[Senate Hearing 110-1259]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 110-1259
 
		EPA'S CLEAN AIR INTERSTATE RULE (CAIR):
               	RECENT COURT DECISION AND ITS IMPLICATIONS

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

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON CLEAN AIR 
                           AND NUCLEAR SAFETY

                                 OF THE

               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 29, 2008

                               __________

  Printed for the use of the Committee on Environment and Public Works
  
  
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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       ONE HUNDRED TENTH CONGRESS
                             SECOND SESSION

                  BARBARA BOXER, California, Chairman
MAX BAUCUS, Montana                  JAMES M. INHOFE, Oklahoma
JOSEPH I. LIEBERMAN, Connecticut     JOHN W. WARNER, Virginia
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
HILLARY RODHAM CLINTON, New York     JOHNNY ISAKSON, Georgia
FRANK R. LAUTENBERG, New Jersey      DAVID VITTER, Louisiana
BENJAMIN L. CARDIN, Maryland         JOHN BARRASSO, Wyoming
BERNARD SANDERS, Vermont             LARRY E. CRAIG, Idaho
AMY KLOBUCHAR, Minnesota             LAMAR ALEXANDER, Tennessee
SHELDON WHITEHOUSE, Rhode Island     CHRISTOPHER S. BOND, Missouri

       Bettina Poirier, Majority Staff Director and Chief Counsel
                Andrew Wheeler, Minority Staff Director
                              ----------                              

              Subcommittee on Clean Air and Nuclear Safety

                  THOMAS R. CARPER, Delaware, Chairman
JOSEPH I. LIEBERMAN, Connecticut     GEORGE V. VOINOVICH, Ohio
HILLARY RODHAM CLINTON, New York     JOHNNY ISAKSON, Georgia
BERNARD SANDERS, Vermont             LAMAR ALEXANDER, Tennessee
BARBARA BOXER, California (ex        JAMES M. INHOFE, Oklahoma (ex 
    officio)                             officio)
                            C O N T E N T S

                              ----------                              
                                                                   Page

                             JULY 29, 2008
                           OPENING STATEMENTS

Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..     1
Voinovich, Hon. George, V., U.S. Senator from the State of Ohio..     3
Lieberman, Joseph I., U.S. Senator from the State of Connecticut.    14
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...    16
Clinton, Hon. Hillary Rodham, U.S. Senator from the State of New 
  York...........................................................    18
Bond, Hon. Christopher, U.S. Senator from the State of Missouri..   194
Sanders, Hon. Bernard, U.S. Senator from the State of Vermont....   195

                               WITNESSES

Mclean, Brian, Director, Office of Atmospheric Programs, Office 
  and Air and Radiation, United States Environmental Protection 
  Agency.........................................................    20
    Prepared statement...........................................    23
    Responses to additional questions from:
        Senator Boxer............................................    38
        Senator Carper...........................................    42
        Senator Clinton..........................................    48
    Response to an additional question from Senator Inhofe.......    49
Snyder, Jared, Assistant Commissioner for Air Resources, Climate 
  Change and Energy, New York State Department of Environmental 
  Conservation...................................................    76
    Prepared statement...........................................    79
    Responses to additional questions from Senator Boxer.........   105
    Response to an additional question from Senator Inhofe.......   110
Svenson, Eric, Vice President, Environment, Health and Safety, 
  Public Service Enterprise Group................................   111
    Prepared statement...........................................   113
 Spence, William H., Executive Vice President and Chief Operating 
  Officer, Ppl Corporation.......................................   130
    Prepared statement...........................................   132
    Responses to additional questions from:
        Senator Boxer............................................   140
        Senator Carper...........................................   141
Korleski, Christopher, Director, Ohio Environmental Protecton 
  Agency.........................................................   144
    Prepared statement...........................................   146
Walke, John D., Clean Air Director, Natural Resources Defense 
  Council........................................................   149
    Prepared statement...........................................   152


 EPA'S CLEAN AIR INTERSTATE RULE (CAIR): RECENT COURT DECISION AND ITS 
                              IMPLICATIONS

                              ----------                              


                         Tuesday, July 29, 2008

                               U.S. Senate,
         Committee on Environment and Public Works,
               Subcommittee on Clean Air and Nuclear Safety
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:30 a.m. in 
room 406, Dirksen Senate Office Building, Hon. Barbara Boxer 
(chairman of the full committee) presiding.
    Present: Senators Carper, Voinovich, Lieberman, Clinton, 
Inhofe.

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

    Senator Carper. The hearing will come to order.
    Welcome, one and all. We appreciate the efforts of our 
witnesses to be with us today, both the first and second panel.
    Today's hearing is focused on the D.C. Circuit Court's 
recent decision on EPA's Clean Air InterState Rule, known 
affectionately as CAIR. Senators will have 5 minutes for 
opening statements. Then I will recognize the Director of EPA's 
Office of Atmospheric Programs to offer his statement to the 
Committee. Welcome, Mr. McLean.
    Following the Director's statement, we will have two rounds 
of questions. Then our second panel of witnesses will come 
forward. Their testimony will be followed by two rounds of 
questions.
    We will then break for dinner, return for a prayer meeting. 
And after hot chocolate, sing Kumbyah and go home and see where 
the future takes us from there.
    [Laughter.]
    Senator Carper. Albert Einstein, my colleagues are used to 
me quoting Thomas Edison, but I am going to change that to now 
quote Albert Einstein, who once said that in the midst of every 
difficulty lies an opportunity. Einstein was one smart fellow, 
and we in Congress need to listen to him, at least on this 
point.
    As members of our Committee charged with protecting our 
environment, we are confronted with some of the greatest 
challenges facing our planet: global warming, making sure that 
people can swim and fish in our Nation's rivers and lakes, 
cleaning up the air so that fewer Americans will die or suffer 
from lung cancer from mercury poisoning. As Members of 
Congress, it is our responsibility to seize these opportunities 
and to solve them.
    The clean air issue is one that I began to address when I 
first became a Senator, almost 8 years ago. During those last 8 
years, we have seen the Bush administration propose its own 
legislation called Clear Skies, but refuse to budget when 
Congress wanted to strengthen that proposal. We then saw the 
Administration try to implement Clear Skies through regulation, 
only to see those regulations, first through the mercury rule 
and now the Clean Air InterState Rule, overturned by the 
Federal courts for being either too weak or flawed in some 
respect.
    In other words, 8 years have gone by without any 
meaningful, substantive action on the clean air debate. I hope 
this offends everyone here as much as it offends me.
    This inaction means that tens of thousands of Americans 
will die prematurely from lung-related diseases who didn't have 
to die. It means that thousands more children will be borne 
with birth defects, thanks to mercury poisoning, who otherwise 
would have been healthy without incident. It means that 
Congress and the White House failed to do what is right.
    Let me be clear. I am not going to wait another 8 years to 
do what should have been done 8 years ago, and that is to pass 
a strong, comprehensive Clean Air bill that makes deep and 
meaningful reductions in mercury, nitrogen oxides and sulfur 
dioxide. We have the science and we have the technology to 
clean up our act in a way that makes sense and won't put anyone 
out of business. We owe it to the American people to try 
harder, to come together and develop a bipartisan solution to 
the clean air mess that we find ourselves in today.
    My bet is that no one in this room really wanted the D.C. 
Circuit Court to overturn the CAIR rule. I certainly didn't. 
While I thought CAIR should have been stronger in the proposed 
legislation along those lines, CAIR would have nevertheless 
provided real benefits to my State, and I know to a number of 
our neighboring States.
    As many of you know, Delaware struggles to meet its clean 
air goals, because we are located, along with our neighbors, 
Pennsylvania, New Jersey, Maryland and others, at the end of 
what we call America's tailpipe. We simply can't cleanup our 
air along the eastern seaboard unless the upwind States meet 
their obligations too. In Delaware alone, we have some 80,000 
children and adults who suffer from asthma this year. CAIR 
would have reduced that number and saved lives.
    But the court said that the rule was fundamentally flawed, 
and that is why we have invited all of our witnesses here to 
testify today, to find out what this ruling means and to 
understand its impact on the States, on industry and on public 
health.
    I am also hopeful that we can use today's hearing to begin 
to develop consensus on how Congress should proceed for the 
balance of this year and once the new Administration takes 
office in less than 175 days. Let me offer just a couple of my 
initial thoughts on that front.
    One, we should not expect this Administration or the next 
one to get the job done through regulation alone. The only 
surefire way that we are going to get reductions that we need 
is through, I believe, congressional action. Only Congress can 
take back the power from the courts and ensure that we move 
forward on schedule.
    Two, CAIR only covered the eastern United States. We need 
to write legislation that protects the whole Country. This 
approach doesn't just save more lives, it also prevents 
polluters from moving to unregulated areas in order to escape 
environmental controls.
    Three, CAIR only addresses SOx and NOx. We can do better by 
simultaneously addressing toxic mercury emissions as well as 
carbon dioxide that causes global warming. I said for some time 
it makes no sense to address only one or two of these 
pollutants without trying to address the others. The four-
pollutant approach better protects the public health and gives 
industry the flexibility and the regulatory certainty that they 
need to implement the most cost-effective control strategy.
    I believe a good starting point for discussions on how to 
proceed is a bipartisan bill that I introduced again last year, 
the Clean Air Planning Act, which many of this Committee's 
members have co-sponsored. That legislation just picked up its 
13th co-sponsor yesterday, I am told, and I want to thank 
Senator Clinton for joining us as a co-sponsor of the 
legislation and welcome her as a co-sponsor as well as welcome 
her back to this Committee and lending her voice and her 
support to our efforts.
    We believe that the Clean Air Planning Act provides an 
aggressive yet achievable schedule for power plants to reduce 
emissions from nitrogen oxides, from sulfur dioxide, from 
mercury and from CO2. It goes further and goes faster than what 
the Bush administration put forward; in fact, even more 
compelling given the legislative stalemate of the last 8 years.
    I would also point out that EPA's own analysis shows that 
that CAPA greatly improves the health benefits associated with 
CAIR. For instance, 10,000 more premature deaths would be 
avoided under our legislation than under the CAIR rule. I 
believe the Clean Air Planning Act is a great starting point, 
but I want to say that all options are on the table. What 
matters most to me is not what legislative vehicle we use to 
clean up our air, but rather that we get something done.
    But that something has to be comprehensive, it needs to be 
meaningful and it has to be stronger than what the 
Administration's Clean Air InterState Rule and seriously flawed 
mercury rule would have provided. In addition to today's 
hearing, I will be holding other hearings and roundtables on 
this issue, along with my friend, Senator Voinovich, throughout 
this fall to hear various perspectives on how we can move 
forward on clean air legislation early next week at the latest.
    Again, we don't have the luxury of waiting another 8 years 
to get the job done. I don't know that we have the option of 
waiting another 8 months. It is time for all of us to come to 
the table and pass a long-overdue update to the Clean Air Act. 
It is time to stop squandering opportunities and to begin to 
seize them.
    That having been said, Senator Voinovich, I am pleased that 
you are here, and you are recognized for as long as you wish.

