from region to region. 
Ozone and the pollutants that form ozone also can be transported into 
an area from pollution sources located hundreds of miles upwind. Based 
on 2002-04 data, more than 138 million people live in nonattainment 
areas that violate the 8-hour ozone standard.
    Of the many air pollutants regulated by EPA, fine particle 
pollution is perhaps the greatest threat to public health. Dozens of 
studies in the peer-reviewed literature have found that these 
microscopic particles can reach the deepest regions of the lungs. 
Exposure to fine particles is associated with premature death, as well 
as asthma attacks, chronic bronchitis, decreased lung function, and 
respiratory disease. Exposure is also associated with aggravation of 
heart disease, leading to increased hospitalizations, emergency room 
and doctor visits, and use of medication. Based on data through 2004, 
90 million people live in areas not attaining the fine particle 
standards, primarily in California and in the eastern half of the 
United States.
    Particulate matter is the general term used for a mixture of solid 
particles and liquid droplets found in the air. PM2.5 
describes the ``fine'' particles that are less than or equal to 2.5 
micrometers in diameter. PM2.5 is formed mostly through 
atmospheric chemical reactions. These reactions involve a number of 
precursor gases including sulfur dioxide from sources such as 
industrial facilities and powerplants; nitrogen oxides from sources 
such as automobiles, diesel engines, powerplants and other combustion 
sources; carbon formed from organic compounds, including a number of 
volatile organic compounds from automobiles and industrial facilities; 
and ammonia from various sources. PM2.5 can also be emitted 
directly from certain sources, such as industrial facilities, diesel 
engines and fire. PM2.5 concentrations can be elevated at 
all times of the year, not just in the summertime. Changing weather 
patterns contribute to yearly differences in PM2.5 
concentrations from region to region. Also, PM2.5 can be 
transported into an area from sources located hundreds or thousands of 
miles upwind.
                           national programs
    There is no doubt that emissions of key pollutants into the air are 
going down in the United States and that the Clean Air Act has been a 
critical component of that improvement. Congress carefully laid out the 
role that States and EPA must play in implementing the NAAQS. Among 
other things, EPA is responsible for setting the standards, designating 
areas as attaining or not attaining the standards, addressing the 
regional, national, and international aspects of air pollution 
problems, and helping the States deal with problems that are generated 
locally. States are given the primary responsibility for assuring that 
air quality within its borders is maintained. This is achieved through 
source-specific requirements in State Implementation Plans.
    Several Federal programs already in place will help bring many 
areas into attainment and help others come much closer to attainment, 
thus making the burden of local controls lighter.
                          mobile source sector
    It is no surprise that the transportation sector--cars, buses, and 
trucks--contributes a significant amount to air pollution problems in 
many communities. Emissions of NOx, PM and other pollutants have been 
and will continue to decrease significantly as a result of the 
successful implementation of the series of EPA regulations controlling 
emissions from new mobile sources and the fuels they use.
    Most recently, EPA has adopted emission standards for new nonroad 
diesel engines used in construction, agricultural, and industrial 
operations. These engine standards will be combined with very low 
sulfur limits in the fuel for these engines, which will allow optimal 
performance of the engines' pollution control equipment. EPA's nonroad 
standards are estimated to reduce 129,000 tons of PM and 738,000 tons 
of NOx in 2030, and prevent annually 12,000 premature mortalities, 
15,000 nonfatal heart attacks, and almost 9,000 hospital admissions.
    Fine particle and ozone pollution will also decrease as a result of 
EPA's 2007 Clean Diesel Truck and Bus Rule to clean up pollution from 
new diesel trucks and buses. When fully phased in, these rules will 
result in diesel trucks and buses being 95 percent cleaner than today's 
models for smog-causing emissions and 90 percent cleaner for 
particulate matter. The rule also requires very low sulfur diesel fuel 
to enable the use of advanced aftertreatment technologies. We estimate 
that this program will prevent 8,300 premature deaths and 1.5 million 
lost work days among other quantified benefits.
    As a result of this program, there will be a dramatic 
transformation of diesel engines over the next decade. The benefits of 
these rules will be added to those from two other mobile source rules. 
Starting with the 2004 model year, cars and light trucks must comply 
with the Tier II program which established tighter tailpipe standards 
and limited the amount of sulfur in gasoline. The program will be fully 
phased in by 2009. This rule requires for the first time that larger 
vehicles like SUVs, minivans and pick-up trucks meet the same tailpipe 
emissions standards as cars. The associated gasoline sulfur standards 
will ensure the effectiveness of emission-control technologies in 
vehicles. These new standards require passenger vehicles to be 77 to 95 
percent cleaner than those on the road today.
    We have a number of other nationally applicable programs that will 
achieve needed reductions, such as new standards for motorcycles and 
lawn and garden equipment. We are also working on new requirements, for 
sources like locomotive and marine engines, which will help States meet 
their clean air goals.
                           voluntary programs
    In addition to our regulatory programs, EPA has a number of 
innovative voluntary programs that work to achieve measurable 
environmental results in a cost-effective and beneficial way without 
the need for regulation. These programs are available to assist States 
and Tribes in implementing programs that reduce ozone and particulate 
matter. I want to thank you, Mr. Chairman, for the leadership you have 
shown in the effort to reduce diesel emissions. Your recent 
legislation, included in the Energy Policy Act of 2005, shows strong 
support for voluntary retrofit programs.
National Clean Diesel Campaign
    Building on the successes of EPA's regulatory and voluntary efforts 
to reduce emissions, the Agency created the National Clean Diesel 
Campaign (NCDC) to address the important issue of diesel emissions. The 
National Clean Diesel Campaign encompasses the stringent regulations 
that reduce emissions from new engines and addresses the more than 11 
million engines in operation today through voluntary approaches. 
Successful programs like the Clean School Bus USA and the SmartWay 
Transport Partnership are important parts of the NCDC. Technical and 
financial assistance is provided to stakeholders interested in reducing 
their emissions effectively and efficiently. Strategies include 
reducing unnecessary truck and rail idling along major transportation 
corridors and in rail yards, use of ultra-low sulfur fuel in advance of 
Federal compliance dates, replacing old vehicles or engines with 
cleaner new models, installing ``retrofit'' control technologies on 
existing vehicles or engines, and other approaches. NCDC projects exist 
in 44 States.
    The National Clean Diesel Campaign has created a number of tools to 
assist States and local governments in reducing diesel emissions. EPA 
provides technical assistance to help educate stakeholders on the wide 
array of clean diesel technologies and strategies that can be used to 
cost effectively reduce diesel pollution. NCDC's vendor-funded 
technology verification program evaluates the effectiveness and 
efficacy of clean diesel technologies so that users of the technology 
can be assured that the emissions benefits captured in the field match 
those advertised by the manufacturer. The Agency has also created peer-
reviewed emission models and provides State Implementation Plan (SIP) 
guidance to State air partners so that they may implement clean diesel 
strategies as cost effectively as possible. In the coming months 
guidance for quantifying and using diesel retrofit projects in SIP and 
conformity plans will be made available and the Agency is also working 
with the Department of Transportation to provide guidance for utilizing 
Congestion Mitigation and Air Quality Improvement Program funding for 
diesel retrofit projects.
                         market-based programs
    Emissions from powerplants contribute to most of the nonattainment 
areas in the eastern United States. The nitrogen oxides and sulfur 
dioxide from these facilities mix with emissions from local and 
biogenic sources to cause ozone and fine particle problems. Through 
market-based programs, emissions from this sector have dropped and will 
continue to drop for years to come.
    Since 1995, EPA has been implementing the Acid Rain Program to 
reduce SO2 and NOx emissions from powerplants nationwide. 
The centerpiece of the program is an innovative, market-based ``cap-
and-trade'' approach to achieve a nearly 50 percent reduction in 
SO2 emissions from 1980 levels. The results of the program 
have been dramatic--and unprecedented. Compliance has been nearly 100 
percent. Reductions in powerplant SO2 emissions were larger 
and earlier than required, confirming the high value of a cap and trade 
system and the high value of its effects--earlier human health and 
environmental benefits. Now, in the 10th year of the program, we know 
that the greatest SO2 emissions reductions were achieved in 
the highest SO2-emitting States; acid deposition 
dramatically decreased over large areas of the eastern United States in 
the areas where reductions were most critically needed; trading did not 
cause geographic shifting of emissions or increases in localized 
pollution (hot spots); and the human health and environmental benefits 
were delivered broadly. Allowance trading provided sources with an 
incentive and the flexibility in developing a compliance strategy. It 
has reduced compliance costs by 75 percent from initial EPA estimates.
    A similar cap-and-trade program has been incorporated into two 
other programs aimed at reducing the interstate transport of air 
pollution--the NOx SIP Call and the recently issued Clean Air 
Interstate Rule. The 1998 NOx SIP Call is showing results. To fulfill 
emission reduction responsibilities under the SIP Call, States are 
requiring powerplants and large industrial emitters in the eastern 
United States to reduce emissions of the ozone-precursor nitrogen oxide 
(NOx) during the summer months. After adjusting for the effects of 
meteorology, ozone levels across the East were on average 10 percent 
lower in 2004, the first full year of the program, than in 2002.
    In March 2005, EPA issued the Clean Air Interstate Rule (CAIR), 
which will reduce powerplant emissions of sulfur dioxide and nitrogen 
oxides in 28 eastern States and the District of Columbia by 70 percent 
and more than 60 percent respectively from 2003 levels when fully 
implemented. This will go a long way to help many areas attain the fine 
particle standards and the ozone standards.
    However, we have received 14 Petitions for Review and 11 Petitions 
for Reconsideration for the 2005 Clean Air Interstate Rule. EPA has 
also received two administrative stay requests; two judicial stay 
motions have been filed. While we are confident that we will prevail in 
the litigation concerning CAIR, there is always some uncertainty 
regarding the outcome of any litigation.
    The Administration prefers to reduce emissions from powerplants 
through multipollutant legislation such as the President's Clear Skies 
legislation. The key difference between the Acid Rain Program and our 
cap and trade rulemakings is statute versus regulation. Congress 
enacted the Acid Rain Program in 1990. EPA has relied on authority in 
the Clean Air Act to put in place the NOx SIP call and CAIR. This 
authority is limited. Regulations do not provide enough certainty--that 
is why EPA has been urging Congress to pass a permanent, nation-wide 
solution, Clear Skies, which will result in substantial reductions in 
pollution, and help ensure stable and affordable energy costs for the 
American consumer.
    In response to Senate requests in April of this year, EPA 
Administrator Johnson directed EPA staff to conduct additional analyses 
on a number of legislative proposals concerning control of powerplant 
emissions currently before Congress. This is a detailed, thorough, 
comprehensive legislative analysis--we believe it is the most detailed 
analysis we have produced for a Congressional debate ever. The analysis 
incorporates the latest computer models and assumptions to compare the 
President's Clear Skies legislation to several alternatives introduced 
on Capitol Hill--an apples-to-apples comparison.
    President Bush and EPA are committed to working with Congress to 
enact Clear Skies legislation to cut powerplant emissions to help 
States meet air quality standards in a way that is consistent with a 
health economy. Clear Skies delivers dramatic health benefits across 
the Nation without significantly raising energy costs. Legislative 
enactment of Clear Skies will provide the certainty utilities need to 
build large new clean coal plants and incentivize efficiency at 
existing units, significantly reducing the potential for increased 
utility use of natural gas to meet demand and new air quality 
requirements. This will make more natural gas available to consumers 
and manufacturers. Clear Skies will significantly minimize the 
regulatory impact on electricity prices for households and 
manufacturers. I urge the Committee members to avail themselves of this 
detailed analysis.
                      working with states & tribes
    To help States implement the NAAQS, EPA has developed analyses and 
analytical tools that can help States assess their air quality problems 
and evaluate potential control measures. EPA is working to provide 
implementation guidance to States on the minimum requirements for their 
State implementation plans. In addition, we have worked with States to 
achieve ozone reductions earlier than required through their voluntary 
participation in the Early Action Compact program.
    We issued Phase 1 of the Ozone Implementation Rule in April 2004, 
at the same time that we designated nonattainment areas and attainment 
areas for the 8-hour standard. This rule established classifications 
for the 8-hour ozone NAAQS; outlined the attainment dates for the 8-
hour standard, revoked the 1-hour ozone NAAQS; established how anti-
backsliding principles will ensure continued progress toward attainment 
of the 8-hour ozone NAAQS; and described the timing of emissions 
reductions needed for attainment.
    We have just issued the second part of the Ozone Implementation 
Rule. It includes, among other things, our interpretation of 
requirements for reasonably available control measures, reasonably 
available control technology, attainment demonstrations and modeling 
requirements, and new source review guidelines for the 8-hour ozone 
nonattainment areas. States will have until June 2007 to formulate 
their State Implementation Plans. Together, this rule and the Phase 1 
Ozone Implementation Rule issued a year and a half ago, provide a 
complete framework to guide development of State Implementation Plans, 
including detailed guidance on many implementation issues.
    EPA has also proposed the Fine Particle Implementation Rule. This 
2005 proposal addresses the required elements of State Implementation 
Plans for the fine particle air quality standard, which are due in 
April 2008. The rule is based on the more general and more flexible 
Clean Air Act requirements for attainment planning (known as ``subpart 
1'' of section 172). For example, this part of the Act provides 
flexibility on whether to require a specific multi-tiered 
classification system for nonattainment areas or not. In addition, it 
does not require specific control measures to be implemented in certain 
nonattainment areas, but instead provides the States with greater 
flexibility to design local control strategies to meet the attainment 
needs of each individual area.
    We are also assisting the States in evaluating their options. EPA 
has included a general list of strategies in the implementation 
proposal that should be considered by the States in developing their 
plans, and the Agency has provided STAPPA/ALAPCO with grant funding to 
develop a PM2.5 ``menu'' of control options document. The 
final document is expected by the end of this year or early next year.
    The Clean Air Act presumptively requires each area to attain the 
PM2.5 standard within 5 years of designation, by April 2010, 
with authority for EPA to grant a State an attainment date extension of 
up to an additional 5 years for a specific area. In order to be 
considered for an extension, a State would include such a request with 
its April 2008 submittal.
    We acknowledge that we are late in completing these rules to guide 
States in developing implementation plans for the PM2.5 and 
8-hour ozone standards. I wish that the timeline for our rules could 
have been different. Some States have expressed concern about achieving 
the new ozone and PM2.5 attainment deadlines. We are 
committed to assisting States as they work to identify local or 
regional control measures for their SIPs and of course, our Federal 
programs will provide significant reductions for these areas. The Clean 
Air Act does provide opportunities for an area under certain 
circumstances to obtain additional time and we are also committed to 
exploring these options if needed.
    Beyond this, we are working to help States identify and implement 
strategies that can help cut emissions by issuing policies and guidance 
on specific implementation issues, providing technical assistance and 
analytical tools, and offering training and support for NAAQS 
implementation. And, in those cases where information gaps remain, we 
are working to close them as quickly as possible.
    Please see attachment for additional details.
    We appreciate the work that the States are doing to bring cleaner 
air sooner to the millions of Americans living in fine particle and 8-
hour ozone nonattainment areas. It will be a challenge but national 
rules and State plans together will bring the health benefits of the 
fine particle and ozone standards to the American people. The numerous 
successes of the past inform our optimism toward the future.
    Thank you. Mr. Chairman that concludes my testimony. Once again, 
thank you for inviting me to appear before this subcommittee. I would 
be pleased to answer any questions you may have.
                                 ______
                                 
                               Attachment
           examples of policies and agency guidance to states
     1997--``Mobile Source Voluntary Measures Policy''--
supports the use of voluntary mobile source measures such as programs 
that reduce idling emissions from trucks, locomotives, and school 
buses, retrofit programs, commuter benefit programs such as parking 
cash-out programs, employer-based telecommuting programs, and small-
engine buyback programs.
     2001--``Improving Air Quality with Economic Incentive 
Programs''--provides information on developing and implementing 
economic incentive-based control strategies.
     2004--``Incorporating Emerging and Voluntary Measures in a 
State Implementation Plan''--supports and encourages States to test new 
and innovative stationary source control strategies.
     2004--``EPA and FAA National Guidance on Airport Emissions 
Reduction Credits for Early Measures''--allows airport sponsors to use 
certain funds to finance airport air quality improvements such as low 
emission vehicles, refueling and recharging stations and gate 
electrification. Credits generated by the emission reductions are kept 
by the airport sponsor and may be used for current or future general 
conformity determinations.
     2004--``Guidance on SIP Credits for Emission Reductions 
from Electric Sector Energy Efficiency and Renewable Energy 
Measures''--provides a readily available procedure to quantify and 
validate emission reductions from specific energy efficiency and 
renewable energy measures and have these reductions applied to State 
Implementation Plans.
     2004--``SIP Credit for Truck and Locomotive Idling 
Reductions''--offers guidance on using technologies to reduce air 
emissions from locomotives and trucks while idling, or replacing the 
need to idle.
     2005--``Guidance on Incorporating Bundled Measures in a 
SIP''--provides provisional pollution reduction credits to States up-
front from a group, or ``bundle,'' of pollution control measures or 
strategies considered in the aggregate.
     2005--``Emissions Inventory Guidance for Implementation of 
Ozone and Particulate Matter National Ambient Air Quality Standards 
(NAAQS) and Regional Haze Regulations''--helps States develop their 
emissions inventories.
     2005--``Guidance for Creating Annual On-Road Mobile Source 
Emission Inventories for PM2.5 Nonattainment Areas for Use 
in SIPs and Conformity''--describes how State and local agencies should 
prepare annual inventories for PM2.5 SIPs or regional 
conformity analyses.
     2005--``Guidance for Quantifying and Using Emission 
Reductions from Best Workplaces for CommutersSM Programs in 
State Implementation Plans and Transportation Conformity 
Determinations''--describes how State and local agencies can gain 
emission credit for commuter benefit programs like Best Workplaces for 
CommutersSM.
                     technical and analytical tools
    EPA is working closely with States to provide them with technical 
support for their modeling analyses, emissions inventory development, 
evaluation of costs for various control strategies, updated regional 
modeling, and air quality analyses. These technical and analytical 
tools will help States characterize their air quality problems and use 
the state-of-the-art methods to craft solutions.
     Reviewing a menu of control options for fine particles
     Developing a fast, flexible, and transparent tool for 
estimating health and environmental benefits of air quality 
improvements via the peer-reviewed BenMAP model
     Providing grants for State organizations to develop and 
distribute information about control strategies
     Improving and automating emissions inventory quality 
assurance tool to reduce staff effort at the State level, while 
improving the quality and reliability of the resulting emissions data
     Collaborating with the Department of Energy to improve the 
Community Multi-Scale Air Quality Model (CMAQ) that will help States 
develop their State Implementation Plans. States and Regional Planning 
Organizations can use the peer-reviewed ``community' CMAQ model to 
evaluate regional and local emission reduction strategies for meeting 
ozone, PM2.5 and regional haze goals
     Issuing guidance on the use of models and other analyses 
in attainment demonstrations for the 8-hour ozone NAAQS. This document 
provides important guidance to EPA Regional, State, and Tribal air 
quality management authorities and the general public on how to prepare 
8-hour ozone attainment demonstrations using air quality models and 
other relevant technical analyses.
     Conducting regional air quality modeling analyses to help 
inform State and local agencies about contributions from upwind air 
pollution sources and the likely consequences of programs to reduce 
emissions from those sources.
     Collaborating with equipment manufacturers to develop, 
test, and improve measurement instruments, including continuous 
monitors, to assist States in obtaining better measurements and greater 
insight into the sources of air pollution.
     Developing the MOVES model for highway vehicles, a next 
generation model that can be used to estimate emission inventories and 
make county level projections through 2050.
                training and support for pilot projects
     Partnering with stakeholders to promote woodstove 
changeouts and other innovative programs with big local benefits in 
some areas
     Sponsoring meetings, workshops and conferences for State 
and local officials to share best practices.
     Collaborating with local and State officials to evaluate 
the effectiveness of control strategies in real-world settings
     Working in the Clean Energy-Environment State 
Partnership--voluntary partnership between States and EPA to assess 
clean energy potential and determine strategies for implementing 
policies that reduce emissions, save energy, strengthen State 
economies, and protect public health. Partners commit to working across 
key State agencies to ultimately develop a clean energy-environment 
action plan; EPA provides tools, resources, and access to experts to 
ensure States have the best information available as they decide steps 
and policies.
     Establishing and funding the Community Modeling and 
Analysis Center to support community-based air quality modeling. This 
Center provides model codes and documentation, on-line help desk, 
training courses, and workshops/conferences that help States in 
conducting air quality modeling for their ozone, PM, and regional haze 
State Implementation Plans.
                                 ______
                                 
