[Senate Hearing 110-]
[From the U.S. Government Publishing Office]



 
     DEPARTMENT OF THE INTERIOR, ENVIRONMENT, AND RELATED AGENCIES 
                  APPROPRIATIONS FOR FISCAL YEAR 2008

                              ----------                              


                        TUESDAY, MARCH 13, 2007

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10 a.m., in room SD-124, Dirksen 
Senate Office Building, Hon. Dianne Feinstein (chairman) 
presiding.
    Present: Senators Feinstein, Dorgan, Reed, Nelson, Allard, 
Craig, Domenici, and Alexander.

                    ENVIRONMENTAL PROTECTION AGENCY

STATEMENT OF STEPHEN L. JOHNSON, ADMINISTRATOR
ACCOMPANIED BY:
        MARCUS PEACOCK, DEPUTY ADMINISTRATOR
        BILL WEHRUM, ACTING ASSISTANT ADMINISTRATOR, OFFICE OF AIR AND 
            RADIATION


             opening statement of senator dianne feinstein


    Senator Feinstein. Let me begin by welcoming everyone here 
this morning, and thank you for attending this hearing on the 
Environmental Protection Agency's fiscal year 2008 budget 
request.
    We have Steve Johnson, the EPA Administrator, as our 
principal witness. So, we look forward to the testimony.
    I'd also like to thank Senator Craig, our ranking member, 
and other members who, hopefully, will join us this morning.
    I think all of us should be extremely concerned about the 
cuts in EPA's budget for fiscal year 2008. The administration's 
request provides $7.2 billion for the EPA. That's $508 million 
less than 2007. That's a 6.6 percent cut. So, this, then, is 
the smallest EPA budget in more than a decade, and more than 
$1.1 billion less than the agency's budget in 2004.
    Now, we all know we have to make tough fiscal choices, 
but--and we need to reduce the deficit, but I don't believe 
that cutting funding for clean water or clean air is the 
answer. In particular, I can't begin to understand why the 
administration would cut $400 million out of the Clean Water 
State Revolving Fund. That's a 37 percent cut. Congress funded 
this Fund at nearly $1.1 billion last year, because we know 
that our communities depend on this funding to meet their clean 
water needs. EPA's own GAP analysis tells us that our Nation 
needs hundreds of billions of dollars for clean water 
infrastructure just to keep pace with our aging water systems.
    I mean, I remember the day when no one used bottled water 
anywhere. We all drank water straight from the tap. That just 
simply is not true today. Water is not nearly as clean as it 
used to be.
    In my State, the San Joaquin Valley has some of the worst 
air quality in the Nation. Its geography serves as a bowl that 
collects air pollutants from cars, trucks, and farm equipment, 
and it makes the challenges of meeting the Federal air-quality 
deadlines for ozone and particulate matter virtually 
impossible. As a matter of fact, it's one of the two 
nonattainment areas in the State.
    The South Coast air district is also fighting severe 
pollution from ozone and particulate matter. To meet air-
quality standards, they'll have to address pollution from a 
whole host of sources, including heavy trucks, oceangoing 
ships, and locomotives that move goods to the port. Yet, the 
air management district tells me that the EPA's recent 
locomotive and maritime diesel rule is insufficient to allow 
Southern California to meet its clean air deadlines. These 
districts need more Federal assistance to clean up their air, 
not less. In particular, they need the Federal Government to be 
a better partner on clean diesel programs.
    While EPA is moving forward with regulations to reduce 
further diesel emissions, we have to deal with the 11 million 
diesel engines that are polluting our air today. So, this is a 
challenge that could cost billions of dollars.
    Now, I'm very pleased that the administration's budget does 
contain $35 million to fund clean diesel grants. But, Mr. 
Administrator, we both know that $35 million is just not enough 
to get the job done. It's far less than the $200 million that 
Congress authorized for these cleanups, and it's even less than 
the President proposed last year. My own State is already 
spending $100 million each year for diesel emission reduction 
grants. It's not fair for the States to have to pick up the tab 
on this, so I hope the Federal Government can step up to the 
plate and provide more funding.
    So, Mr. Johnson, bottom line, I hope you will commit to 
working with us to make that happen, and I look forward to your 
testimony.
    I'll now call on the ranking member, distinguished Senator, 
Senator Craig.


                    STATEMENT OF SENATOR LARRY CRAIG


    Senator Craig. Well, Madam Chairman, thank you very much.
    I must say, at the beginning of my comments, they're going 
to sound a great deal like the chairman's, Steve. But, welcome 
before the committee. Marcus, it's great to have you back 
before the committee to look at your 2008 budget.
    EPA has one of the most important and difficult missions of 
all of our Federal agencies. The agency's jurisdiction ranges 
from responsibility to cleanup--in the cleanup of Superfund 
sites such as the Coeur d'Alene site in my home State of Idaho, 
to funding clean water and drinking water infrastructure 
programs. If you come to my State, I think bottled water is a 
fad, Madam Chairman, not a necessity.
    In Idaho?
    Senator Feinstein. It's not a necessity?
    Senator Craig. It's a fad.
    It's not a necessity.
    But certainly there is infrastructure problem of severity 
and enforcement of the long list of environmental laws that are 
out there, is a phenomenal obligation to some of our 
jurisdictions.
    The administration has requested $7.2 billion in the total 
budget authority for 2008. This is $500 million below the 
enacted level. While I am a supporter of the agency and the 
administration's efforts to curb spending, I think my 
priorities are not unlike the Senator from California's 
priorities, and the chairman of this committee. A reduction in 
EPA's budget is in the form of $396 million cut to Clean Water 
State Revolving Funds, at a time when they are desperately 
needed because of the new requirements in drinking-water 
standards, is tremendously important and enormously impossible, 
I guess is a great way to say it, in some of these small 
communities where the technology is simply not allowing them to 
comply because of the costs involved for the number of patrons 
that are recipients of the water delivered. So, that's a 
tremendously important issue. The State revolving funds work, 
they work very well. They are the kind of assistance we need.
    Now, on a positive note, I am pleased that both the Asian-
Pacific Partnership, $5 million, and Methane to Markets, $4.4 
million, received funding in the budget request. Let me look at 
my home State a little bit. Coeur d'Alene is a beautiful city 
in the north end of my home State, adjacent to a Superfund 
site. I'm way too familiar with the difficulties surrounding 
cleanup processes with Superfund sites. They still are more 
valuable to litigate, it seems, than to partnership on the 
cleanups that are necessary. I appreciate the challenges the 
agency's facing with cleaning up 1,245 active Superfund sites 
on the national priority list. However, I am most concerned 
that EPA is pushing the Superfund program to not only complete 
construction on sites in a timely manner, but also to turn 
these areas into healthy and safe conditions.
    As we emerge out of our difficulties in north Idaho, it is 
amazing the economic renaissance that can occur. But we spent 
20 years fighting and spending lots of money to get there, and 
that does not seem like a very productive way to handle 
resources.
    I would like to look past some of the science of drinking 
water to the realities of our rural communities in Idaho, as I 
mentioned, suffered from arsenic relations that are simply too 
big to deal with. Senator Domenici has just arrived. He and I 
have partnershiped on this issue, because we have communities 
that are in unique geologic regions of the country, where the 
reality of arsenic, with the standards currently set, are 
simply unattainable in a cost-effective way, compared with 
large municipalities.
    So, those are some of our struggles, Administrator Johnson. 
I think you understand them well. We've had not only productive 
dialogue, but cooperation, as we've worked on these issues in 
the past. We'll continue to do so. But to start with a budget 
that is below last year is, in itself, a phenomenal challenge.
    I would hope this isn't just the gamesmanship that 
oftentimes goes on when the administrations, Democrat or 
Republican, know that there are certain congressional 
priorities that they don't necessarily hold. So, if you get 
your funding, and your budget looks good, then Congress will 
come along and stick some of the money in it that they want, 
and, in the end, maybe both win, but the budget loses. That's a 
reality that we all struggle with.
    Madam Chairman, thank you very much.
    Senator Feinstein. Thank you, Senator Craig.
    Does any other member have a statement they might like to 
make?
    Senator, do you?
    Senator Dorgan. Madam Chairman, just 1 minute, if I might, 
and----
    Senator Feinstein. Please.
    Senator Dorgan [continuing]. No more than 1 minute.


                  STATEMENT OF SENATOR BYRON L. DORGAN


    Senator Dorgan. Mr. Johnson, thank you very much.
    My colleague from Idaho talked about spending less money 
than the previous year. That's been the case repeatedly in 
recent years on this subcommittee, despite the fact there are 
substantial needs. But, Administrator Johnson, I talked to you 
about the Center for Air Toxic Metals, which is a 12-year 
cornerstone program on this issue of research on technologies 
to deal with the air toxic metal issue. I talked to you about 
the fact that Congress has earmarked that for all of these 
years, because it's never put in the budget, I guess because 
you expect us to put it in. But I want to continue to work with 
you to make sure that, in that critical area dealing with the 
environment, that we don't have, in the intervening period, 
before Congress once again indicates its importance to that 
issue, that there not be layoffs and so on in that program 
before October 1st, when Congress almost certainly will fund it 
again.
    So, I'm going to provide you some information again today 
relevant to our phone call, but thank you for your leadership. 
I look forward to working with you.
    Mr. Johnson. Thank you.
    Senator Feinstein. Thank you.
    Going--I beg your pardon. I said I was going to use the 
early-bird rule, and I didn't. I think you were in next, Mr.--
Senator Allard. If you----
    Senator Allard. Madam Chairman, it's not a problem. Thank 
you.


                   STATEMENT OF SENATOR WAYNE ALLARD


    Senator Allard. I want to congratulate you for holding the 
hearing. I have a full statement I'd like to make a part of the 
record.
    But I would just, first of all, like to congratulate the 
Environmental Protection Agency for their new building in 
Denver, which I understand is an energy-efficient building 
and----
    Mr. Johnson. Yes.
    Senator Allard [continuing]. Likely to get what they call 
the Silver LEEDs rating, which is very good. I want to 
congratulate you on that. I want to thank you for many of the 
cleanup areas that we've moved forward on in Colorado. This 
hasn't been just in the past year, but it's been over a period 
of time--Rocky Flats, Rocky Mountain Arsenal, Shattuck Cleanup 
Site--and we're working on some other sites, too. I appreciate 
your cooperation in that regard.
    A concern that I raise in my comments is that we have to be 
very sensitive to what is happening in small communities. Many 
times when we're passing rules and regulations and doing 
enforcement in small communities, they simply can't afford to 
do whatever is required. I think we need to be sensitive, in 
some way. We just can't shut down the small community.
    Mr. Johnson. Right.
    Senator Allard. So, somehow or other, we need to figure out 
ways and, I think, maybe take more of a supportive role. Many 
of the fines and everything that get applied are very 
appropriate to a large community. But in a small community it's 
just--becomes unreasonable. I think that, somehow or the 
other--I don't know whether you have that flexibility because 
of current law; sometimes you don't--but in other--in some 
cases, where law permits--and I think we need to be somewhat 
flexible--there are some challenges on some clean-water issues 
for small communities and whatnot, and some environmental 
issues.