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

    Senator Voinovich. Thank you, Mr. Chairman.
    The Chairman and I have been friends for a long time. And 
we are arm in arm on many things, although we don't see eye to 
eye on some issues. And one of the great disappointments in my 
being here in the Senate is the fact that we weren't able to 
come together when we had the Clear Skies legislation before 
us. We spent hours and hours and hours and had all kinds of 
work done by staff and so forth. And I think we both talked 
that, who knows what would happen. I predicted that the courts 
would overrule it and it would be back on our table, and that 
we are in a period of uncertainty.
    I accept the challenge of trying to find some way that we 
can work together to get this done. I am hopeful, but every 
time we have tried in the past, we have failed because of the 
fact that there hasn't been a willingness to compromise. And we 
are back at it. The environmental policy of the United States 
has been determined by the courts.
    I am glad that Chris Korleski, our Director of the Ohio 
Environmental Protection Agency is here, because he can give us 
a perspective on what does this mean, really, to the States 
that have gone ahead and passed their implementation plans, and 
what do they do now? What are we going?
    We know about the North Carolina suit, and they vacated the 
Clean Air InterState Rule. I think the people that brought the 
cause of action today, if you ask them, would say, what a 
revolting situation this turned out to be, because I don't 
think they expected the Court to strike down the whole thing. 
They wanted a little exemption to the thing and the court just 
came in and said, goodbye.
    So we know that CAIR implemented a cap and trade program to 
provide significant reductions from fossil power utilities 
across 28 eastern States and the District of Columbia. Now that 
it is vacated, it also, we have the mercury rule to decide what 
are we are we going to do.
    According to the EPA, when fully funded or implemented, 
CAIR would have reduced SO2 emissions in the participating 
States and D.C. by over 70 percent, and NOx emissions over 60 
percent from 2003 levels. EPA predicted that by the year 2015 
CAIR would have provided $85 billion to $100 billion in annual 
health care benefits at a cost of approximately $4 billion. EPA 
also estimated that CAIR would have annually prevented 17,000 
premature deaths. Senator Carper has talked about deaths, but 
the prediction from the EPA was 17,000 premature deaths. 
Millions of lost work and school days and tens of thousands of 
non-fatal heart attacks and hospital admissions.
    So it did something pretty significant. Indeed, CAIR and 
CAMR, combined with the Clean Air Visibility Rule were viewed 
as one of the most cost-effective set of environmental 
regulations in our history. In 2005, EPA estimated that the 
cost-benefit ration of these three rules to be greater than 20 
to 1, with most of the benefits coming from the CAIR rule. 
While there were differences of opinion on how CAIR should be 
implemented, who should be included and whether the reduction 
requirements went far enough. The rule was generally supported 
by much of the regulated community, affected States and 
environmental groups. Indeed, Duke Energy, a petitioner in the 
litigation, didn't want to have the rule vacated, as I 
mentioned. They just wanted to have it remanded to address how 
the SO2 allowances were distributed.
    The Natural Resources Defense Council, NRDC, intervened on 
EPA's behalf in support of the rule. And Mr. Chairman, I would 
like to submit a statement from Duke Energy for the record with 
regard to what it was they tried to accomplish with that.
    Senator Carper. Without objection, so ordered.
    [The referenced information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Senator Voinovich. Now that it has been vacated, there is 
no comprehensive and cost-effective policy to address NAAQs 
compliance, untangle the complicated web of overlapping and 
redundant regulations affecting power plants and to bring about 
the public health benefits we had hoped to achieve.
    This situation is precisely what I feared, and is why 
Senator Inhofe and I worked so hard to move the Clear Skies Act 
during the last Congress. I already mentioned that.
    As most of you recall, Clear Skies was more or less the 
legislative equivalent to CAIR and CAMR. While Clear Skies did 
not go far enough for some, passing that legislation would have 
at least locked into law the emission reduction requirements 
that have now been invalidated by the Court. Now that the rule 
has been overturned, we have an uncertain and chaotic situation 
that I believe is incumbent upon the Congress to fix. I pledge 
publicly to work with Senator Carper and the other members of 
this Committee to see if we cannot get some legislation done 
before the end of the year, so there is not chaos, so there is 
certainty and we can move forward as a Country in reducing NOx, 
SOx, mercury and do it in a way that looks at not only the 
health benefits but also the impact that it has overall on our 
society in terms of our economy.
    [The prepared statement of Senator Voinovich follows:]

          Statement of Hon, George V. Voinovich, U.S. Senator 
                         from the State of Ohio

    Mr. Chairman,
    I thank you for holding today's hearing on this important 
issue. I thank the witnesses for being here today and look 
forward to their testimony. Today's panel includes Chris 
Korleski, Director of the Ohio Environmental Protection Agency. 
I'm glad you're here, Chris. I am anxious to hear how the 
court's decision will impact Ohio. As you know, issues now 
before us have great bearing on Ohio and I look forward to your 
testimony.
    Earlier this month, in North Carolina v EPA the U.S. Court 
of Appeals for the DC Circuit vacated the Clean Air InterState 
Rule (CAIR). The decision undermines years of work and unravels 
the Administration's attempt to implement a comprehensive air 
quality strategy to meet the combined goals of: bringing much 
of the country into attainment with the ozone and fine 
particulate matter National Ambient Air Quality Standards 
(NAAQS); achieving reductions in mercury emissions from coal-
fired power plants; addressing regional haze impacts from power 
plants; and, responding to State petitions to control upwind 
sources of ozone and fine particulates under Section 126 of the 
Clean Air Act.
    Generally, CAIR implemented a cap and trade program to 
provide significant reductions in sulfur dioxide 
(SO2 ) and nitrogen oxide (NOx) emissions 
from fossil fuel powered utilities across 28 eastern states and 
the District of Columbia.
    CAIR, along with the also now vacated Clean Air Mercury 
Rule (CAMR), was an attempt to avoid piecemeal implementation 
of multiple emissions control obligations and to attain air 
quality standards in a cost effective manner. Among other 
things, coordinating the compliance obligations for all three 
air pollutants (SO2 NO and mercury) 
promoted efficiency, enabling many companies to meet a 
substantial portion of mercury emission reduction obligations 
through the co-benefits achieved by installing pollution 
controls to reduce SO2 and NOx (scrubbers 
and SCRs).
    According to EPA, when fully implemented, CAIR would have 
reduced SO2 emissions in the participating states 
and D.C. by over 70 percent, and NOx emissions by 
over 60 percent, from 2003 levels. EPA predicted that by the 
year 2015, CAIR would have provided $85 to $100 billion in 
annual health benefits, at a cost of approximately $4 billion. 
EPA also estimated CAIR would have annually prevented 17,000 
premature deaths, millions of lost work and school days, and 
tens of thousands of non-fatal heart attacks and hospital 
admissions.
    Indeed, CAIR and CAMR, combined with the Clean Air 
Visibility Rule (CAVR) were viewed as one of the most cost 
effective set of environmental regulations in history. In 2005, 
EPA estimated that the cost benefit ratio of these three rules 
to be greater than 20 to 1, with most of the benefits coming 
from the CAIR rule. And while there were differences of opinion 
on how CAIR should be implemented, who should be included, and 
whether the reduction requirements went far enough, the rule 
was generally supported by much of the regulated community, 
affected states and environmental groups. Indeed, Duke Energy, 
a petitioner in the litigation didn't want to have the rule 
vacated, but wanted to have it remanded to address how the 
SO2 allowances were distributed; the Natural 
Resources Defense Counsel (NRDC) intervened on EPA's behalf in 
support of the rule. (Mr. Chairman, I'd like to submit a 
statement from Duke Energy for the record.)
    Now that CAIR has been vacated, there is no comprehensive 
and cost effective policy to address NAAQS compliance, untangle 
the complicated web of overlapping and redundant regulations 
affecting power plants and to bring about the public health 
benefits we had hoped to achieve. This situation is precisely 
what I feared and is why Senator Inhofe and I worked so hard to 
move the Clear Skies Act during the last Congress. As most of 
you will recall, Clear Skies was--more or less--the legislative 
equivalent to CAIR and CAMR. And while Clear Skies did not go 
far enough for some, passing that legislation would have at 
least locked in to law the emission reduction requirements that 
have now been invalidated by the court. Now that the rule has 
been overturned, we have an uncertain and chaotic situation 
that I believe it is incumbent upon this Congress to fix.
    Thank you.

    Senator Carper. I look forward to working with you and try, 
try again, we will make another run at this. I think the stakes 
are even higher now than they are when we took a run at this, a 
very serious run at this about 4 years ago. You have my pledge 
to work with you in the harness.
    Senator Lieberman, I believe you are next.

        OPENING STATEMENT OF HON. JOSEPH I. LIEBERMAN, 
           U.S. SENATOR FROM THE STATE OF CONNECTICUT

    Senator Lieberman. Thanks, Mr. Chairman. Thanks to you and 
Senator Voinovich for holding this important hearing this 
morning.
    The EPA's Clean Air InterState Rule, CAIR, was one of those 
rare moments in recent times in Washington where you had, with 
regard to environmental matters, where you had, it seemed to 
me, the overwhelming majority of regulated entities in the 
overwhelming majority of environmental groups supporting the 
overwhelming majority of parts of the CAIR rule. As Senator 
Voinovich indicated, some of the plaintiffs in the action in 
the courts had concerns about pieces of it. This is always a 
danger when you go to a court, you are not quite sure what the 
court might do in the exercise of its own individual judgment. 
This district circuit panel acted, if I may misappropriate an 
expression in a way that both shocked a lot of us and I suppose 
created an awe about what we were going to do, a lot of hard 
work by a lot of people may well have been, as my mother used 
to say, thrown on the window on that day.
    And the hopes that we had of really making progress in the 
reduction of these air pollutants was also put in jeopardy, 
unless we figure out a way to act together now. The decision 
was July 11th. Until that date, we were looking forward, as a 
result of CAIR, to exactly the positive public health effects 
that my colleagues have referred to, thousands of fewer 
premature deaths, thousands of fewer heart attacks, for 
instance, per year, as a result of the CAIR rule. Those 
projects are from science-based EPA testimony. Up until that 
decision on July 11th, if I may be a bit parochial, seven of 
Connecticut's eight counties were looking forward to coming in 
line with important Federal air quality standards by 2015. That 
is something we simply can't do on our own because of all the 
movement of air into and out of Connecticut. And the seven 
Connecticut counties are joined by more than 100 other counties 
who similarly would have been benefited and whose people would 
have been protected from air pollution throughout the Country.
    It is worth saying that in the 3-years before this court 
decision on July 11th, owners of fossil fuel fired power plants 
all across the eastern part of the United States spent billions 
of dollars buying and installing pollution control equipment 
designed to bring their facilities into compliance with CAIR, 
with the Clean Air InterState Rule. For at least two of those 3 
years, power plant owners had also been buying and saving 
emission allowances under CAIR's emission trading system. 
Private energy companies and public electric utilities woke up 
on July 12th, the day after the decision, to learn that 
billions of dollars that they had convinced shareholders, 
lenders and ratepayers to spend, were now effectively stranded, 
perhaps at worst, wasted. They woke up to find that emission 
allowances they had prudently bought and saved were now worth a 
lot less than what they had paid for them.
    In all these alarming respects, the D.C. Circuit Court's 
sudden invalidation, and unexpected, I would say, invalidation 
of the CAIR program has really hurt in a lot of ways. It could, 
if there is not some further action, get a lot worse. I know 
there are a lot of people, government officials, business 
leaders, environmentalists, lawyers, now trying to figure out 
how to devise alternative ways for the litigants, the EPA or 
Congress to reinState most of the CAIR program that most 
people, as I said at the beginning, agree on. I think it is 
very important that that way continue.
    I thank you, Mr. Chairman, and Senator Voinovich, for what 
I take to be your bold statement that if there is not some 
other way that this can be fixed quickly, that Congress must 
and will at under the leadership of this Subcommittee, to try 
to achieve all that CAIR was going to achieve, based on the 
consensus among the parties involved that that rule expressed.
    Thank you.
    [The prepared statement of Senator Lieberman follows:]