       Responses of William Wehrum to Additional Questions from 
                           Senator Lieberman
    Question 1. States are less than 1 year away from the time at which 
they must propose their State Implementation Plans for public review if 
they are to meet deadlines under the Clean Air Act. Why has it taken so 
long for the Agency to release final rules for the implementation of 
National Ambient Air Quality Standards for ozone and particulate 
matter? In expending the significant resources needed to develop the 
Clear Skies Proposal, the CAIR rule and other rules, did the Agency 
expend resources that could have been used to complete the NAAQS 
implementation rules earlier? Why did EPA not make getting out NAAQS 
Implementations rules its top priority in this area?
    Response. EPA promulgated the 8-hour ozone and PM NAAQS on July 18, 
1997. Due to litigation, the designations and implementation phases of 
the NAAQS process were delayed. In the case of ozone, EPA finalized 
designations for 8-hour nonattainment areas on April 30, 2004. 
Simultaneously, EPA issued the final Phase 1 implementation rule for 8-
hour ozone. These two rules describe many of the key elements of the 
implementation framework for the 8-hour ozone standard. Specifically, 
the Phase 1 and Designations Rules established:
     which areas are in nonattainment;
     which areas are regulated under the Clean Air Act's basic 
subpart 1 requirements, and which are subject to the more detailed 
subpart 2 requirements and classification system;
     the maximum attainment date for each nonattainment area; 
and
     the required timing of emissions reductions necessary for 
attainment.
    The Phase 1 rule also called for revocation of the 1-hour ozone 
standard for most areas in June 2005 and established anti-backsliding 
requirements to ensure continued progress toward attainment of the more 
stringent 8-hour ozone NAAQS as areas transition from implementing the 
1-hour NAAQS to implementing the 8-hour NAAQS. EPA issued a separate 
rule addressing requirements for conformity of transportation plans and 
8-hour ozone plans on July 1, 2004.
    OMB received the Phase 2 ozone implementation rule for E.O. 12866 
review on March 7, 2005. At that time, review of other Agency 
priorities, some of which had court-ordered deadlines--e.g., the Clean 
Air Interstate Rule (CAIR), Clean Air Mercury Rule (CAMR), and Best 
Available Retrofit Technology (BART) rules--took precedence over review 
of the Phase 2 rule. Also, EPA and OMB desired that the Phase 2 ozone 
implementation rule reflect careful consideration of the relationship 
between 8-hour ozone implementation efforts and these other rules.
    On November 9, 2005, EPA issued the final Phase 2 rule. This rule 
includes, among other things, our interpretation of requirements for 
reasonably available control measures, reasonably available control 
technology, attainment demonstrations and modeling requirements, and 
new source review guidelines for the 8-hour ozone nonattainment areas.
    States have already been moving ahead with their implementation 
plans. States, both individually and via cooperative regional 
organizations, are assembling emissions inventories, conducting air 
quality modeling, assessing the emissions reductions needed for 
attainment, and evaluating potential control measures. States will have 
until June 2007--more than 18 months after finalization of the entire 
regulatory framework for ozone implementation--to formulate their State 
Implementation Plans (SIPs). Together, the Phase 1 and Phase 2 ozone 
implementation rules provide a complete framework to guide SIP 
development, including detailed guidance on many implementation issues.
    In the case of particulate matter (PM), EPA has also been working 
hard to provide States with appropriate tools and guidance to implement 
the 1997 air quality standards. Designations for the fine particle 
standards were completed in December 2004 (slight modifications were 
completed in April 2005). CAIR is one of the major tools that will help 
States in the East reach attainment with the 1997 standards--where the 
bulk of PM2.5 nonattainment areas are located. EPA believes 
that it was essential to finalize CAIR before turning our attention to 
additional control requirements at the local level via the 
implementation rule.
    OMB received the proposed PM2.5 implementation rule for 
E.O. 12866 review in October 2004. At that time, review of other Agency 
priorities, some of which had court-ordered deadlines--e.g., the Clean 
Air Interstate Rule (CAIR), Clean Air Mercury Rule (CAMR), and Best 
Available Retrofit Technology (BART) rules--took precedence over review 
of the PM2.5 implementation rule. Also, EPA and OMB wanted 
the PM2.5 implementation rule to reflect careful 
consideration of the relationship between PM2.5 
implementation efforts and these other rules. The PM2.5 
implementation rule was signed by the Administrator on September 8, 
2005 and published in the Federal Register on November 1, 2005. This 
proposed rule covers a wide variety of topics, such as:
     attainment demonstrations and modeling;
     reasonably available control measures (RACM);
     reasonably available control technology (RACT);
     policy on PM2.5 and precursors such as 
SO2, NOx, VOC, ammonia, and direct emissions (including 
organic carbon, elemental carbon and crustal material); and
     new source review (NSR) requirements
    EPA will continue to work to issue the final rule as soon as we 
complete the public review and comment process. This rule will help 
States as they develop their nonattainment area SIPs, which must be 
completed by April 2008. If the final PM implementation rule is issued 
in summer 2006, as expected, States will have substantial time to rely 
on it as they develop their SIPs.

    Question 2. The Agency issued its ozone modeling guidance only 
after most States had begun work on their SIPs. Why was this rule so 
slow in coming out and how long did it remain at OMB? Is the time now 
remaining adequate for all States to complete their work in accordance 
with this guidance?
    Response. The original draft of the document ``Guidance on the Use 
of Models and Other Analyses in Attainment Demonstrations for the 8-
Hour Ozone National Ambient Air Quality Standards'' was released in 
1999 with a subsequent draft in February 2005. This technical guidance 
document is not a rule and was not reviewed by OMB. The draft guidance 
documents were developed after a comprehensive internal and external 
review by EPA, States, and stakeholders. After the release of the 
February 2005 draft, we again asked for and received comments from the 
EPA Regions, States and stakeholders. Based on these comments, a final 
version of the ozone modeling guidance document was released in October 
2005. The final version of the modeling guidance contains some changes, 
but most of the changes affect the final steps in the SIP modeling 
process and therefore we believe that States should be able to complete 
their modeling and submit their SIPs in accordance with the schedule 
contained in the final 8-hour ozone implementation rule. In addition, 
the preamble to EPA's 8-hour ozone implementation rule states that we 
will generally review the demonstrations for technical merit using 
EPA's most recent modeling guidance at the time the modeling relied on 
in the attainment demonstration is performed. However, in almost all 
cases, we expect States will be able to complete their work based on 
the recommendations contained in the October 2005 final guidance 
document.

    Question 3. EPA has determined that for purposes of RACT compliance 
under CAIR for Electric Generating Units qualifies, and thus that 
states upwind of Connecticut may meet their RACT obligations by 
participating in the CAIR cap and trade program for electric generating 
units. In fact, as much as 95 percent of the ozone in Connecticut's 
nonattainment areas is the result of transported air pollution. In 
addition, even after application of CAIR, in 2015 and 2020, Connecticut 
will remain in nonattainment for ozone. In what way does the CAIR rule 
and the Agency's approach to RACT for EGUs assist Connecticut in 
achieving the ozone NAAQS?
    Response. We agree that much of Connecticut's ozone problem is due 
to interstate transport of pollution. EPA recently completed extensive 
analyses to evaluate the interstate contributions to downwind ozone 
nonattainment areas as part of the CAIR. We determined, for example, 
that in the absence of CAIR, six States (MA, NJ, NY, OH, PA, and VA) 
might contribute up to 93 percent of exceedance-level ozone in 2010 in 
Middlesex Co, CT. Thus, we determined that each of the six States makes 
a significant contribution to nonattainment in this county.
    The Clean Air Act provides a statutory framework for nonattainment 
issues to be addressed. EPA has ensured regional action to reduce 
interstate ozone transport through CAIR. CAIR provides substantial air 
quality benefits for downwind areas significantly affected by transport 
of pollution from other States. EPA has set the CAIR NOx cap at a level 
that, assuming the reductions are achieved from electric generating 
units (EGUs), would result in EGUs installing emission controls on the 
maximum total capacity on which it is reasonable to install emission 
controls.
    As discussed in EPA's 8-hour ozone implementation rule, we believe 
total NOx emission reductions from EGUs covered by CAIR would be the 
same with or without RACT. Under a cap-and-trade program such as CAIR, 
there are a given number of allowances that equal a given emissions 
level. In that rule we stated our belief that: (1) EGUs subject to the 
CAIR NOx controls meet the definition of RACT for NOx (in States that 
require all CAIR NOx reductions from EGUs); (2) requiring source-
specific RACT controls on EGUs will not reduce total NOx emissions from 
sources covered by CAIR below the levels that would be achieved under 
CAIR alone; and (3) source-specific RACT could result in more costly 
emissions reductions on a per ton basis. Therefore, RACT and the CAIR/
RACT provisions of EPA's 8-hour ozone implementation rule do not affect 
interstate transport in any significant way, and would not be expected 
to affect Connecticut's air quality situation in any significant way.

    Question 4. Is there anything in the CAIR rule or in the Agency's 
current plans for implementing CAIR that would prevent States from 
including requirements for additional reductions at EGUs in their SIPs?
    Response. No, States are free to require controls on any sources 
within their boundaries. However, EPA is strongly encouraging States to 
consider all emission reduction opportunities before prematurely 
reaching the conclusion that EGUs are the best source category for 
additional controls to address their nonattainment issues.

    Question 5. As part of the followup to the November 10, 2005 
subcommittee hearing regarding the Implementation of the Existing 
Particulate Matter and Ozone Air Quality Standards, you were asked 
about EPA's determination that for purposes of Reasonably Available 
Control Technology (RACT), compliance with the Clean Air Interstate 
Rule (CAIR) qualifies as RACT. In your response, you indicated that 
``requiring source-specific RACT controls on EGUs will not reduce total 
NOx emissions from sources covered by CAIR below the levels that would 
be achieved under CAIR alone.'' However that response does not appear 
to answer the question. The question is whether or not a RACT 
requirement that functions in addition to CAIR would achieve additional 
reductions beyond CAIR and thus would help alleviate Connecticut's 
situation with regard to large amounts of interstate transport. 
Wouldn't a RACT that is not simply equivalent to a national cap and 
trade program provide additional reductions beyond that program? 
According to you, ``RACT and the CAIR/RACT provisions of EPA's 8-hour 
ozone implementation rule do not affect interstate transport in any 
significant way, and would not be expected to affect Connecticut's air 
quality situation in any significant way.'' Doesn't that in fact 
support the point that the agency's chosen position effectively 
eliminates RACT as a basis for controls beyond CAIR? If it is your 
contention that RACT applied at all applicable sources in the CAIR 
region results in fewer reductions that CAIR please provide an analysis 
and documentation to support that conclusion.
    Response. EPA has set the 2009 CAIR NOx cap at a level that, 
assuming the reductions are achieved from electric generating units 
(EGUs), would result in EGUs installing emission controls on the 
maximum total capacity on which it is feasible to install emission 
controls by 2009. The rationale for this approach is addressed in the 
November 29, 2005 final phase 2 8-hour ozone NAAQS implementation rule 
and is discussed more fully in the CAIR final rulemaking. RACT does not 
require installation of additional controls if it is infeasible to do 
so. Source-specific RACT requirements could drive up the cost of 
reductions on a per-ton basis compared to CAIR. Also, with the CAIR 
trading system in place, if a State did decide to place a specific 
emission limit on an EGU to meet a RACT limit, that EGU could sell any 
excess emissions allowances to another EGU source in the CAIR region, 
such that the same total emission reductions would be achieved in the 
CAIR region as without RACT. This is the expected result because RACT 
does not apply to all EGUs covered by CAIR. In fact, RACT potentially 
applies only to a subset of CAIR-affected EGUs. Thus, we do not believe 
that RACT in addition to CAIR would achieve additional emissions 
reductions in the CAIR region beyond those expected from CAIR alone. 
These findings are described in the preamble to the November 29 rule. 
We do not expect that a more quantitative analysis of specific RACT 
reductions would change these findings, and any such analysis would be 
speculative, since States generally determine RACT for NOx major 
sources on a case-by-case or source category basis.
                               __________
       Responses by William Wehrum to Additional Questions from 
                           Senator Lautenberg
    Question 1. On October 13, 2005, EPA proposed further changes to 
the New Source Review program as it relates to utilities. That same 
day, Deputy Administrator Peacock released a memorandum related to NSR 
Enforcement (Peacock Memorandum). In that memorandum he stated that 
``in deciding which cases to pursue, it is appropriate to focus on 
those that would violate our NSR reform rules and our latest NSR 
utility proposal which the agency is releasing today.'' As a result of 
that policy we understand that EPA will not be pursuing future cases 
that would not trigger NSR under either EPA's Equipment Replacement 
Rule (68 Fed. Reg. 61248 (October 27, 2003)) or the NSR rule proposed 
on October 13, 2005.
    As I am sure you are aware, the Equipment Replacement Rule was 
stayed by the United States Court of Appeals for the D.C. Circuit on 
December 24, 2003. However, the Peacock memorandum proposes to use that 
rule as a basis for not bringing enforcement actions, thereby giving 
that rule prospective and retrospective effect and effectively 
legalizing actions at sources that meet the requirements of the stayed 
rule but that do not meet the requirements of Federal and SIP-approved 
NSR-PSD rules. If, as the court found likely, that rule proves to be 
illegal, and source have made changes subject to NSR in reliance on the 
Peacock Memorandum, will EPA bring enforcement actions against such 
sources? If not, isn't EPA effectively legalizing questionable activity 
that the Court of Appeals has already signaled may not comport with the 
dictates of the law? What will EPA's answer be to judges that seek to 
minimize or eliminate penalties against such sources on the basis that 
EPA sanctioned such activity through the Peacock memorandum?
    Has EPA analyzed the amount of emissions increases that will or 
could be allowed through such a policy? Considering that one pre-
requisite for the court stay was the finding that EPA's Equipment 
Replacement Rule would cause ``irreparable harm'' to the public in the 
absence of a stay, why is EPA allowing unlawful activities that caused 
and will cause irreparable harm to the public to escape enforcement 
under the Peacock Memorandum? Does EPA intend for the enforcement 
policies announced in the Peacock Memorandum to preempt or otherwise 
affect the ability of States and citizens to enforce against activities 
that would violate existing NSR requirements but not the Equipment 
Replacement Rule or the October 13, 2005 rulemaking proposal?
    Response. The regulated community must comply with all applicable 
regulations, including existing NSR requirements. As your question 
points out, the Agency's Equipment Replacement Rule (ERP) has been 
stayed by the U.S. Court of Appeals for the District of Columbia 
Circuit, and therefore the regulated community currently has no legal 
right to rely on ERP to avoid potential NSR liability. The ``Peacock 
Memorandum'' was not intended to circumvent the D.C. Circuit stay or 
``legaliz[e] questionable activity.'' Indeed, the Agency reserves its 
discretion to bring enforcement actions against companies that violate 
the law, including those that prematurely rely on ERP. EPA's 
enforcement resources are limited, and thus the Agency must expend its 
resources wisely. The Peacock Memorandum does not create any rights for 
the regulated community and is intended to help focus EPA's enforcement 
discretion on those cases that would have the biggest benefit for human 
health and the environment.

    Question 2. On August 25, 2005, Adam Kushner, Director of the Air 
Enforcement Division sent a memo to William Harnett, Director of IPTID/
OAQPS regarding the proposed New Source Review Clean Air Interstate 
Rule. In that memo, Mr. Kushner states that ``the proposed rule will 
adversely affect our enforcement cases and is largely unenforceable as 
written.'' Did you review this memorandum prior to release of the 
proposal? Was this memorandum shared with the Department of Justice 
prior to Administrator Johnson signing the rulemaking proposal? Did the 
Department of Justice respond? Please provide any documents in EPA's 
possession that relate to the response of the Department of Justice.
    Response. I did not review the Kushner memo prior to release of the 
NSR-EGU proposal. The memo was reviewed by my staff. The proposal 
reflects the agency's determination regarding this matter. I have been 
told by OECA managers that it was not shared with DOJ prior to 
Administrator Johnson's signature.

    Question 3. Recent events suggest that Mr. Kushner's memo appears 
to have been accurate. Defendants in two existing NSR enforcement cases 
have already cited the proposal as grounds for a stay or summary 
judgment. In U.S. v. AEP, (Consolidated Civil Actions No. C2-99-1182 
and C2-99-1250 (S.D. Oh.)), American Electric Power filed a motion for 
stay in which it stated that ``USEPA's actions eliminate the need for 
further liability and future remedy proceedings'' and that EPA's 
``admissions severely undercut Plantiff's liability claims.'' In U.S. 
v. Cinergy, (Civil Action No IP99-1693C-M/S), Cinergy filed for summary 
judgment stating that `` The United States Environmental Protection 
Agency has now admitted--including as recently as three weeks ago--that 
it did not provide ``fair notice'' of the Clean Air Act New Source 
Review legal standards that Plaintiff attempt to apply in this case.''
    In light of these filings, how can you or EPA reasonably contend 
that these rules will have no impact on existing enforcement cases? 
What guarantee can you or EPA provide that the positions taken by the 
Defendants above will not be accepted by the courts? Did you or EPA 
consider the possibility that the statements cited by the defendants in 
the cases above might impact existing enforcement cases? Or did EPA 
consider that possibility and reject it? If so, why? In light of the 
filings in these cases has EPA or the Department of Justice undertaken 
a review of the impact on existing enforcement cases? Considering that 
some of these same defendants had filed similar motions in pending 
enforcement cases following adoption of EPA's ERP rule, why would EPA 
have jeopardized these same pending enforcement cases by issuing a 
rulemaking proposal that has now prompted the above motions filed in 
the AEP and Cinergy cases?
    Response. The NSR rules plainly and expressly state that they are 
to be applied to changes that post-date the rules' respective effective 
dates and thus do not have any impact on the existing enforcement 
cases. EPA intends to continue to vigorously pursue the existing 
enforcement cases and other matters in negotiations. EPA did consider 
the impact that the rules would have on the existing enforcement cases. 
It is for that reason the rules plainly and expressly state that the 
rules are to be intended to only those changes that post-date the rules 
effective date. With respect to whether or not EPA or DOJ has 
evaluated, or is evaluating, the impact of the rules on the enforcement 
cases, it is EPA's long-standing policy to not comment on the specific 
enforcement sensitive aspects of individual cases.