                           PREPARED STATEMENT


    I've been contacted by a number of them. I'm sure that 
there's a number of Senators up here from smaller States that 
have had some of the same conversations with their smaller 
communities. So, I'd just bring that to your attention, and 
I'll have my full statement put in the record.
    Thank you very much, Madam Chairman.
    [The statement follows:]
               Prepared Statement of Senator Wayne Allard
    Madam Chairwoman, thank you for holding this hearing today. While 
the EPA oversees the many important environmental regulations and 
requirements, some of these regulations may have a disproportionate 
effect on small communities. I think that this fact makes it very 
important for Congress to exercise close oversight of the Agency and 
its funding.
    I would like to begin by congratulating you, Administrator Johnson, 
on EPA's new home in Denver. I understand that the recently completed 
building is likely to receive a silver LEEDs rating. As a founding 
member of the Renewable Energy and Energy Efficiency Caucus I am very 
pleased to hear that the federal government is leading by example in 
this area.
    I would also like to thank you for the leadership role EPA has 
played at the clean-up of the Rocky Flats site, the Rocky Mountain 
Arsenal and the Shattuck site in Denver. Those areas are of great 
importance to the people of Colorado and to me.
    I cannot stress enough the need to utilize sound, peer-reviewed 
science when making decisions about increasing regulations. I also 
believe that the cost-benefit analysis of regulations should be given 
more weight in many situations--such a cost-benefit analysis should 
take into account the size of the systems and income level of the users 
who will bear the cost. Even with such considerations, some communities 
simply cannot afford to implement the types of upgrades that are 
required to meet ever evolving federal requirements. I believe that the 
federal government should step up and help these communities instead of 
pushing down yet another unfunded mandate on them.
    Finally, I have mentioned in previous years that I have had 
concerns with a climate within EPA that seems to lean heavily toward 
enforcement. From communications I have had with constituents, it has 
seemed that EPA was no longer interested in assisting communities in 
complying with regulations set by EPA. Instead reports of heavy-handed 
enforcement were the norm. Although enforcement is certainly a 
responsibility that has been delegated--and sometimes mandated--to EPA 
from Congress, small communities often do not have the expertise to 
meet new regulations on their own. The EPA should be willing to help 
communities who operate in good-faith efforts to meet federal 
requirements, rather than simply wait until they are able to take 
enforcement action.
    I am pleased to report this year that the news I have been hearing 
recently is more encouraging. Several of our small communities are 
reporting that EPA seems to have acquired new flexibility and is more 
willing to work with them. While things are not yet perfect, I am happy 
to hear of this progress. However I noted with some disappointment that 
EPA is requesting a substantial increase in their enforcement budget. 
When small communities are subjected to fines there is less funding for 
correcting the problems that triggered the fines in the first place. I 
think that we can all agree that upgrading water infrastructure, for 
example, is a far better use for a community's funds than is paying a 
fine. I hope this requested increase in funding does not mean that the 
agency is stuck in the mindset that enforcement of regulations is more 
important that helping communities meet those regulations.
    I look forward to working with the Administrator, and my colleagues 
in the Senate, to see that EPA is able to reasonably carry out their 
mission. And I look forward to working with the committee to ensure 
that activities at the Environmental Protection Agency are funded in a 
manner that is responsible and sufficient.

    Senator Feinstein. Thank you, Senator.
    Senator Domenici.

                 STATEMENT OF SENATOR PETE V. DOMENICI

    Senator Domenici. Madam Chairperson, I will just make a 
very brief statement, knowing that it'll--eventually, I'll have 
a chance, during questions, to bring up the issue.
    We have a terrible problem of arsenic in the small 
communities. So do you. We just can't meet the standard that 
they've set. Some of our small communities are now under the 
gun for real. We've been kind of putting it off, putting it 
off, begging, begging. But I think you've gotten to the point 
where you're going to have to do something, but I don't know 
what it will be. I don't think we're going to close a bunch of 
small communities' systems down. They're doing the very, very 
best they can. I'll ask some questions, just to see if there's 
any more chances that we have, and any opportunities, that our 
small communities have to get out again from under this yoke 
that's strangling them.
    I thank you for your cooperation, and your office. You have 
been out there to see how bad it is, and you know the arsenic 
standards for the small communities are, for all intents and 
purposes, not achievable.
    With that I'll hold until my questions. Thank you for your 
time.
    Senator Feinstein. Thank you, Senator.
    Mr. Johnson, we'll turn it over to you now. I think you've 
heard the concerns of individual committee members. I know 
they'd appreciate it, to the extent you can address them in 
your opening remarks.

                SUMMARY STATEMENT OF STEPHEN L. JOHNSON

    Mr. Johnson. Thank you very much, Madam Chairman. Thank you 
and members of the committee.
    I am pleased to be here to discuss the President's fiscal 
year 2008 budget request for the Environmental Protection 
Agency. The President's $7.2 billion request builds upon EPA's 
record of accomplishments and funds its role as our Nation 
enters the next phase of environmental progress.
    Over our 36 years, EPA has laid a strong foundation to 
shift America to a green culture. Our citizens are embracing 
the fact that environmental responsibility is everyone's 
responsibility. So, instead of having only 17,000 EPA employees 
working to protect the environment, we now have 300 million 
Americans as environmental partners.
    These are exciting times. Our air, water, and land are 
cleaner today than a generation ago. With this budget, our 
progress will continue.
    The evolution of environmental progress has come in--about, 
in part, because we have proven that a healthy environment and 
a healthy economy can, in fact, go hand-in-hand. As the economy 
continues to grow, so do our energy needs. In order to help 
meet the President's ambitious clean energy and air goals, 
EPA's budget requests over $82 million to support our Energy 
Policy Act responsibilities. This includes $8.4 million to 
implement the Renewable Fuel Standards, and $35 million for 
grants to cut diesel emissions from trucks and school buses.
    EPA also plays a vital role in advancing the 
administration's aggressive, yet practical, strategy for 
reducing greenhouse gas emissions. The President has requested 
$117.9 million for EPA's climate change programs, including $44 
million for the successful Energy Star program, $5 million for 
the Asia-Pacific Partnership initiative, and $4.4 million for 
the Methane to Markets program.
    The evolution of environmental progress requires EPA to 
work effectively with our State and local partners. The 
President's budget builds upon this cooperation by providing 
$2.7 billion to help our partners improve their water quality. 
We are also promoting the use of innovative, tax-exempt, 
private activity bonds for capital investments in drinking 
water and wastewater projects.
    Additionally, collaboration is the key to protecting 
America's great water bodies. In order to strengthen the 
efforts of EPA and our partners, the President is requesting 
$28.8 million for the Chesapeake Bay, $56.8 million for the 
Great Lakes, $4.5 million for the Gulf of Mexico, and $1 
million for the Puget Sound.
    At EPA, we're working productively with our partners to 
deliver a healthier and more prosperous future. The President's 
budget provides $1.2 billion for the Superfund program to 
continue transforming hazardous waste sites back into community 
assets.
    After highlighting some of these cooperative initiatives, 
we also must recognize the necessity of vigorously enforcing 
our Nation's environmental laws. The proposed fiscal year 2008 
enforcement budget, $549.5 million, is the highest enforcement 
budget ever.
    As EPA helps shape America's green culture, we understand 
the need to advance environmental science. The President's 
commitment to sound science is reflected in his $134 million 
request, an increase of $9.4 million, to fund human health 
risk, clean air, and nanotechnology research.
    Finally, I must mention EPA's evolving role from being 
guardians of the environment to, also, guardians of our 
homeland. The President has requested $152 million for our 
homeland security responsibilities in water security and 
decontamination efforts.
    While the Nation's environment progress continues to 
evolve, so does EPA's role. This budget will fulfill EPA's 
responsibilities of being good stewards of the environment and 
good stewards of our Nation's tax dollars.

                           PREPARED STATEMENT

    By making smart use of our resources, we're not only 
building on our Nation's environmental accomplishments, we're 
creating a lasting legacy for future generations of Americans.
    Thank you, and I look forward to addressing your questions.
    Thank you, Madam Chairwoman.
    [The statement follows:]

                Prepared Statement of Stephen L. Johnson

    Madam Chairman and members of the committee, I am pleased to be 
here today to discuss the fiscal year 2008 budget request for the 
Environmental Protection Agency (EPA). The President has requested $7.2 
billion to support the work of EPA and our partners nationwide. This 
funding illustrates the administration's unwavering commitment to 
setting high environmental protection standards, while focusing on 
results and performance, and achieving the goals outlined in the 
President's Management Agenda.
    The President's request builds on EPA's long record of 
accomplishments and funds its role as America enters into the next 
phase of environmental progress. These are exciting times for our 
Nation's environment. Since its founding, EPA has laid a strong 
foundation of environmental progress. Our air, water and land are 
cleaner today than they were just a generation ago, and with this 
year's budget, this progress will continue.
    While our Nation's environmental results are significant, it is 
important to understand how they're being achieved. Over our 36 years, 
EPA has laid a strong foundation to shift America into a ``green'' 
culture. Today, instead of having just 17,000 EPA employees working to 
protect the environment, we now have over 300 million Americans as 
environmental partners. Americans from all sectors of society--
businesses, communities and individuals--have begun to embrace the fact 
that the environment is everyone's responsibility, not just the 
responsibility of EPA.
    Madam Chairman, the fiscal year 2008 budget will fund our new role 
in this next exciting phase of environmental progress.
    Our Nation is committed to balancing the budget, and EPA is a proud 
partner in this effort. EPA is not only a good steward of our 
environment, but it is a good steward of our Nation's tax dollars. We 
are accountable for spending the taxpayer's money efficiently and 
effectively, while focusing on wisely investing in environmental 
results.

                  CLEAN AIR AND GLOBAL CLIMATE CHANGE

    The fiscal year 2008 President's Budget requests $912 million for 
the Clean Air and Global Climate Change goal at EPA. EPA implements 
this goal through its national and regional programs that are designed 
to provide healthier air for all Americans and protect the 
stratospheric ozone layer while also minimizing the risks from 
radiation releases, reducing greenhouse gas intensity, and enhancing 
science and research. In order to carry out its responsibilities, EPA 
utilizes programs that include many common elements, including: setting 
risk-based priorities; facilitating regulatory reform and market-based 
approaches; partnering with state, tribal, and local governments, non-
governmental organizations, and industry; promoting energy efficiency; 
and utilizing sound science.
    The Clean Air Rules are a major component of EPA work under Goal 1 
and include a suite of actions that will dramatically improve America's 
air quality. Three of the rules specifically address the transport of 
pollution across state borders (the Clean Air Interstate Rule, the 
Clean Air Mercury Rule, and the Clean Air Nonroad Diesel Rule). These 
rules provide national tools to achieve significant improvement in air 
quality and the associated benefits of improved health, longevity and 
quality of life for all Americans. In fiscal year 2008, EPA will be 
working with the states and industry to implement these rules.
    In order to address the Nation's growing energy challenges, EPA's 
request supports activities associated with the Energy Policy Act of 
2005. These activities include the implementation of the Renewable Fuel 
Standards that will promote the use of renewable fuels, diversify our 
energy sources, and reduce our reliance on oil. EPA's request provides 
$35 million to support the new Diesel Emission Reduction Grants program 
that is designed to reduce diesel emissions in trucks and school buses 
through retrofitting and replacing existing engines. This program will 
target projects in areas that don't meet air quality standards to help 
ensure improvements occur in areas of the country where the benefits 
are needed most.
    In fiscal year 2008, EPA's climate protection programs will 
continue its government and industry partnerships to achieve reductions 
in greenhouse gas emissions and contribute to the President's goal of 
reducing greenhouse gas intensity by 18 percent in 2012. The 
President's request for EPA's voluntary partnership climate change 
programs and research on technology and science in fiscal year 2008 is 
$118 million. The request includes $4 million for the Methane to 
Markets Partnership which promotes methane recovery and use in 
landfills, coal mines and natural gas facilities. In addition, EPA's 
request provides $5 million to support the Asia Pacific Partnership--
this partnership supports international efforts to reduce greenhouse 
gas emissions by creating new investment opportunities, building local 
capacity, and removing barriers to the introduction of more efficient 
technologies. EPA's climate partnership and technology research efforts 
are components of the administration's Climate Change Technology 
Program. In addition, EPA's Global Change research program coordinates 
its efforts and actively contributes to the administration's Climate 
Change Science Program.