          Statement of Hon. Joseph I. Lieberman, U.S. Senator 
                     from the State of Connecticut

    Thank you, Mr. Chairman. And thank you very much for 
holding this important hearing. Up until July 11, we as a 
nation were looking forward to preventing--starting as early as 
2 years from now--19,000 heart attacks and 13,000 premature 
deaths every year.
    Up until July 11, seven of Connecticut's eight counties-- 
and more than a hundred others in the country-- were looking 
forward to coming into line with important Federal air-quality 
standards by 2015.
    In the 3 years leading up to July 11, owners of fossil 
fuel-fired power plants all across the eastern half of the 
United States spent billions of dollars buying and installing 
pollution control equipment designed to bring those facilities 
into compliance with the Clean Air InterState Rule.
    For at least two of those 3 years, power-plant owners had 
been buying and saving emission allowances under CAIR's 
emission trading system. When, on July 11, the DC Circuit panel 
invalidated CAIR in its entirety, we lost the program that was 
going to prevent those 13,000 premature deaths each year. We 
lost the program that was going to dramatically improve air 
quality for tens of millions of Americans while lightening a 
regulatory burden carried by countless State and local 
governments.
    And both private energy companies and public electric 
utilities woke up on July 12 to learn that billions of dollars 
that they had convinced shareholders, lenders, and ratepayers 
to spend was now potentially stranded. They woke up to find 
that emission allowances that they had prudently bought and 
saved were now worth substantially less than what they had paid 
for them.
    In all these alarming respects, the court's sudden 
invalidation of the CAIR program is potentially disastrous.
    I know that a lot of government officials, business-people, 
and lawyers are now trying to devise various alternative ways 
that the litigants, the EPA, or Congress might quickly 
reinState the CAIR program. I am glad they are. I am eager to 
start learning about the options. And I am very willing, Mr. 
Chairman and Senator Voinovich, to help in whatever way I can 
to reinState the pollution reductions, bureaucratic 
streamlining, and clarity for industry that the July 11 
decision has jeopardized.

    Senator Carper. Senator, thank you for your statement.
    I also just want to say personally how much I appreciate 
the great leadership you and Senator Warner and Senator Boxer 
and others have shown on climate change. We thank you for that. 
I want to thank you also for being a co-sponsor, not just of 
our Clean Air Planning Act, but also of Senator Alexander's 
sister proposal, a very similar proposal. Thank you for all of 
that.
    Senator Inhofe, welcome.

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

    Senator Inhofe. Thank you, Mr. Chairman. Again, I will join 
everyone else in thanking both Senators Carper and Voinovich 
for this very timely hearing. You acted pretty quickly after 
this rule came.
    While I welcome the opportunity to discuss the impacts and 
where we might go from here to achieve the reductions that are 
needed in real criteria pollutants that have direct adverse 
health effects, it is very unfortunate that the set of 
circumstances that brought us to this point has taken place. 
Let me just repeat something I said sitting in this chair 3 
years ago, ``CAIR is significantly more vulnerable to court 
challenges than Clear Skies would have been and will 
undoubtedly be held up not unlike the 1997 air quality 
standards.'' This latest round of litigation demonstrates the 
need for a strong national Clear Skies law more than ever. 
Today, here we are, and unfortunately, the statement has rung 
true, and as I stated back then, trying to litigate the way to 
cleaner air only delays progress, often yields little or no 
results and wastes millions of taxpayers' dollars, as Senator 
Lieberman has mentioned.
    Now we are faced with the full vacating of the entire rule, 
which ironically enough is a litigation result that no party 
actually wanted. In addition, we face an uncertain regulatory 
future. Most importantly, we have thrown into jeopardy the 
health and environmental benefits that CAIR would have 
achieved, estimated to have benefits over 25 times greater than 
the cost by EPA. I also note that this decision certainly 
doesn't bode well for those folks who say we can structure 
flexibility into regulating carbon under the Clean Air Act.
    As I said in the beginning, none of these chaotic results 
needed to happen. Passing the Clear Skies legislation would 
actually have done far more to help State and local governments 
comply with the new air quality standards by providing greater 
certainty than implementing the Clean Air InterState Rule. Now 
we are left with a laundry list of uncertainty, and very costly 
uncertainty, most importantly for States who are either in the 
final planning stages or recently submitted SIPs that did rely 
on CAIR to finally achieve attainment for the 1997 ozone and PM 
National Ambient Air Quality Standards. Add to this the 
potential direct impacts the rule had on mercury reductions, 
conformity, new source review, and its effects on reductions in 
the regional haze rule, which may impact my State of Oklahoma. 
And we have a colossal mess on our hands.
    Clear Skies would have proposed to put in place an 
integrated set of emissions controls, requirements with 
coordinated compliance deadlines. It would have avoided 
piecemeal implementation of multiple emissions control 
obligations, and was essential if electric power generators 
were to achieve compliance in the most economically efficient 
manner possible. Among other things, coordinating the 
compliance deadlines for all three air pollutants, SOx, NOx and 
mercury, promoted economic efficiency including enabling many 
companies to meet a substantial portion of mercury emissions 
reductions obligations through the eco-benefits achieved by 
installing pollution controls to reduce SO2 and SOx and NOx. 
Now once again we are left with the status quo, and I think 
both sides agree that the status quo is not acceptable. It 
means more litigation, more costs and less certainty. And less 
certainty means a lot of costs. I won't go into what has 
already been identified by Senator Voinovich and Senator 
Lieberman in terms of the EPA's estimate on the very large 
numbers of premature deaths that could have been avoided, non-
fatal heart attacks, the hospital emissions and all the things 
that we know were so great. We suspected that would happen, we 
stated that back then.
    So here we are back before this Committee, because these 
benefits were held hostage, first legislatively here in the 
Senate due to the issue of CO2 caps and now because of the 
litigation by some disgruntled parties. While this rule was not 
perfect in any way, it was progress, and an agreement among 
various stakeholders, something that rarely happens in this 
area. We had a rule in place that started guaranteeing real 
reductions in health benefits starting on January 1st of 2009. 
Now we are here in search of another solution to the problem.
    So I don't know, it was very frustrating to me, I have to 
join Senator Voinovich in expressing my frustration that back 
when we had Clear Skies legislation, a fix, the largest 
reduction proposed by any President in the history of this 
Country, and we had a chance to do it with SOx and NOx and 
mercury and it was held hostage because everybody wanted CO2 to 
be in on the deal and it could have been handled separately. So 
I regret that, Mr. Chairman, and here we are. Let's try to go 
forward from here.
    Senator Carper. That is the spirit, and we will.
    Senator Clinton, I don't know if Senator Clinton recalls 
this, but a couple of years ago, when you and I came here to 
the Senate, I think one of our first hearings, full Committee 
hearing here on EPW was a confirmation hearing for Governor 
Christie Todd Whitman. She had been nominated by the President 
to head up EPA. And in part, to help spearhead and lead us to 
the option of a four-pollutant strategy.
    And there were lot of cameras here in the room where Mr. 
McLean is sitting today, a lot of clicking noises as she came 
in and took her seat. And then at that moment, you entered the 
room and sat down right next to me, and immediately 400 cameras 
turned to you, and in the room all I could hear was the 
clicking of cameras. I turned to you and I said, I know that is 
a lot of cameras, but you will get used to it.
    [Laughter.]
    Senator Carper. I know in the last 18 months, I am sure, I 
don't know if you have gotten used to it, but you had one heck 
of a lot of cameras.
    I just want to say as a friend how proud I am of you and 
the way that you handled yourself on the campaign trail and 
worked your heart out. We all applaud you and I am thrilled 
that you are back and look forward to working with you and very 
much appreciate your support of our multi-pollutant 
legislation. Thank you so much, and you are recognized.

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

    Senator Clinton. Thank you so much, Mr. Chairman, and 
thanks for your dedication. I remember very well that you have 
been a tireless advocate for reducing power plant pollution 
ever since you came to the Senate, and your leadership 
continues with this hearing. I join with all of my colleagues 
to hope that we are going to come to some resolution. Because 
we find ourselves in a very unexpected and difficult position 
with the consequences of the D.C. Circuit Court's decision to 
vacate the Clean Air InterState Rule.
    I also want to welcome Mr. Jared Snyder, who is 
representing New York and other downwind States on the second 
panel.
    It is critically important here, and you have already heard 
from my friends and colleagues who have already spoken about 
this, we have a very difficult dilemma. And it is not partisan 
in terms of political parties, so much as it is, I would argue, 
geographic to some extent. And maybe a little philosophical. We 
know that the Clean Air rule wasn't perfect. It was trending in 
the direction of trying to help us get some of these pollutants 
under control and save the lives and alleviate suffering that 
we think would have flowed from that. And it wouldn't have just 
improved human health, because it would also have affected 
positively the health of the mountains, lakes, farms and 
wildlife in New York and many other States.
    Just last week we had a new report detailing the continuing 
toll of acid rain and other air pollution on eastern 
ecosystems. It was released by the Nature Conservancy and the 
Cary Institute of Ecosystem Studies located in Milbrook, New 
York. And it talked about how ground level ozone harms both 
natural ecosystems and agricultural crops. High levels of 
deposited mercury continue to have negative impacts on 
wildlife. Acid rain is making sensitive lakes and streams 
uninhabitable for fish. And excess nitrogen in part from air 
pollution is harming waterways from the Chesapeake to the 
Narragansett Bay.
    Now, some of these ecosystem impacts double back on human 
health. Mercury, as we know, is a potent neurotoxin. And in New 
York, high levels of mercury in fish due to air pollution have 
caused the State Department of Health to recommend that 
infants, children under 15 and women of child-bearing age 
should not eat even a single serving of fish caught from 93 
lakes and 265 miles of river in New York. And last, of course, 
we know that power plants are a major contributor to the urgent 
problem of global warming, accounting for about 40 percent of 
U.S. greenhouse gas emissions.
    Now, the CAIR rule would not have solved all of these 
problems. In fact, the NRDC testimony we will hear later today 
underscores the point that to some extent, CAIR was in fact 
designed to avoid solving some of these problems. It was 
designed to dovetail with the EPA's plan to ignore the Clean 
Air Act and delay action on mercury pollution from power 
plants. It was designed to delay reductions in NOx and SOx in 
accordance with industry wishes. And it wasn't designed to do 
anything about global warming.
    For all these reasons, I was at the time critical of both 
CAIR and the Clean Skies legislation that it was based on. Yet, 
since CAIR was finalized in 2005, utilities have been making 
and planning billions of dollars of investment in pollution 
control equipment, based on the expectation of having to comply 
with CAIR. In turn, New York and other States have been relying 
on these new pollution controls to help us attain ozone and 
particular matter standards.
    The Court's decision to vacate CAIR leaves States and 
utilities with uncertainty and confusion about the path 
forward. It is already financially punishing utilities like PPL 
who acted quickly and have already installed pollution 
controls. I have always felt, certainly since I have sat on 
this Committee, that we have done this backward. We should have 
figured out what incentives and rewards we could provide to 
utilities to move them more quickly. We put into place CAIR, 
some utilities moved, and now they are left holding the bag.
    So here we are, 8 years down the road, and I believe that 
the way forward is comprehensive legislation to reduce all four 
pollutants. I am proud to sponsor the Chairman's Clean Air 
Planning Act. I also am a co-sponsor of Senator Sanders' Clean 
Power Act, the successor to Senator Jeffords' bill that I voted 
for as a member of this Committee in 2002.
    Now, I appreciate the concerns of some members of this 
Committee about the cost of pollution controls. But I am 
convinced that there are economic ways of ameliorating those 
costs for utilities, and we just cannot wait any longer. And if 
you are downwind State, like we are, we are getting the worst 
of both worlds.
    So I hope, Mr. Chairman, that we will do whatever we can, 
working together, to try to take on this issue. It is my 
initial judgment that rather than pursuing an inadequate short-
term fix we should get to work and hopefully with a new 
Administration, immediately move to comprehensive bipartisan 
legislation to sharply reduce NOx, SOx 
mercury and carbon dioxide emissions from our power plants.
    Senator Carper. Senator Clinton, thank you very much for 
your statement.
    Our lead-off witness joins us today from EPA. Mr. McLean, 
just tell us a little bit about how long you have been at EPA 
and the nature of your responsibilities there. Just very 
briefly.
    Mr. McLean. I have been at EPA since 1972. At the time I 
didn't think I was going to be there that long, but it is a 
very challenging and rewarding institution. I have been 
involved in many of the clean air issues since that time, 
including the 1989-1990 period, when I worked with staff of 
this Committee on the Title IV Acid Rain provisions, which have 
turned out to be one of the most successful air quality 
programs we have had in this Country.
    Senator Carper. Good. I spoke with Administrator Johnson 
last week about this hearing and urged him, if he couldn't come 
himself, to send somebody who is knowledgeable and would be a 
very good expert witness. My staff tells me that EPA has sent 
the right person. So welcome, we are delighted that you are 
here. Please proceed. You will have roughly 5 minutes for your 
statement. If it goes a little bit long, that is OK, if it goes 
really long, that is not OK, I will reign you in.
    [Laughter.]
    Senator Carper. But please proceed. Your entire statement 
will be made part of the record.