    Question 4. One of the approaches taken in the proposed rule is not 
new. EPA took public comment on basically this approach in 1996. In 
doing so, EPA noted that ``one of the most troubling side effects'' of 
the approach was that it ``could ultimately stymie major new source 
growth by allowed unreviewed increases of emissions from modifications 
of existing sources.'' 61 Fed. Reg. 38250, 38270/2 (July 23, 1996). 
Moreover, in December 2002, EPA once again rejected this approach 
saying that it ``could lead to unreviewed increases in emissions that 
could be detrimental to air quality.'' 67 Fed. Reg. at 80205 (Dec. 31, 
2002). What, if anything has changed the agency's view with regard to 
the potential emissions increases that would result from the approach 
proposed in the rule? Would any perceived differences prevent the 
immediate local, regional or national unreviewed increases in emissions 
that led EPA to reject this approach in 2002? Although the proposal 
cites a number of benefits from the rule, none of these relate to 
decreased emissions or increased environmental protection. Instead the 
benefits cited relate to industry flexibility. Do the previous 
statements regarding this approach remain accurate? If not, why not?
    Response. The previous statements referred to in the question do 
not apply to the recently proposed rule. The referenced statements (61 
FR 38250, 38270/2; 67 FR 80205) were about an approach considered 
during the 1980's, commonly known as CMA Exhibit B. CMA Exhibit B is an 
emissions test that compares pre-change emissions based on design 
capacity (potential emissions) to post-change emissions based on design 
capacity (potential emissions).
    Our proposed rule includes three options for determining an 
emissions increase at electric generating units (EGUs), none of which 
operate in the same fashion as the CMA Exhibit B test. For example, one 
option is an emissions increase test that is based on the current NSPS 
regulations, which compares the maximum hourly emissions achievable at 
an emissions unit during the past 5 years to the maximum hourly 
emissions achievable at that unit after the change. This option 
determines actual emissions based on current operating capacity, which 
is not the same as the approach in CMA Exhibit B. Furthermore, CMA 
Exhibit B proposed to use potential emissions to determine the amount 
of emissions that must be offset. We proposed to retain actual 
emissions for computing the amount or availability of emissions 
offsets. For these reasons, the maximum achievable hourly emissions 
option of our proposed rule for EGUs is not the same approach as CMA 
Exhibit B.
    We do not expect the proposed rule would lead to emission increases 
from the power sector. To the contrary, emissions from the power sector 
are projected to decrease dramatically over the next two decades. This 
is attributable to several CAA programs, including the Clean Air 
Interstate Rule, the Acid Rain Program, and the Clean Air Visibility 
rule. We describe the EGU emission reductions from these regulations in 
detail at 70 FR 61084. We intend to present supporting analyses in our 
supplemental proposal, which should be published in the near future.

    Question 5. In the Kushner memorandum, an attachment contains case 
studies that examine the potential effect of the EPA NSR proposal. Case 
study one appears to indicate that under the proposed approach, 
SO2 emissions would increase by 13,096 tons per year. Case 
studies 2 through 4 also show increases in emission of SO2 
and NOx. What is the agency's position with regard to these case 
studies? Does the agency believe that its proposed changes will not 
allow such increases in emissions? On what basis does the agency reach 
such a conclusion?
    Response. As previously noted, we intend to provide in the near 
future a thorough environmental analysis of the NSR proposal in a 
supplemental proposal.

    Question 6. The EPA Office of Enforcement recently briefed EPA on 
its enforcement activities during the last year and noted that 
enforcement cases brought to conclusion during FY 2005 resulted in 1.1 
billion lbs. of pollutant reduction from all media. Of these 
reductions, nearly half the reductions, in the vicinity of half a 
billion pounds, were from 2 NSR enforcement cases--the Illinois Power/
Dynegy Case and the Ohio Edison case. And these benefits only take into 
account a single year of reductions, with the actual reductions going 
on for many years into the future. These two cases represent the vast 
majority of benefits from the top ten air cases, which had estimated 
benefits for a single year valued at $4.6 billion. If the Illinois 
Power/Dynegy and Ohio Edison cases had not yet been brought and instead 
were ready to be referred to the Department of Justice now, would they 
be eligible for filing under the Peacock memo? If so, how and why?
    Response. EPA will continue to pursue existing filed utility cases 
and those matters in ongoing negotiations. Both Illinois Power and Ohio 
Edison are filed cases and were prosecuted to successful settlements. 
It is EPA's long-standing policy to not comment on specific enforcement 
sensitive aspects of individual cases.

    Question 7. According to an article in Greenwire dated July 14, 
2004, 14 NSR cases were referred to the Department of Justice (DOJ), 
but were not filed as of that date. In addition, 8 cases were being 
developed for possible referral to DOJ. Of these cases, how many would 
not be eligible for filing or referral under the Peacock memorandum? 
Have any of these cases been filed or referred since the July 14, 2004 
story? How many? Have any of these cases been filed or referred since 
the Peacock Memorandum was issued? Will the agency be moving forward to 
file or refer any of these cases? When? Are there additional NSR cases 
for which EPA has filed section 114 requests or issued notices of 
violation? How many? Have any of these cases been referred or filed 
since July 14, 2004? How many? What are the plans for moving these 
cases forward?
    Response. Since July 2004, with respect to Clean Air Act New Source 
Review utility violations, EPA has issued 4 information requests under 
Section 114 of the Clean Air Act, served 3 notices of violation, filed 
0 complaints, and settled 2 cases. As to your remaining questions, EPA 
considers the status of individual referred cases or cases under 
investigation for possible referral to be enforcement sensitive 
information and thus it is EPA's long-standing policy to not comment on 
specific enforcement sensitive aspects of individual cases.

    Question 8. Please indicate the number of cases that have been 
referred to EPA for prosecution of NSR violations since 1999, but have 
not yet been filed. Please identify these cases by company or facility 
name. Please provide EPA's position as to whether each of those cases 
should go forward. Do EPA's enforcement policies now exclude 
prosecution of these cases? If so, then do they qualify for an 
enforcement privilege? Please indicate, using aggregate figures what 
reductions in SO2, NOx, mercury, ozone and fine particulate 
matter would occur if the facilities subject to these referrals 
installed SCRs (or operated existing SCRs year round) and FGDs within 
the next 3 or 4 years?
    Response. EPA considers the status of individual referred cases or 
cases under investigation for possible referral to be enforcement 
sensitive information and thus it is EPA's long-standing policy to not 
comment on specific enforcement sensitive aspects of individual cases.

    Question 9. We understand that 75 investigations were ``suspended'' 
by Assistant Administrator Suarez in November 2003. Are these 
investigations still suspended? Please indicate, using aggregate 
figures what reductions in SO2, NOx, mercury, ozone and fine 
particulate matter would occur if the facilities subject to these 
referrals installed SCRs (or operated existing SCRs year round) and 
FGDs within the next 3 or 4 years?
    Response. EPA considers the status of individual cases or cases 
under investigation for possible referral to be enforcement sensitive 
information. Thus it is EPA's long-standing policy to not comment on 
specific enforcement sensitive aspects of individual cases.

    Question 10. With respect to the proposed new source review rule 
that was signed on October 13, 2005, please produce all documents 
(including electronic documents and e-mails) in the Agency's possession 
related to the proposed rule, that were prepared or dated prior to 
October 13, 2005, including but not limited to:
    (a) drafts of the preamble or inserts for the preamble;
    (b) comments on draft rules or preambles;
    (c) documents discussing the legislative history or legal authority 
related to this proposal; and
    (d) correspondence or other documents related to the proposed rule 
that were shown to, given to, or received from people other than 
Federal employees or contractors.
    Response. In response to your request for information on the NSR 
rule, we have included all non-privileged documents available at this 
time.
    [The referenced documents have been retained in committee's file.]
                               __________
       Responses of William Wehrum to Additional Questions from 
                            Senator Jeffords
    Question 1. In its proposed PM Implementation Rule, EPA has 
indicated that for States meeting their SO2 cap under the 
Clean Air Interstate Rule (CAIR) through reductions at electric 
generating units (EGUs), then EGUs in that State may comply with the 
Reasonably Available Control Technology (RACT) obligations of the Clean 
Air Act by complying with CAIR. Given that CAIR is a cap and trade 
program, it will clearly not require reductions at all major sources in 
nonattainment areas and will allow many such sources instead to remain 
entirely uncontrolled.
    Please provide, by State, a list of all major source EGUs in the 
CAIR region that EPA estimates will not have both a scrubber and a SCR 
in 2010, 2015 and 2020 under CAIR. Please identify which of these 
sources are in nonattainment areas. Has EPA analyzed the difference 
between applying the CAIR based RACT approach described above and a 
source specific RACT approach in terms of local air quality in each 
nonattainment area? Will EPA conduct such an analysis and put it in the 
record so that each community will be able to see whether their 
nonattainment status will be better or worse off under the CAIR equals 
RACT approach?
    Response. In the PM2.5 implementation rule proposal 
notice, EPA proposed to find that CAIR satisfies RACT in States that 
achieve their CAIR reductions solely from EGUs, with the condition that 
existing selective catalytic reduction (SCR) systems in 
PM2.5 nonattainment areas be run year-round. (Federal 
Register, Vol. 70, No. 210, November 1, 2005, p. 66024-25.) The notice 
stated that the CAIR 2009 and 2010 caps would require EGUs to install 
emission controls on the maximum total capacity on which it is feasible 
to install controls by those dates, and that imposition of source-
specific RACT on EGUs covered by CAIR would not reduce total emissions, 
but would only impose a higher cost to achieve the same total emission 
reductions. The notice also observed that a State has authority to 
conduct its own RACT analysis for any source or to require beyond-RACT 
controls for attainment.
    This question appears to presuppose that RACT for EGUs should be 
SCR for NOx control and scrubbers for SO2 control. EPA has 
not issued guidance indicating that a particular level of 
SO2 or NOx control is RACT for EGUs or other sources in 
PM2.5 nonattainment areas. There currently is no established 
RACT benchmark for EGU control in PM2.5 areas to serve as a 
comparison point with CAIR.
    This question also appears to assume that if a coal-fired unit does 
not have SCR for NOx removal or scrubbers for SO2 removal, 
then it would be entirely uncontrolled. Significant reductions in NOx 
can be achieved through combustion control technology (such as low NOx 
burners) and significant reductions in SO2 can be achieved 
through switching to lower sulfur coal.
    The spreadsheet that you have requested is attached and we have 
also included information regarding NOx emissions and emission rates, 
SO2 emissions and emission rates, the size of the unit, and 
the capacity factor (e.g. how much the unit is projected to operate) of 
each unit. This information shows that, in general, scrubbers and SCRs 
are projected to be installed on larger units with higher capacity 
factors (which would emit significantly more if scrubbers and SCR were 
not installed), while smaller, less frequently operated units tend to 
use low NOx burners and low sulfur coal as their compliance choice.
    As noted above, EPA designed CAIR to maximize emission reductions 
that could occur by 2010 given limits to important resources needed to 
install emission controls such as available boiler-maker labor. Any 
RACT determination would have to consider whether these resources were 
available when determining what controls would be appropriate to apply.
    EPA has not performed an air quality analysis comparing 
hypothetical source-specific RACT controls to those projected under 
CAIR. We have not determined analyses to be performed for the final PM 
implementation rule.
    [The referenced spreadsheet follows.]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Question 2. EPA's CAIR allows a utility to participate in the 
federally-run SO2 regional trading program if the State in 
which the utility is located complies with CAIR by adopting a State 
implementation plan that requires utilities to turn in acid rain 
allowances at the rate of 2 allowances for every ton of SO2 
emitted from 2010 through 2014, and 2.86 allowances for every ton 
emitted in 2015 and later. EPA's recent analysis of the Clean Air 
Planning Act indicates that SO2 reductions from utilities 
beyond those achieved by CAIR would be useful in bringing additional 
areas into attainment with the PM2.5 NAAQS and could be 
achieved without raising the cost of electricity compared to what is 
expected under CAIR. I understand that a number of States are 
considering requiring SO2 reductions from utilities greater 
than those that would be required under CAIR.
    If a State submits a State implementation plan that requires 
utilities in that State to turn in acid rain allowances at a higher 
rate (e.g., 3 allowances for every ton of SO2 emitted in 
2015 and later), will EPA allow that State's utilities to participate 
in the federally-run SO2 regional trading program?
    If not, why not? Is there some other way that a State could require 
greater reductions than required by CAIR and still have its utilities 
participate in the federally-run trading program?
    I understand that when States have asked this question in the past, 
EPA has refused to provide a definitive answer, and instead has 
suggested to States that they should seek reductions from outside the 
power sector. Although EPA may have a preference as to how States get 
the emission reductions necessary to demonstrate attainment, what 
authority does EPA have for imposing this preference on States?
    Why is EPA refusing to give States an answer to this important 
question when this information could be useful for States as they 
develop their implementation plans?
    Response. States are allowed to require more stringent reductions 
than CAIR from the power sector. That is a statutory prerogative that 
CAIR has not altered. We think that CAIR will improve air quality 
significantly in the affected region and that States should review the 
CAIR regulatory record thoroughly and other Federal/State rules that 
are now taking effect and then determine what further controls might be 
necessary. Several regions of the country are undertaking additional 
detailed local air quality modeling of CAIR along with other Federal/
State actions to address their nonattainment problems. This modeling 
will include emissions reductions from CAIR as well as from other 
Federal and State emissions reductions measures. For areas that are 
still projected to be in nonattainment, this modeling will provide 
information about what additional sources may need to be controlled. We 
think it is premature to evaluate what further control options States 
may choose to consider. States will have a better idea of what they 
need to do to have effective attainment compliance strategies after air 
quality modeling and related analyses are completed. Given the nature 
of regional cap and trade programs like CAIR, a State cannot simply 
lower its emissions allowance budget and achieve specific reductions 
from specific facilities. The emission reductions occur whenever and 
wherever it is most cost-effective to make them.
    Looking at the Northeast, EPA's analysis indicates that only one 
area, in western Pennsylvania, will likely be in nonattainment for the 
PM2.5 NAAQS after 2009, and we believe it is likely that 
local controls will most effectively rectify this situation.

    Question 3. As you know, the Federal Records Act governs the 
maintenance and disposition of agency records. According to the EPA 
website, Federal records include ``working files, drafts, E-mail 
messages, data and spreadsheets, computer output, data from test 
equipment, results of computer modeling, videos, maps, architectural 
drawings and microfilm.'' The EPA website asks and answers the 
following question ``What do Freedom of Information Act requests, 
lawsuits, Congressional inquiries and Federal judicial opinions have in 
common--The need for impeccable records.'' Are you aware of the 
requirements of the Federal Records Act? Please describe the 
requirements of the Act as applied to your documents, including the 
disposition schedules for your documents. Have you ever disposed of any 
records in contravention of the requirements of the Act? Have all your 
records either been retained or disposed of in accordance with an 
approved disposition schedule?
    Response. I am aware of the requirements of the Federal Records 
Act. I believe that I have complied with these requirements during my 
tenure at EPA.

    Question 4. EPA stated in its May 12th Federal Register notice 
finalizing the Clean Air Interstate Rule (or CAIR) that the reductions 
in ground-level ozone achieved by CAIR could save 500 more people from 
premature death every year. Yet EPA did not include these benefits in 
its main analysis for the CAIR Rule. Since then, three new studies were 
published in the July edition of the journal of Epidemiology which 
clearly provide strong scientific evidence that the link between ozone 
and premature mortality is real and significant and additive to the 
effects of fine particles. At the hearing on November 10th you 
mentioned that mortality is among the health effects from ozone. 
However, you did not list that among the health effects mentioned in 
your written testimony. Does the agency agree that exposure to ozone 
has been associated with premature mortality? Will the agency include 
benefits associated with reduction in premature mortality from ozone in 
rules that relate to ozone from now on?
    Response. As I stated at the hearing, ``studies also show an 
association between ozone exposure and mortality.'' EPA is reviewing 
the body of literature available on the association between ozone 
exposure and premature mortality. EPA's second external review draft of 
the Criteria Document for ozone has concluded that there is evidence 
that exposure to ozone has been associated with premature mortality. We 
are exploring ways of appropriately characterizing the premature 
mortality benefits of reducing ozone and have included preliminary 
estimates in recent analyses of the Clear Skies legislation as well as 
in other economic assessments.

    Question 5. During the confirmation process for Deputy 
Administrator Peacock, he was asked the following question:
    ``According to an Inside EPA article of September 17, 2004, EPA and 
OMB have been collaborating on an approach which polls a small number 
of outside experts and asks them to interpret the literature on fine 
particle health effects and provide an estimated dose-response 
function. This sounds to me like an odd kind of non-scientific process 
where a small number of selected people are being asked to do the work 
traditionally done by EPA scientists. Inside EPA reports that the 
result of this OMB-EPA collaboration is a lowering of the estimated 
benefits of pollution control. The professional experts and scientists 
on the EPA staff were strongly critical of this project, which I also 
imagine is a very time-consuming and expensive effort. Aren't there 
enough health effects experts already on the government payroll in EPA 
who have already interpreted the particulate matter health effects 
literature, and haven't these EPA experts' interpretations already been 
subject to outside peer review by the Science Advisory Board and the 
National Academy of Sciences?''
    Mr. Peacock replied that:
    ``I am not familiar with the expert elicitation approach mentioned, 
nor any of the details associated with the estimating the benefits of 
pollution control. If confirmed, I plan to take a close look at this 
issue and will make any changes necessary.''
    Has Deputy Administrator Peacock undertaken this process and when 
is a result expected? If not, would you please respond to the question 
on behalf of Deputy Administrator Peacock or answer the question on the 
basis of your own knowledge and information?
    Response. The use of formal methods to elicit probabilistic 
judgments from experts is an important tool in the field of decision 
analysis. Over the past two decades, there has been an increasing 
number of studies, funded both by the Federal Government and the 
private sector, that have used expert judgment techniques to 
characterize uncertainty in environmental risk analysis and 
decisionmaking. In the 1980's, EPA's Office of Air Quality Planning and 
Standards (OAQPS) successfully used expert judgment to characterize 
uncertainty in the health effects of exposure to lead (Whitfield and 
Wallsten, 1989) and to ozone (Winkler et al., 1995).
    Expert elicitation is a formal, highly structured, and well-
documented process whereby expert judgments are obtained through a 
structured interview. Responses to the elicitation are usually in the 
form of a probability distribution of outcomes to a quantitative 
question (i.e., the relationship of PM2.5 exposures to 
mortality are elicited and presented as a mean, median, and estimates 
of the 5th, 50th, and 95th percentiles of an uncertainty distribution). 
Formal expert elicitations are usually conducted using independent 
consultants with expertise in statistics, decision analysis, and 
probability encoding to structure unbiased questions about uncertain 
relationships or parameters and who design and implement the process 
used to obtain probability and other judgments from subject matter 
experts.
    In 2002, the National Academy of Sciences (NAS) released a report 
on its review of the Agency's methodology for analyzing the health 
benefits of measures taken to reduce air pollution. In its report, the 
NRC said that EPA has generally used a reasonable framework for 
analyzing the health benefits of PM-control measures and recommended 
that the Agency take a number of steps to improve the characterization 
of uncertainties in its benefits analysis. EPA has consulted with the 
Science Advisory Board (SAB) Council\1\ and the Office of Management 
and Budget (OMB) to develop and improve the methods used in conducting 
regulatory impact analyses (RIAs).
---------------------------------------------------------------------------
    \1\ EPA-SAB-COUNCIL-ADV-99-005, 1999; and SAB-HES, 2004. 
---------------------------------------------------------------------------
    The SAB and the NAS support the continued use of empirically-based 
cohort studies in estimating the benefits of mortality risk reduction 
associated with air pollution. However, the NAS recommended that (EPA 
should move the assessment of uncertainties from its ancillary analyses 
into its primary analyses by conducting probabilistic, multiple-source 
uncertainty analyses. To do so, EPA will specify probability 
distributions for major sources of uncertainty based on available data 
and expert judgment''(NAS, 2002: 14). The NAS further stated that EPA 
should build on its earlier experience in developing and using expert 
elicitation by the Office of Air Quality Planning and Standards in the 
1980's and by others in fields such as climate change, residential 
radon cancer risks, and stratospheric ozone depletion. They also 
recommended that EPA clearly distinguish between data-derived 
components of an uncertainty assessment and those based on expert 
opinions.
    In response to the NAS recommendations, EPA has developed a 
comprehensive, integrated strategy for characterizing the impact of 
uncertainty in key elements of the benefits modeling process (e.g., 
emissions modeling, air quality modeling, health effects incidence 
estimation, valuation) on the health impact and monetized benefits 
estimates that are generated. The strategy includes several different 
tools and methods such as meta-analysis, expert elicitation, and other 
statistical approaches.
    Part of this strategy was a collaborative effort between the EPA's 
Office of Air and Radiation (OAR) and the Office of Management and 
Budget (OMB) on the Clean Air Non-Road Diesel Rule. EPA extended its 
collaboration with OMB in 2003-2004 to conduct a pilot expert 
elicitation intended to more fully characterize uncertainty in the 
effect estimates used to estimate mortality resulting from exposure to 
PM. The pilot expert elicitation consisted of a series of structured 
questions, both quantitative and qualitative, about the nature of the 
PM2.5-mortality relationship. The elicitation allowed 
experts to assimilate multiple sources of information from scientific 
studies into a single function that expresses their judgment of the 
concentration-response relationship for mortality. These judgments were 
expressed in terms of median estimates and associated percentile values 
of an uncertainty distribution.
    The pilot was designed to provide EPA with insights into the design 
and application of expert elicitation methods to economic benefits 
analysis, and lay the groundwork for a more comprehensive elicitation. 
The scope of the pilot was limited to a 1-year effort in which we 
limited our selection of experts to a total of 5 individuals from lists 
of nationally recognized experts that participated on two previously 
established panels of the NAS. The limited scope of the pilot meant 
that a full expert elicitation process was truncated and many aspects 
of the uncertainty surrounding the PM2.5-mortality 
relationship could not be quantitatively characterized. Recognizing 
this, the results of the pilot are only used by EPA for illustrative 
purposes.
    The results of the pilot elicitation were presented in the Clean 
Air Non-Road Diesel Rule and in the Clean Air Interstate Rule. We 
presented the primary estimate of benefits based on the Pope et al. 
(2002) study as recommended by the SAB. Thus, the elicitation did not 
lower our primary estimate of benefits. We then characterized 
uncertainty surrounding our primary estimate using a probabilistic 
range of benefits based on statistical uncertainty as captured by the 
Pope et al. (2002) epidemiological study. The elicitation results then 
expanded the range of uncertainties that were expressed quantitatively. 
Both approaches provided insights into the likelihood of different 
outcomes and about the state of knowledge regarding the benefits 
estimates. Both approaches have strengths and weaknesses.
    Based on our experience during the pilot, EPA is currently 
conducting a full-scale expert elicitation that will provide a more 
robust characterization of the uncertainty in the premature mortality 
function. The full-scale elicitation includes 12 experts who were 
nominated by scientists who have published literature on this topic and 
from a list of individuals provided by the Health Effects Institute.
    The time and cost of conducting an expert elicitation will vary 
depending on the depth of coverage of a particular topic. For the Pilot 
Elicitation, EPA devoted a team of six technical experts from our staff 
to the project. We also hired a contractor team that consisted of three 
people with expertise in conducting elicitations. Pilot testing of the 
elicitation was conducted with EPA staff in the Office of Research and 
Development. Expenses for the elicitation are associated with the 
contractor's efforts to design and conduct the elicitation (including 
travel expenses to each elicitation interview), compensation to the 
experts participating in the elicitation, and conducting an external 
peer review of the elicitation. The Pilot Elicitation was limited in 
time to a 1-year effort, while the full-scale elicitation will be 
conducted over a 2\1/2\-year period. The total cost of these 
elicitations has ranged from $200,000 to more than $500,000, for the 
pilot and full-scale elicitation, respectively.