                          CLEAN AND SAFE WATER

    The fiscal year 2008 President's Budget requests $2.7 billion to 
implement the Clean and Safe Water goal through programs designed to 
improve the quality of surface water and drinking water. EPA will 
continue to work with its state, tribal, and local partners to achieve 
measurable improvements to the quality and safety of the Nation's 
drinking water supplies as well as the conditions of rivers, lakes and 
coastal waters.
    The President's request continues the administration's commitments 
to the Clean Water and Drinking Water State Revolving Funds. The 
President funds the Clean Water State Revolving Fund (CWSRF) at $688 
million, supporting the cumulative capitalization commitment of $6.8 
billion for 2004-2011 and enabling the CWSRF to eventually revolve at 
an annual level of $3.4 billion. The budget proposes $842 million for 
the Drinking Water State Revolving Fund (DWSRF), essentially the same 
as the 2007 level. This request keeps the administration's commitment 
of achieving a long-term $1.2 billion revolving level.
    EPA has worked with Treasury and other parts of the administration 
to propose expanded use of tax-exempt Private Activity Bonds for 
capital investments in drinking water and wastewater projects. The 
President's Budget proposes to exempt PABs from the private activity 
bond unified state volume cap. PABs are tax-exempt bonds issued by a 
state or local government, the proceeds of which are used by another 
entity for a public purpose or by the government entity itself for 
certain public-private partnerships. By removing drinking water and 
wastewater bonds from the volume cap, this proposal will provide states 
and communities greater access to PABs to help finance their water 
infrastructure needs and increase capital investment in the Nation's 
water infrastructure.
    This Water Enterprise Bond proposal would provide an exception to 
the unified annual State volume cap on tax-exempt qualified private 
activity bonds for exempt facilities for the ``furnishing of water'' or 
``sewage facilities.'' To ensure the long-term financial health and 
solvency of these drinking water and wastewater systems, communities 
using these bonds must have demonstrated a process that will move 
towards full-cost pricing for services within 5 years of issuing the 
Private Activity Bonds. This will help water systems become self-
financing and minimize the need for future subsidies.

                   LAND PRESERVATION AND RESTORATION

    The Agency's fiscal year 2008 budget request to Congress implements 
the Land Preservation and Restoration goal through EPA's land program 
activities that promote the following themes: Revitalization, 
Recycling, Waste Minimization, and Energy Recovery; Emergency 
Preparedness and Response; and Homeland Security.
    The President's budget provides $1.2 billion for the Superfund 
program to continue progress cleaning up the Nation's most contaminated 
hazardous waste sites. As of the end of fiscal year 2006, cleanup 
construction has been completed at 1,006 National Priorities List (NPL) 
sites. The Superfund program often completes short-term removal actions 
to mitigate immediate health threats at sites prior to completion of 
investigations and the start of long-term cleanup construction.
    EPA has continued its efforts to efficiently utilize every dollar 
and resource available to clean up contaminated sites and to protect 
human health. In fiscal year 2006, EPA obligated $390 million of 
appropriated, state cost-share, and responsible party funding to 
conduct ongoing cleanup construction and post-construction work at 
Superfund sites that includes nearly $45 million to begin construction 
at 18 new Superfund projects. Based upon the construction schedules, 
EPA expects to complete construction of all remedies at 24 sites in 
fiscal year 2007 and 30 sites in fiscal year 2008. EPA expects to 
complete construction at 165 sites during the fiscal year 2007 to 
fiscal year 2011 time period, the goal established in the Agency's 
fiscal year 2006 to fiscal year 2011 Strategic Plan.
    In fiscal year 2008, the Agency is requesting $34 million for the 
Underground Storage Tank Program to provide assistance to states to 
help them meet their new responsibilities, that include: (1) mandatory 
inspections every 3 years for all underground storage tanks; (2) 
operator training; (3) prohibition of delivery to non-complying 
facilities; (4) secondary containment of financial responsibility for 
tank manufacturers and installers; (5) various compliance reports; and 
(6) grant guidelines. The Agency is also submitting new legislative 
language to allow states to use alternative mechanisms, such as the 
Environment Results Program, to meet the mandatory 3-year inspection 
requirement. This proposal provides states with a less costly 
alternative to meet the objectives of the Energy Policy Act.

                   HEALTHY COMMUNITIES AND ECOSYSTEMS

    In fiscal year 2008, EPA's Budget carries out the Healthy 
Communities and Ecosystems goal via a combination of regulatory, 
voluntary, and incentive-based programs. A key component of the Healthy 
Communities and Ecosystems goal is to reduce risks to human health and 
the environment through community and geographically-based programs.
    In fiscal year 2008, $162.2 million was requested for the 
Brownfields program to support research efforts with additional 
assessments, revolving loan fund, cleanup grants and workforce 
development programs. When leveraged with state and local resources, 
this Brownfield funding will help assess more than 1,000 properties, 
clean up more than 60 sites, and address petroleum contamination in 
more than 40 communities.
    EPA focuses on collaborative place-based programs to protect the 
great waterbodies--the Chesapeake Bay, the Great Lakes, the Gulf of 
Mexico and the Puget Sound.
    The Chesapeake Bay is the largest estuary in the United States and 
a water resource of tremendous ecological and economic importance. The 
greatest success in the last 5 years has been the water quality 
initiative that has resulted in new water quality standards for the 
Bay, the adoption of nutrient and sediment allocations for all parts of 
the watershed that meet new standards, and tributary-specific pollution 
reduction and habitat restoration plans. To continue to carry out these 
functions, the fiscal year 2008 President's Budget requests $29 million 
in fiscal year 2008, an increase of over $2 million from the previous 
President's Budget request. Within the request is $8 million for 
competitive grants for innovative, cost-effective non-point source 
watershed projects, which reduce nutrient and/or sediment discharges to 
the Bay.
    The Great Lakes are the largest system of surface freshwater on 
earth, containing 20 percent of the world's surface freshwater and 
accounting for 84 percent of the surface freshwater in the United 
States. The goal of the Agency's Great Lakes Program is to restore and 
maintain the chemical, physical and biological integrity of the Great 
Lakes Basin Ecosystem. The President's fiscal year 2008 budget commits 
$57 million towards continuing efforts by EPA's Great Lakes program, 
working with state, local, and tribal partners and using the Great 
Lakes Regional Collaboration Strategy as a guide to protect and restore 
the Great Lakes. The Agency will focus on working with partners to 
clean up and de-list eight Areas of Concern (AOCs) by 2010, emphasizing 
clean up of contaminated sediments under the Great Lakes Legacy Act. 
EPA will continue to work towards reducing PCB concentrations in lake 
trout and walleye and keeping Great Lakes beaches open and safe for 
swimming during the beach season.
    The fiscal year 2008 President's Budget Request provides $4.5 
million for the Gulf of Mexico program to support Gulf States and 
stakeholders in developing a regional, ecosystem-based framework for 
restoring and protecting the Gulf of Mexico.
    EPA efforts in the Puget Sound are focused on the Basin's highest 
priority environmental challenges: air and water quality. The fiscal 
year 2008 Budget provides $1 million for restoration activities to 
improve water quality and minimize the adverse impacts of rapid 
development.
    Another major focus of the Healthy Communities and Ecosystems goal 
is identifying, assessing, and reducing the risks from pesticides. In 
fiscal year 2008, EPA will continue identifying and assessing potential 
risks from pesticides. In addition, EPA will set priorities for 
addressing pesticide risks and promoting innovative and alternative 
measures of pest control. EPA will continue to meet its pesticide-
related homeland security responsibilities by identifying and reviewing 
proposed pesticides for use against pathogens of greatest concern for 
crops, animals, and humans. EPA will continue to work closely with 
other federal agencies and industry to implement its Registration 
Review program that will review existing pesticide registrations on a 
15-year cycle to ensure that registered pesticides in the marketplace 
continue to be safe for use in accordance with the latest scientific 
information.

                COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP

    The EPA's fiscal year 2008 Budget request of $743.8 million for the 
Compliance and Environmental Stewardship goal provides funding for 
programs that monitor and promote enforcement and compliance with 
environmental laws and policies. The Agency will also support 
stewardship through direct programs, collaboration and grants for 
pollution prevention, pesticide and toxic substance enforcement, 
environmental information, and continuing an environmental presence in 
Indian Country.
    In fiscal year 2008, the budget for this goal also provides $56.9 
million for GAP grants, which will build tribal environmental capacity 
to assess environmental conditions, utilize available federal 
information, and build an environmental program tailored to tribes' 
needs. The grants will develop environmental education and outreach 
programs, develop and implement integrated solid waste management 
plans, and alert EPA to serious conditions that pose immediate public 
health and ecological threats. Through GAP program guidance, EPA 
emphasizes outcome-based results.

                              ENFORCEMENT

    In fiscal year 2008, the proposed total of $549.5 million 
represents the highest requested enforcement budget. This request for 
an increase of $9.1 million reflects the administration's strong 
commitment to the vigorous enforcement of our Nation's environmental 
laws and ensures that we will have the resources necessary to maintain 
a robust and effective enforcement program.
    EPA's enforcement program continues to achieve outstanding 
enforcement results with settlements over the past 3 years resulting in 
commitments of nearly $20 billion in future pollution controls. As an 
outcome of EPA's Superfund enforcement actions in fiscal year 2006, 
parties held responsible for pollution will invest $391 million to 
clean up 15 million cubic yards of contaminated soil and approximately 
1.3 billion cubic yards of contaminated groundwater at waste sites. 
These results show a strong and vigorous enforcement program that will 
be attainable under the fiscal year 2008 Request.

                                RESEARCH

    EPA conducts research that provides a scientific foundation for the 
Agency's actions to protect the air that all Americans breathe. In 
fiscal year 2008, EPA's air research program will support 
implementation of the Clean Air Act, especially the National Ambient 
Air Quality Standards (NAAQS). The NAAQS programs will focus on 
tropospheric ozone, particulate matter, carbon monoxide, sulfur 
dioxide, nitrogen oxides, and lead. EPA also conducts research to 
improve understanding of the risks from other hazardous air pollutants, 
known as air toxics. EPA is also one of many federal agencies that 
actively contribute to the administration's Climate Change Science 
Program.
    Other important areas of research in fiscal year 2008 will include: 
(1) development of molecular microarrays for detection of bacterial 
pathogens and non-pathogenic microbes in drinking water source waters; 
(2) epidemiological studies on the illness rates resulting from 
untreated groundwater and distribution systems; (3) studies on the 
practices, such as blending, for handling significant wet weather 
events to identify ``best practices'' for preventing peak wet weather 
flows from overwhelming wastewater treatment facilities while 
protecting water quality; and (4) providing more efficient monitoring 
and diagnostic tools through continued research to develop methods of 
using landscape assessments for monitoring and assessing watershed 
conditions. These programs will help assess risks and priorities for 
ensuring clean water.
    EPA is requesting $10.2 million in fiscal year 2008 for 
nanotechnology research, which will focus primarily on the potential 
implications of manufactured nanomaterials on human health and the 
environment. The Agency's efforts are coordinated with other federal 
agencies through the National Nanotechnology Initiative (NNI), which 
the administration has identified as a fiscal year 2008 research and 
development budget priority. In fiscal year 2008, EPA's Science to 
Achieve Results (STAR) program will continue to fund exploratory grants 
on the potential implications of manufactured nanomaterials on the 
environment and human health, in collaboration with other federal 
agencies.
    The Agency also will continue in-house nanotechnology research 
initiated in fiscal year 2007. The integrated programs will focus on: 
(1) assessing the potential ecological and human health exposures and 
effects from nanomaterials likely to be released into the environment; 
(2) studying the lifecycles of nanomaterials to better understand how 
environmental releases may occur; (3) developing methods to detect 
releases of nanomaterials; and (4) using nanotechnology to detect, 
control, and remediate traditional pollutants.
    Recognizing that environmental policy and regulatory decisions will 
only be as good as the science upon which they are based, EPA makes 
every effort to ensure that its science is of the highest quality and 
relevance, thereby providing the basis for sound environmental 
decisions and results. EPA uses the federal Research and Development 
(R&D) Investment Criteria of quality, relevance, and performance in its 
decision-making processes through: (1) the use of research strategies 
and plans; (2) program review and evaluation by the Board of Scientific 
Counselors (BOSC) and the Science Advisory Board (SAB); and (3) 
independent peer review.