  STATEMENT OF BRIAN MCLEAN, DIRECTOR, OFFICE OF ATMOSPHERIC 
     PROGRAMS, OFFICE AND AIR AND RADIATION, UNITED STATES 
                ENVIRONMENTAL PROTECTION AGENCY

    Mr. McLean. Thank you.
    Mr. Chairman and members of the Subcommittee, thank you for 
the opportunity to testify today on EPA's Clean Air InterState 
Rule, or CAIR and our preliminary assessment of how the recent 
D.C. Circuit Court decision vacating that rule may affect EPA's 
air quality programs.
    CAIR contains three regulatory programs intended to support 
the efforts of 28 eastern States and the District of Columbia 
to meet their obligations to attain the fine particle and ozone 
standards. It is the linchpin of EPA's program to improve air 
quality, reduce regional haze and further reduce acid rain, and 
our most significant action to protect public health and the 
environment since the passage of the 1990 Clean Air Act 
amendments. Over the last 20 years, first with acid rain and 
then with ozone and fine particles and regional haze, the 
States, EPA and industry have come to appreciate the value of a 
coordinated, multi-State approach to these problems.
    CAIR, along with other pollution control efforts, was 
poised to help over 450 counties in the eastern United States 
meet the national air quality standards for ozone and fine 
particles. CAIR was neither designed nor intended to replace 
State obligations to attain the air quality standards. Rather, 
it was designed to assist States by establishing a common level 
of control in upwind States that downwind States could count on 
in preparing their (SIPs) plans.
    The U.S. power sector, the focus of CAIR, is unique in that 
through the electricity grid, production (and accompanying 
emissions) can be rapidly shifted from one source to another, 
and one State to another, in the course of meeting electricity 
demand. In response to CAIR, the power industry had committed 
billions of dollars in add-on pollution control technology to 
meet the stringent new caps for SO2 and 
NOx in the CAIR rule. By 2020, in fact, about 80 
percent of coal-fired capacity in the CAIR region was projected 
to have such equipment.
    By the year 2015, as you have noted, CAIR would 
dramatically reduce emissions and deliver $85 billion to $100 
billion in annual health benefits, preventing 17,000 premature 
deaths annually and millions of lost work and school days. It 
would provide nearly $2 billion worth of annual visibility 
benefits in our national parks in the East, and significantly 
reduce the number of acidic lakes and streams in the Northeast. 
As early as 2010, just 2 years from now, we projected the 
avoidance of about 13,000 premature deaths from this program.
    As you know, on July 11th, the D.C. Circuit issued its 
ruling on the petitions for review of CAIR. The Court's opinion 
was mixed. It ruled for EPA on some issues and against us on 
other issues. Overall, however, the Court decided to vacate the 
entire rule and the associated Federal implementation plan.
    EPA is continuing to evaluate its litigation options. 
However, assuming the decision stands, it will have a ripple 
effect that will delay, if not impede, significant clean air 
programs and activities throughout the eastern United States. 
Since in many cases, State plans to attain the ozone and fine 
particle standards relied heavily on CAIR, they will likely 
need to be revised. States will likely have to reexamine the 
reasonable progress goals of the regional haze plans, develop 
alternative emission reduction strategies, and make individual 
best available retrofit technology determinations for certain 
power plants.
    After States missed the July 2000 Clean Air Act deadline 
regarding interState transport, EPA issued a Federal 
implementation plan (FIP) for all States covered by CAIR. The 
Court decision vacated the CAIR FIP, but not the findings of 
failure to submit. Therefore, EPA remains obligated to issue 
FIPs based on those findings and the statutory timeframe for 
doing so has now expired, in that it was May 2007.
    In 1998, EPA issued a rule known as the NOx SIP Call, to 
mitigate significant transport of nitrogen oxides critical in 
forming ozone. All 20 States and the District of Columbia 
covered by that NOx SIP Call chose to participate in an 
optional NOx trading program. The CAIR rulemaking in many 
States discontinued that trading program after this year's 
ozone season. We are now evaluating the impact on the 2009 
ozone season, which is rapidly approaching.
    While it is too early to assess fully the impact of this 
decision, we have many concerns, from the precipitous declines 
in allowance values that could lead to units slowing 
installations or abandoning pollution controls that could in 
turn increase emissions, to possible financial losses to those 
who acted early to meet CAIR's compliance deadlines. But we are 
most concerned with the possible air quality impacts on 
ecosystems and human health.
    Another concern is the implication of the Court decision on 
the future of cap and trade programs. Cap and trade has been an 
extremely effective mechanism, delivering broad emission 
reductions with certainty that specific emission levels will be 
maintained, regulatory certainty and compliance flexibility for 
affected sources, cost savings to industry and government, 
unprecedented levels of compliance, and dramatic human health 
and environmental benefits. Losing such programs means losing 
assurances that reductions will be made in a timely manner. It 
may also make environmental protection more expensive and thus, 
more difficult to achieve.
    With CAIR, we believed we were properly implementing the 
Clean Air Act and faithfully following precedent. In the wake 
of the Court's decision, EPA and the affected States will need 
to work together to develop strategies to protect public health 
and the environment. EPA will earnestly be considering all 
options over the next few weeks.
    This concludes my oral statement. I would be happy to 
answer questions.
    [The prepared statement of Mr. McLean follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Senator Carper. Thanks very much.
    Very, very briefly, Mr. McLean, tell us a little bit about 
your involvement in the development of the Clean Air InterState 
Rule. Just very briefly.
    Mr. McLean. Following the Acid Rain law in 1990, I was put 
in charge of implementing that program. Then in the mid-1990's 
we started looking at ozone and got involved with the Ozone 
Transport Commission in the Northeast and partnered with them, 
actually, in operating a multi-State trading program in the 
Northeast, which then expanded into the NOx SIP Call, covering 
20 States. Then after 2000, the first step was to look at Clear 
Skies, or a legislative solution to further reducing SOx, NOx 
and mercury, which you have mentioned.
    Since we didn't make progress for a variety of reasons, we 
decided that it was urgent to address these emission reductions 
and we proceeded with the Clean Air InterState Rule. That was 
part of my office, and I was involved in helping to put forward 
that program as an alternative or a backup to the legislative 
fix that we had originally looked for. We proposed that program 
in 2004, it was final in 2005. So it was 3 years ago that this 
rule went into effect. And we were pleased to see the reaction 
of industry to accept that this was going to happen, and they 
began the steps necessary to start implementing that program 
and installing in control equipment.
    What we have actually seen is emissions of SO2, for 
example, which had been controlled by Title IV, start coming 
down in advance of this program to the point today where they 
are actually below the cap for Title IV.
    Senator Carper. Thank you. You mentioned that in the weeks 
ahead, EPA is going to be considering their options. Just very 
brief, what are some of those options?
    Mr. McLean. Well, trying to get your head around this whole 
thing, because it is like dropping a bomb in the middle of a 
program that was the underpinning of a lot of different other 
parts of the air program. It had been accepted as sort of a 
foundation piece.
    We are looking at it in three directions at the same time. 
One is our legal options in response to the Court decision, 
which we are working on. A decision will be made there by 
August 25th, I believe, on a request for rehearing. So that has 
not yet been decided but will be decided in the next few weeks.
    We are also looking at regulatory issues, both short-term 
and long-term. In the short term, we have issues like the NOx 
SIP Call and some of the SIPs that have been submitted that may 
have to be changed. So we have to address those issues quickly. 
And then we are also considering the legislative options that 
you have mentioned as a longer term solution to dealing with 
this program. And even on the legislative side, there are quick 
responses and there are longer term responses. So I think all 
of those areas are open and are being pursued.
    Senator Carper. Good, thank you. So by the time we return 
following the August recess, we will know whether or not you 
are going to appeal and in what manner?
    Mr. McLean. Yes.
    Senator Carper. OK, thank you.
    The real purpose of today's hearing, we have gotten out of 
the box quickly, within 2 weeks of the Court's decision, to 
hear from a variety of folks, including EPA and certainly a 
number of groups that are interested in these issues, States 
and environmental groups and the industry, the utility industry 
itself. I think as much today, what I am going to do is listen 
and hear a variety of options that are out there for EPA, but 
also for us as we try to decide what to do in the next several 
months and also by the early part of next year.
    Let me just ask a couple of questions, then I will yield to 
Senator Voinovich. What does EPA anticipate will happen to 
States that have relied on CAIR for their State implementation 
plans? For example, is EPA planning on issuing guidance to 
States to assist in the necessary State implementation plan 
revisions?
    Mr. McLean. That is clearly one of the things we are 
considering and we will need to do if we go down that path. So 
I would say in the next few weeks, we have to make decisions in 
those areas as to which rules, which actions need to be taken 
first. But that is an area that we are looking at.
    Senator Carper. Do you believe that many downwind States 
will supplement their State implementation plans with a Section 
126 petition? Do you expect EPA will encourage downwind States 
to look to Section 126 as a means to address regional 
transport?
    Mr. McLean. We are clearly aware of that and even the Court 
mentioned 126 as a possibility for action. We have dealt with 
that section before, and it certainly is a tool that States can 
use. At this point, we haven't decided what is the best path, 
so we are not encouraging anybody to use or not use that 
provision.
    Senator Carper. Do you expect to be in a position to 
encourage them to consider that option after August 25th?
    Mr. McLean. Some time after August 25th, I don't know 
exactly how that will play out.
    Senator Carper. Last, would a cap and trade policy be a 
good policy option for reducing upwind reductions if EPA had to 
act on a Section 126 petition?
    Mr. McLean. We have to look at the Court opinion. It seems 
to say in parts that interState cap and trade may not be an 
option. So we would have to be sure of how the opinion is 
actually directing us and whether that limits some of our 
regulatory options.
    Senator Carper. Thank you for your responses.
    Senator Voinovich?
    Senator Voinovich. Thank you, Mr. Chairman.
    Several things, you talked about a quick legislative fix or 
a long-term legislative fix. I have been on this Committee 10 
years and I can recall many pieces of legislation that Senator 
Clinton and I worked on, and there was a time when we had 
something on NOx, SOx and mercury and we couldn't get it, and 
everybody held out for greenhouse gases. And now we have 
separate legislation on greenhouse gases that didn't go 
anywhere, and there are several of us that are working to try 
and come back with another proposal on that.
    So in effect, if you leave that off the table, 
understanding that we have to deal with it, and by the way, if 
we don't deal with it, we are back to the EPA dealing with it. 
And you restricted to say NOx, SOx, and mercury. First of all, 
in terms of a quick fix on CAIR, which deals with NOx and SOx, 
what do you anticipate would be a quick fix? And would you 
involve the mercury rule in that or leave that separate and 
apart and deal with that differently?
    Mr. McLean. Personally, I think involving mercury would not 
be as quick a fix. I think the more issues and the more details 
one provides, the less quick it becomes. So I define quick as 
one page, very short direction to put things back in place 
while we consider how to deal with the longer term 
implications. It gets complicated very fast, as you know, and 
it becomes not quick very fast. I don't necessarily think a 
quick fix is a permanent fix.
    But the permanent fix may, and you know better than I the 
difficulty of bringing parties together as we try to deal with 
all of the issues involved. So I see quick as being very short 
and trying to put the pieces back together for some period of 
time in order to develop a longer term solution.
    Senator Voinovich. In other words, if you had a quick fix, 
the one piece of paper, it would put everybody back where they 
are at and continue to be going forward with it in terms of 
what is underway. And if we held back and said, well, we want 
to deal with a lot of this other, the same thing that Senator 
Carper and I dealt with for, how long did we do that?
    Senator Carper. Forever.
    [Laughter.]
    Senator Voinovich. Could take forever again. I hope not, 
but it could. And at the same time, while that is going on, you 
would have the situation where people, there would be 
uncertainty out there throughout the Country. The other issue 
is this: even if you go back to court and win this situation, 
you are still dealing with a CAIR that is not legislation. So 
somebody else could come in and say, we don't like this piece 
of it and come back into court and take that on.
    So the best thing that we could possibly do, is it your 
opinion that the best thing we could do would be to pass 
legislation to clarify this?
    Mr. McLean. I am trying not to give you a definite answer, 
because the Administration, in fact, while we are meeting, is 
meeting to work on this. There is a sincere sense of urgency 
within the Administration about dealing with this issue, and 
people are focused on it. So I am trying not to preclude 
whatever options they are trying to consider. So I think the 
range is open as to how to proceed, and there is no definite 
view at this point as to what the right path is. I personally 
think it may be a combination of these things.
    Senator Voinovich. Well, here is the thing. If you go back 
and the Court ruling is overturned, it still means that other 
actions could be filed against the CAIR rule, correct?
    Mr. McLean. I believe so. I would have to check with my 
lawyers. Because I find this rather complicated, the situation 
we are in.