    Question 6. Another question asked of Deputy Administrator Peacock 
is as follows:
    `` In my view, the Agency's budget and resources for hazardous air 
pollutants research, regulation development and prevention activities 
have been much lower than warranted by the statutory requirements in 
the Clean Air Act. As a result, the Agency has often been significantly 
behind schedule. EPA has also recently issued unauthorized MACT 
standards incorporating risk factors inappropriately (for example in 
the plywood/boiler MACT development) and is also unwisely 
contemplating, perhaps due to resource constraints, further 
unauthorized residual risk regulatory actions. Will you commit to 
reviewing the air toxics program budget and resources and advising this 
committee of gaps in funding or resources that are needed so that the 
Agency can promulgate and enforce rules that comport with the statutory 
requirements of the Clean Air Act?''
    Mr. Peacock answered that ``I am aware of the ongoing demands and 
the importance of the air toxics program. If confirmed, I will look 
into this issue and address any problems if warranted.''
    Can you tell the status of this review and when this question will 
be answered?
    Response. The Agency faces significant workload and resource 
challenges to fully implement the air toxics Clean Air Act 
requirements. In light of these challenges, we have developed a 
strategy that prioritizes resources to maximize risk reduction. To 
date, we have completed 16 area source standards, and we are working on 
developing standards for an additional 32 (four of which are the 
subject of a consent decree). Once completed, standards for the 32 area 
source categories will address a significant portion of urban HAP 
emissions, as outlined in EPA's 1999 Integrated Urban Air Toxics 
Strategy. We also expect to have completed the first 8 residual risk 
standards by the end of 2006.

    Question 7. Executive Order 12866, which this Administration has 
said governs its process for reviewing proposed and final regulations, 
requires OMB to comply with certain requirements to improve the 
transparency of the regulatory development process, such as disclosing 
relevant information regarding any communications with outside parties 
while a regulation is under review by OMB. These requirements are 
designed in part to ensure that the public knows whether people outside 
the government are sharing views with OMB about regulations as they are 
being reviewed, and to provide the public with information about the 
changes made to a rule as a result of the inter-agency review process.
    As you know, the PM Implementation rule, when finalized will 
provide important guidance to the States for implementing the 
PM2.5 NAAQS. A number of Senators at the November 10th 
hearing raised concerns regarding the relatively slow pace at which 
this rule is being developed and released. The official draft of the 
proposed PM Implementation Rule went to OMB on October 14, 2004, where 
it remained for nearly a year. However in recent times, EPA has had a 
practice of sending informal drafts or portions of rules to OMB prior 
to sending a complete official package for review. Was this proposed 
rule or portions of this proposed rule shared with OMB prior to the 
official transmission on October 14, 2004? How and when? Which portions 
or drafts? Please provide all documents in your possession that relate 
to the sharing of drafts or portions of the proposal with OMB prior to 
October 14, 2004.
    Response. The recently proposed PM Implementation Rule will help 
States develop plans to achieve attainment with the health-based 
PM2.5 NAAQS. Although I did not have a substantive role in 
the preparation or review of this proposal, I have been informed that a 
draft was sent informally to OMB prior to October 14, 2004. I have no 
knowledge or records that would show which version or versions were 
informally provided to OMB. It is likely that the draft that 
incorporated comments from the internal EPA workgroup was provided to 
OMB sometime after March 2004. The only documents in my possession that 
relate to the sharing of drafts or portions of the proposal with OMB 
prior to October 14, 2004 indicate that the proposal was to be 
submitted formally to OMB on October 12, 2004.

    Question 8. When OMB has a regulatory package that has been 
submitted ``informally,'' do you know whether it logs the dates and 
names of individuals outside the government who are involved in any 
substantive communication with OMB about the regulation as it is 
required to do once a regulatory package is submitted formally?'' 
Please list each rule that you have worked on at EPA that has been 
submitted informally to OMB and explain why it was submitted 
informally. For each such rule, list the individuals or stakeholders 
outside the government with whom you believe OMB had substantive 
communications after the regulatory action was shared informally with 
OMB? Please provide any related documents in your possession.
    Response. As I understand it, OMB's policy under Dr. Graham is to 
log information about contacts with outside parties on all rules that 
are under informal review. To my knowledge, all major rules I have 
worked on at EPA were submitted informally to OMB prior to formal 
submission. Each of these rulemakings embodied complex technical and 
legal issues, and informal submission to OMB allows reviewers at OMB 
and other agencies additional time to read documents, and often leads 
to an expedited review process.
    I do not possess any documents related to OMB communications with 
individuals or stakeholders outside the government after draft rules 
were informally submitted to OMB.

    Question 9. Section 307(d) of the Clean Air Act, Congress requires 
EPA to place in the docket all drafts of proposed and final rules (and 
accompanying documents) sent to OMB for interagency review and ``all 
written comments'' on those drafts by other agencies. On a regulatory 
package that has been sent to OMB for review, if someone from OIRA or 
another agency, rather than sending comments in writing to EPA, were to 
dictate changes to draft preamble or regulatory text to EPA staff with 
the understanding that EPA staff would incorporate these changes, would 
that be a circumvention of these provisions rather than compliance with 
them? What is the policy with regard to oral conversations regarding 
changes to EPA proposals or final rules? Are EPA staff directed that, 
if they receive changes to text in a Clean Air Act rulemaking package 
orally rather than in writing, they are to write the comments down, 
identify who made the comments, and then ensure that they are placed in 
the docket at the appropriate time? If not, why not?
    Response. Section 307(d)(4)(B)(ii) states that ``[t]he drafts of 
proposed rules submitted by the Administrator to the Office of 
Management and Budget for any interagency review process prior to 
proposal of any such rule, all documents accompanying such drafts, and 
all written comments thereon by other agencies and all written 
responses to such written comments by the Administrator shall be placed 
in the docket no later than the date of proposal of the rule. The 
drafts of the final rule submitted for such review process prior to 
promulgation and all such written comments thereon, all documents 
accompanying such drafts, and written responses thereto shall be placed 
in the docket no later than the date of promulgation.'' This 
requirement of section 307(d) encompasses ``written'' comments. EPA 
procedure does not require that conversations during the interagency 
review be recorded and therefore they are generally not transcribed and 
submitted to the docket; however any changes to a rule draft reflecting 
a conversation would be available for review in the docket.

    Question 10. In the question referenced above, sent to you as 
followup to the November 10, 2005 study you were asked: Will EPA 
conduct such an analysis and put it in the record so that each 
community will be able to see whether their nonattainment status will 
be better or worse off under the CAIR equals RACT approach?'' In your 
answer, you stated that: ``We have not determined analyses to be 
performed for the final PM implementation rule.'' Please indicate 
whether EPA will or will not conduct such an analysis and the timeline 
for doing so.
    Response. EPA intends to finalize the PM2.5 
implementation rule later this year. At this time, EPA is considering 
what analyses will be performed in support of the final rule. EPA has 
not made a final decision on whether the analysis suggested in the 
question above will be conducted, but given the rulemaking schedule, we 
will likely make this decision in April or May.
    Please note that EPA has performed analysis of the impact of CAIR 
and other existing measures on future PM2.5 and ozone 
levels. Links to our most recent projections are included on the 
``Multi-Pollutant Analyses and Technical Support Documents'' web page 
at http://www.epa.gov/airmarkets/mp/. Also, under the Clean Air Act, 
States perform local attainment modeling that shows the air quality 
impact of additional controls they are using to meet the NAAQS. This 
information also is available to the public.

    Question 11. In a previous question sent to you as followup to the 
November 10, 2005 subcommittee hearing regarding the Implementation of 
the Existing Particulate Matter and Ozone Air Quality Standards, you 
were asked a question regarding EPA's position on the ``turn in ratio'' 
for acid rain allowances. Specifically you were asked: ``If a State 
submits a State implementation plan that requires utilities in that 
State to turn in acid rain allowances at a higher rate (e.g., 3 
allowances for every ton of SO2 emitted in 2015 and later), 
will EPA allow that State's utilities to participate in the federally-
run SO2 regional trading program?'' Your answer did not 
respond to this question or a number of the questions that directly 
followed this question. Please answer the question above.
    Response. In the preamble to the final CAIR (70 FR 25258), we made 
the following statement, which responds to the question: ``EPA will use 
a Phase II ratio of 2.86-to-1 for all States affected by CAIR who 
choose to participate in the trading program.''

    Question 12a. Please also answer the following specific questions 
that were not answered in your response on the ``turn in ratio'' issue: 
If EPA will not allow a higher turn in rate, why not?
    Response. EPA has designed and agreed to implement a trading 
program to obtain the reductions required under CAIR. If individual 
States were to change basic rules of the program such as the retirement 
ratio, it would impact the allowance price, changing the cost 
effectiveness of the program not just for their State but also for 
other States. EPA has concerns about a change to such a fundamental 
component of the program for a small number of States given the impact 
it could have on other States. In addition, a tighter retirement ratio 
does not guarantee any more emission reductions in the State where it 
is applied, therefore EPA does not believe it to be the best mechanism 
to address local nonattainment issues.

    Question 12b. Although EPA may have a preference as to how States 
get the emission reductions necessary to demonstrate attainment, what 
authority does EPA have for imposing this preference on States?
    Response. EPA agrees that States may achieve the emission 
reductions they need to demonstrate attainment however they wish. One 
mechanism that States may choose to use is an interstate trading 
program that EPA has agreed to administer. EPA believes it is very 
important to use a consistent set of rules in order to have a trading 
program that achieves its environmental goals and that EPA can 
successfully implement on a multi-state basis.

    Question 12c. Why is EPA refusing to give States an answer to this 
important question when this information could be useful for States as 
they develop their implementation plans?
    Response. EPA made it clear in the preamble to the final rule that 
States needed to use a ratio of 2.86-to-1 if they wanted to participate 
in an EPA-run trading program. Subsequent to finalization of the rule, 
a number of States have asked EPA to revisit aspects of the rule such 
as the requirement to use the 2.86-to-1 ratio. EPA has explained its 
rationale (outlined above in (A.)) and has suggested to States that it 
would be better to consider alternative mechanisms to achieve emission 
reductions after they have completed further analysis (such as air 
quality modeling) to identify more specifically the reductions they 
need. Many States are currently engaged in such efforts and, in many of 
these cases, EPA is participating and providing assistance.

    Question 13. With regard to ``informal'' submission to the Office 
of Management and Budget (OMB) of rules, you were asked to list each 
rule that you have worked on at EPA that has been submitted informally 
to OMB. You responded by noting that all of the rules that you have 
worked on while at EPA were submitted informally to OMB. Please list 
all of the rules that you have worked on while at EPA.
    Response. Enclosed with this document is a list of all rules on 
which I have had significant input since joining EPA. I have had minor 
involvement in many more rules than those listed. For example, I 
reviewed part or all of virtually every signature package involving 
stationary sources while serving as Counsel to the Assistant 
Administrator for Air and Radiation. I would be pleased to provide more 
information if needed.

    Question 14. Another question sent to you as followup to the 
November 10, 2005 hearing related to the Air Toxics program and Deputy 
Administrator Peacock's commitment to ``reviewing the air toxics 
program budget and resources and advising this committee of gaps in 
funding or resources that are needed so that the Agency can promulgate 
and enforce rules that comport with the statutory requirements of the 
Clean Air Act.'' Your answer provided a status update of the current 
air toxics program which did not address specific gaps in funding or 
resources need to comply with the statutory requirements of the Clean 
Air Act. Please advise the committee regarding any gaps in funding or 
resources that prevent EPA from fulfilling its air toxics duties under 
the Clean Air Act.
    Response. The Agency faces significant workload and resource 
challenges to fully implement the air toxics Clean Air Act 
requirements. To help ensure we have adequate resources, the President 
has requested for FY2007 a $2M increase from the FY2006 enacted budget 
to enhance EPA's capacity to meet air toxics rulemakings under court-
ordered deadlines and complete other priority air toxic rulemaking. 
These resources will be critical for enabling EPA to implement the 
Agency's program to reduce air toxics.

    Question 15. With regard to the Particulate Matter Implementation 
rule, you were asked as followup to the November 10, 2005 hearing to 
provide all documents relating to the sharing of drafts or portions of 
drafts prior to October 12, 2004. Your response indicates that the only 
responsive documents you have are documents that discuss transmission 
of the proposal on October 12, 2004. Please provide these documents.
    Response. Enclosed with this document is a copy of an e-mail I 
received on October 12, 2004, together with a hardcopy of the draft 
rule that was attached in the e-mail. These items are the only 
documents I have that are responsive to your request.
                               __________
Statement of Sam Olens, Chairman, Atlanta Regional Commission on Behalf 
                   of the Atlanta Regional Commission
    Good morning, Mr. Chairman and members of the Committee. I am Sam 
Olens, Chair of the Atlanta Regional Commission (ARC). I am testifying 
today on behalf of the ARC. The ARC is the designated Metropolitan 
Planning Organization (MPO) for 18 counties within the 20+ county 
Atlanta 8-hour ozone and fine particulate matter nonattainment areas. 
As such, ARC has primary responsibility under the Clean Air Act for 
ensuring transportation conformity provisions are met through 
development of regional transportation plans and programs that support 
clean and healthy air for all of our region's citizens. I am pleased to 
have this opportunity to provide our perspectives regarding 
implementation of new air quality standards in the Atlanta region.
    Atlanta has a long history of nonattainment; primarily with the 
older 1-hour ozone standard and more recently with the revised 8-hour 
ozone standard and new fine particulate matter standard 
(PM2.5). Over the past 15 years, since Atlanta was first 
designated as nonattainment under the 1-hour ozone standard, we have 
made significant progress in improving regional air quality. This 
resulted in attainment of the 1-hour ozone standard in 2004--something 
that many people doubted could be achieved in a high-growth region like 
ours. And the levels of ozone have remained low through 2005 (reference 
Attachment I--Number of Ozone Violation Days).
    Our State air quality agency, the Georgia Environmental Protection 
Division, was able to put together a regional air quality plan that 
enabled us to meet the 1-hour ozone standard by 2004 due to the 
following:
     A better understanding of ozone pollution and emission 
control measures through improved science;
     Concerted effort in the region to implement effective, 
innovative pollution control measures; and
     Improved intergovernmental and interagency relationships 
between the various organizations that have a role in ensuring clean 
air in our State and in our region.
    At the same time, the ARC has maintained a positive transportation 
conformity status for our transportation plan and program since our 2-
year conformity lapse in the late 90s.
    These successes have occurred in spite of unprecedented growth, 
numerous legal challenges, and implementation of new air quality 
standards and provisions that have greatly impacted our planning 
process.
    Although we have made significant progress, in Atlanta we continue 
to actively work towards implementation of the new ozone and 
particulate matter standards. Twenty counties in our region are 
designated as nonattainment under the 8-hour ozone standard. These same 
counties, plus a portion of two others, are also designated 
nonattainment under the PM2.5 standard. We continue to deal 
with a number of significant issues related to air quality planning 
requirements for both the new air quality standards and the previous 1-
hour ozone standard, in particular as they impact transportation 
conformity.
    In Atlanta we continue to deal with the very significant concern 
regarding the Clean Air Act requirement to implement Federal 
Reformulated Gasoline (RFG). RFG is a provision of our reclassification 
to Severe nonattainment status under the 1-hour ozone standard. 
Technical analysis has shown that this fuel blend would actually 
contribute to an increase in emissions over our existing Georgia 
gasoline which is tailored to meet our unique air pollution needs. The 
ARC, along with our State air quality agency, has requested legislative 
relief from this requirement (reference Attachment II--Memo: Federal 
RFG Impact on the Atlanta Area, Attachment III--Resolution by the ARC 
Requesting Legislative Relief and a Time Extension from Federal RFG 
Requirements). Although the 1-hour standard has been revoked as of June 
15, 2005, and the requirement to implement this fuel blend is currently 
stayed by the courts, examples such as this create uncertainty in the 
modeling process, inconsistency in the planning process, and make it 
very difficult to develop an accurate emissions inventory.
    Similarly, we continue to deal with continued, habitual delay in 
release of rules and guidance documents that direct implementation of 
new standards. Much of the burden of implementing new standards could 
be alleviated if we ensured that rulemaking and guidance is provided in 
a timely manner. The efforts of MPOs and States who are trying to meet 
statutory deadlines for conformity, attainment, etc. must be 
recognized. These deadlines are fixed by law, yet dates to receive 
rules and guidance continually slip months, even years, past promised 
timeframes. This is unacceptable and needs to be addressed as we 
continue to implement the new standards. Some specific examples related 
to rulemaking delay are listed below.