                           HOMELAND SECURITY

    Following the cleanup and decontamination efforts after the 
terrorist incidents in 2001, the Agency has focused on ensuring we have 
the tools and protocols needed to detect and recover quickly from 
deliberate incidents. The emphasis for fiscal year 2008 is on several 
areas including decontaminating threat agents, protecting our water and 
food supplies, and ensuring that trained personnel and key lab 
capacities are in place to be drawn upon in the event of an emergency. 
Part of these fiscal year 2008 efforts will continue to include 
activities to implement a common identification standard for EPA 
employees and contractors such as the Smartcard initiative.
    EPA has a major role in supporting the protection of the Nation's 
critical water infrastructure from terrorist threats. In fiscal year 
2008, EPA will continue to support the Water Security Initiative 
(formerly known as Water Sentinel) pilot program and water sector-
specific agency responsibilities, including the Water Alliance for 
Threat Reduction (WATR), to protect the Nation's critical water 
infrastructure. The fiscal year 2008 budget provides $22 million for 
the Water Security Initiative to continue operation at the existing 
pilot systems and to begin deployment of the last pilot systems. 
Ultimately, an expansion of the number of utilities will serve to 
promote the adoption of Water Security within the water sector. 
Functioning warning systems, among several utilities of potentially 
divergent configurations, will afford a more compelling outcome than 
just one utility. After start-up of the remaining pilot systems in 
2008, the program will ramp down as EPA shifts its focus to evaluation 
of the pilots. EPA will continue support of each pilot for 3 years, 
after which the host cities will assume maintenance of these systems 
and over time bring them to full-scale operation. By the end of fiscal 
year 2007, EPA will issue interim guidance on design and consequence 
management that will enable water utilities to deploy and test 
contamination warning systems in their own communities.
    In fiscal year 2008, the Agency, in collaboration with our water 
sector security stakeholders, will continue our efforts to develop, 
implement and initiate tracking of national measures related to 
homeland security critical infrastructure protection activities.
    In summary, this budget will enable us to carry out the goals and 
objectives as set forth in our Strategic Plan, meet challenges through 
innovative and collaborative efforts with our state, tribal, and 
private entity partners, and focus on accountability and results in 
order to maximize environmental benefits. The requested resources will 
help us better understand and solve environmental challenges using the 
best available science and data, and support the President's focus on 
the importance of homeland security while carrying out EPA's mission.

    Senator Feinstein. Thank you very, very much. Appreciate 
it.
    Mr. Johnson. Thank you.

                           SAN JOAQUIN VALLEY

    Senator Feinstein. If I may, let me raise an issue of 
concern to me, which is the San Joaquin Valley. As you know, it 
is a nonattainment area. It faces very serious strictures, 
which could shut down the economy if they can't meet their 
attainment standards. There is virtually no way, presently, 
that they know how to meet those attainment standards. The 
valley's geography traps pollution; and so, there are too many 
different sources coming into the valley, many of which are of 
no fault to the valley. Additionally, it's a big area; 
consequently, the diesels play a role.
    Mobile sources are the biggest polluters, but there's no 
way it can meet its Federal ozone standard by 2013, even if it 
were to ban all cars and all trucks from the San Joaquin 
Valley.
    What are you doing to help them comply? What could the EPA 
do, if Congress provided additional resources?
    Mr. Johnson. Well, Madam Chairman, we, too, share your 
concern about the San Joaquin Valley, and, in fact, are 
committed, and have been working through our Region 9 office to 
help businesses and the local air-management districts there. 
As you point out, they are going to require additional time for 
attainment. Their final draft of their ozone plan, which was 
issued in January, moves the attainment time to 2023. This will 
provide some additional time to help, but also will entail 
additional requirements to add local measures to try to help 
achieve.
    Senator Feinstein. Do you----
    Mr. Johnson. So, we're----
    Senator Feinstein [continuing]. Support that--moving the 
attainment time? Can it be done, legally?
    Mr. Johnson. Yes, it can be done, legally. We're very 
supportive of working with the Valley and the businesses to 
help in every way we can. Of course, the steps that we've taken 
for diesel, both on-road and off-road, as well as the recent 
proposal for locomotives and marines, again, all help. You have 
my commitment that we're going to continue to work to help the 
Valley achieve their attainment status as quickly as possible.

                           CLEAN DIESEL GRANT

    Senator Feinstein. Well, as you know, you have to convert 
11 million diesels. As you also know, the Clean Diesel Grant is 
authorized at $200 million. You only ask for $35 million in 
your budget this year. Why is that?
    Mr. Johnson. We believe that we are committed to make the 
diesel puff of smoke something you only read about in history 
books, and, through our regulations, as well as through the 
President's request of $35 million, we believe we continue to 
make progress in doing that. The good news is, we're going to 
continue to deliver results while meeting a balanced budget. 
The $35 million requested as part of the President's budget, 
will be leveraged through the grant mechanism into $72 million. 
Putting it in terms of health benefits, that will derive $1.4 
billion in health benefits. So, while there is much to be done, 
this continues to deliver results, and we're committed to make 
that happen.

                          NONATTAINMENT AREAS

    Senator Feinstein. Now, 30 percent of your request, about 
$10.5 million, will go to States to fund grants for 
nonattainment areas, but the remaining money, about $24.5 
million, is not targeted to any particular need or region. What 
is the plan for that $24.5 million?
    Mr. Johnson. Let me ask our Acting Assistant Administrator, 
Bill Wehrum, to come to the table, and he can describe the plan 
in greater detail.
    Bill?
    Mr. Wehrum. Good morning, Madam Chair. My name is Bill 
Wehrum. I'm the Acting Assistant Administrator for Air and 
Radiation.
    There are needs across the country with regard to funding 
diesel retrofit programs, so we tried to create a balance, in 
the budget that has been proposed: to target a significant 
amount of money in the areas that need it most, which are the 
nonattainment areas, but not to leave out many other areas of 
the country that have clean air, but also have dirty diesels.
    Senator Feinstein. Well, will this be done on a priority 
basis?
    Mr. Wehrum. We try very hard to prioritize, but also to 
provide adequate and substantial funding for the many needs 
across the country, Madam Chair.
    Senator Feinstein. Well, I mean, this is a problem for me. 
If you have an area that geographically can't meet its ozone 
requirements--and this area can't meet it, even as I say, if 
they prohibited every car and truck from entering the area, 
they still can't meet them. Therefore, the only thing they can 
do is make the changes in the diesel engines. It's a priority 
area, because it's a nonattainment area. I don't think any of 
these other areas, outside of Los Angeles, perhaps, in the 
United States, have the same problems as this area does. So, 
it's a pretty important priority, it seems to me. What you 
sounded like is, this is going to be another revenue-sharing 
program that's going to be spread, kind of, based on the 
politics of it. I hope that's not the case.
    Mr. Johnson.
    Mr. Johnson. Well, Madam Chairman, we are very interested 
in prioritizing these grants to those areas of nonattainment. 
As you aptly point out, the San Joaquin Valley and Cleveland, 
Houston, Dallas/Fort Worth, are all areas that are in 
nonattainment that would greatly benefit by these kind of grant 
monies. Again, our first priority is to try to help in those 
nonattainment areas.
    Senator Feinstein. Well, I appreciate that, and I thank you 
for going on the record.
    Mr. Johnson. Thank you.
    Senator Feinstein. The next question--and I'll--this is my 
last one--is, this is just 30 percent, about $10.5 million 
would go to States in nonattainment areas. I would ask you to 
work with me on that and re-look at it, based on these 
nonattainment areas around the United States, and what the 
strictures are on them, and what options they have, and then 
perhaps tailor this money to the most needy.
    Mr. Johnson. Look forward to working with you.
    Senator Feinstein. Thank you very much, Mr. Johnson.
    Senator Craig.

                    CLEAN WATER STATE REVOLVING FUND

    Senator Craig. Administrator Johnson, I spent a little time 
in the San Joaquin on agricultural issues and labor issues. In 
just conversation with the agricultural community alone, I'm 
always amazed at the amount of money they are now committing to 
retrofitting and changing and trying to come into compliance. 
It is literally hundreds of millions of dollars annually. Of 
course, the Senator from California and I work on agricultural 
issues. We know that sometimes their profitability margins are, 
at best, marginal, and their input costs are phenomenal. This 
is an input cost in that valley that is--if it were in Idaho, 
based on our cropping patterns, it would shut our agriculture 
down. It would really be quite that simple. They could not 
afford what California is attempting to afford, at this time.
    Let me talk about Clean Water State Revolving Fund. We've 
all expressed our concern about it. You've heard the Senator 
from New Mexico and I talk about uniqueness's that we have, but 
also a standard that--you know, I can question the science of 
it. It--that hardly makes a headline anymore. The reality is, 
here, the standards have been accepted, and now everybody 
rushes to comply, or attempt to comply.
    Can you tell me how EPA intends to help rural and poor 
communities maintain sewage plants and mitigate nonpointsource 
pollutions, and face the reality of what they need to get done, 
with that kind of a proposed cut?
    Mr. Johnson. Well, Senator, we are committed, as an agency, 
to help each of the States, whether they be small water systems 
or large water systems, to comply. The Clean Water State 
Revolving Loan Fund, that the President has requested in 2008, 
is at a level that supports his commitment. It's his commitment 
to extend the coverage from 2004 to 2011. This year's request 
is $687.6 million, revolving at $3.4 billion. That's the money 
side of it.
    This year, the President is proposing a very innovative 
solution, and that is the use of private activity bonds. Of 
course, that will require a change in the internal tax code, 
which we would urge Members of Congress to pass. We continue to 
support full-cost pricing and other programs, including 
research and development. In part of the President's budget for 
2008, there are monies to help in infrastructure research and 
development. So, we think these, coupled with improvements in 
efficiency, will help move us to a sustainable infrastructure.

                         PRIVATE ACTIVITY BONDS

    Senator Craig. Steve, you mentioned private activity bonds. 
I'm on the board of a think tank out West called the Center for 
the New West. We've held a series of meetings across the West 
and in California about the realities of all of these water 
issues--sewage, waste, water quality, urban water in--the whole 
combination of things--along with Bureau of Reclamation and 
their responsibility. There's a very obvious bottom line out 
there; and that is, nobody should expect the Federal Government 
to pay for all of it.
    Mr. Johnson. Right.
    Senator Craig. At the same time, this standard is a Federal 
mandate, ``You will comply,'' period. It's not a local mandate. 
It's not a State mandate. It is a Federal mandate.
    Having said that, though, the world in which we live in 
today out West is not the world of 70 years ago, when we were 
developing the West; it is a pretty developed, sophisticated, 
and very wealthy area today, in most respects. But when it 
takes on some of these water projects that are just 
phenomenally expensive, it needs flexibility in doing so--a 
little Federal help, local help.
    Talk to us more about this tax-exempt idea. I assembled a 
group of Wall Street investors in San Diego, Madam Chairman, 
about 3 months ago, to have this kind of conversation with 
urban and municipal water managers and developers. The Federal 
Government really does need to move in this area. We ought to 
be sensitive to the values of it, because it is a great new way 
of finding resources that we simply cannot budget up to, if you 
will, at the Federal level.
    Beyond just talking about it, what do you plan to do about 
it? Is it going to be advocated by the administration? Is it 
going to be part of their proposal? Are they going to go before 
the Senate Finance Committee, try to accomplish something like 
this?
    Mr. Johnson. It is part of the President's 2008 budget 
request. We are advocating that the tax code be changed to 
remove the cap that's currently in the tax law. That would 
allow private activity bonds so that additional investments 
could be made.
    Some of the analysis that we've done would indicate that, 
with these private activity bonds, we would see investments 
literally in the billions of dollars that would otherwise not 
be available because of the current cap in the current law. 
Here's a great opportunity for us to help strengthen our 
infrastructure by an infusion of monies through private 
activity funds. Yes, the administration is very supportive.
    Senator Craig. There are also concepts, Madam Chairman, 
that we ought to look at that are scored differently, or it is 
believed they would be scored differently than private activity 
bonds so that they don't fit the kind of frustration that OMB 
has as it relates to the expansion of some of these types of 
things being, if you will, a liability factor involved. They 
really hinge on opportunity and tax--unique tax advantagements 
within--advantages within the investment community that don't 
push a Federal obligation.
    Thank you.
    Senator Feinstein. Thank you----
    Mr. Johnson. Madam Chairman, if I might just add, on March 
21 through March 23, we are having a summit on innovative 
financing. It's a summit that we've been working with, with the 
Western Governors.
    Senator Craig. That's good.
    Mr. Johnson. You're all welcome to come.
    Senator Feinstein. Thank you very much. Thank you.
    Senator Allard, you're next.