    Senator Voinovich. Well, I would argue that you would be 
better off with legislation than you would be with a rule.
    Mr. McLean. I would tend to agree. In fact, I think the 
Administration would tend to agree, having tried to go down 
that path first earlier. I think the general preference is for 
legislation.
    Senator Voinovich. The one last question is this. One of 
the things that I have been really impressed with is that you 
estimated some reductions in emissions. In fact, you mentioned 
it in your testimony. Because we had the certainty out there, 
as Senator Clinton and others have mentioned, that there has 
been billions of dollars worth of investments that are being 
made, and that we are getting in phase one of this reductions 
that we thought we wouldn't get until we got to phase two of 
this program, which I think is terrific. Could you comment on 
that?
    Mr. McLean. We were in fact a little surprised but very 
pleased at how rapidly the industry responded and the equipment 
was going in. That has accentuated our concern, that so much 
was going in now as we speak, people are installing equipment, 
and they are probably also making decisions about wherever they 
are in their contracts, how much money to spend at this point. 
So we have a considerable concern about any effect on slowing 
that effort.
    Senator Voinovich. Thank you.
    Senator Carper. Senator Lieberman?
    Senator Lieberman. Thanks, Mr. Chairman.
    Mr. McLean, thanks for your public service and all you have 
done in this regard and so many others to help our environment.
    I want to ask you a few questions that I think may help us 
understand in somewhat more local terms the impact of the Court 
decision on CAIR. I am going to come back to my own State. 
Currently in Fairfield and New Haven Counties, the airborne 
concentration of fine particles from coal-fired power plants 
and other sources exceeds EPA's public health standard. But by 
2015, it was expected that the concentration would drop down 
within the range deemed acceptable by EPA. That was according 
to CAIR. The reduction in coal-fired plant pollution that CAIR 
was going to bring about in upwind States, in other words, 
outside of Connecticut, was going to account for a very large 
part of the air quality improvement that was going to bring 
Fairfield and New Haven Counties back into attainment.
    So I wanted to ask you if you could walk us through, by way 
of illustration, some of the specific Federal legal 
requirements. I noted in your opening statement you 
specifically referred to the Federal implementation plan still 
necessitated by pre-existing Federal law, and some of the 
practical difficulties that State and local government entities 
in Connecticut, and by extension of course, throughout the 
Country face with respect to these two counties, Fairfield and 
New Haven that I have mentioned, if the CAIR reductions and 
regulations are not by one means or another reinstated.
    Mr. McLean. State and local governments face a daunting 
task under normal circumstances to deal with a lot of the 
provisions of the Clean Air Act. They have to devise plans that 
are going to attain the standards. And as I mentioned earlier, 
what we have learned over the last 20 years is that the 
contribution to the emissions and the air quality in many local 
areas is dominated by emissions that come from outside those 
areas, making it extremely difficult for State and local 
governments to figure out, even begin the process to figure 
out, how they are going to attain those standards.
    Connecticut in particular is downwind of New York and 
Pennsylvania and the whole Midwest. So a large portion of their 
air quality is determined by factors outside their control. 
CAIR was an attempt, as the NOx SIP Call was, to give those 
States some certainty as to what they could count on in 
developing their plan. If they could assume that reductions 
were going to be 50 or 60 percent coming into the area, then 
they had a point to start with. And then they could figure out 
what was left for them to do.
    There are two consequences of this. First of all, the 
reductions that we were getting on a regional basis were, as we 
called them, highly cost effective. They were very effective 
cost reductions. And often more cost effective than what a 
local government could do. So the first thing that happens when 
they lose this is that the alternatives they have are much more 
expensive. So the cost of pollution control in those 
communities is going to rise to compensate for the reduction, 
if in fact they can.
    The second part is it may not be possible for them to 
compensate. Sometimes what they have available is just not 
enough to get to the standard, in which case they find 
themselves missing deadlines and being behind the eight ball, 
so to speak, with their responsibilities. Then the Clean Air 
Act has automatic provisions that deal with sanctions that may 
affect these areas from transportation to new source review, et 
cetera. So there is a whole set of consequences here that 
States face. And removing this piece increases the cost and 
greatly complicates their lives and may lead to other 
consequences.
    We had this problem in the mid-1990's with ozone, when the 
States in the Northeast and others started to realize that they 
couldn't even do their planning until they had a better handle 
on this regional air pollutant problem. So it is very important 
to try to put back in place some certainty for them so that 
they can move forward, because they can't.
    Senator Lieberman. Very well stated. At one point a while 
back, we had some modeling done in Connecticut that showed that 
we could, if we shut down the whole State, effectively, we 
still couldn't meet the EPA attainment standard.
    Mr. McLean. That is probably true.
    Senator Lieberman. Can you take a moment, I am running out 
of time, just to talk a little bit about the impact of the 
Court decision on some of the utilities that have coal-fired 
plants in States that affect us but are away from us, like 
Indiana or Kentucky or West Virginia? What impact does this 
have now on those companies and their bottom lines, really?
    Mr. McLean. First of all, there are a couple hundred 
companies in the eastern United States, and many are under 
different regulatory regimes in every State as to how their 
costs are handled and the rates are handled. Each one of them 
was on their own independent path in terms of where they were 
in contracting and building.
    So it is hard to sort of go through a good example, because 
each one would be almost unique. In each State, the regulatory 
structure for utilities is different. So their costs would be 
different.
    So they each were designing programs that were responding 
to the rest of the regulatory environment in which utilities 
operate. They would have to go back to their rate commissions 
and find out if they had been given authority to charge, can 
they still charge for those costs or do they have to write them 
off. You will have a couple of utilities in the next panel that 
can describe their unique situations and what they face. It is 
like a story of each company separately.
    One of the beauties of this program was, we didn't have to 
figure out each company's situation. We gave them the general 
direction and they were able then to go work through those 
problems at the State level.
    Senator Lieberman. Thank you. My time is up. Thanks, Mr. 
Chairman.
    Senator Carper. Thank you, Senator Lieberman.
    Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman. Most of my 
questions I had actually have already been asked. Let me just 
pursue a couple of things. In your opinion, if Congress had 
passed the Clear Skies back in 2005, would there have been the 
same problems that were noted with the CAIR in the D.C. 
Circuit?
    Mr. McLean. I do not believe so. I mean, I would have to 
ask, but I think because some of them would have been 
statutorily directed that that would not have been the issue. 
Most of the Court's issues were regarding our interpretation of 
the current act.
    Senator Inhofe. When the EPA talks about trading, we still 
hear concerns about the hot spots today. Since EPA has 
significant experience in the acid rain program, there has been 
extensively modeled other trading programs. Does the EPA 
believe that trading results in more hot spots?
    Mr. McLean. The programs that we have used cap and trade 
for we have analyzed quite a bit and have not found the case of 
hot spots. Hot spots are predicated on the assumption that 
areas will either not reduce or in fact increase their 
emissions and that the surrounding emissions won't come down 
and you have this confluence of sort of a bad situation where 
emissions and concentrations increase.
    What we have seen is that across large areas, like the 
eastern United States or the whole Country, there are 
variabilities in costs across companies, within States, across 
States, within companies, and that you don't see like pockets 
of areas where emissions increase and areas where they go down. 
Instead, it tends to be spread over an area. So when we have 
thousands of sources, which we do in these programs, we just 
haven't seen any concentration of pollution increases. In fact, 
we haven't seen any air quality areas that have gone up in air 
pollution concentrations. All areas have come down.
    Senator Inhofe. We talked about, all of us talked about 
some of the very responsible parties out there anticipating 
what they would have to do to comply with the CAIR rule, and 
millions of dollars have been spent by different parties. Do 
you have any kind of a figure as to how much you think could 
have been spent up to this point, No. 1? And No. 2, I think it 
goes without saying that all of us up here agree, we may 
disagree on how we got into this situation, but we all want to 
get out. And if any solution we have, whether it is legislative 
or whether it is a rule, do you think that some of the money 
that has been spent by responsible parties will not be totally 
lost? In other words, they would have to do it anyway when we 
come up with a solution to this?
    Mr. McLean. I think that we are all talking about solutions 
that would lead to comparable emission reductions. In some 
cases, maybe more. So that the actions people are taking, if we 
put things back together quickly, there will not be significant 
long-term losses. The longer we have this gap, the more 
discontinuity there will be, the more costs you could say maybe 
shouldn't have been expended or would have been spent too soon.
    So timing is important in resolving this and minimizing the 
losses. But I think if we act relatively quickly, there should 
not be long-term financial consequences.
    Senator Inhofe. Yes, because this is not the first time we 
have been faced with this. There are a lot of other times when 
they have either retrofitted something or expended a lot of 
money and then find out that the rules have changed.
    Well, when we do ultimately have the solution, is it going 
to be better to have a legislative fix or a regulatory fix?
    Mr. McLean. Given the choice, what we are facing today, I 
would rather have a legislative fix. I think that is the 
Administration preference. But what we did between Clear Skies 
and CAIR was we decided that a regulatory fix was better than 
no fix. So there is a priority there.
    Senator Inhofe. Thank you, Mr. Chairman.
    Senator Carper. Thank you, Senator Inhofe.
    Senator Clinton.
    Senator Clinton. Thank you, and thanks, Mr. McLean, for 
your many years of service to our Country, and especially on 
these important environmental issues.
    I want to followup on what Senator Inhofe was asking, 
because clearly when you take stock of where you will be by 
August 25th and what kind of actions you think you will pursue 
going forward, I think you can sense a readiness on the part of 
all of us up here to try to assist you in whatever way makes 
sense.
    In the second panel, you will hear what New York thinks 
should happen. Obviously, we want to move as quickly as 
possible to regain the benefits of CAIR and not undermine the 
implementation that was going on.
    At the same time, we want to do it in a way that does not 
remove the incentive for us pursuing multi-pollutant 
legislation. So we see a bit of a dilemma here, but we ought to 
be able to work our way through this.
    I know that New York sent EPA a letter that will be part of 
the testimony of Mr. Snyder when he testifies, asking you to 
immediately take action to protect air quality by restoring the 
protections required by the 1997 NOx SIP, which was largely 
displaced by CAIR. Could that be done?
    Mr. McLean. I would have to check. I understand the 
question and we certainly are looking at that as one of the 
areas that we might need to move more quickly on than others.
    Senator Clinton. And then of course at the same time, you 
would be taking steps to issue a new comprehensive transport 
rule that would give us the opportunity to regain the benefits 
from CAIR, I assume?
    Mr. McLean. Correct.
    Senator Clinton. We are also hoping that the States can use 
the authority they have under Section 126 of the Act to try to 
file petitions seeking the elimination of emissions that 
contribute significantly to the non-attainment in the downwind 
States. One of the reasons that some of us had a problem with 
Clear Skies was because it removed the Section 126 opportunity 
for States to be able to take action on their own when they 
felt that they were not being given national relief. I think 
that we should also ask you to perhaps get back to the 
Committee as soon as you can after you have assessed the 
situation. Because if it were possible to pass something or 
support a new rulemaking before the Congress went out, some of 
us would certainly be interested in trying to do that, for all 
of the reasons that we have already heard discussed.
    So I guess, Mr. McLean, I can ask you specific questions 
about what if, what if, but I take it from your testimony you 
are in the process of trying to figure out what if, what if.
    Mr. McLean. Yes.
    Senator Clinton. So if you could, with the Chairman's 
direction, provide us as soon as possible what your options are 
that you are considering and what if any help you need from us 
legislatively. Obviously if we can get Congress to act to 
promptly restore the benefits of CAIR, that would be a very 
good first step. And then we can, under the leadership of 
Senators Carper and Voinovich, try to figure out what else we 
are going to do to strengthen air quality across the board.
    So I hope you will let us know as soon as you know what it 
is you are pursuing, if there is any option other than a 
rehearing with the Court, whether they might consider some kind 
of negotiated settlement, if the parties would agree. In 
looking at the six reasons that the Court gave for overturning 
CAIR, it seems some of those are solvable. They didn't look to 
me like they were big deal breakers.
    So it might be some kind of settlement or negotiation could 
perhaps bring everybody back to the table. But let us know as 
soon as you know through our Chairman what we all need to be 
doing.
    Mr. McLean. We would be glad to, and appreciate the 
request.
    Senator Carper. Mr. McLean, let me just ask, do you think 