         Transportation conformity is required within 1 year of 
        a nonattainment designation. Transportation conformity guidance 
        related to the revised 8-hour ozone standard was released in 
        July 2004 with conformity determinations required by June 2005. 
        Guidance related to emissions inventory development for 
        PM2.5 was released in August 2005 with conformity 
        analyses pending April 2006. While it may appear that this 
        still leaves enough time for areas to complete the conformity 
        determination process, it is not. EPA is not sensitive to the 
        significant time and resources it takes to develop a 
        transportation plan and program, complete a conformity 
        analysis, and have everything reviewed and approved by multiple 
        agencies. Guidance needs to be provided on or before 
        nonattainment status designations to allow areas time to 
        prepare for and implement conformity requirements.

         Attainment plans are due within 3 years of 
        nonattainment designation. For 8-hour ozone, designations were 
        made June 2004. Air quality plans are due by June 2007. Phase 
        II of the 8-hour ozone implementation rule that deals with 
        State Implementation Plan development has been delayed well 
        over a year after nonattainment area designations. This rule 
        directs air quality plan development and is not yet available 
        in final form for State air quality agencies.

    I have included in our written submittal some additional detail 
related to the issues we are dealing with in Atlanta as we transition 
to these new standards from a transportation conformity perspective 
(reference Attachment IV--Implementing the New Air Quality Standards in 
Atlanta, Presentation at the National Association of Regional Councils 
38th Annual Conference, June 2004).
    There has been a great deal of concern expressed related to 
implementation of the new ozone and particulate matter standards, in 
particular that the deadlines to meet the standards are too short and 
that the Clean Air Act should be amended to provide more time to 
attain. These concerns become even greater in the context of the 
current review and potential tightening of the particulate matter 
standard that is only now at the beginning stages of implementation. 
The ARC shares many of the concerns, as implementation of new standards 
will always require a change to our process, additional (and often 
significant) resource expenditures, and additional complexity to an 
already complicated transportation planning process. However, while we 
recognize that there are tough air quality standards in place and that 
they do have a considerable impact on the planning process, we also 
acknowledge that these standards are based on good science and health 
data and are in place for a reason and, as such, need to be addressed 
in a timely manner. Furthermore, we see many of the issues that we are 
dealing with as external to the primary issue of attainment deadlines 
and, as such, can be dealt with within existing law.
    In Georgia, we are not hearing from our State air quality agency 
that attainment deadlines associated with the new standards are a 
concern. It is, in fact, probably too soon to tell if we will have an 
issue with meeting attainment deadlines as modeling for these standards 
has only just begun. If we are hearing anything, it is that we need to 
address these standards in a timely manner. Atlanta is an area 
experiencing tremendous growth. With approximately 4 million people 
living in the region today and an expected 2.3 million more people 
projected to move to the region in the next 25 years, we are dealing 
with an incredibly large population that is breathing unhealthy air. 
Our State air agency understands that nonattainment status has a major 
impact on growth and economic development. Our unprecedented growth 
translates to both a larger population being exposed to unhealthy air 
and significantly increased health and other economic costs for the 
region. The longer we delay implementation of these health-based 
standards, the longer we pay these costs.
    For the newer ozone and particulate matter standards, the deadlines 
and mandates we have to plan for and implement are not unreasonable. We 
are on the right track with our current planning and modeling to 
develop effective air quality plans and regional pollution controls 
needed to attain. If we find in this planning that we need more time to 
attain the standard(s), there are currently provisions in existing law 
and rules that provide a way for us to do this without threatening 
transportation planning or funding (e.g., for ozone through 
reclassification or for particulate matter through the opportunity to 
add 5 years to the attainment deadline, up to 2015, if the State can 
prove such an extension is warranted).
    Currently, our concern in Georgia is not our pending attainment 
deadlines, but ensuring we have the support at the national level to 
meet these deadlines. This includes providing rules and guidance in a 
timely manner and, most importantly, ensuring that we maintain the 
flexibility and control needed to implement pollution control measures 
that work best for our region. Our region must have the ability to 
implement innovative, proactive measures to improve our air quality. 
The more tools and options we have the better. Senator Voinovich has 
already shown great leadership in this area through introduction of the 
Diesel Emissions Reduction Act of 2005, a program that will provide 
substantial funding through national and State-level loans and grants 
to voluntarily retrofit existing diesel engines to improve air quality 
and protect public health. This legislation is a perfect example of 
providing nonattainment areas the opportunity and the flexibility that 
they need to design programs to fit their own unique needs. This is 
EXACTLY what we need in an area like Atlanta and where our focus needs 
to be.
    I will end with a few comments related to the potential revision of 
the fine particulate matter standard. The timing of this review/
revision is of particulate concern for Atlanta. Currently the EPA is 
reviewing the particulate matter standard as required by the Clean Air 
Act, and will revise the standard if needed based on more current 
health data. EPA is currently finishing that review and is to recommend 
action on the standard by end of the year with a final standard 
proposed by late 2006. If a new fine particulate standard is 
promulgated by EPA according to this timeline, it will confuse not only 
the public, but our decisionmakers, and potentially divert staff 
attention from our current efforts to meet the existing 
PM2.5 standard. While promulgating a new standard is a very 
time consuming process that will occur over the course of several 
years, it requires staff attention in the interim and serves as an 
additional resource drain as we work towards implementing the current 
standard. I am assured by our State air quality partners, however, that 
because this process will overlap our present planning effort, that 
ongoing planning related to our existing fine particulate matter 
standard will be applicable to any newer, more stringent standard.
    In Atlanta we are growing accustomed to the changing face of our 
region. We have accepted and are actively preparing for the challenges 
that our projected growth will bring. At the same time, we acknowledge 
that environmental standards play a very important role in how we deal 
with this growth. We accept that they have become more stringent over 
time and may continue to become tighter in the future. While updates to 
any air quality standard can be complicated and will carry its own 
challenges, we trust that any update is based on a technically rigorous 
process that is vetted through a strong scientific review. If indeed 
standards are strengthened to improve public health, they will be 
incorporated into the long-range planning processes that are managed by 
the ARC and the State in a timely manner. To ensure that new standards 
are implemented efficiently, however, we must have support from our 
Federal partners in providing us effective guidance and the means by 
which to meet clean air standards in a manner suitable to our own 
unique region.
    Mr. Chairman and members of the committee, the ARC looks forward to 
working with you and others as we, collectively, work to implement air 
quality standards that protect our citizens from poor air quality. Once 
again, on behalf of the ARC, I thank you for this opportunity to 
present our views on implementation of the new air quality standards.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                             Attachment II
                 Federal RFG Impact on the Atlanta Area

MEMORANDUM

TO: TCC and TAQC Members

FROM: Tracy Clymer

DATE: September 3, 2003

SUBJECT: Federal RFG Impact on the Atlanta Area

    The Atlanta 1-hour nonattainment region will be reclassified from a 
Serious to a Severe air quality area by late 2003 or early 2004. EPA 
has made clear that this action is the result of a technicality and 
does not mean that the Atlanta area's air quality is worsening. 
Atlanta's air quality has not declined; in fact, it has improved, with 
ozone monitoring data indicating a significant decline in the number of 
violations of the 1-hour standard over the last several years.
    Once the 1-hour nonattainment area is reclassified, Federal 
Reformulated Gasoline (Federal RFG) will be required 1 year from the 
effective date of reclassification. This means that Federal RFG will 
first be in use for the 2005 ozone season. There are several 
implications for the Atlanta area concerning the use of Federal RFG:
     Federal RFG is designed to reduce VOC and carbon monoxide 
emissions
     NOx reductions are more effective for reducing ozone in 
the Atlanta area
     GA gasoline already in use is tailored to reduce NOx 
emissions
     Ozone concentrations in Atlanta will likely increase if 
Federal RFG is implemented
    In fact, analysis performed by the Georgia EPD for the 2005 ozone 
season indicates the following increases in ozone precursors from motor 
vehicles if the Federal RFG is required:

 Modeled Increase in Ozone Precursors due to Federal RFG Implementation,
                                Year 2005
------------------------------------------------------------------------
                                   Emission       Percent Increase over
          Pollutant             increase, tons    GA Gasoline Emissions,
                                    per day              Percent
------------------------------------------------------------------------
VOC                            0.94............                     0.65
NOx                            11.53...........                      4.1
------------------------------------------------------------------------

    Fortunately, the Federal RFG problem could be solved if Atlanta is 
granted a 2-year extension on the requirement to adopt Federal RFG as a 
Severe area:
     NOx emissions are reduced by lowering the sulfur content 
of gasoline
     A new Federal low-sulfur gasoline mandate will be fully 
implemented by 2006
     The low-sulfur requirements will apply to Federal RFG
     Once the low-sulfur requirements are fully implemented, 
Federal RFG makes sense
    Once the Federal mandate is fully implemented the benefits of using 
the Federal RFG will approximate the benefits of the GA gasoline.
                                 ______
                                 
                             Attachment III

    Resolution by the ARC Requesting Legislative Relief and a Time 
                Extension from Federal RFG Requirements

      Draft endorsed by TCC on 9/5; to TAQC on 9/11 and Board 9/24

 resolution by the atlanta regional commission requesting legislative 
 relief and a time extension from federal reformulated gasoline (rfg) 
                              requirements
    WHEREAS, pursuant to the Clean Air Act Amendments of 1990 the 13 
county Atlanta region was designated as a ``serious'' nonattainment 
area under the one-hour ozone standard; and
    WHEREAS, the Atlanta Regional Commission as the Metropolitan 
Planning Organization for the 10 county Atlanta Region develops 
transportation plans and programs pursuant to 23 CFR Part 450; and
    WHEREAS, the Atlanta Regional Commission performs the necessary 
technical analysis of plans and programs for the 13 county Atlanta 
Nonattainment Area as required to demonstrate conformity with motor 
vehicle emission budgets; and
    WHEREAS, in 1999 a Georgia low sulfur fuel was implemented in a 25 
county region; and
    WHEREAS, in 2003 the Georgia low sulfur fuel was implemented in an 
expanded 45 county market in support of the one-hour ozone attainment 
demonstration; and
    WHEREAS, the 13 county Atlanta nonattainment area is expected to be 
reclassified from a ``serious'' to a ``severe'' nonattainment status as 
a result of legal action; and
    WHEREAS, as a result of this reclassification, Federal law requires 
implementation of Federal Reformulated Gasoline within the 
nonattainment area within one year of reclassification; and
    WHEREAS, analysis of Federal Reformulated Gasoline by the Georgia 
Environmental Protection Division demonstrates that this fuel would 
cause an increase in 2005 emissions of 0.94 tons per day of VOC and 
11.53 tons per day of NOx in the 13 county nonattainment area; and
    WHEREAS, the Atlanta region is committed to using the cleanest 
fuels possible to attain national ambient air quality standards in the 
shortest timeframe possible.
    NOW THEREFORE BE IT RESOLVED that the Atlanta Regional Commission 
requests legislative relief from implementation of Federal Reformulated 
Gasoline in the 13 county Atlanta nonattainment area until such time 
that this fuel meets or exceeds Georgia low sulfur fuel requirements in 
the Atlanta region; and
    BE IT FURTHER RESOLVED that the Atlanta Regional Commission 
supports the Georgia Environmental Protection Division request to 
Congress that Atlanta be granted an extension on a requirement to adopt 
Federal Reformulated Gasoline in the Atlanta nonattainment region.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                              Attachment V
 Major Mobile Source Pollution Control Measures Implemented in Atlanta
    *The controls listed relate only to the mobile source sector and do 
not reflect the numerous controls applied to stationary and area 
sources in Atlanta.
    While the Atlanta region has gained a national reputation because 
of its high quality of life and booming economy, we are confronted with 
numerous transportation and air quality challenges. With rapid growth 
forecast over the next 25 years, how we address issues of mobility for 
people and goods and comply with Federal air quality standards is 
paramount. These issues require deliberate and thoughtful planning if 
we are to maintain the quality of life that has attracted nearly one 
million new residents to the Atlanta region in the past decade.
    As the regional planning and intergovernmental coordination agency 
for the metropolitan area, the ARC is responsible for a federally 
mandated metropolitan transportation planning process that meets all 
the requirements of the Clean Air. A number of innovative air pollution 
control measures have been implemented through the transportation 
planning process as a result of the air quality nonattainment status of 
the Atlanta region. Despite the significant progress made in improving 
air quality over the last decade, additional air pollution controls are 
being developed to ensure continued success in cleaning the air and 
maintaining a healthy environment for the region's citizens.
    A number of significant air pollution controls related to the 
transportation sector are defined below to give the reader an idea of 
the great number and type of mobile source emissions control programs 
that are underway in the region.
                 1.0 state implementation plan controls
    The SIP is a federally enforceable plan that identifies how each 
State with a designated air quality problem will attain and/or maintain 
national air quality standards. The SIP estimates the level of air 
pollutant emissions generated from multiple source categories and 
defines the necessary reductions needed to attain air quality 
standards. It establishes a plan (through State regulations and 
programs) to reduce emissions to necessary levels to achieve clean air.
    The SIP must take into account all Federal air pollution control 
regulations in place or slated for implementation within the time frame 
of the SIP, and then identify additional State mandated regulation(s) 
and/or voluntary measures, if needed, to bring the nonattainment 
area(s) into compliance with air quality standards by the date 
established in the Clean Air Act. All of the State adopted control 
measures identified within the SIP become federally enforceable upon 
Federal approval of the SIP. Below is a listing and brief discussion of 
the mobile source emission controls (i.e., transportation-related 
controls) identified in the State Implementation Plan for the 1-hour 
ozone standard and the associated 10-year Maintenance SIP for the 1-
hour ozone standard. This attainment plan ultimately yielded attainment 
of the 1-hour standard in June 2004.
                        1.1 national regulations
     Federal vehicle exhaust (``tailpipe'') emission standards 
for passenger vehicles to include\1\:
---------------------------------------------------------------------------
    \1\ For more detailed information related to emission control 
standards for passenger vehicles see http://www.epa.gov/otaq/ld-
hwy.htm.

         Tier 1 Standards.--Emission standards designed to 
        reduce light-duty gas vehicle and light-duty gas truck (i.e., 
        typical passenger vehicles) emissions by 40 percent from 
        standards set in the 1980's. Tier 1 standards were phased in 
        between 1994-1996.
         National Low Emission Vehicle (NLEV) Standards.--
        Emission standards designed to reduce light-duty gas vehicle 
        and light-duty gas truck NOx emissions beyond Tier 1 standards 
        by approximately 50 percent for light-duty gas vehicles and 17 
        percent for light-duty gas trucks. NLEV standards were 
        implemented in 2001.
         Tier 2 Standards.--Tier 2 standards will be phased in 
        beginning in 2004 and are designed to reduce emissions from 
        NLEV standards for passenger vehicles by approximately 75 
        percent - 85 percent and 95 percent for passenger trucks. Tier 
        2 standards reflect the first time that cars and light trucks 
        are held to the same stringent standards.

     Federal vehicle exhaust emission standards for heavy-duty 
vehicles to include\2\:
---------------------------------------------------------------------------
    \2\ For more detailed information related to emission control 
standards for heavy-duty vehicles see http://www.epa.gov/otaq/hd-
hwy.htm.

         Emission standards designed to significantly lower 
        heavy-duty diesel NOx exhaust levels. This program began in 
        1998 and ran through 2003.
         Emission standards designed to further reduce heavy-
        duty diesel NOx exhaust emission levels beyond the 1998 
        standards by approximately 50 percent. This program began in 
        2004.
         Beginning in 2006, diesel fuel at the national level 
        will contain 97 percent less sulfur.
         In combination, these programs will reduce emissions 
        of new trucks and buses by up to 95 percent beginning in the 
        year 2007.
                         1.2 state regulations
    Enhanced annual I/M program designed for light--duty gasoline cars 
and trucks (model years 1975 and newer) within the 13-county 1-hour 
ozone nonattainment area.\3\
---------------------------------------------------------------------------
    \3\ Enhanced inspection and maintenance programs are a Federal 
requirement for Serious and above ozone nonattainment areas, but the 
State implements the program and decides how the Federal performance 
standards will be met.
---------------------------------------------------------------------------
     Low-Sulfur Georgia gasoline for light-duty cars and trucks

         In October of 1999, a two-phase State rule promulgated 
        the use of low sulfur gasoline in the Atlanta region. The first 
        phase, effective summer 1999, decreased the average sulfur 
        concentration of gasoline sold in a 25-county region from 
        approximately 300 ppm to 150 ppm during the summer months, from 
        June 1 through September 15. The second phase, effective 
        September 16, 2003, further reduced the average sulfur 
        concentration to 30 ppm. In addition, phase 2 required that the 
        low sulfur gasoline be sold year round in a 45-county market.
         The reduction in sulfur content enhances the 
        performance of the vehicle's catalytic converter thereby 
        reducing NOx and VOC emissions, which are shown to be more 
        effective at reducing ozone levels in the Atlanta area.

     Partnership for a Smog-Free Georgia

         The Partnership for a Smog-Free Georgia (PSG) is a 
        loosely defined term used to represent all voluntary travel 
        demand management efforts operating in the Atlanta 
        nonattainment region\4\. The PSG program was originally defined 
        as a voluntary ozone action program implemented by EPD to 
        attain voluntary actions from employers, employees, schools and 
        the local citizenry in the Atlanta metro area to improve 
        regional air quality by changing typical commuting and other 
        lifestyle behaviors that contribute to unnecessary ozone 
        production. Over time, this effort has transformed 
        significantly and become part of a larger cooperative effort 
        between business and government entities, public and private 
        sector organizations, that work to coordinate activities to 
        reduce traffic congestion and improve air quality in the metro 
        Atlanta region.
---------------------------------------------------------------------------
    \4\ The PSG program has evolved into a program of the Clean Air 
Campaign which consists of a number of partnering organizations, both 
public and private (e.g., ARC, GAEPD, GDOT, the Metro Atlanta Chamber 
of Commerce et al.,), that joined together to improve the Atlanta 
region's air quality and mobility through coordinated programs designed 
to change individual and employer behaviors.

     Stage II gasoline vapor recovery\5\ designed to ``catch'' 
gasoline vapors (VOC emissions) emitted from the gas tank while fueling 
a vehicle and redirect the vapors back into the gasoline storage tank.
---------------------------------------------------------------------------
    \5\ Gasoline vapor recovery is a Federal requirement for ozone 
nonattainment areas, but the State implements the program.