                         COST-BENEFIT ANALYSIS

    Senator Allard. Madam Chairman, thank you.
    I'm just curious, do you include a cost-benefit analysis 
when you're setting your new regulations, or when implementing 
new thresholds? If you are, are you applying that to certain 
specific groups of size communities?
    Mr. Johnson. The Executive Order No. 12866 requires that 
any economically significant regulation, which is defined as 
greater than $100 million impact, include a cost-benefit 
analysis. Now, having said that, there are certain restrictions 
that are inherent in legislation. For example, in establishing 
a National Ambient Air-Quality Standard, as Administrator, I am 
strictly forbidden by law to consider the costs associated with 
setting the health standard. Other laws, in some cases, 
specifically, require that a cost-benefit analysis be done, 
regardless of that threshold. So, understand that we have an 
executive order that requires cost-benefit analysis, laws 
sometimes require that we conduct it; in some cases, as I make 
a decision, I'm strictly prohibited from including that cost 
consideration in my decision. The National Ambient Air-Quality 
Standard is a prime example of the latter.

                          GOOD SAMARITAN BILL

    Senator Allard. I see. Now, one of the things that we're 
working on in Colorado--and it's a bipartisan effort, both 
Republicans and Democrats working on it--is a Good Samaritan 
bill----
    Mr. Johnson. Yes.
    Senator Allard [continuing]. Which looks at abandoned mines 
and relieves the new owner of some liability if they move 
forward with cleanup of those particular mines. It's a 
particularly sensitive problem. We have these old abandoned 
mines that continue to discharge and cause water pollution 
problems, and yet nothing's done to clean them up. Until we can 
get that piece of legislation through the Congress, are you 
doing anything, administratively, in your--in the Environmental 
Protection Agency to move that forward so we can begin to get 
some of those abandoned cleaned? As you know, some of them 
are----
    Mr. Johnson. Well----
    Senator Allard [continuing]. Pretty toxic.
    Mr. Johnson. Our commitment is to do everything we can to 
address the estimated 500,000 abandoned--and that is the key 
word--abandoned hardrock mines. We----
    Senator Allard. That's throughout the country----
    Mr. Johnson. That's throughout the country, principally in 
the West.
    Senator Allard. That's a--sure.
    Mr. Johnson. Principally in the West.
    Senator Allard. Yeah.
    Mr. Johnson. We have put in place, through our 
administrative procedures, at least one agreement, with Trout 
Unlimited, to actually clean up a mine. It was very resource-
intensive. We believe that the best solution is legislation, as 
you have suggested. So, we would certainly urge Members of 
Congress to pass the Good Samaritan legislation. It makes sense 
to have groups who don't want to assume liability for an entire 
site, to go in and make a difference and help clean it up. So, 
we certainly are very supportive of Good Samaritan legislation.
    Senator Allard. It doesn't make sense, when they didn't 
cause the problem, to hold them----
    Mr. Johnson. That's exactly----
    Senator Allard. It doesn't make any sense----
    Mr. Johnson [continuing]. Right.
    Senator Allard [continuing]. At all. And----
    Mr. Johnson. It doesn't make any sense.
    Senator Allard [continuing]. And they're there for the full 
sole purpose of making that property better, you know----
    Mr. Johnson. Exactly.
    Senator Allard [continuing]. From an environmental 
perspective. So----
    Mr. Johnson. Good.
    Senator Allard. Okay.
    Madam Chairman, that concludes my questioning. Thank you. 
Or--Mr. Chairman.
    I'm sorry. I didn't see who was in charge around here.
    Senator Craig [presiding]. We're going to third reading 
right quickly.
    Let me turn to the Senator from New Mexico. Senator 
Domenici?
    Senator Domenici. Thank you. Thank you very much, Mr. 
Chairman. I will just take a minute. Thank you, Senator Allard.
    First of all, I wanted to ask, Do you--did you know Paul 
Gilman?
    Mr. Johnson. Yes. Yes. A great scientist, great colleague, 
and he served the agency and the Nation well. So, yes----
    Senator Domenici. I was----
    Mr. Johnson [continuing]. Sir, I did.
    Senator Domenici [continuing]. Going to tell you, that's--I 
figured you and some of your cohorts knew him, but I wanted to 
report that I heard from him the other day. They're up--he's 
working in a private laboratory, and he has--his twins are 
growing like asparagus sprouts, and Angela, my secretary of 
years, was his personal friend----
    Mr. Johnson. Yes.

                            ARSENIC STANDARD

    Senator Domenici [continuing]. He and his wife's, and they 
sent for her the other day. She went up to spend a long 
weekend. She was used to babysitting, so they sent her up to do 
something akin to that.
    Sir, I want to tell you, the problem of arsenic has not--
while it--you know, we continue to say it's just around the 
corner, and therefore, we think it isn't going to bite us. It's 
there, and it's terrible, and we haven't done much about it. 
But I appreciate your ever-consistent ear of concern for the 
very small facilities that are really not going to be able to 
put in this equipment for this new standard. You began 
enforcing the standard in 2006. The level from 50 parts per 
billion down to only 10 parts. My home State of New Mexico has 
high levels of natural-occurring arsenic in its volcanic soil, 
so that 20 percent of the State's municipalities will have to 
treat their drinking water to meet this standard, compared to 
only 5.5 percent of the municipalities nationwide. Of the New 
Mexico communities impacted by this requirement, 90.93 percent 
are small communities--most, well below the national median 
household income level--and yet, they face increased costs of 
water, exceeding $50 to $90 a month. When EPA promulgated these 
new rules in 2001, small-community variances were not allowed, 
because EPA claimed that the rule was affordable for small 
communities based on extraordinary cost thresholds of $1,000 
per family. I am pleased that EPA has agreed to consider 
revisions to the national level affordability and methodology 
for very small drinking water systems. However, the development 
of a new methodology by a lower affordability threshold by 
itself may not help poor communities in my State and some of 
the other States involved.
    Can you commit to me that the EPA will quickly perform this 
revision, and the revision will apply retroactively to arsenic 
standard?
    Mr. Johnson. Well, Senator, what I can commit to you is 
that we'll continue to aggressively work with the small 
communities in your State, and others, to help them achieve 
compliance with the arsenic standard. In the President's fiscal 
year 2008 budget, there's $1.8 million for continuing the 50 
demonstration projects, where we're looking at 15 cost-
effective technologies that would help small systems. One of 
the provisions in the Arsenic Rule is to allow States to 
monitor; some States have availed themselves of additional time 
for monitoring to help sort through things.
    In addition, we have been working with them through 
administrative orders to provide sufficient time to try to help 
them meet the standard. The good news is that, as we sit here 
today, approximately 50 percent of the systems have been able 
to comply with this new standard. The good news, 50 percent 
have; but we have work to do, and that's what we're committed 
to do to help.
    Senator Domenici. Well, listen, I would be remiss if I 
didn't tell you that we very much owe you a debt of gratitude 
for your concern and consideration, and you're doing everything 
humanly possible. When you go out there and find this little 
tiny system out in the boonies, you're not closing them down. 
It wouldn't accomplish a great deal, you know, in terms of real 
effectiveness. I included four or five other questions in my 
packet of questions for today.
    Mr. Johnson. Thank you.
    Senator Domenici. I would appreciate your--if you would 
answer them. Maybe, if we have to, we'll get you and our 
experts together soon.
    Mr. Johnson. Be happy to.
    Senator Domenici [continuing]. To talk about what we might 
do.
    Thank you.
    Thank you very much, Mr. Chairman.
    Mr. Johnson. Thank you.
    Senator Craig. Pete, thank you very much. We've just been 
joined by Senator Reed. Please proceed, if you're ready.

                            CLEAN WATER ACT

    Senator Reed. Thank you, Mr. Chairman. Thank you, 
gentlemen.
    The Rhode Island Department of Environmental Management 
recently sent my office a letter concerning a proposed EPA rule 
regarding the Clean Water Act, section 106 grant funding. The 
proposed rule would set aside a portion of State section 106 
funding to be distributed only to those States that generate 75 
to 100 percent of their NPDS program costs through user fees. 
The Clean Water Act does not require the use of fees to fund 
the NPDS program. So, what legal authority are you using to 
require the States effectively to impose fees in order to 
qualify for these monies?
    Mr. Johnson. Well, thank you, Senator. We believe that it's 
important that we invest in clean water. We believe that this 
section, 106 NPDS permit rule provides a financial incentive to 
utilize adequate fee programs. The comment period closed on 
March 5, 2007. We're reviewing those comments. We believe this 
proposal helps promote sustainable management of State and 
local services, and we look forward to reviewing the public 
comments as we make our final determination on this rule.
    Senator Reed. Thank you very much, Mr. Administrator. Let 
me point out that, for Rhode Island to meet these proposed 
levels to qualify, they would have to increase fees seven times 
their current levels, which would be extraordinarily 
disruptive. Also, the State of Rhode Island contributes their 
general-fund monies, their own monies, to help regulate and 
administer the NPDES program. So, I would appreciate you 
keeping me posted about the rulemaking that goes forward, and 
to take into consideration the burden that this would impose on 
my State. I'm sure I'm not alone.
    Mr. Johnson. Pleased to do so. Thank you, sir.

                        STAG PROGRAM--REDUCTIONS

    Senator Reed. Each year, EPA generates 50 or so new rules. 
They expect the States to make the changes, implement them, et 
cetera. It gets harder and harder to do that when the 
administration continues to propose significant cuts to the 
STAG program. How can we reconcile the ever-increasing burden, 
changes, et cetera, when there are decreasing monies--or at 
least proposed decreases in the STAG program?
    Mr. Johnson. We believe that the President's fiscal year 
2008 continues to deliver results while meeting a balanced 
budget. We continue to use the tax dollars to not only be good 
stewards in the environment, but good stewards of taxpayer 
dollars. We have an excellent working relationship with our 
States, and want to continue that. Certainly, we look for 
opportunities to leverage those tax dollars for the 
environment. Of course, Brownfields is an excellent example of 
that, as well as our actual enforcement program. So, certainly 
we are committed to working with our State partners to continue 
to improve and to use our resources wisely.