EPA will still go through with finalizing a new source review 
rule, even though the basis for that rule, and that is 
relaxation of the new source review provisions, was justified 
by CAIR benefits?
    Mr. McLean. The NSR rule is one of the things that we are 
looking at to see what effect this decision has on that rule. 
Unfortunately, it is not my area of responsibility, so I am not 
exactly sure how that is going to turn out. But it is one that 
we are aware of and we are looking at that.
    Senator Carper. Is there some correlation between 
tightening the emissions standards for SOx, NOx and mercury, 
for example, the tighter those standards are with the greater 
ability of EPA to relax the new source review rule? Is there 
any correlation, or some kind of an inverse correlation?
    Mr. McLean. I know that has been an area that has been 
discussed and I think it is a matter of specifics as to exactly 
what you do and how that can work. I know legislatively that 
has also been considered, whether there is a relationship there 
that we can figure out a better path forward.
    Senator Carper. Just kind of think out loud for us, and if 
you are not comfortable with answering this, don't. But just 
kind of think out loud for us on this point, please.
    Mr. McLean. On what?
    Senator Carper. On the question I am raising.
    Mr. McLean. On the relationship between the two? I think 
over time, as I have watched the Clean Air Act evolve, we have 
added to it new mechanisms. The cap and trade mechanism in 
Title IV didn't exist in 1970 or 1977. I think from time to 
time, it is good to assess where we are and whether we need 
every mechanism or exactly the way it was originally written or 
whether we can make adjustments that can reconcile and allow 
those programs to operate more effectively together. That would 
be my general response. So I think there is an opportunity 
there to look at those issues again.
    Senator Carper. Thank you.
    Another question. It is my understanding that the folks at 
EPA thought that they were limited in their legal scope to keep 
CAIR as a regional program. Would EPA rather have had a 
national program?
    Mr. McLean. The focus of CAIR was responding to the 
requirement to meet the fine particle standard and ozone 
standard through Section 110, through Title 1. And based on 
Title 1, we had to tie the actions to specific contributions to 
non-attainment of those two pollutants. And that is what 
defined the boundary conditions.
    If your scope, if your purpose is different, then the scope 
of the geography can be different. Certainly we have regional 
haze issues in the east and west and we even have acid rain 
issues in the east and west. So I think there is an opportunity 
to look at the overall purpose and then define the scope of the 
area.
    Senator Carper. Let me just followup. Without a national 
approach, what keeps polluters moving from one region of the 
Country where they are regulated to another region where they 
are not?
    Mr. McLean. The general answer is, there are a lot of 
provisions in the Clean Air Act now. It is not so easy to move 
and be freed of responsibility. Between new source review and 
SIPs in every part of the Country, there would be requirements 
on anybody moving anywhere. So there would be some limitations.
    But you do raise an issue that is a valid one in terms of 
looking at the implications. Certainly if the requirements in 
one State are extremely different, tighter than another State, 
you do run the risk of moving sources or emissions.
    Senator Carper. And one last followup, I think you said in 
your testimony that the CAIR would have saved some 17,000 lives 
per year when it is fully in effect. Any idea how many more 
lives per year would have been saved if CAIR was nationwide as 
opposed to regional in scope?
    Mr. McLean. I don't know the number, but I think that is 
doable.
    Senator Carper. Would you provide that for the record, 
please?
    Mr. McLean. OK.
    [The referenced information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Senator Carper. Last, with CAIR intact, how many States 
would still have non-attainment areas for ozone or particulate 
matter, say, maybe in 2010 or 2015? Any idea?
    Mr. McLean. I would have to give that number to you for the 
record, but I think we can get that.
    Senator Carper. All right, thanks very much.
    Senator Voinovich.
    Senator Voinovich. I am not asking you to speculate, but 
give me your best shot on some of these things. If we were to 
pass legislation that would put CAIR into law, and we put a 
sunset on it, i.e., 2 years from now we would have to 
reauthorize it, which would put us in the position where we 
could look out around the Country to just see how things are 
working or not working, what impact would that have on some of 
the decisionmaking, in your opinion, of the utilities that are 
primarily the ones that are going to have to invest the money?
    Now, I would suspect, and just add this, that if I am a 
utility and I am going forward and I am spending billions of 
dollars right now based on the CAIR rule, that they have to 
know that maybe down the road something else more stringent 
might be legislated. So as a regulator, looking out, what is 
your reaction to the concept of say, putting CAIR into law and 
then say, we have to reauthorize it in 2 years to see just 
exactly where we are and what impact would that have on 
decisionmaking made by some of the utilities and others that 
are making these decisions?
    Mr. McLean. It could vary quite a bit from company to 
company. You would find different situations, where for some 
people a short timeframe might be sufficient for them to make 
their decisions on what they have to do. Other companies, may 
need a longer timeframe in order to make those decisions. You 
certainly have capital investments and payback and the longer 
the timeframe you have the more certainty and therefore the 
more efficient a solution would be. But you have to weigh that 
and you would be weighing that against various other pressures 
and trying to design an appropriate long-term solution.
    So the idea is to give people a long timeframe. But how 
much time do you have to put a fix in place and say you have to 
balance those two, I couldn't really tell you at this point 
without looking at the whole range of companies and situations. 
It is sort of like a discount rate curve over time. There are 
diminishing returns the farther you go out. Certainly the near-
term actions and stability are more valuable than the long-term 
ones. Again, you could ask the two companies here and they 
could probably tell you from their perspective how different 
timeframes would affect their decisionmaking.
    Senator Voinovich. Since they are here, hopefully they will 
respond to that.
    I know you are not supposed to do this, but has the EPA 
looked at the impact that the CAIR rule has had on ratepayers?
    Mr. McLean. Yes, we did. I could give you that for the 
record. I don't know what the numbers are. But we did look at 
the cost of the program and the likely impact on electricity 
rates. That is something that we usually do.
    Senator Voinovich. Has it been around long enough to get an 
idea of the impact in the short term?
    Mr. McLean. Of the decision, you mean?
    Senator Voinovich. Of the cost, yes.
    Mr. McLean. We could probably do that. I mean, as you can 
imagine, there are many factors affecting the costs to 
ratepayers, this being one of them. So we often model this, 
assuming everything else doesn't change, what is the 
incremental impact of this regulatory action. And I can check 
and see for what timeframes we have done that.
    Senator Voinovich. OK, a couple of questions. New source 
review. If I heard correctly, there are certain things that 
trigger new source review. And the reason I bring this up, it 
gets into the whole climate change area. One of the thoughts 
that many of us have to reduce greenhouse gases in this Country 
would be to allow utilities to move forward with making their 
plants more efficient, so they produce more energy. I think for 
every, it is like one for one, if you increased the efficiency 
by one, then you reduce your carbon emissions overall.
    Under CAIR, are there certain things that trigger new 
source review? And what would you think about having a 
different regimen, say, in terms of efficiency, taking into 
consideration the greenhouse emission aspect of it?
    Mr. McLean. That is a good series of questions. I don't 
really have the answer to that. But I understand what you are 
thinking about, and I think those are one of the areas that we 
will try to work on.
    Senator Voinovich. First of all, does CAIR trigger new 
source review, or does a company doing something trigger new 
source review?
    Mr. McLean. I think it is more what a company does. 
Pollution control devices, generally, we have exempted from 
triggering new source review. So if you are responding to one 
part of the law, we are not trying to tie you into another 
part.
    Senator Voinovich. The way I understand it, some utilities 
are not going forward and doing the efficiencies that they 
could do because they are afraid they are going to trigger new 
source review, which then becomes a lot more expensive for them 
to do their----
    Mr. McLean. My perception, and I may be wrong, is that the 
efficiency itself is not the problem, it is how the plant is 
used afterward. So the efficiency allows you to increase 
production and emissions at the plant, that is the concern, not 
the efficiency per se.
    Senator Voinovich. Do you think it would be a good idea to 
have, when we take into consideration these decisions in terms 
of new source review, to look at the impact that they would 
have on climate change and greenhouse gases?
    Mr. McLean. I think they should all be looked at, 
particularly given the relevance of the climate change issue 
that needs to be factored into the decisionmaking process. I 
also have found that with the cap and trade program, if you get 
the goal that you are looking for in terms of the emission 
reduction, then there is more flexibility on how you get there, 
and it may allow one to look at those issues with new eyes.
    Senator Voinovich. To your knowledge, does the issue of 
greenhouse gases come into play when you are considering the 
new source review being triggered?
    Mr. McLean. I don't know the answer to that question.
    Senator Voinovich. Could you find out for me?
    Mr. McLean. Yes.
    Senator Voinovich. Thank you.
    [The referenced information was not received at time of 
print.]
    Senator Carper. Mr. McLean, I just have one last question, 
and if you can help us with this on the record that would be 
great, if you have to dig up the answer, that is 
understandable. I seem to recall that earlier it was forecast 
or predicted that the implementation of the CAIR rule would be 
saving roughly 17,000 lives per year by 2015. And the health 
benefits were anywhere from $85 billion to maybe $100 billion, 
which was roughly--what is the cost benefit ratio there, do you 
recall? Is it 20 to 1?
    Mr. McLean. Twenty-five to one.
    Senator Carper. The Clean Air Planning Act, which a number 
of us co-sponsored in support, would save, I believe, 
additional lives by 2015. Any idea how much that might be?
    Mr. McLean. I would have to look at that. We analyzed your 
bill a few years ago, and we did have estimates of that. I 
don't think we have done the more recent bill. It is the 
magnitude of the reductions which drives the benefits. So they 
should be similar.
    Senator Carper. For some reason, I am thinking it was 
26,000 lives and the health benefits were in the range of $150 
billion to $160 billion.
    Mr. McLean. Yes, that could be correct. I can check that.
    Senator Carper. Well, we are going to have, I suspect, some 
additional questions to submit in writing. I know a number of 
our colleagues would like to have been here. I personally have 
four hearings going this morning, and Senator Voinovich 
probably has at least as many. People have a lot on their 
plates. This is important for our Country, it is important, 
certainly, for my State and for other States that are at the 
end of the tailpipe. We will be interested in working with you 
and your colleagues at EPA in the weeks ahead as you decide 
your near-term course forward. Then as we get past August 25th, 
and you have made that decision to decide what we need to do 
this year, and then just as importantly, maybe more 
importantly, what we need to do next year.
    It sounds to me like what you are saying is that the EPA 
and the Administration believe that the real solution here is 
not for the long term additional regulation, but you need some 
legislation.
    Mr. McLean. Yes.
    Senator Carper. Thank you for your willingness on very 
short notice to be here for your testimony, for responding to 
our questions and for your willingness to followup. I leaned 
over to Senator Voinovich during one of your responses and 
said, well, I think we have ourselves, we are fortunate that 
you were able to make time to be here today. These are 
difficult issues for all of us to understand. I am certainly 
one of those. But you have helped make it a bit more 
understandable, and for that, I am grateful.
    Mr. McLean. Thank you very much.
    Senator Voinovich. Thank you very much. You have been a 
great, great witness. Thanks for your service.
    Senator Carper. We will now excuse Mr. McLean and invite 
our second panel to come to the table.
    Thank you very much. So far, we have been fortunate enough 
not to have any votes. I am told that we may not have any votes 
until 2:15, when I will be presiding, not over this 
Subcommittee, but over the Senate. And then we are going to be 
having a series of votes, so there is a good chance we will be 
able to finish this up at a reasonable time and break for a bit 
of lunch, then the Senate will convene and start its work.
    I want to just briefly introduce these five panel members. 
First of all, Jared Snyder, who is the Assistant Commissioner 
for Air Resources, Climate Change and Energy, New York 
Department of Environmental Conservation. Welcome, thank you 
for joining us today.
    Eric B. Svenson, Jr., Vice President, Environment, Health 
and Safety, Public Service Enterprise Group, our neighbors 
across the river in New Jersey. Welcome. We are happy you are 
here.
    Mr. William H. Spence, Executive Vice President and Chief 
Operating Officer, PPL Corporation. What does PPL stand for?
    Mr. Spence. Well, it used to be Pennsylvania Power and 
Light Corporation, but we changed it to PPL Corp.
    Senator Carper. Fair enough. Thank you.
    Chris Korleski, Director of the Ohio Environmental 
Protection Agency. We are both Ohio State grads.
    John Walke, Director, Clean Air Program, Natural Resources 
Defense Council. Mr. Walke, thank you so much for coming today 
and we look forward to your testimony and the chance to ask you 
some questions.
    Mr. Snyder, you are our lead-off hitter, and Mr. Walke, you 
get to bat clean-up, even though you are No. 5 in the lineup. 
We are happy you are all here. Your entire testimoneys will be 
made part of the record. You can summarize if you wish. Try to 
wrap it up in about 5 minutes apiece, then we will get into 
some questions.