---------------------------------------------------------------------------
     Atlantic Station Brownfield Redevelopment

         The Atlantic Steel Mill, located in midtown Atlanta, 
        ceased operations in the late 1990s. The site was determined to 
        be a severe brown-field clean-up site by EPA; clean-up and 
        redevelopment of the site was subsequently approved as a 
        Transportation Control Measure in the SIP. Atlantic Station 
        will be a mixed use development covering approximately 140 
        acres. It will include residential, office, entertainment, 
        commercial, and recreational uses. The developer will provide 
        transit access throughout the site with connections to the Arts 
        Center MARTA rail station. The thought behind such a 
        development is that reductions in vehicle miles traveled will 
        be observed due to the central location, density of the 
        development, and the increased mix of uses on the site that 
        encourage a decreased need to rely on cars as the sole mode of 
        travel.
               2.0 regional transportation plan controls
    In the last 10 years, the Atlanta region has gained a million new 
residents, with ARC forecasts estimating an additional 2.3 million 
residents in the region by 2030. The ARC's latest long range plan, 
Mobility 2030, attempts to address the transportation needs in the 
region through four primary goals and objectives:
    (1) Improve accessibility and mobility for all people and goods,
    (2) Maintain and improve system performance and preservation,
    (3) Protect and improve the environment and the quality of life, 
and
    (4) Increase the safety and security of the transportation system.
    In order to achieve the third goal to protect and improve the 
environment and quality of life, transportation projects that could 
potentially increase emissions of air pollutants need to be offset or 
balanced by projects that help to mitigate the increase in emissions. 
This is not an easy task given the rapid growth that Atlanta has 
experienced and the foreseen continued growth for the region.
    The majority of decreases in on-road motor vehicle emissions will 
come from significant improvements in engine technology and fuel 
controls for all vehicle types; if these regulations and innovations 
were not in place, it would be very difficult for transportation 
planners to develop plans that meet the stringent requirements of the 
Clean Air Act considering the tremendous growth the Atlanta region is 
enjoying. Transportation or travel patterns are founded on many 
decisions and elements that are largely out of the control of 
transportation planners, for example: land use, residential growth 
areas, growth of major employment centers, commercial and private 
vehicle sales, individual driving habits, and much more. However, good 
transportation planning can encourage activities that help decrease 
emissions by encouraging multi-modal travel, accessibility to 
alternative modes, and more efficient use of the existing 
transportation infrastructure. Programs that support these activities 
not only contribute to improvements in air quality, they also 
contribute to meeting the other transportation goals outlined above.
    Following is a discussion of some of the different types of 
programs that have been implemented and/or encouraged in the long range 
transportation planning process for the Atlanta region.
                     2.1 livable centers initiative
    The Livable Centers Initiative (LCI) promotes quality growth in the 
region by encouraging greater mobility and livability within existing 
employment and town centers, thereby using the infrastructure already 
in place instead of building anew. The program awards $5 million in 
planning grants over 5 years, with 2004 the final year in the initial 
LCI program. ARC is currently exploring the best ways to continue and 
expand this popular program in the future. To be considered for 
funding, LCI study scopes must demonstrate:
     A local planning public outreach process that promotes the 
involvement of stakeholders,
     A diversity of mixed-income residential neighborhoods, 
employment, shopping and recreation choices at the employment and town 
center level, and
     Access to a range of travel options including transit, 
roadways, walking, and biking to enable access to multiple destinations 
within the study area.
                   2.2 bicycle and pedestrian network
    Bicycle and pedestrian paths have the potential to improve air 
quality by providing an alternative mode for a trip other than driving. 
Bicycling and walking are becoming more realistic modes of 
transportation for Atlantans as traffic congestion becomes more severe. 
According to the 2000 Census, 3.5 percent of the U.S. population walked 
to work while 1.3 percent used other means, such as bicycling. The ARC 
has been promoting safe, functional and regional bicycle and pedestrian 
planning since 1973 and continues to update its process to address new 
needs and trends. The ARC recently adopted the 2002 Regional Bicycle 
and Pedestrian Walkways Plan which assesses current trends and sets 
goals, objectives, and performance measures for future bicycle and 
pedestrian planning.
                              2.3 transit
    Long range transportation plans emphasize the need for an 
integrated transit system that ties into the existing MARTA system, HOV 
lanes, and areas of interest. Future plans for the Atlanta region 
include an expansive regional transit system that is based primarily on 
Bus Rapid Transit (BRT). BRT is a rubber-tired system that runs in a 
dedicated or restricted lane and can be deployed quickly. BRT is 
planned for every interstate and many of the region's major highways, 
roadways, and surface streets. This concept is planned to be supported 
by local buses.
                          2.4 smart corridors
    The Smart Corridors concept relies on technology to improve the 
efficiency of the existing transportation system. In the current long 
range plan, a network of more than 1,600 miles of roadways will rely on 
technology to help improve flow. This use of technology is often 
referred to as Intelligent Transportation Systems or ITS. Specifically, 
ITS is the application of a combination of technologies to the existing 
transportation system to save time, lives, and money. The goal is two 
fold: safer, quicker travel with enhanced mobility and efficient use of 
existing transportation infrastructure. The benefits of ITS include 
(but are not limited to) better travel information, quicker emergency 
response, easier travel, improved traffic flow, fewer traffic jams, 
improved trucking management, faster goods delivery, and safer travel. 
All of these benefits work to decrease traffic and gridlock and, thus, 
improve the quality of the air.
                   2.5 high occupancy vehicle system
    The current HOV system in place in the region allows for more 
efficient transportation of buses (and other forms of mass transit) 
along with high occupancy vehicles or carpools. Carpools and mass 
transit encourage individuals to travel more efficiently in order to 
achieve a quicker, more reliable travel time. At the same time, 
emissions are reduced to the degree that HOV or mass transit trips 
replace single occupancy vehicle trips and improve traffic flow. The 
current long range plan expands the HOV system to every interstate and 
major highway in the region. In addition to the possible increased 
efficiency gains, the expansion of the HOV system also provides the 
potential for some sort of variable or congestion pricing system in the 
future.
                 2.6 ultra low sulfur diesel initiative
    The Georgia Environmental Protection Division has established a 
multi-state coalition that will provide the metro Atlanta area and 
possibly adjacent States with ultra-low sulfur diesel (ULSD) earlier 
than the 2006 federally required phase in date. The goal is to 
consolidate individual State demands in order to meet the minimum 
demand required by refineries.
                     2.7 signal coordination effort
    In 2003, Georgia Governor Sonny Perdue announced an initiative to 
retime metro Atlanta's traffic signals. This initiative is aimed at 
improving traffic flow in metro Atlanta; doing so would also decrease 
vehicle emissions. The Georgia Department of Transportation estimates 
that there are over 900 signals in the City of Atlanta alone; the 
effort will focus on the most congested areas first.
                               __________
Statement of James D. Werner, Delaware Department of Natural Resources 
                       and Environmental Control
    Thank you Mr. Chairman and members of the Environment and Public 
Works' Subcommittee for the opportunity to speak with you today about 
implementing the National Ambient Air Quality Standards (NAAQS) for 
fine particles and ground-level ozone. I serve as the Director of the 
Division of Air and Waste Management for the Delaware Department of 
Natural Resources and Environmental Control. I previously served in a 
similar position in the Missouri Department of Natural Resources, and 
previously in the Environmental Management office of the U.S. 
Department of Energy and for a private engineering consulting firm. 
With me today is Ali Mirzakhalili, who is the Administrator of the Air 
Quality Management Section in our Division. Together we have more than 
40 years of professional experience in air pollution control and 
engineering.
    At the outset, let me compliment Senators Voinovich and Carper for 
their leadership on reducing diesel emissions. The Diesel Emissions 
Reduction Act (DERA), enacted as part of the Energy bill, can be a 
vital piece of the puzzle we are gathered here today to solve. We agree 
with the recent letter by the National Governors' Association, the 
National Conference of State Legislators, the National Association of 
Counties and the National League of Cities who expressed the hope that 
DERA would be funded ``at $200 million in [the] Fiscal Year 2007 budget 
without affecting funding support for other key environmental 
programs.''\1\ We are confident that cooperating on such result-
oriented solutions will incrementally yield the health and 
environmental benefits through cleaner air we all seek.
---------------------------------------------------------------------------
    \1\ Joint letter from the National Governors' Association, the 
National Conference of State Legislators, National Association of 
Counties and the National League of Cities to President George W. Bush, 
November 2005.
---------------------------------------------------------------------------
    This solution, however is only one of several actions needed to 
attain the air quality standards on a reasonable schedule, which is an 
often-deferred goal. Implementation of the existing particulate matter 
and ozone standards are a minimum vital step for protecting Delaware. 
We will describe Delaware's situation, our actions to control the air 
pollutants, and the enormous health benefits possible through 
implementation of these extraordinarily important public health 
protection measures.
               a. delaware--small, precious and downwind
    President Thomas Jefferson dubbed Delaware ``The Diamond State'' 
because we are ``small but precious.'' To which we would add, 
``downwind.'' In few other States is the fate of our air quality 
decided before we wake up in the morning and start turning on lights or 
driving cars. As you may know, all of Delaware is currently 
nonattainment for ozone, and our most populous county, New Castle, is 
nonattainment for fine particulates. This situation should not obscure 
the fact that we have made enormous progress improving air quality. We 
have met the one-hour standard for ozone, and substantially reduced 
SO2 emissions, especially from the oil refinery in Delaware 
City, which is one of the few oil refineries with the capability of 
processing ``sour'' crude. Thanks largely to a variety of State 
measures and EPA's Clean Air Interstate Rule (CAIR) rule and 
implementation we expect further improvements in air quality. 
Nonetheless, Delaware will continue to fail to meet the ozone standard 
in 2010, despite our best efforts. Again the main reason is our down 
wind location. As with many policy questions, where you stand depends 
on where you sit. We sit at the end of a conveyor belt of air pollution 
that is loaded in the mid-west and deliver fully cooked on the Atlantic 
seaboard. Monday's rush hour in St. Louis and Cincinnati can become 
Wednesday's Ozone alert in Delaware. Part of our routine function as 
the State air agency is to constantly monitor air quality and provide 
reports on the Internet. Often, our high pollution levels are measured 
in southern Delaware where there more acres of soybeans than suburbs, 
and far more chickens than people or industrial emissions. This 
observation is no puzzle when you consider upwind sources.
    To some, the expected nonattainment is an excuse to kick the can 
down the road even further. To us, it motivates us to seek other cost-
effective controls to control ozone precursors and PM2.5 
sources. For example, we are pleased to announce Delaware DNREC 
Secretary John Hughes recently signed a ``Start Action Notice'' to 
initiative rulemaking to reduce emissions from Delaware's older, high-
emitting coal and residual oil fired powerplants. This ``multi-
pollutant regulation will control NOx, SOx and mercury. The goal is to 
adopt a final regulation by fall 2006. Second, we are regulating 
industrial boilers. Third, we have just completed permitting of a major 
source of Volatile Organic Compounds (VOC)--the lightering (off-loading 
of crude oil) of Supertankers coming out of the Atlantic Ocean into the 
Delaware Bay before they make their way upriver to refiners in 
Delaware, Pennsylvania and New Jersey. We are proud that this 
lightering permit was negotiated in a way that results in a win-win by 
allowing the lightering company to refit their entire fleet with vapor 
balancing equipment to capture the lost VOCs, which is a product for 
them and their customers.
    We are pursuing this variety of air pollution controls initiatives 
because we know the benefits outweigh the costs. We also know that 
national and regional solutions are necessary to help control air 
quality in Delaware. We persevere nonetheless knowing we cannot ask 
others to take action we ourselves are not willing to take.
      b. air pollution costs and benefits: deja vu all over again
    Recent reports\2\ of the costs, technical challenges and complexity 
of meeting Clean Air Act attainment deadlines remind me of the 
observation of baseball great and philosopher, Yogi Berra, ``It's Deja 
Vu all over again.'' Regrettably, much of the analysis behind these 
claims has not been subject to the normal peer review process for 
publication in a scientific journal. More substantively, it fails 
entirely to consider the substantial benefits to controls and examines 
only the projected costs. Finally, the complexity of the Clean Air Act 
is nothing new to those of us who live in this world of air pollution 
control. We are more sympathetic than most to the desire for 
simplification. The essential management metric for evaluating the 
performance of any proposal is the impact on air quality. And by this 
measure, we cannot support trading off paperwork simplification for 
dirtier air in the real world. We urge the Committee not to confuse 
``harmonizing'' dates with merely ``kicking the can down the road'' on 
improving the air quality and achieving the sustainable health benefits 
known to be possible.
---------------------------------------------------------------------------
    \2\ For example, NERA Economic Consulting for the American 
Petroleum Institute, Economic Impact of 8-Hour Ozone Attainment 
Deadlines on Philadelphia Region, September 2005 (released November 7, 
2005).
---------------------------------------------------------------------------
    These ``cost-only'' studies also have had a strong track record of 
overstating the eventual costs, whether it was the original acid rain 
studies or the more recent estimates of New Source Review (NSR) 
compliance. And on this matter we must also disagree: we do not agree 
that American engineers lack the skill and creativity to develop 
innovative technologies and methods for achieving air pollution 
reductions more cost-effectively than merely extrapolating from current 
trends. We also stand ready to continue to pursue regulatory 
streamlining that reduce compliance costs (e.g., paperwork and 
permitting value stream mapping. In short, we are very bullish on 
American ingenuity, and have been richly rewarded with our confidence 
in the past.
    We are not insensitive to costs. We live in the communities where 
our neighbors' jobs are on the line. However, can not ignore the 
substantial and subsequent savings derived from health-related costs 
from air pollution. So, the question is not whether there are costs, 
but rather ``who bears the costs?'' There are clear, though less 
quantifiable, costs to public health that result from failing to 
address air pollution problems. In conjunction with our State Division 
of Public Health, Delaware recently released a report on ``the Asthma 
Burden'',\3\ which showed a continuing increase in the number of asthma 
cases. We realize these asthma cases cannot be attributed solely to air 
pollution. However, it provide local data supporting hundreds of other 
studies finding a rising tide of asthma that represents a terrible 
burden on individuals, families, communities, employers and the 
economy. As you consider various options for potentially adjusting 
current schedule for compliance, we urge you to consider the other side 
of the cost formula; the health benefits and subsequent savings derived 
from controlling air pollution promptly.
---------------------------------------------------------------------------
    \3\ The Burden of Asthma in Delaware, Delaware Health & Social 
Services Division of Public Health, and Department of Natural Resources 
and Environmental Control, August 2005.
---------------------------------------------------------------------------
    We realize there are those who argue that health standards should 
be subject to strict cost-benefit analysis. We respectfully disagree 
with this view. However, this is not the questions before us. Over the 
years, every major, peer-reviewed study has found substantially greater 
benefits than costs from controlling air pollution, and found greater 
benefits from air pollution control than virtually any other 
environmental programs (e.g., oil spill cleanup). Among the most 
prominent studies was EPA's ``unfinished business report, release in 
1987, which found air pollution to be among the highest benefit program 
in EPA.\4\ Few years later, under President George H.W. Bush, EPA's 
Science Advisory Board reviewed this assessment more rigorously and 
found uncertain in the estimate in many areas, except air pollution 
control.\5\ Criteria Air pollutants were ranked as a high risk by the 
unfinished Business report in the 1980's. In 1990 the Science Advisory 
Board report on Reducing Risk ``. . . considered to be supported more 
firmly by the available data than were the rankings for the others.'' 
More recently, in 2003, the White House Office of Management and 
Budget, Office of Information and Regulatory Affairs, under John 
Graham, found that one of the most clear examples of an environmental 
program where the benefits clearly outweigh the costs is in the area of 
air pollution control.
---------------------------------------------------------------------------
    \4\ EPA, Unfinished Business: A Comparative Assessment of 
Environmental Problems, 1987.
    \5\ EPA, Reducing Risk: Setting Priorities and Strategies for 
Environmental Protection, SAB-EC-21, September 1990. and Stevens, 
William K., ``What Really Threatens the Environment,'' New York Times, 
January 29, 1991.
---------------------------------------------------------------------------
 c. attainment of minimum air quality standards--following the science
1. Smog: Ground-level Ozone Can Give Your Lungs a ``Sunburn''
    Ozone is essentially highly energized oxygen that contains an extra 
oxygen atom, which results in a respiratory effect sometimes compared 
to giving your lungs a sunburn. It is not emitted directly but results 
from ``cooking'' precursors like NOx and VOCs in sunlight. Ozone is a 
strong respiratory irritant that affects healthy individuals as well as 
those with impaired respiratory systems. It can cause respiratory 
inflammation and reduced lung function, and can reduce human's 
resistance to colds and pneumonia. Ozone also adversely affects trees, 
crops (soybeans are a particularly sensitive species), and other 
vegetation. The national agricultural loss from ozone pollution is 
estimated to be several billion dollars annually.\6\ In the 1970's and 
1980's scientists realized it was not only the concentration of ozone 
exposure but also the duration. Consequently, EPA began the lengthy 
process of developing a revised standard to replace the old ``1-hour'' 
standard, with an ``8-hour'' standard that reflected this scientific 
consensus about how ozone affects human lungs. It is a valuable lesson 
to have read scientific journals and heard academics talk about the 
chronic exposure phenomenon in the 1970s and need to change the short-
term standard, only to be involved with implanting a standard to 
address this issue in 2005. Consequently, when we learn of EPA's 
interest in developing a new standard, you must forgive us if we do not 
reach for our seatbelt.
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    \6\ (61 FR 65742, December 13, 1996, National Ambient Air Quality 
Standards for Ozone: Proposed Decision) An examination of the monetized 
benefits reported above indicates that most of the estimated benefits 
accrue from attainment of the 8-hour, 0.08 ppm primary standard with a 
smaller incremental improvement obtained by the addition of a seasonal 
secondary standard. The projected national approximations for commodity 
crops and fruits and vegetables suggest that benefits on the order of 1 
to more than $2 billion would result from the proposed 8-hour, 0.08 ppm 
primary standard, alone or in combination with a seasonal secondary 
standard.
---------------------------------------------------------------------------
    Like many metropolitan areas, but States, Delaware has been 
struggling with chronic ozone pollution for years. We have worked 
diligently for many years to overcome the burden of this pollutant on 
our citizens. As I mentioned, Delaware's air quality, statewide, does 
not meet the standards for ozone, and is not expected to meet the ozone 
standard until beyond 2010. We know better than most the difficulty in 
explaining to the lay people that we met the standard that we have been 
pursuing for years, but the rules changed and that we are now violating 
a new standard. Essentially, our violations do not reflecting worse air 
quality, but a change in standard. It is easy to criticize this 
situation as ``changing the goal line.'' It is harder to explain the 
need to use the best science available. But, given a choice between 
easy public relations and good science, our choice should be clear.
    We have worked with OTC States to evaluate CAIR and found it does 
not adequately produce the needed emissions to reach attainment of the 
ozone and PM standards in the northeast and mid-Atlantic States. EPA 
acknowledged that there would be ``residual'' nonattainment areas after 
full implementation of CAIR, but detailed modeling suggests strongly 
that the difference between EPA's coarse scale modeling and that which 
was done by the OTC shows a larger gap to fill. In an attempt to derive 
a solution, a CAIR PLUS alternative was derived and tested. The model 
rule, corresponding to this alternative, will provide for lower 
regional EGU emissions through, potentially, a higher NOx and SOx 
allowance retirement ratio, which will be determined based on SIP 
quality modeling. The CAIR PLUS concept may also be a cooperative 
effort with States outside the Ozone Transport Region (OTR), as States 
beyond the OTR are also concluding that reductions beyond CAIR are 
needed. Even with this alternative, residual nonattainment areas exist. 
Considerable area, regional, mobile and local measures, yet to be fully 
determined, will be needed to finally fill this gap.
    Delaware and several other States, have taken steps to meet the 1-
hour ozone standard, which are essential to fulfill the 8-hour ozone 
standard.
    Delaware has adopted in coordination with other OTC States that are 
not specifically identified in the CAA:
    1. Architectural and Industrial Maintenance (AIM) Coatings: reduced 
VOC content of numerous coatings beyond federal requirements.
    2. Mobile Equipment: established coating equipment standards to 
reduce VOC emissions.
    3. Gas Cans: required gas cans meet certain performance and 
permeability standards to reduce VOC emissions.
    4. Degreasing: reduced degreaser vapor pressure and instated 
equipment standards and work practices to reduce VOC emissions.
    5. Control of NOx Emissions from Large Boilers: reduced NOx 
emissions from boilers larger than 100 mmbtu/hr that weren't well 
controlled through other programs.
    6. Anti-Idling: reduced VOC, NOx, SOx, and DPM emissions from heavy 
duty vehicles by reducing allowable idling time.
    7. Open Burning: instated strict open burning ban during the ozone 
season.
    8. Minor NSR: reduced criteria pollutant and air toxic emissions by 
subjecting new minor stationary sources to top-down BACT requirements.
    9. OTC NOx Budget Program: participated in a regional NOx Cap and 
Trade program to reduce NOx emissions from powerplants (program later 
replaced by the NOx SIP Call).
    10. Adopted several regulations to reinforce EPA-adopted heavy-duty 
diesel rules.