                          CLEAN WATER FUNDING

    Senator Reed. Well, let me ask a final question. It follows 
on, I think, a point that Senator Craig made with respect to 
rural communities. That's the proposed cuts in the budget for 
clean water funding. There's a national annual need of almost 
$20 billion, with the Federal share being close to about $5 
billion for public health and economic development with respect 
to clean water. The demand, I know, not only in rural 
communities, but also in urban areas, like Rhode Island, is 
increasing for these clean water projects. One, I think a more 
robust funding level would be in order. Two, perhaps better 
incentives for the smarter use of these dollars might be called 
for, too. Do you have a comment?
    Mr. Johnson. We think that there are a number of tools that 
we need to employ. One is the President's request for private 
activity bonds which requires a change in the tax code, which I 
certainly urge Members of Congress to do. We think that helps. 
Full-cost pricing helps. Another tool is a program that I 
launched recently, called WaterSense, which is modeled after 
Energy Star that would bring water efficiency labeling into 
products as a piece. We're--and, obviously, continue to support 
meeting the President's commitment for both clean water as well 
as drinking water, State Revolving Loan Funds.
    As I mentioned just briefly, we are hosting a conference, 
beginning on March 21 through the March 23. The title is 
``Paying for Sustainable Water Infrastructure: A Summit on 
Innovative Financing.'' We are looking at financing, and we're 
looking at policy. The last piece, which I didn't mention, is 
an investment in research and development, not only for small-
community water systems, dealing with issues such as arsenic, 
but infrastructure needs, in general. So, we think that all of 
these tools will help us move in the direction of a more 
sustainable infrastructure.
    Senator Reed. I think what's been happening is that we've 
been taking water--its prevalence and its accessibility and its 
affordability for granted. I think we're beginning to see 
that--you know, systems all across the country having more and 
more difficult problems, in terms of infrastructure. Up our 
way, it's age. We have water systems that are upwards of 100-
plus years old. But we have a big bill to pay. Our concern--my 
concern is that we're not putting the resources, either through 
appropriations or the tax system, to make it--to pay the bill, 
and do it in a smart way now.
    Thank you.
    Mr. Johnson. Thank you.
    Senator Reed. Thank you, Mr. Chairman.

                           ARSENIC STANDARDS

    Senator Craig. Thank you, Senator.
    We have a revolving chairmanship going on here which is 
fine, because other Senators are coming.
    Let me, in passing through to Senator Alexander, 
Administrator, ask this question, and then I'm going to leave.
    You've heard the whole conversation here. I understand 
policy sometimes can drive a variety of things to happen before 
it's feasible for them to happen. It can drive technology, it 
can do a variety of things. It is also something that is 
phenomenally intimidating to well-meaning people when they feel 
they are out of compliance and cannot get there, have no way of 
getting there without subjecting their clientele and--or their 
voter--to a cost that is just unrealistic. Do you think that 
setting arsenic standards at 10 parts per billion is affordable 
and feasible for a community of less than 1,000 people? Or 
should not, in doing that, there have been some kind of off-
ramp, with certain activities in mind, that they might follow 
over a course of time as technology catches up to us?
    Mr. Johnson. With regard to arsenic, or, for that matter, 
any chemical, we need to focus our decisions on: What is the 
level that provides sufficient health protection to our 
Nation's population, whether they're in a small community or a 
large community or wherever they might live? Of course, that's 
what was done for arsenic.
    Senator Craig. Ten parts per billion, you believe the 
science was amply there to make the decision that was made.
    Mr. Johnson. Yes, I do.
    Senator Craig. Ok.
    Mr. Johnson. So, then it becomes a matter of, if that is 
the health protective standard, then what are the steps that we 
can take to help communities achieve that, and achieve that in 
the most cost-effective way. That's what we're very actively 
working on, on arsenic, as well as other contaminants of 
concern across the United States.
    Senator Craig. Ok.
    Thank you very much. I'm going to have to leave, so I'll 
turn to the Senator from Tennessee, but I'll also turn him over 
the chairmanship.
    How's that?
    Senator Alexander [presiding]. This is a very----
    Senator Craig. I was granted----
    Senator Alexander [continuing]. Dangerous thing to do.
    Senator Craig. I was granted that authority by the 
chairman, so have at it.
    Senator Alexander. Thank you very----
    Senator Craig. Thank you both very much for being with us.
    Mr. Johnson. Thank you, sir.
    Senator Alexander. Thank you, Senator Craig. I thank the 
chairman for this.
    Administrator, welcome. I'm----
    Mr. Johnson. Thank you.

                       CLEAN AIR INTERSTATE RULE

    Senator Alexander [continuing]. Glad to have a chance to 
talk with you. I'd like to talk with you a little bit about the 
Clean Air Interstate Rule----
    Mr. Johnson. Yes.
    Senator Alexander [continuing]. A little bit about the 
success you've had over the last 15 years working on sulfur and 
nitrogen, and ask you about the future.
    Mr. Johnson. Yes.
    Senator Alexander. Let me start with the Clean Air 
Interstate Rule. My sense of the Clean Air Interstate Rule is 
that it--which is the rule that you've adopted, I guess, nearly 
2 years ago, to--in the EPA, to----
    Mr. Johnson. Yes.
    Senator Alexander [continuing]. To regulate the use of 
sulfur and nitrogen--the emission of sulfur----
    Mr. Johnson. Emission of sulfur dioxides----
    Senator Alexander [continuing]. And nitrogen----
    Mr. Johnson [continuing]. Yes.
    Senator Alexander [continuing]. Pollutants. How would you 
describe the acceptance of that rule by those who care about 
the environment in the United States?
    Mr. Johnson. Well, we're making great progress. There are 
28 States and the District of Columbia that are subject to the 
Clean Air Interstate Rule. Nineteen States and the District of 
Columbia are preparing full State implementation plans. Eight 
States are preparing abbreviated, and two States are adopting 
the Federal implementation plan. We're very pleased that there 
is good progress.
    Senator Alexander. Is it generally accepted--I know this is 
a generalization, but does it seem to be generally accepted 
that the--those are sufficiently strong rules to clean the air 
of sulfur and nitrogen over a period of time, or----
    Mr. Johnson. Well, as with any EPA regulation, we believe 
that they are not only sufficient, but appropriate for 
achieving significant health benefits. As with any regulation, 
there are those who believe that we have gone too far, and 
others who believe we haven't gone far enough. But at EPA, we 
believe the Clean Air Interstate Rule provides significant 
public-health benefits. When you combine that rule, plus the 
rules I have signed dealing with diesel, these are the most 
health-protective rules in the history of the Environmental 
Protection Agency, with the possible exception of getting lead 
out of gasoline. So, it's a----
    Senator Alexander. Well, that----
    Mr. Johnson [continuing]. Significant health benefit.
    Senator Alexander [continuing]. That's what I was getting 
around to. Let me take it one step further. Do you recommend 
that the rules that you've adopted, the Clean Air Interstate 
Rule and the standards you've set for sulfur and nitrogen, be 
adopted by law, codified in law?
    Mr. Johnson. We do, and, in fact, would urge Congress to 
push forward the President's Clear Skies legislation, for a 
number of reasons. First is that it codifies them in law. 
Second is that it makes it nationwide. Because of the 
limitations of the Clean Air Act and our use of Title I for the 
Clean Air Interstate Rule, we were limited in our ability to 
make it nationwide.
    Senator Alexander. Right. Just so I understand you 
accurately--so, you're suggesting that the--that, in essence, 
the Clean Air Interstate Rule be codified.
    Mr. Johnson. Yes.
    Senator Alexander. The standards that are there be 
standards in the law, so that there--so that people who care 
about the environment can see that that's permanent, and those 
who are in business and who are making plans can have certainty 
as they make these very large investments to rid the air of 
sulfur and nitrogen.
    Let me pick up on something you just said. I would----
    Mr. Johnson. Just to answer that, yes.
    Senator Alexander. Is yes to that. Well, I would--I would 
urge you to urge the administration to more strongly urge our 
Congress to codify the Clean Air Interstate Rule, and take 
credit for it. Because I agree with you, I think there are a 
number of actions this administration have taken which are 
strong environmental actions and strong conservation actions, 
and I think you should urge the Congress to adopt it, and take 
credit for it. Specifically, I've been a critic of the 
administration, and of other proposals, that haven't been 
strong enough on sulfur and nitrogen, because I live in a part 
of the country, the Great Smoky Mountains, which we have 
discussed--has a clean air problem. But I believe that the 
sulfur and the nitrogen provisions in the Clean Air Interstate 
Rule are sufficiently strong to address that problem, and that 
they ought to be codified.
    Second, I think you're exactly right that the low-sulfur 
diesel-fuel provision that the EPA stuck to, that was started 
under President Clinton, but it was implemented under President 
Bush. I think you deserve credit for that. As I look at my area 
of the country, the Great Smoky Mountains, we have--one of our 
truck stops there is the second-busiest big truck stop in the 
United States, and the low-sulfur diesel-fuel provision will 
make a big difference, in terms of the health of our citizens 
and the visibility of the Great Smoky Mountains.
    When I look at the fact that you are proposing the first 
regulations on mercury----
    Mr. Johnson. Yes.
    Senator Alexander [continuing]. I think you should take 
credit for that. Now, I would like to see them a little bit 
stronger, but the fact of the matter is, no one has proposed 
doing that before you did it. Last session, the Congress 
enacted legislation that extended drilling for oil and gas into 
the Gulf of Mexico, but it also took $1 out of $8 and put it 
into the State side of the Land and Water Conservation Fund, on 
a mandatory basis, as a conservation royalty. I know that's not 
under the EPA, but, to me, it's important as a conservation 
matter. I also like the fact, since I live next to the Great 
Smoky Mountains and not far from other areas, that the 
President has proposed a 10-year centennial initiative that 
basically gives all the--gives the national parks all the money 
they need----
    Mr. Johnson. Yes.
    Senator Alexander [continuing]. For the next 10 years, with 
a bold initiative to attract private money for that.
    So, I think this administration is greener than it gets 
credit for being, and I think, part of the reason, it doesn't 
take enough credit for itself. One thing I would like to see is 
stronger advocacy by the administration to codify the Clean Air 
Interstate Rule.
    I'd like--in doing that, I'd like to ask you a question 
about how it applies. My sense of the regulations over the last 
15 years on--well, let me put it this way, there's a lot of 
talk today about a cap-and-trade system, a market-based so-
called cap-and-trade system----
    Mr. Johnson. Yes.
    Senator Alexander [continuing]. For dealing with carbon.
    Mr. Johnson. Yes.

                         CAP-AND-TRADE PROGRAM

    Senator Alexander. Well, we've had a good deal of 
experience with that, starting in the early 1990s. How has that 
worked? How successful has it been?
    Mr. Johnson. Our cap-and-trade program has been very 
successful. It started with the Acid Rain Program----
    Senator Alexander. What year was that?
    Mr. Johnson. That was--Bill----
    Senator Alexander. First President--that was under the 
first President Bush, I believe.
    Mr. Johnson. Enacted in 1990----
    Senator Alexander. Yeah.
    Mr. Johnson. Our focus was, what is the level of 
environmental control that's needed? That is, that cap. There 
are a variety of ways to do trading: input allocations or 
output allocations. Our experience with the Acid Rain Program 
was input allocation. The Acid Rain Program showed significant 
progress. Our Clean Air Interstate Rule was modeled after the 
Acid Rain Program. The Montreal Protocol was a success, as 
well. We have a great deal of experience, and believe that it's 
a very effective way of controlling SOX and 
NOX.
    Senator Alexander. What's----
    Mr. Johnson. Since----
    Senator Alexander [continuing]. What has been the reduction 
of SOX and NOX, of sulfur and nitrogen--
--
    Mr. Johnson. Well, our----
    Senator Alexander [continuing]. Pollutants?
    Mr. Johnson [continuing]. Clean Air Interstate Rule will 
achieve approximately 70 percent reduction.
    Senator Alexander. Will. But what about the last 15 years?
    Mr. Johnson. Over the last 15 years, about 9 million tons.
    Senator Alexander. Is there a percentage----
    Mr. Johnson. That's----
    Senator Alexander [continuing]. That can be--from the level 
where we were in the early 1990s to the level where are today, 
what amount of reduction is--what percentage reduction is that?
    Mr. Johnson. Cut about in half.
    Senator Alexander. Cut about----
    Mr. Johnson. That's what----
    Senator Alexander [continuing]. In half?
    Mr. Johnson. Yes.
    Senator Alexander. Then----
    Mr. Johnson. Yes.
    Senator Alexander. Then, you'd go--so, if that's 50 
percent, you'd go on to 70 percent----
    Mr. Johnson. Seventy----
    Senator Alexander [continuing]. Reduction----
    Mr. Johnson [continuing]. Percent.
    Senator Alexander [continuing]. With the Clean Air 
Interstate----
    Mr. Johnson. That's correct.
    Senator Alexander [continuing]. Rule, if that were----
    Mr. Johnson. That's correct.
    Senator Alexander [continuing]. Codified or if it stayed a 
rule. If I may----
    Mr. Johnson. Oh----
    Senator Alexander. Go right ahead.
    Mr. Johnson. I was just going to say, if I might add just 
two interesting facts. When you look at the history of the 
United States over the past 35 years or 36 years ago, we've had 
a population increase of about 40 percent. We've had vehicle 
miles more than tripled, our GDP almost tripled, and yet, when 
you look at the air pollutants, they have come down 51 percent. 
So, it indicates a number of things to me. One is that economic 
development and environmental success go hand-in-hand. The 
other is that we're not finished yet. We're continuing to move 
down that path of accelerating environmental progress while 
maintaining our economic competitiveness.
    The last comment I just wanted to make on the issue of 
mercury is that, we are the first country in the world to 
regulate mercury from coal fired powerplants. It is a 
regulation now in place. I'm very proud of the fact that this 
was done under my watch, and under the President's watch. 
Another great example of commitment that the President has to 
improving the environment--at the same time, maintaining our 
economic competitiveness.