   STATEMENT OF JARED SNYDER, ASSISTANT COMMISSIONER FOR AIR 
RESOURCES, CLIMATE CHANGE AND ENERGY, NEW YORK STATE DEPARTMENT 
                 OF ENVIRONMENTAL CONSERVATION

    Mr. Snyder. Good morning, Chairman Carper and Senator 
Voinovich. I am Jared Snyder, I am Assistant Commissioner in 
New York responsible for air pollution and climate change 
issues. I am also the current Chair of the Ozone Transport 
Commission. Thank you for providing me with the opportunity to 
testify on this important matter today.
    My message today is simple: unless prompt action is taken 
to rectify the Court's decision vacating CAIR, we will all be 
breathing dirtier air, and many of us will suffer, especially 
the very old and very young and persons with asthma and other 
respiratory illnesses.
    I will make three major points this morning. First, the 
Court's decision will harm air quality and make it more 
difficult for States to meet their obligations to comply with 
the national standards for ozone and particulate matter. 
Second, and perhaps more importantly, the Court's decision 
could have dire public health consequences. And third, 
achieving clean, healthy air means strengthening CAIR, 
requiring quicker and steeper reductions.
    CAIR was flawed. It did not provide sufficient and timely 
reductions from the power sector to fully protect public 
health. Nevertheless, we chose to view CAIR as a glass half 
full, rather than half empty. But the Court's decision means 
that the glass is now empty. New York and other downwind States 
can no longer count on the substantial upwind pollution 
reductions needed for us to comply with the applicable 
standards. The demise of CAIR will also eliminate the help that 
was on its way for the lakes and streams still suffering from 
acid rain and will postpone the visibility improvements 
expected in our natural areas.
    New York and other States face a 2010 deadline for 
compliance with the ozone standards. Because the air entering 
the Northeast on hot summer days is already high in ozone, 
reducing upwind pollution is essential. Losing CAIR places a 
big hole in our efforts to comply.
    In what appears to be a classic case of unintended 
consequences, the Court's decision has also placed the NOx SIP 
Call in jeopardy. Many States have replaced their SIP Call 
programs with CAIR starting next year. Thus, not only do we 
lose CAIR's future air quality improvements but we may even 
lose at least some of the substantial benefits that the NOx SIP 
Call has provided over the last couple of years.
    Even more important from a public health perspective are 
the reductions in fine particulate matter that CAIR would help 
achieve. In cities across the eastern half of the United 
States, we will be unable to meet the 2010 deadline without the 
reductions required by CAIR. But this is not just about States 
meeting their compliance deadlines. Instead, the dirtier air 
that will result from the Court's decision will harm the 
public, especially those who need relief the most, such as 
children, the elderly and persons with asthma.
    By 2015, when the second phase of CAIR is affected, the 
reductions will save over 17,000 lives annually. Each year, 
1,500 of those lives saved will be in New York, the same as in 
Ohio. There will also be tens of thousands fewer 
hospitalizations and other breathing illnesses.
    Many of the OTC States are taking steps to ensure that in-
State reductions comparable to CAIR are realized. New York's 
acid deposition program is just one example. But because that 
program does not deal with transported pollution, which 
accounts for approximately 75 percent of our particulate matter 
in the New York City area, it will not provide the same public 
health benefits as CAIR.
    We must find a way to restore these lost public health 
benefits. We believe that extending compliance deadlines should 
not be part of the solution. It offers no relief to the 
breathing public.
    If Congress takes action, it should strengthen CAIR, 
accelerating the schedules and obtaining steeper reductions. 
CAIR's schedule came from the Clear Skies bill. It wasn't based 
on deadlines for compliance with air quality standards. We 
should also remember that CAIR seeks to facilitate compliance 
with the old ozone standards, which EPA has now replaced with 
more stringent standards. And even those new standards do not 
provide the protection recommended by EPA's science advisors. 
Inadequate as these new standards are, they still require the 
States and EPA to implement new control programs beyond CAIR to 
reduce regional pollution.
    This summer provides a stark reminder of the inadequacy of 
CAIR. Even with the reductions required by the NOx SIP Call, 
the eastern part of the Country is seeing an increase in high 
ozone alert days this summer. But CAIR would not provide 
substantial emission reductions in the ozone season beyond 
those provided by the NOx SIP Call until 2015. That is too 
late.
    A similar story can be told for particulate matter. The 
health benefits that I mentioned a moment ago and that we have 
been hearing about this morning, the 17,000 lives saved, those 
health benefits will not be realized until phase two of CAIR is 
implemented in 2015. We believe that the solution is obvious: 
the reductions required by CAIR should be accelerated and 
strengthened.
    A final point, which I will leave to my written testimony, 
is that Congress should take this opportunity to enact control 
programs for the other two pollutants emitted from power 
plants, mercury and carbon dioxide.
    Thank you very much.
    [The prepared statement of Mr. Snyder follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Senator Carper. Mr. Snyder, thank you again for your 
presence and for your testimony.
    Mr. Svenson, welcome.