    In addition, we have begun work on additional measures, not 
specifically identified:
    1. Stationary Generator Regulation: will reduce criteria pollutant 
and carbon dioxide emissions from stationary generators.
    2. Peaking Units: will reduce peak ozone day NOx emissions from 
combustion turbines used as electrical peaking units.
    3. Refinery Boilers: will reduce NOx emissions from large refinery 
boilers.
    4. Non-Refinery Boilers: will reduce NOx emissions from large non-
refinery boilers.
    5. Utilities Multi-P: will reduce NOx, SOx, and Hg emissions from 
Delaware's coal and residual oil fired electric utilities.
    6. Lightering: will reduce VOC emissions from crude oil lightering 
operations in the Delaware Bay.
    Finally, we are looking at additional measures where we expect the 
benefits will exceed the cost of controls. The point is that there is 
no ``silver bullet'' solution, but a variety of individual actions that 
yield success.
2. Soot: Fine Particulates Get in Your Eyes and Deep in Your Lungs
    The issue of controlling fine particulates is particularly 
important to Delaware for a number of reasons. First, and foremost, the 
air quality in our most populous county is impaired such that it fails 
to meet the minimum standards for human health protection from the 
effects of fine particulates. Second, we are keenly aware that we 
cannot control our ``nonattainment'' situation alone, without 
contributions by upwind States. Third, Delaware air is also polluted 
with toxic chemicals, such as benzene and vinyl chloride\7\, which can 
be absorbed into fine particles with worse health effects than either 
pollutant alone.
---------------------------------------------------------------------------
    \7\ Delaware Division of Public Health and Department of Natural 
Resources and Environmental Control, Delaware Air Toxics Assessment 
Study, phase I final report, August 2005.
---------------------------------------------------------------------------
    Fine particulate matter, known as PM2.5, is a complex 
and harmful mixture of sulfur, nitrogen, carbon, acids, metals and 
airborne toxics. When breathed in, PM2.5 permanently lodges 
in lung tissue and causes lung damage and respiratory problems. The 
fine particles can cross from the lung into the blood stream resulting 
in inflammation of the cardiac system, a root cause of cardiac disease 
including heart attack and stroke leading to premature death. 
PM2.5 exposure is also linked to low birth weight, premature 
birth, chronic airway obstruction, and sudden infant death. In addition 
to these negative health impacts, fine particulate matter is the 
primary cause of reduced visibility. New Castle County's air quality 
does not meet the standards for PM2.5, and Kent and Sussex 
Counties are not much below the standard (currently monitoring about 15 
percent). Health studies for fine particles have consistently shown 
that this pollutant is at the top of the list of concern to health and 
we understand that EPA's review of the standard, as mandated by the 
Clean Air Act is suggesting that the existing standard, only finalized 
in 1997, is not likely to adequately protect public health and should 
be tightened. This means that we may need to cut emissions even more 
than we are currently contemplating in order to provide healthful air 
to our citizens. All activities that we undertake under the standard as 
it now exists will help us with attainment of a future standard, 
whenever it is adopted. This work keeps us on the glide path to timely 
attainment.
    Here again we support the adherence to good science. A compounding 
effect is that the finer particles attract and retain toxic material 
much more efficiently than larger particles. At one time, air pollution 
control was done by controlling ``total particulates'', even though 
scientists have long known that particulates are not all created equal 
in terms of their ability to reach deep into lungs. Scientists have 
found that the standard for PM10 (particulate material with a median 
diameter of 10 microns or less is not adequately protective of public 
health. The reason appears to be that the finer particles are inhaled 
readily into the lungs and essentially are never eliminated (exhaled or 
brought up by cilia with phlegm). In fact, I serve personally as one of 
the guinea pigs in graduate school in the laboratory of David Swift who 
was studying this phenomenon. In the 1980's, we pursued control of 
particulates smaller than 10 microns. Now we know that particulates 
smaller than 2.5 microns are the most harmful, not only because of the 
physical ability to reach and lodge deep into lungs, but also because 
of the ability to behave partly as a fume and partly as a particle and 
ability to adsorb toxics.
    We understand there is some concern with the prospect of adopting a 
new scientific standard for human health protection, when the 
implementation of the previous health standard has barely begun. For 
environmental engineers and scientists, however, this ``pipeline of 
standards and implementation is part of the normal process of careful 
development of programs to protect human health, and of the perils of 
litigation that affect these programs. Accordingly, we believe that the 
new PM2.5 should be adopted with all due alacrity so that 
the public benefits can be realized through detailed implementation.
    We fully realize there is a substantial cost to complying with the 
air pollution control requirements necessary to meet these new 
standards. We also realize there is a cost to not complying with these 
standards. These costs are the often ignored benefits of attaining 
healthful air quality. We realize the real benefits of controlling 
PM2.5 pollution is difficult to quantify and that estimates 
vary significantly from local epidemiological estimates on one end of 
the spectrum to the John Locke institute on the other end. We refer you 
to EPA's estimate of the health benefits, described in the recent 
implementation rule for fine particulates\8\, which, of course could 
not be published without approval by the White House Office of 
Management and Budget's Office of Information and Regulatory Affairs:
---------------------------------------------------------------------------
    \8\ Proposed Rule To Implement the Fine Particle National Ambient 
Air Quality Standards; Proposed Rule 70 Fed. Reg. (210) 65984-66067, 
November 1, 2005.

          ``. . . the effects of PM2.5 on public health are 
        serious. Estimates suggest that each year tens of thousands of 
        people die prematurely from exposure to PM2.5, and 
        many hundreds of thousands more people experience significant 
        respiratory or cardiovascular effects. Even small reductions in 
        PM2.5 levels may have substantial health benefits on 
        a population level . . . EPA has estimated that the monetized 
        health benefits of reducing emissions of pollutants that lead 
        to PM2.5 formation exceed the costs by 3 to over 30 
---------------------------------------------------------------------------
        times.''