                          CAP-AND-TRADE SYSTEM

    Senator Alexander. Could you give me, in a follow-up note, 
an estimate of--or any comment that you might have now--about 
the cost of reducing the sulfur--SOx and NOx over the last 15 
years through this cap-and-trade system and its effect on our 
competitiveness. I know, at the time that it was proposed, 
there were a great many people who were afraid that the 
imposition of the cap-and-trade system and the regulations on 
sulfur would produce an--a burdensome cost on utilities and an 
excessive addition to the ratepayers. My impression is, that's 
not been the case, but I don't know the--I don't have the 
facts. Can you give me----
    Mr. Johnson. Be happy to respond to the record.
    [The information follows:]
      Impacts of Title IV of the Clean Air Act Amendments on U.S. 
                            Competitiveness
    When the Clean Air Act was being amended in 1990, EPA projected 
that the full cost of implementation of the S02 portion of 
the Acid Rain Program would be about $6.9 billion per year (in 2006 
dollars). In 2005, a study in the Journal of Environmental Management 
estimated annual costs of the Acid Rain Program in 2010 will be $3.5 
billion (in 2006 dollars) with the S02 program accounting 
for about $2.3 billion. This decreased overall cost has also lead to 
less impact on consumers and competitiveness in general. Generally 
retail electricity prices have remained at or below what they were in 
1994 before the program began (see figure 1 below). While this does not 
definitively show that prices would not have been even lower in the 
absence of the Title IV program, it at a minimum suggests that 
increases have not been significant. This is consistent with work that 
EIA has done on this subject. In 1997, EIA looked at the cost of 
compliance for six utilities and concluded, ``compliance has not caused 
electricity prices to increase at least for the six utilities examined 
in this report.'' While there have been increases in electricity prices 
since 2000, those prices are generally related to other factors such as 
increases in natural gas prices. Both EPA and EIA have looked into the 
issue of whether Title IV contributed to increases in natural gas 
prices and have concluded that it did not.



    Mr. Johnson. From our analysis, the benefits significantly 
exceeded the costs associated not only with the Clean Air 
Interstate Rule of controlling SOX and 
NOX, but mercury. The same is true for our diesel 
rules, as well. We see a significant increase in public-health 
benefit for, you know, relatively minimal costs.
    Senator Alexander. Well, I----
    Mr. Johnson. But I'd be happy to provide that for the 
record.
    Senator Alexander. I would appreciate--and I understand the 
public-health benefit, but I'm just trying to get a rough idea 
of----
    Mr. Johnson. Sure.
    Senator Alexander [continuing]. What the--how much it added 
to the electric bill in order to take it down.
    Mr. Johnson. Yes.
    Senator Alexander. Now, if I could pursue, a little bit, 
your comment, the--when you impose this cap-and-trade system, 
as I understand it, you basically, 15 years ago, and you 
continue to do that, give a set of allowances, or you set 
limits on the amount of pollutant that can come out of a 
smokestack, and you say to a company: ``You can--here are 100 
units. You can pollute this much.'' That's--one way to do that 
is to look into history and say: ``Here's what you're doing 
today; and so, we're going to permit you to do this much this 
year, this much next year, this much this year, and your 
allowances go down.'' Another way to--that's called ``input,'' 
as I understand it.
    Mr. Johnson. That's correct.
    Senator Alexander. Another way to do that would have been 
an output system, where you look at some goal and say to 
someone emitting pollution, ``All right, here's your goal, and 
we'll spread these allowances around over the entire 
industry.'' Can you tell me why you chose the input system, or 
the historical system, for the cap-and-trade system that you 
imposed 15 years ago? What would be the effect on the utilities 
around the country if you were to make an abrupt change of that 
kind of an input allocation system to an output allocation 
system?
    Mr. Johnson. Well, I'd like to invite Bill Wehrum, who's 
the Acting Assistant Administrator Office of Air and Radiation, 
to come to the table and can give you a lot more specifics.
    Bill?
    Senator Alexander. Senator Nelson, I will wind up my 
comments in just a moment, and you'll become the chairman of 
the subcommittee.
    We have a--so--if that's all right.
    Senator Nelson. Quite a promotion, yes.
    Senator Alexander. So----
    Mr. Wehrum. Thank you, Senator Alexander.

                           ACID RAIN PROGRAM

    Senator Alexander. Yeah.
    Mr. Wehrum. Again, my name is Bill Wehrum. I'm the Acting 
Assistant Administrator for Air and Radiation.
    Going back to the Acid Rain Program, we used an input 
allocation system, because that's what the law required. We had 
to make a choice, when the Clean Air Interstate Rule was 
designed, as to whether to continue with that approach or to 
shift to a different approach, and an output basis was the 
choice that was available to us.
    Our judgment was that it was far better to be consistent 
with the Acid Rain Program, because we were trying to dovetail 
the Clean Air Interstate Rule into the existing obligations 
created by the Acid Rain Program, to have a seamless structure 
over time that would create predictability and consistency for 
the regulated community.
    Shifting from input allocation to output allocation could 
have significant financial impacts both to the benefit and to 
the detriment of companies. The number of allowances we 
allocate would not change, regardless of the system we use. 
What would change is how many allowances each particular 
regulated entity gets. So, if we were to shift from the current 
input basis to an output basis, many of the entities that are 
getting significant allowance allocations right now under the 
Acid Rain Program and the Clean Air Interstate Rule would no 
longer get those allocations, because they would be sent to 
other companies. So, the financial consequences for individual 
companies could be significant.
    Interestingly, in the aggregate----
    Senator Alexander. They would have to buy them from other 
companies, wouldn't they?
    Mr. Wehrum. That's exactly right. The primary advantage of 
using an input basis is, the allowances are allocated in a 
proportion to the amount of emissions, and they're proportioned 
such that the allowances don't cover the current level of 
emissions, and that's what provides incentive for emissions 
reduction to occur under the program. But the basic concept of 
the input approach is that we look at the level of emissions 
across the industry and then allocate proportional to the 
emissions that people have experienced in the recent past.
    Senator Alexander. What happens to the allowances when the 
standards come down a level as you move through 2009 and 2010?
    Mr. Wehrum. The number of allowances we allocate goes down 
in proportion to the step----
    Senator Alexander. So, the----
    Mr. Wehrum [continuing]. Reduction----
    Senator Alexander [continuing]. Allowances track the 
limits.
    Mr. Wehrum. That's exactly right. The Administrator made an 
excellent point, and I believe you're making an excellent 
point, which is, the amount of environmental control achieved 
under these cap-and-trade programs is dictated by where the cap 
is set and the total number of allowances that are distributed. 
If we have an economically efficient market system in place, 
which we believe we have, under the Acid Rain Program, and will 
have under CAIR, the allowance trading system gives regulated 
entities the ability to make financially efficient judgments as 
to where to install air-pollution controls, versus where they 
should buy allowances to cover the emissions that they make. 
So, that's one of the great values of Acid Rain, you get 
permanent significant reductions in emissions, but, at the same 
time, have an economically very efficient way of managing the 
emissions reductions.
    Senator Alexander. So, whether it's an input allowance 
system or an output allowance system, the clean air standard 
stays the same, the amount--the environmental standard stays 
the same. The issue is about----
    Mr. Wehrum. That's correct.
    Senator Alexander [continuing]. Who pays the bill----
    Mr. Wehrum. That's correct----
    Senator Alexander [continuing]. To reach that----
    Mr. Wehrum. [continuing]. Senator. That's exactly right.
    Senator Alexander [continuing]. To reach that standard.
    Mr. Wehrum. That's exactly right, Senator.
    Senator Alexander. Senator Nelson, do you have time for me 
to ask one more question, or are you----
    Senator Nelson. Sure, that's okay.

              CARBON CAPTURE AND STORAGE--ENERGY STRATEGY

    Senator Alexander. It'll be--if you'll--out of respect for 
his time, you'll give him--I want to explore, just for a 
moment, the carbon capture and storage that is so much talked 
about around here. All of us are interested in a coal-based--I 
say ``all of us''--many of--Senators are interested in a coal-
based solution to clean energy, for a variety of obvious 
reasons; and the limit on it is capturing the--and storing--the 
carbon. What's your opinion about the viability of capturing 
and storing large amount of CO2 emissions from fuel-
based--fuel-fired powerplants? What resources would it take, if 
you don't have it now, to help you assess the implications of 
carbon capture and sequestration so it can be a viable strategy 
for our country in developing clean energy? That will be my 
last question.
    Mr. Johnson. Let me start off, and Bill can add to it.
    Certainly we, at EPA, want to help the President meet the 
energy security and clean energy goals that he has outlined, 
and certainly would encourage Congress to pass the legislation 
to, one, change the CAFE standard, provide Department of 
Transportation with the authority to make that change, and also 
the alternative fuel standard. As part of our overall energy 
strategy, we're working cooperatively with the Department of 
Energy on the issue of carbon sequestration, both in their 
focus on the technologies to be able to sequester the carbon 
and on our end, in particular, of what are the environmental 
safeguards that need to be put in place to make sure that it 
can not only be captured in a cost-efficient way, but also: 
What do we do with that carbon? We want to make sure that the 
environment isn't going to be harmed as we, if you will, inject 
the carbon, or whatever we end up doing with it. So, we're 
working very cooperatively with Department of Energy to address 
that.
    Bill, I don't know if you have any additional comments.
    Mr. Wehrum. Sure. Thank you, Mr. Administrator.
    EPA's role today primarily is focused on the sequestration 
piece of your question. My office, in conjunction with the 
Office of Water, were asked a question and made a determination 
as to whether the Underground Injection Control Program should 
be applied to those who want to get a permit for operating 
CO2 and carbon sequestration wells. After careful 
consideration, we made a determination that, in fact, we do 
believe the Underground Injection Control Program should apply, 
and determined that, from now into the near future, these wells 
should be permitted under what's called Class 5, which is an 
experimental classification that allows case-by-case decisions 
to be made. We also understand, and believe, that there's a 
need for greater certainty in the long run. There are many, 
many people talking about doing carbon sequestration projects, 
on many scales and in various parts of the country and around 
the world, so we are already actively working on a new 
classification for carbon sequestration wells that would apply 
specifically to that type of well and have a set of 
requirements that's tailored to the particular needs of people 
who want to engage in that activity. So, we're spending a lot 
of time and effort on that issue right now. As the 
Administrator pointed out, we're working closely with the 
Department of Energy, and the DOE is focusing most of its 
attention and resources on the capture side of this question.
    In any event, we would be more than happy to respond, to 
the record, to particular questions you have on this topic.
    Senator Alexander. Thank you very much.
    Senator Nelson [presiding]. Thank you.
    Well, first of all, I want to thank the Administrator for 
coming before the committee this morning. And I appreciate your 
time.
    Mr. Johnson. Thank you.

                            OMAHA LEAD SITE

    Senator Nelson. I'd like to ask you a few questions about 
the lead cleanup project that EPA has been administering at the 
Omaha lead site for a number of years. As you know, EPA has 
completed soil cleanup at about half of the 5,600 household 
sites agreed to as a part of its interim action plan. While I'm 
obviously glad to see continued progress in addressing the soil 
remediation, I have concerns about the project as a whole. Does 
the EPA agree that education activities for homeowners, 
landowners, and tenants would be a vital part of the overall 
effort to limit toxic exposure of lead in children? I'm 
concerned, for example, that we're being foolish if we don't 
provide education on the dangers of the interior of the home as 
we physically address the exterior problems. For example, I 
know my constituents in Omaha have had a very difficult time 
securing funds for these activities. So, I'd like to know what 
they need to do to get adequate funding, since cleaning up the 
yard's one thing, being in a house, breathing toxic fumes with 
lead-based paint is another thing. Is it possible for EPA to 
coordinate with other agencies such as HUD, if that's what's 
necessary? What I need to have you tell me is: What can we do 
so that we're not cleaning up yards and leaving the interior of 
homes as toxic as they can possibly be? It just doesn't make a 
lot of sense to spend all the money to fix someone's yard and 
leave the homes as they are.
    Mr. Johnson. Well, Senator, we are committed to cleaning up 
the Omaha lead site. Putting that site in perspective, Love 
Canal was about 70 acres, and the Omaha lead site is 
approximately 9,000 acres. So, when we talk about the 
complexity of the Superfund sites today, versus yesterday, the 
Omaha lead site, unfortunately, is a prime example of the 
complexity. We're committed to, and we will continue to, clean 
up the yards there. As you point out, we've completed about 
2,800 yards.
    We are committed, across the Nation, to eliminate childhood 
lead poisoning, and we are in the process now of working on a 
final regulation, called the Renovation and Remodeling Rule, 
which focuses on the households that you are referring to. Just 
within the past couple of days, we released a new study that we 
had commissioned to help us better understand what are the safe 
practices for remediating lead in buildings, homes, and our 
commitment is to continue to work to that end, to have a final 
regulation in place that helps to eliminate childhood lead 
poisoning. It is a priority for us. We expect to finalize the 
rule by 2008. In fact, this is such a priority area that there 
is actually an increase in the President's 2008 budget request 
of $2.2 million to help us finalize and implement this rule.
    One last point, specifically for the Omaha lead site, we, 
too, share the concern about making sure that people are 
informed. In fact, last year, we provided $160,000 to the 
Douglas County Department of Health for outreach and education. 
We continue to believe that that's an important effort for 
outreach and education. We, too, believe that it's important 
for us to use those dollars wisely. Actually what we see from 
cleaning up these yards is that, indeed, blood lead levels are 
coming down. That's what our goal is. So, thank you.
    Senator Nelson. So, would part of the funding for the 
preparation/completion of the rule involve making people aware 
of it? In other words, education about the existence of the 
rule so that, if you've got remodeling and remediation underway 
of a building, that the contractor would be aware of what you 
do, or the homeowner would be aware of what you would do, if 
you want to do it yourself, within your own home--repainting, 
whatever----
    Mr. Johnson. That----
    Senator Nelson [continuing]. It may be?
    Mr. Johnson. That will certainly be part of the role of 
education and outreach, the appropriate methodologies for 
actually doing the lead abatement, as well as the test to make 
sure that, once you have cleaned and remediated, that you have 
addressed it? So, we're looking at a variety of ways to get the 
word out, but it is an important area for us, and a priority as 
part of this 2008 budget request.
    Senator Nelson. We appreciate what's being done. We looked 
at the budget, and your budget actually requests, for Superfund 
cleanup, almost 11 percent less than fiscal year 2006 funding 
levels. EPA has averaged soil cleanup of about 1,000 yards per 
year in 2005 and 2006 in Omaha. I guess my questions is, Can 
you commit to me that your fiscal year 2008 budget request 
provides enough funding to complete soil cleanup of at least 
1,000 more households in the Omaha lead site in fiscal year 
2008? Also, what date do you have scheduled for completion?
    Mr. Johnson. Certainly have my commitment that it is a 
priority, and remains a priority, to clean up the Omaha lead 
site. The precise number, let me ask Susan Bodine, the----
    Senator Nelson. She was nodding her head, so I assume she's 
got an answer.
    Ms. Bodine. Susan Bodine, Assistant Administrator for 
Office of Solid Waste and Emergency Response. Yes, the cleanup 
of the yards has been proceeding at a tremendous rate. With the 
2008 budget, that progress will continue at the same rate. As 
you know, ongoing work is being done under an interim ROD, and 
that the agency is working on a final ROD. That work is 
ongoing. So, because of that, I don't have a date for when the 
whole site will be cleaned up. But the yards are being cleaned 
up as quickly as they can, and that pace is going to continue.
    Senator Nelson. Well, are we looking at 3, 4, or 5 years, 
or do you have a ballpark number of what timeframe you might be 
looking at?
    Ms. Bodine. I'm going to have to get back to you, for the 
record, on that one.
    Senator Nelson. If you would, I would appreciate that.
    [The information follows:]

                         Timeframe for Cleanup

    EPA anticipates that the soil cleanup at the most highly 
contaminated residential properties on the Omaha lead site will be 
completed during the 2008 construction season. EPA plans to issue a 
final Record of Decision (ROD) in 2008 that will determine the scope of 
the final remedy and the time required for remedy implementation. 
Moreover, this schedule provides for continued cleanup work so that 
there should be no stop in work during the transition from the Interim 
to the Final ROD. Currently, EPA is performing ongoing work, including 
a treatability study and a final risk assessment that will support the 
final remedy selection.

    Mr. Johnson. A statistic that I do recall is that there may 
be as many as 16,000 yards that may need to be remediated. 
We're committed to work to turning this problem property into a 
community asset. I should also point out that, with regard to 
Superfund, the President's request is actually higher than last 
year's request and----
    Senator Nelson. Well, yes, but it's 11 percent less than--
--
    Mr. Johnson [continuing]. The response----
    Senator Nelson [continuing]. 2006.
    Mr. Johnson [continuing]. The response cleanup program. 
So----
    Senator Nelson. Well, obviously, at 1,000 a year, 16--I 
haven't decided whether I'm going to try to be around here that 
long. So, I would hope that maybe we could--I'm not suggesting 
it's easy to get done, and it takes a while to get the yards--
but I would hope that we might be able to move a little faster 
than 1,000, if it's going to take 16 years. That's going to 
challenge all of us, timewise. So, that is one of the reasons 
my concern is such about the funding for 2008.
    Mr. Johnson. Well, I think you point out, again, the 
greater complexity of the sites today compared to yesterday. 
Then, there's a variety of ways to look at that. I mentioned 
the acreage. As you're well aware, 9,000 acres, roughly 
speaking, for the Omaha lead site is a lot different than 70 
acres of Love Canal. We've done some analysis of remedies per 
site, and the remedies of the early days of Superfund were, you 
know, 1.7----
    Ms. Bodine. Yes, 1.7 to 1.8 per site.
    Mr. Johnson [continuing]. To 1.8. Today, they are over four 
remedies per site. So, we're still devoting the same amount of 
work and energy, but these sites are definitely more complex.

                 SUPERFUND CLEANUP--HASTINGS, NEBRASKA

    Senator Nelson. I have one other question. I just met with 
the mayor and a city council member from the city of Hastings, 
Nebraska, which has had significant issues with Superfund 
cleanup. On the billing, I guess this is an appropriations 
question as much as it is a substantive question--on the 
billing that I just saw, is it true that the EPA grosses up 
whatever the expenses is--are by 50 percent--adds 50.1 percent 
to whatever the--has indirect cost for direct cost and would be 
billing the city of Hastings 44,000 plus 22,000, with the 
half--the grossing-up, for the Department of Justice? I guess 
I'm a little confused about how appropriations and budgeting 
must work, if you're collecting money for the Department of 
Justice and grossing it up 50 percent to the--as charges to the 
city of Hastings. I just saw the billing. I wish I'd have 
brought a copy of it.
    Ms. Bodine. Yeah, we--I'd have to ask to look at the 
specific numbers and get back, for the record.
    [The information follows:]

                           Hastings, Nebraska

    As a Potentially Responsible Party (PRP), the community would be 
charged by EPA for its share of both direct and indirect costs. EPA's 
indirect cost rate is 50.69 percent, which is based on a methodology 
approved by the Government Accountability Office and upheld by the 
courts in several challenges.

    Ms. Bodine. However, under the Superfund program, EPA is 
spending taxpayer dollars and the Department of Justice is 
spending taxpayer dollars. When we have responsible parties at 
a site, we then take enforcement actions to make the taxpayer 
whole, and collect those funds. That includes not just direct 
costs, but also indirect costs, which are real costs. I mean, 
the costs associated with running the agency are real costs, 
and to the extent----
    Senator Nelson. Aren't those--excuse me--aren't those 
included within the appropriations that are sent back to the 
agency?
    Ms. Bodine. Then--yes, the funds are paid for by 
appropriations, and then we seek cost recovery. Those cost-
recovery funds go back into the trust fund----
    Senator Nelson. Well, I understand----
    Ms. Bodine [continuing]. And then----
    Senator Nelson [continuing]. That the direct costs would, 
but I guess I'm a little surprised that there would be indirect 
costs going back into the Superfund that--for the Department of 
Justice.
    Ms. Bodine. Well, the Department of Justice is also funded 
out of the Superfund.
    Mr. Johnson. Again, the general concept is, if we can 
identify a responsible party, we want to make sure that the 
polluter is paying. We----
    Senator Nelson. Well, this is the city of Hastings. I 
just----
    Mr. Johnson. Again, the way the Superfund law is, whether 
it be a city or another Federal agency or an individual 
business, it is the responsibility of the polluter to pay.
    Senator Nelson. There are some questions about whether the 
audit has to be done on site, with the grassed-in, fenced-in 
area, versus looking at the reports that are submitted--that 
are reviewed once they're looked at in Hastings--versus what 
could be submitted to Region 7 or to some other location. I 
think the costs--this is something I'd like to take up--not the 
whole committee, here, but I do have some serious questions 
about the significant bills that are being run up with direct 
and indirect costs that I think can--could otherwise be handled 
without as many personal visits and audits as are occurring, 
because much of the work is just simply reports that are 
reviewed on site in Hastings, that could be reviewed, either 
electronically submitted to the EPA--to try to cut down on some 
of the costs to the local community. They are taxpayers' 
dollars. These people aren't complaining. They asked me about 
it, and I'm complaining.
    Mr. Johnson. Be happy to work with you, sir.
    Senator Nelson. Okay. Thank you.
    Mr. Johnson. Thanks.
    Senator Nelson. I think that's--those are all the questions 
that I have.

                          SUBCOMMITTEE RECESS

    Thank you very much. The subcommittee will stand in recess 
to reconvene at 2:30 p.m., Wednesday, March 28 in room SD-124. 
At that time we will hear testimony from the Honorable Mark E. 
Rey, Under Secretary for Natural Resources and Environment, 
U.S. Department of Agriculture.
    [Whereupon, at 11:30 a.m., Tuesday, March 13, the 
subcommittee was recessed, to reconvene at 2:30 p.m., 
Wednesday, March 28.]
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