    And the evidence of serious health problems from particulates 
continues to mount a recent survey of data from 90 urban areas.\9\ 
Again, we do not suggest cost be ignored, but strongly urge that the 
benefits be weighed as well.
---------------------------------------------------------------------------
    \9\ JAMA study Pope CA 3rd, Burnett RT, Thun MJ, et al., ``Lung 
cancer, cardiopulmonary mortality, and long-term exposure to fine 
particulate air pollution,'' Journal of the American Medical 
Association (JAMA), 2002;287:1132-1141; Brook RD, Brook JR, Urch B, et 
al. Inhalation of fine particulate air pollution and ozone causes acute 
arterial vasoconstriction in healthy adults. Circulation. 
2002;105:1534-1536; and Ozone and Short-term Mortality in 95 U.S. Urban 
Communities Bell, M.L., et al. (2004). JAMA 292, p. 2372-2378.
---------------------------------------------------------------------------
        d. cair: a good start on a national good neighbor policy
    The Clean Air Interstate Rule (CAIR) addresses the age-old problem 
long known to those of us in the dismal science of air pollution--the 
wind obeys no State boundaries. Commerce may or may not be interstate 
requiring a Federal role, but air pollution cries out for a Federal 
role of an intestate activity--air pollution.
    All States, in cooperation with the EPA, have made significant 
strides in improving the quality of the air, and made equal strides in 
understanding what forms of control offer the most effective path to 
success, both from ease of implementation and from an economic view. We 
have managed to improve air quality by reducing emissions while 
enjoying increases in GDP and experiencing significant growth in 
vehicle miles traveled. Since 1970, we have cut emissions that cause 
soot, smog and acid rain by more than half, even while our Nation's 
economy has grown by 187 percent--clear evidence that a growing economy 
and environmental results can, in fact, go hand-in-hand. (Administrator 
Johnson's speech on August 4, 2005 at Adirondack Council 30th 
Anniversary, Essex, NY) We need to continue this pattern and bring 
about healthful air to our citizens as expeditiously as possible.
    However, we know more needs to be done. The understanding of the 
problem brings with it the double-edged sword or recognition of the 
extent of the problem. Attainment of NAAQS is clearly more vexing than 
we thought when the earlier Clean Air Acts were passed. Even with the 
1990 Amendments, which we hoped would address the ozone problem. 
Despite concerted effort, the problem persists. We need, and fervently 
ask for your support to allow us to properly regulate major sources, 
and most importantly, those sources that are causing our population the 
most harm. Some issues like intestate transport require a strong 
Federal role while a variety of individual solutions are more 
appropriately tailored by States. We have taken action of oil tanker 
lightering because it is significant source of VOC pollution. We know 
that some States like Missouri, are legally restricted from controlling 
pollution more stringently than the Federal Government, and so chronic 
problems like lead deposition form smelter persists because of EPA 
inaction on a problem that is restricted to few States. Surely, this is 
not the time to consider extending attainment deadlines, or hobble 
States ability to take action. Already action on these standards has 
been delayed by litigation, that neither cleared the air for better 
science or law nor for people's health.
    The CAA established a clear path to ameliorate these problems. The 
Act provides the States with the mechanism to accomplish this task by 
identifying the culprit areas and making sound estimates of the sources 
within the areas most likely to be causing the problem. Areas 
experiencing nonattainment have 3 years to develop State Implementation 
Plans (SIPS), with the fine particulate matter SIP due in April 2008, 
and the ozone SIP due in June 2007. The preparation and adoption of 
past SIPs by each State containing a nonattainment area are grueling 
tasks, but with very limited exceptions, and only in extraordinary 
circumstances, have these SIPs not been submitted by the appointed 
date. A combination of detailed information on the amount of air 
pollution entering the State, plus information on the amount of 
pollution generated internally, constitute the cornerstone of the SIP 
preparation. Knowing how serious the pollution problem is, and what is 
causing the problem, States can perform complex modeling to determine 
how much reductions in emissions are necessary to result in an 
attainment condition. Selection of measures to effect that reduction in 
emissions, whether locally or regionally, is the final major step in 
the process. When regional emissions are the major contributor, 
regional solutions must be developed. One example of this activity is 
the exemplary work accomplished by the Northeast Ozone Transport 
Commission (OTC), including all States from Maine to Virginia, working 
together for a common cause. Using the mechanisms of MOUs and 
Resolutions, members of the OTC work together to develop control 
measures that benefit wide areas and not strictly one State.
    It is EPA's responsibility and authority to move the preparation of 
SIPs as expeditiously as possible, and provide adequate support by 
developing guidance documents, in a timely manner, which states can use 
to move forward with their work on the SIPs. This mandate, as clearly 
defined in the Clean Air Act, forms the backbone for the important 
relationship between the Federal, State and local governments, and 
allows the entire process to move forward effectively and efficiently. 
According to the recently proposed fine particle standard 
implementation Rule, it is the clear responsibility for the Federal 
Government to promulgate rules on utilities and other large sources, 
mobile sources, ports, rail operations and others, that produce a 
universally positive impact on reducing emissions. Subsequent to that 
activity, and depending on how severe a nonattainment condition 
remains, State and local areas must fill in the gap with more localized 
measures that are not pre-empted by Federal authority.
    EPA has taken a universally effective first step with the adoption 
of the CAIR rule. Unfortunately, it is only a first step. We believe 
EPA has the authority and a responsibility to do much more. Modeling 
performed by both State and regional entities have determined that the 
results not only fall short of producing the needed emission reductions 
but also are timed in such a manner that little assistance will be 
gleaned from these actions in time to attain by the required, and I 
might note, very reasonable schedule, mandated by the Clean Air Act. 
While EPA has taken an important first step to address transport, we 
are still concerned that the agency has not done enough. CAIR leaves 
over 9 million citizens in the North East alone with unhealthy air 
after its implementation. But even with the most stringent controls we 
have tested thus far, more than two million citizens remain 
experiencing unhealthy air. We believe the compliance deadlines are too 
long, the emissions caps are too weak, and an insufficient number of 
sources are covered. Additionally, we are troubled that EPA is 
intending to weaken an important regulatory tool under Section 126 of 
the Clean Air Act for addressing interstate transport. Now that regions 
and States recognize the shortcomings of CAIR, work is underway to fill 
those gaps. The tools necessary to accomplish these objectives must not 
be taken away from the States. Actions such as preemption of State 
authority on small engine controls, accomplished by legislated activity 
and prevention of State's ability to adopt mobile source rules 
identical to those of California, severely hamper a State's ability to 
do it's job. Very simply put, if a State is able to pas muster through 
its normal adoption process, which is both very open and rigorous, 
there is no reason to prevent a State from doing so.
    For example, the northeast and mid-Atlantic States, under the 
auspices of the OTC, are currently developing a CAIR plus strategy 
which will result in considerably more emission reductions, from the 
most appropriate geographical locations, to make a substantial 
improvement on the original CAIR Rule. The kinds of improvements on the 
original CAIR framework include nonroad emission control and fuel 
requirements, and the tightening of the existing controls on stationary 
sources. Another example of measures directed to improve upon the CAIR 
framework are being accomplished under the auspices of other regional 
organizations in the Midwest and the Southeast.
    We fully realize there is a substantial cost to complying with the 
air pollution control requirements necessary to meet these standards. 
We also realize there is cost to not complying with these standards. 
These costs are the often ignored benefits of attaining healthful air 
quality.
    At this point in time, our largest and overarching concern is that 
the Federal Government should refrain from interfering with our ability 
to adopt more stringent controls than those already promulgated. These 
measures are ones which we feel can most efficiently and cost-
effectively fill the gap between the benefits of CAIR, which again, we 
concur are substantial, and that amount of reductions in emissions 
necessary to result in widespread attainment. There have been too many 
instances when opportunities have been lost when apparently artificial 
limits have been placed on measures which would affect substantial 
positive impacts on the wide field of emission reduction possibilities. 
We ask that you allow the States to do the necessary evaluation and 
take whatever actions necessary to reach attainment, and not extend 
timelines and remove any existing authorities that States now have.
    Finally, on this day before Veterans Day, I would be remiss if I 
did not acknowledge the contribution of our men and women of the armed 
Force who have contributed to our understanding of the science of fine 
particles and human health. The U.S. Army supported the laboratory of 
the Dr. David Swift at The Johns Hopkins University, and much of the 
work at the Inhalation Toxicology Research Laboratory at the Sandia 
National Laboratory in Albuquerque, New Mexico. Without this critical 
contribution by this military-sponsored research, our appreciation of 
the role of fine particles in human health would not be great as it is 
today. God bless our men and women of the Armed Forces and all their 
contributions to the people of the United States and people who yearn 
to breath free everywhere.
    Thank you for the opportunity to present these views. I would be 
happy to answer your questions.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Statement of Stephen Moret, President and CEO, Baton Rouge Area Chamber 
                              of Commerce
                              introduction
    The Baton Rouge Area Chamber is made up of over 1,500 businesses in 
the Baton Rouge metropolitan area. Our membership is comprised of large 
and small businesses that are as varied as the people in our community. 
As the voice of the Baton Rouge area business community, the Chamber 
strives to foster economic and community development so that one 
overriding goal will be met: the Baton Rouge area will be a better 
place for the people who live and work there.
    Unfortunately, as we have tried to grow our community in positive 
ways, the Chamber, the people, and the businesses in our community have 
been required to devote substantial time and resources (that otherwise 
could have been spent on positive steps forward) to make sure that the 
mechanistic application of the Clean Air Act (``CAA'') did not cause 
greater problems than the ones the act was designed to solve. Cleaner 
air is an important part of our goal. However, the CAA must incorporate 
the flexibility necessary to allow our area to use its resources to 
achieve real progress rather than diverting resources to unnecessary 
activities that do not advance the goal of improved air quality.
    Following the CAA Amendments of 1990, the Baton Rouge area was 
classified as ``serious'' nonattainment with the 1-hour National 
Ambient Air Quality Standard for ozone. Over the last 15 years, the 
Baton Rouge area community, including the Louisiana Department of 
Environmental Quality (LDEQ), has worked diligently to achieve 
attainment. We have followed the strict mandates of the CAA. We have 
enacted laws and regulations designed to reduce air emissions of ozone 
forming pollutants, nitrogen oxides (NOx) and volatile organic 
compounds (VOC). We have submitted plans and emission budgets to EPA. 
We have installed expensive control equipment to reduce NOx and VOC. We 
have instituted vehicle inspection programs, raised fees, and performed 
transportation studies. We have modeled emissions from industry 
sources, large and small, on-road and off-road vehicles, and biogenic 
sources (i.e., trees), and modeled the fate and transport of those 
emissions. In short, the Baton Rouge area has done everything that the 
CAA and the EPA required and/or suggested. As a result, tremendous 
emission reductions have been achieved as illustrated in the following 
chart.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Unfortunately, although the Baton Rouge area came within 1-2 parts 
per billion (``ppb'') of achieving attainment in 1999 and again in 
2004, the rote application of the CAA forced us to divert attention and 
resources away from achieving attainment to fighting the potentially 
ruinous actions/penalties mandated by the CAA.
    Under the CAA, every nonattainment area of similar classification 
is treated exactly the same way. The Baton Rouge area provides a 
perfect example of the inequities associated with the application of 
the CAA. Most ``serious'' and ``severe'' ozone nonattainment areas have 
a large number of industrial emitters and/or a large fleet of vehicles. 
Our area does not fit this mold. Although Baton Rouge area industry 
does produce its share of NOx and VOC emissions, our community has a 
very small fleet of vehicles and those vehicles are fairly new, lower 
emitting models. Industry has reduced emissions, both voluntarily and 
through regulation, such that it is difficult to find additional 
reductions in significant amounts. In fact, industry is not the main 
source of VOC emissions in Baton Rouge; biogenic sources are actually 
the highest producers of VOC in the area. Baton Rouge also is not 
experiencing the slow, steady ozone rise that peaks with a summer 
afternoon exceedance. Instead, on the infrequent occurrence when there 
is an exceedance, Baton Rouge now experiences short duration, sharp 
spikes in ozone production, attributable to highly reactive VOCs 
reacting with the available NOx. The CAA rules are designed to address 
the former, but not the latter. Although well intentioned and helpful 
in many areas, the blind application of CAA statutory mandates and the 
`one-size-fits-all' approach does not provide the flexibility and 
innovation needed to solve Baton Rouge's ozone problem.
    In the wake of Hurricanes Katrina and Rita, the Baton Rouge area 
has taken on a large, permanent increase in population. While we 
readily have opened up our hearts and homes to our displaced neighbors 
from the New Orleans region, this influx of population creates new air 
quality challenges for us as it will result in increased numbers of 
houses, offices, and cars in the Baton Rouge area. Moreover, our State 
faces unprecedented challenges that we cannot adequately address 
without an unprecedented response from Congress. We deeply appreciate 
your efforts to help rebuild South Louisiana and pray that you will 
make good on President Bush's promise in Jackson Square to rebuild the 
Gulf Region better than it was before. The future of our entire State 
depends on a strong--and swift--Federal response.
    At this time, I would like to provide some information about Baton 
Rouge's nonattainment history, its fight against reformulated gasoline 
(RFG), and the litigation it has been forced to participate in to 
protect its interests.
                          history of br ozone
    The Baton Rouge area's original ozone classification in 1991 of 
``Serious'' was based on a design value that was within 5 percent of 
the `Moderate' ozone classification. Over the years, Baton Rouge 
instituted all of the controls required by law, following EPA's 
guidance and modeling. The focus of those initial efforts was VOC 
reductions, which over time were realized.
    When it became apparent that the biogenic component of Baton 
Rouge's emissions was so large that further anthropogenic VOC 
reductions would have little impact, a NOx strategy was adopted. In 
other words, the Baton Rouge area had reduced VOC as much as possible. 
After spending hundreds of millions of dollars to reduce VOC, we 
learned that was not good enough. EPA-approved studies showed that the 
Baton Rouge area's ozone levels were strongly sensitive to NOx but not 
to VOC. In late 2001, the Baton Rouge area implemented a 30 percent 
across-the-board reduction in major point source NOx emissions, 
effective as soon as possible but no later than May 2005. The current 
NOx strategy offers the Baton Rouge area an opportunity for achieving 
attainment.
    The Baton Rouge area has seen a steady and substantial downward 
trend in its ozone design value. By its 1999 attainment date under the 
1-hour standard, Baton Rouge was only 2 ppb from attainment, down from 
about 40 ppb over attainment in 1991. This contrasts with many other 
nonattainment areas that showed little improvement or even degradation. 
Although the Baton Rouge area did not attain the 1-hour standard, it 
had improved to the point that, according to the classifications under 
the CAA, the area was at ``Marginal'' status. Unfortunately, because of 
the strict requirements of the CAA, Baton Rouge was slated to be 
reclassified as ``Severe,'' like Houston.
    At this point, EPA did work with our community. EPA's models showed 
that ozone was transported from the Houston/Galveston and Beaumont 
areas in sufficient amounts that Baton Rouge's own ozone levels were 
raised by 2-6 ppb, an amount EPA itself termed `significant' and in 
fact an amount large enough to have prevented attainment. As a 
`downwind' area, Baton Rouge qualified for, and EPA granted, an 
extension of its attainment date under a nationwide EPA policy. But 
that policy was struck down by the Fifth Circuit because it was not 
literally provided for in the CAA.
    Judicial decisions interpreting the CAA ``bump-up'' provision 
finally forced EPA to reclassify Baton Rouge from `Serious' to `Severe' 
and withdraw its attainment date extension. Despite the fact that Baton 
Rouge area was only 2 ppb from attainment and would be classified as 
`Marginal' under the 1-hour standard, the CAA dictated that Baton Rouge 
be classified as `Severe.'
    Based on its re-classification to `Severe' after the bump-up, new, 
very strict requirements were to be applied to Baton Rouge. The mandate 
to implement RFG, Section 185 or `penalty' fees, and a reduced major 
source threshold were a few of the new requirements imposed on Baton 
Rouge under the CAA. The new requirements under the `Severe' standard 
were projected to cost hundreds of millions of dollars in direct and 
indirect costs. The economy of the Baton Rouge area was on the brink of 
a major disruption.
    Against this backdrop, two significant events occurred. First, a 
coalition of Baton Rouge interests joined together to resist the RFG 
mandate. Second, EPA issued the 8-hour Ozone Implementation Rule. Each 
of these events will be discussed.
                                  rfg
    As the June 23, 2004 deadline for the implementation of RFG in 
Baton Rouge loomed nearer, it became increasingly apparent that RFG--
while successful in areas with large fleets of vehicles--was not a good 
idea due to the enormous negative impacts it would have on our 
community. First, it would interfere with attainment because it is 
designed to decrease VOC emissions, but it actually causes an increase 
in NOx emissions--the opposite result than what is needed in the Baton 
Rouge area. Second, it would cause health problems due to increasing 
rather than decreasing the ozone forming potential of the area. Third, 
it would create huge economic hardships.
    RFG was documented by EPA's approved models (MOBILE6 and MOBILE6.2) 
to cause NOx increases from on-road vehicles in Baton Rouge. Studies 
from around the country further documented this fact. When NOx 
emissions from RFG-fueled off-road vehicles (a significant component of 
the Baton Rouge inventory) were added, there was a clear ``disbenefit'' 
from NOx increases of about 400 tons per year. In other words, RFG use 
in Baton Rouge would have caused NOx emissions to increase by at least 
400 tons. A correlation between RFG and poor vehicle Inspection and 
Maintenance performance also was documented. The ``disbenefits'' 
clearly created substantial challenges with the current EPA-approved 
ozone control strategy, which relies on NOx decreases.
    Further, ethanol-based RFG, which was to be used in Baton Rouge, 
increased NOx emissions even more than standard RFG, adding to the 
interference with achieving attainment. Ethanol-based RFG was also 
proven to increase certain air toxics and VOC emissions through 
evaporative losses (permeation) and commingling.
    RFG in the Baton Rouge area also would have increased health 
problems associated with ozone. As VOC and NOx are increased, ozone 
levels are more likely to increase, thus increasing the very health 
problems the CAA is designed to minimize.
    The imposition of RFG in Baton Rouge also would have produced 
severe economic hardship. A respected LSU Professor of Economics, Dr. 
Loren Scott, conducted a study in which he found that the economic 
impacts would be catastrophic. Gas prices were estimated to increase by 
10-15 cents per gallon. Approximately 1,000 jobs and tens of millions 
of dollars in household income were to be lost. The oil marketers would 
have to retrofit their tanks to meet the UST compatibility requirements 
for ethanol-based fuel. Dr. Scott's economic model estimated that the 
cost to Baton Rouge in increased gas prices, lost earnings, and lost 
sales would be approximately $150 million. Moreover, due to the small 
size of the 5-parish (county) area, and the ease of gasoline purchases 
out of the area, many small retailers on the edges of the area would 
have been put out of business.
    There was and is a clear alternative to RFG which was applicable in 
Baton Rouge. The new Tier 2-low sulfur gasoline has been shown to 
significantly reduce NOx emissions. Thus, there was no need to 
implement RFG in Baton Rouge, with its associated ``disbenefit'' and 
economic hardship, when a suitable alternative existed that provided as 
much or greater environmental benefit was soon to go into effect. This 
low sulfur gasoline was being phased in across the country, including 
Louisiana, in 2004, with full implementation in 2005. EPA's own 
rulemaking for Tier 2 gasoline used models to project that the Baton 
Rouge area would achieve attainment with the ozone standard through its 
use. This rulemaking even relied upon that fact as economic 
justification for the rule. The Tier 2 rulemaking did not in any way 
ever consider that RFG would be required instead of Tier 2 fuel in 
Baton Rouge. However, although EPA explicitly relied on use of Tier 2 
fuel in Louisiana as a justification to pass the rule, the CAA seems to 
completely preclude a State or region from considering these nationwide 
fuel improvement programs as an ozone attainment measure. Instead, the 
Baton Rouge area is forced to use RFG by a completely separate fuel 
provision in the Act.
    The CAA, as written, seemed to offer EPA no flexibility. Having had 
its transport policy overturned, EPA was understandably reluctant to go 
out on a limb for Baton Rouge. While EPA expressed concern regarding 
the evidence presented by Baton Rouge, it felt constrained by the 
wording of the CAA itself.
    The Chamber decided to take the initiative, filing a request in the 
U.S. Fifth Circuit for a review of EPA's decision regarding the use of 
RFG in Baton Rouge and requesting a stay of the RFG mandate. All of the 
evidence noted above was placed before the court. On June 18, 2004, 
just a few days prior to the deadline for implementing RFG, the Fifth 
Circuit granted the Chamber's request for a stay. EPA agreed to review 
the use of RFG and agreed to keep the stay in effect while it conducts 
that review. However, it is important to note that the existence of the 
judicial proceedings was the only avenue available to EPA, under the 
CAA, to review the use of RFG in Baton Rouge. Without the litigation 
over RFG, EPA would not have been able to fashion a remedy for the 
Baton Rouge area under the wording of the CAA.
                     the 8-hour implementation rule
    When EPA issued the new Implementation Rule for the ozone 8-hour 
standard in 2004, the Baton Rouge area missed attainment with the new 
standard by a mere 1 ppb. It was therefore classified under the new, 
more stringent and protective 8-hour standard as `Marginal.'
    The issuance of the Phase I Implementation Rule provided some 
benefits for the Baton Rouge area. First, it revoked the old 1-hour 
standard. Second, a new attainment date of June 15, 2007 was 
established for compliance with the 8-hour standard for marginal areas. 
Third, the major source threshold for New Source Review was raised from 
25 tons per year (applicable to `Severe' areas) to 100 tons per year. 
Fourth, on the effective date of the revocation of the 1-hour standard 
(June 15, 2005), areas that were once classified as `Severe' under the 
1-hour standard were not obligated to impose penalty fees for continued 
failure to attain. However, the Implementation Rule does provide one 
`disbenefit' to Baton Rouge. Under its so-called `anti-backsliding' 
provisions, many of the `Severe' requirements that applied to the Baton 
Rouge area would still have to be implemented, even though our 
community was properly classified as `Marginal' under the 8-hour 
standard.
    Review of the Implementation Rule was sought by a diverse group of 
petitioners, including the Chamber. Eventually, all petitions were 
consolidated in the District of Columbia Circuit where such entities as 
the South Coast Air Quality District (Southern California), the 
Louisiana Environmental Action Network, the States of Ohio and Georgia 
(on behalf of the City of Atlanta), various environmental groups, 
various industry groups, and certain northern States are all joined 
together with the Chamber, asserting differing positions on many 
aspects of the Implementation Rule.
    The Chamber has two basic positions in the current litigation.
    First, the Phase I Implementation Rule in its current form is 
important to the Baton Rouge area and must be upheld and protected from 
the attacks of the Environmental Petitioners. The Environmental 
Petitioners strenuously contest portions of the rule and will continue 
to do so. They will advance their arguments in the court and request 
that the court overturn the Phase I Implementation Rule. If that 
occurs, the old 1-hour standard may not be revoked, penalty fees may 
again be applicable for failure to attain the 1-hour standard, and the 
major source threshold may be returned to `Severe' levels. Such a 
result would gravely impact the Baton Rouge area. LDEQ has stated in 
its Fiscal and Economic Impact that penalty fees would result in an $85 
million increase in fees, the possible shut down of facilities, and a 
negative effect on competition between companies in the Baton Rouge 
nonattainment area and those on the outside of the area that do not 
have to pay the penalty fee. A lower major source threshold would cause 
increased difficulty for sources to modify existing permits, require 
smaller sources to install tougher control equipment, and require many 
small industrial sources to obtain Title V major source permits. It is 
doubtful whether this result will actually assist the Baton Rouge area 
in solving its ozone problem, and such efforts are not needed as other 
measures enacted by both the State and EPA will address our ozone 
issues. For example, LDEQ is targeting specific voluntary HRVOC 
reduction measures that became effective through agreements with 16 
large sources in May 2005 and has extended NOx reduction measures to 
certain attainment parishes surrounding the nonattainment area. Neither 
of these measures is prescribed by the CAA, yet they are projected to 
be effective for our area. Further, EPA has several new programs that 
will substantially affect ozone. Two examples: (1) In 2006 and 2007 
EPA's new clean diesel fuel requirements will take effect and are 
projected to reduce NOx and PM10 emissions by substantial levels; and 
(2) powerplants in Louisiana are required to reduce NOx emissions by 
approximately 50 percent on a statewide aggregate basis under the Clean 
Air Interstate Rule.
    Prior to Hurricanes Katrina and Rita, we had identified the 
imposition of the penalties associated with a ``Severe'' classification 
under the now defunct 1-hour standard as the greatest short-term 
economic threat facing the Baton Rouge area: taking into account 
increased fees, likely facility closures, and foregone economic 
development opportunities, we estimate that our regional economy would 
sustain a negative economic drain of roughly $300-$500 million per year 
for the foreseeable future. This obviously would have a hugely 
detrimental impact on the businesses and families of the Baton Rouge 
area.
    Our second position is that the EPA has no legal authority to 
require that an area retain or implement requirements that are beyond 
the requirements of its 8-hour classification. Requirements that were 
applicable based on its old classification under the 1-hour standard, 
i.e., the `anti-backsliding' provisions, are beyond EPA's statutory 
authority to implement and are not a reasonable interpretation of the 
Clean Air Act.
    The Chamber is forced to assert Baton Rouge's interests in the 
litigation to ensure that the beneficial aspects of the Implementation 
Rule are upheld. Although ``Marginal'' under the 8-hour standard, the 
Baton Rouge area over the years implemented requirements mandated by 
the CAA for `Serious' areas when it was a ``Serious' area under the 1-
hour standard. Substantial and continuing reductions of ozone in the 
region have been achieved. Despite this, many petitioners actually seek 
the imposition of penalty fees and lower major source thresholds. 
Unless the Implementation Rule is upheld, the Baton Rouge area will 
again be faced with the more draconian aspects of the CAA, which will 
again be applied to it in a mechanistic or rote fashion, without the 
possibility of exception and without real benefit to air quality in our 
community.
                               conclusion
    As can be seen from our community's history, flexibility is not a 
hallmark of the CAA. The Chamber understands that the CAA was amended 
in 1990 to limit EPA's discretion to a certain degree. The addition of 
certain CAA Subpart 2 provisions specifying the exact programs that 
apply in a given classification is one example. RFG is another. 
Unfortunately, stringent provisions, however well-meaning and designed 
to enhance the quality of the air we breathe, when enacted without 
exception or with exceptions that are too narrowly drawn and difficult 
to meet, can lead to results that may end up harming the environment 
and/or the economy. This seems especially harsh when attainment just 
barely eludes a community, such as the Baton Rouge area, that has 
faithfully followed the law and EPA guidance over the years.
                               __________
     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 issue regarding the 
States ability to meet the new 8-hour ozone standard. U.S. EPA's 
implementation rule for the 8-hour ozone standard has dramatic 
repercussions for the States. Ohio believes that the current Federal 
approach to improving air quality lacks coherency. The federally 
mandated air pollution control programs are on much longer 
implementation schedules than the deadlines established by U.S. EPA for 
States to meet the 8-hour ozone standard. A better balance needs to be 
struck.
    On June 15, 2004, U.S. EPA finalized the 8-hour ozone 
implementation rule. The rule establishes firm deadlines for all of the 
counties within the States to meet the new, more stringent, 8-hour 
ozone standard. In all, Ohio has 33 counties that don't meet this 
standard. By June 2007, Ohio EPA must finalize air pollution control 
plans that will demonstrate reductions in air emissions enough so as to 
bring all 33 counties into attainment with the standard.
    U.S. EPA has classified all of the nonattainment counties based on 
air monitoring data. The higher the readings of ozone above the 
standard the higher classification that county will receive. The 
classifications from lowest to highest are: basic, moderate, serious, 
severe and extreme. Most nonattainment areas in the country are 
designated basic nonattainment. In Ohio, only Northeast Ohio (a total 
of 8 counties) was classified as moderate nonattainment.
    Under this classification scheme, the higher the classification, 
the more time U.S. EPA gives to meet the standard. Areas classified as 
basic nonattainment have until 2009 to demonstrate attainment with the 
new standard. Areas classified as moderate nonattainment have until 
2010 to demonstrate attainment.
    However, there is a trade off for getting more time; higher 
nonattainment classifications are accompanied with more stringent 
federally mandated control programs. In addition, areas with higher 
classifications have more limits placed on economic growth.
    From the day U.S. EPA issued the final implementation rule, Ohio 
has been concerned with the method used by U.S. EPA to establish the 
deadlines for the various classifications to meet the 8-hour standard. 
Despite the fact that the 8-hour standard is far more stringent than 
the previous 1-hour ozone standard, U.S. EPA gave areas exactly the 
same amount of time to comply with the new standard. For example, 
moderate nonattainment areas had 6 years to comply with the 1-hour 
ozone standard and are given 6 years to comply with the 8-hour 
standard.
    Ohio's concerns grew once it reviewed the logic behind establishing 
the deadlines for the 8-hour standard. The 1-hour ozone standard 
deadlines were established by Congress. In setting the deadlines, 
Congress engaged in a thoughtful process to determine reasonable, 
appropriate timeframes. Congress concluded that the amount of time 
required for attainment depends on the available controls and the time 
it takes to add these controls to existing sources. The congressional 
record is replete with testimony regarding science and available 
technology to meet the 1-hour ozone standard. Even though it engaged in 
this thoughtful process, many areas still were unable to meet the 1-
hour standard within the deadlines established despite best efforts to 
comply.
    In developing the compliance schedule for the new 8-hour ozone 
standard, U.S. EPA ignored the thoughtful process Congress used to 
establish timeframes. Instead, U.S. EPA used the 1-hour timeframes for 
the new, stricter 8-hour standard. U.S. EPA failed to consider any new 
evidence regarding the feasibility of meeting the new 8-hour standard. 
The result, U.S. EPA established unrealistic deadlines for large 
regions of the country.
    Despite the concerns with the methods used to establish the 8-hour 
compliance schedule, Ohio EPA has been working very hard to determine 
exactly what new air pollution controls will be required to put all of 
its counties into attainment with the 8-hour ozone standard. For basic 
nonattainment areas, Ohio EPA believes a reasonable level of new 
controls will be needed to reach attainment by 2009. The enormous 
challenge lies in moderate nonattainment areas, like Northeast Ohio. 
Right now, there is no viable air pollution control plan that would 
place Cleveland and the rest of Northeast Ohio into attainment by 2010. 
The failure to meet the current Federal deadline will have dramatic 
repercussions on economic growth in the Cleveland area, an area already 
facing significant challenges in its economy.
    To demonstrate the impossibility of the task of meeting the 
standard in Northeast Ohio, we have performed studies that show that 
even if all of industry was shut down and the area depopulated, it 
would just barely be able to meet the standard by 2010, the applicable 
deadline under the Federal rule. However, those same studies show that 
Northeast Ohio could attain the new standard by 2015 using almost 
exclusively existing local and Federal control programs.
    Why does the picture change so dramatically in such a relatively 
short period of time? The reason is that U.S. EPA has implemented 
effective regional air pollution control programs that will 
dramatically improve air quality. However, the mandated reductions will 
not occur fast enough to benefit areas like Northeast Ohio. These new 
Federal programs include controls on utilities (CAIR rule) and motor 
vehicles (clean fuels and new engine standards). U.S. EPA's studies of 
the effectiveness of these controls show they will be highly effective 
in helping States meet the new ozone standard. A critically important 
reason why the Federal programs are so effective is that they mandate 
reductions on a regional basis. Regional control programs have been 
shown to be the most effective means of improving air quality in order 
to meet the 8-hour standard. Alternatively, local control programs on 
industry and vehicles are shown to be very limited in their 
effectiveness to reduce 8-hour ozone levels. As a consequence, the most 
effective tools in improving air quality lie with the Federal 
Government, not the States.
    Although U.S. EPA has the most effective tools, it has placed the 
States in an impossible situation of mandating compliance with the 
standard much faster than its control program will achieve reductions. 
All of the Federal programs that reduce emissions from motor vehicles 
rely on turnover of the existing fleet of cars and trucks to gain those 
emission reductions. For example, emissions from diesel engines are 
predicted to be reduced by 80 percent from 2000 levels. However, that 
level of reduction will not be occur until 2030 because they are tied 
to turnover of the fleet. A similar time period is at issue with the 
Federal plan to control utility emissions. Emissions from powerplants 
are projected to be reduced by 70 percent from 2003 levels. However, 
those reductions will not be achieved until after 2015 due to the 
phased-in approach contemplated under the rules.
    Ohio EPA understands and supports the need to balance the economic 
costs of these reductions by phasing them in over time. However, U.S. 
EPA failed to take into account the need for balance when it 
established the deadlines for meeting the ozone standard. While the 
emission reductions mandated by U.S. EPA for utilities and vehicles are 
on a 10- to 25-year schedule, the States must meet the new standard in 
most areas no later than 2010, 5 years from now.
    The Federal air pollution programs for vehicles and utilities will 
account for major reductions and will aid the States in complying with 
the 8-hour ozone standard. But because of the short deadlines 
established by U.S. EPA for States to reach the 8-hour ozone standard, 
the benefits of those reductions will be too late to avoid mandatory 
local controls that will, by comparison, do little to reduce ozone. The 
reductions will also be too late for areas like Northeast Ohio to avoid 
Federal sanctions for failing to meet its designated deadline for 
compliance. These sanctions and mandated local controls will have 
significant and unnecessary consequences on Northeast Ohio's economy.
    So what is the appropriate solution? EPA should have adjusted the 
attainment dates so States can take full advantage of these Federal 
programs. All nonattainment areas are not faced with the same dilemma. 
Most basic areas have a realistic and fair chance of meeting their 2009 
deadline. But most moderate nonattainment areas have no chance of 
meeting their 2010 deadline. Ohio EPA believes these areas should be 
provided relief. We are not advocating for doing nothing more to 
improve air quality in these areas, but rather an appropriate balance 
be struck between the length of time provided to comply and a 
reasonable number of new cost effective pollution control programs that 
will help accelerate compliance.
    I would like to thank Senator Voinovich for holding this hearing on 
such a critically important issue to the States. Ohio stands ready and 
willing to engage in discussion that would lead to a practical solution 
that strikes the right balance between improved air quality and the 
economic costs of compliance.
  

                                  
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