STATEMENT OF ERIC SVENSON, VICE PRESIDENT, ENVIRONMENT, HEALTH 
          AND SAFETY, PUBLIC SERVICE ENTERPRISE GROUP

    Mr. Svenson. Mr. Chairman and Senator Voinovich, I am very 
pleased and honored to appear before you today.
    My name is Eric Svenson and I am Vice President of 
Environment, Health and Safety for Public Service Enterprise 
Group, PSEG. PSEG is a large, New Jersey-based diversified 
energy company with 16,000 megawatts of electric generation in 
eight States. Mr. Chairman, you asked PSEG to provide an 
overview of the impacts of the vacatur of the Clean Air 
InterState Rule, otherwise known as CAIR.
    When CAIR was promulgated, PSEG believed it was the second 
best solution. But putting that aside, we believe the rule 
would have provided significant air quality and public health 
benefits. We are very concerned that it will take a long time 
for EPA to replace the rule.
    In the meantime, public health and the environment will 
suffer. As a result of this, a great cloud of additional 
uncertainty now hangs over the electric industry regarding 
future generation investment and air quality obligations.
    PSEG believes immediate legislation action is need for 
four-pollutant, or 4P legislation to address needed and timely 
NOx, sulfur dioxide, mercury and CO2 reductions from the 
electric power sector. Let me elaborate on some of the impacts 
of the Court decision.
    First and foremost, the significant public health and 
productivity benefits that would have been achieved by CAIR are 
lost. The EPA predicted the implementation of CAIR would lead 
to the reduction of 17,000 premature deaths a year and 22,000 
non-fatal heart attacks. In addition, CAIR was expected to 
reduce lost work days by 1.7 million a year and lost school 
days by 500,000 per year.
    CAIR would have also resulted in improvements in our lakes 
from reduced acid rain and improvements in visibility at some 
of our most cherished national parks. CAIR was expected to 
stimulate one of the most extensive pollution control retrofits 
in the history of the Clean Air Act, and now that has been 
lost. Those retrofits primarily would have consisted of the 
installation of scrubbers, which remove sulfur dioxide, and 
selective catalytic reduction technology, which removes NOx.
    The proven cap and trade method, whereby sulfur dioxide and 
NOx emissions are capped and allowances for emissions are 
traded was the heart of CAIR. Up until the D.C. Circuit's 
decision, sulfur dioxide allowances were actively traded at 
approximately $500 per ton. After the decision, sulfur dioxide 
prices fell precipitously to a record low of $85 per ton. The 
glut of allowances discourages additional investment in 
scrubbers, and in some cases may even encourage existing 
scrubbers to shut down.
    In addition to NOx and sulfur dioxide, scrubbers and SCRs 
also help remove mercury from flue gases. Add that to the list 
of benefits now lost. The Court's decision calls into question 
EPA's ability to use cap and trade programs to meet National 
Ambient Air Quality Standards. While the Court did not State 
definitively that cap and trade programs are impermissible 
under the Clean Air Act, the Court created at best an extremely 
high hurdle for the agency. We now have a huge regulatory hole. 
States must still attain the National Ambient Air Quality 
Standards for fine particulates and ozone. Without CAIR, States 
will have limited options other than to engage in protracted 
litigation like what led to the NOx SIP Call, 
ratchet down on existing sources within the State or both. 
Ultimately, the public will bear the additional costs of these 
systems.
    Finally, the uneven playing field of environmental 
regulation that cap and trade would have specifically addressed 
is back. CAIR would have provided a mechanism to meet the 
National Ambient Air Quality Standards and at the same time 
provide a level playing field for the competitive energy 
markets.
    So unless rectified, the Court decision leaves us stuck 
with an inefficient, more expensive system with significant 
public health loss and much less environmental benefit.
    Mr. Chairman, the vacatur of CAIR, the previous court 
ruling striking of the Clean Air Mercury Rule and the continued 
implementation of a patchwork of State and regional programs 
governing carbon dioxide have created a chaotic regulatory 
environment. PSEG believes that national multi-pollutant 
legislation is a national imperative for ensuring timely public 
health and environment benefits, business certainty and a 
level, competitive playing field for the electric generation 
sector.
    Mr. Chairman, for these reasons, PSEG was an early 
proponent of your Clean Air Planning Act, CAPA. The electric 
sector needs 4P regulatory certainty sooner rather than later, 
and more importantly, so does the public.
    Mr. Chairman, Senator Voinovich, thank you for the 
opportunity to be here.
    [The prepared statement of Mr. Svenson follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Carper. Thank you for your testimony. Thank you 
especially for the last two sentences of your testimony and for 
your strong support right from the start.
    Mr. Spence, you are recognized.

 STATEMENT OF WILLIAM H. SPENCE, EXECUTIVE VICE PRESIDENT AND 
            CHIEF OPERATING OFFICER, PPL CORPORATION

    Mr. Spence. Good morning, Chairman Carper and Senator 
Voinovich. It is my pleasure to be here.
    As the Chief Operating Officer of PPL, I have the 
responsibility to run the day to day operations of the 
corporation, which includes the operation of all of our power 
stations. Along with PSEG, you have before you two of the 
largest top ten power companies in the Nation. So I think we 
have a unique perspective on this.
    We own 12,000 megawatts of generation throughout the 
Country, from Montana to Maine, and 4 million customers in 
Pennsylvania and in the U.K. We have fossil plants in 4 of the 
28 States covered by the CAIR rule, most notably of course, 
Pennsylvania, where we have 3,500 megawatts of generation.
    Under the EPA Clean Air Act and programs to reduce acid 
rain and ozone, we have already reduced emissions of SO2 by 30 
percent and NOx by 60 percent since 1990. We are poised to do a 
lot more. In fact, we are in the midst right now of a billion 
and a half dollar program to put scrubbers on five of our power 
stations as we speak. In fact, two of those are already in 
operation. So this is a very important topic for us.
    The July 11th Appeals Court decision really shattered our 
expectations and left a lot of uncertainty, as already noted, 
for our sector and for our company. In fact, we have already 
had to advise our investors in the investment community that we 
expect the immediate impact of this rule to have resulted 
probably in about $100 million of reduction in value from just 
the SO2 and NOx credit market declines alone. As you are 
probably aware, the SO2 market price prior to this rule was 
around $300 a ton and it dropped immediately to less than $100 
a ton, a 70 percent reduction, very significant. And the annual 
NOx allowances actually went to no value, completely worthless 
at this point.
    In addition to the disruption in the allowance market, the 
D.C. Court of Appeals decision has also put at risk the ability 
of power generators in the eastern part of the U.S. to comply 
with the 2009 ozone season. I think the gentleman from EPA 
mentioned that as well. The Appeals Court held that EPA's NOx 
SIP Call program, initiated in 1998, remains in place even 
though the CAIR has been now invalidated. This means the 
industry and the States covered by the SIP Call provisions must 
have necessary NOx allowances to surrender for the 2009 ozone 
season. But there are no 2009 ozone season NOx available 
because of the vacation of CAIR. So again, very serious impact 
on the company.
    The decision also adversely affects States, and of course, 
the environment, importantly. States have now no assurance of 
the reductions needed to comply with National Ambient Air 
Quality Standards for ozone and fine particulates. We fully 
supported the CAIR, as did PSEG, and developed a compliance 
strategy based on CAIR requirements and construction of the 
billion and a half dollars in scrubbers was part of our 
strategy to comply with that rule. Scrubbers were placed in 
service already at our Montour Station in northeastern 
Pennsylvania, and we are in the midst of building three more 
scrubbers at our Brunner Island plant in south central 
Pennsylvania.
    So where do we go from here? What we propose is simply to 
codify the CAIR through an immediate legislative fix to rectify 
the situation in time in particular for 2009. Codifying CAIR, 
in our view, would not preclude further modifications or a 
multi-pollutant bill in the future. But with 2009 just around 
the corner, in our view, it is imperative that Congress act now 
to give us in the generation community certainty about the 
future requirements to reduce emissions.
    Thanks for the opportunity.
    [The prepared statement of Mr. Spence follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Senator Carper. Mr. Spence, thank you very much. Thanks for 
being here as well.
    Mr. Korleski, you are recognized. Thank you.

STATEMENT OF CHRISTOPHER KORLESKI, DIRECTOR, OHIO ENVIRONMENTAL 
                       PROTECTION AGENCY

    Mr. Korleski. Mr. Chairman, Senator Voinovich, thank you.
    As you know, the Clean Air Act requires States to develop 
approval State implementation plans, SIPs, which set forth the 
emission reduction measures that States will implement in order 
to achieve attainment with what I am going to call the NAAQS, 
the National Ambient Air Quality Standards. Stated simply, CAIR 
served as an integral component of Ohio's plan to achieve 
necessary reductions in both NOx and SOx emitted from power 
plants. Those NOx and SO2 emission reductions would have 
greatly assisted Ohio and other States in attaining the 
standards for both PM and ozone, and in addition, were an 
essential component of U.S. EPA's plan for addressing regional 
haze.
    Now, of critical importance to the States is that despite 
the CAIR vacatur, the States' obligation to achieve the NAAQS 
for ozone and PM in the strict timeframes promulgated by U.S. 
EPA remain firmly in place. Specifically, Ohio must still 
achieve compliance with the NAAQS for the old ozone standard in 
marginal non-attainment areas by June 2009, which I 
respectfully submit is tomorrow. And in our moderate non-
attainment area, northeastern Ohio, by June 2010, with similar 
deadlines coming quickly for PM as well. And new, more 
stringent standards for ozone and PM with their own compliance 
deadlines are now in place.
    Ohio was looking forward to the reductions achieved by CAIR 
to not only help us meet the old standards but also would have 
helped us toward achieving the new standards as well. Given the 
significant reductions we anticipated resulting from CAIR, we 
have quickly evaluated the direct impact of the decision on 
Ohio's plans for both ozone and PM. Now, without the benefit of 
time to run a detailed modeling analysis, our preliminary 
estimate for ozone demonstrates that with Ohio's NOx SIP Call 
still in place, we still do have the NOx SIP Call in Ohio, 
which requires reductions from utilities in the summer months, 
we are hopeful, cautiously hopeful that we will be able to meet 
our 2009 ozone attainment deadline in our marginal non-
attainment areas.
    Unfortunately, the loss of the additional SO2 
and NOx reductions CAIR would have provided will 
make it much more difficult to attain the PM standard and to 
achieve ozone attainment in our moderate non-attainment area 
under both the old and the new standards.
    Now, it is true that a number of power plants in Ohio have 
already installed and are operating NOx controls and 
SO2 scrubbers on their largest, newer units in 
anticipation of the first phase of CAIR, with a compliance 
deadline of January 2009. My intention is to work with the 
utilities on a one on one basis to determine if we can mutually 
agree to lock in those controls already planned or in place 
pursuant to CAIR. However, there is no guarantee that that will 
happen. And it is very unclear to me how the power companies 
will respond to any attempt to do so in light of the vacatur.
    Now, as non-attainment with air quality standards threatens 
both public health and economic development, I am concerned by 
the wholesale vacatur of a rule which, without question, went a 
long way to help Ohio and many other States lower ozone and PM 
levels. So the question is, what now? Do we face years of 
litigation? Years of waiting while U.S. EPA goes back to the 
drawing board? Will we be faced with continued non-attainment 
in Ohio and other States, such that U.S. EPA is forced to 
impose sanctions, bump up our non-attainment status or impose 
costly but not necessarily cost-effective pollution controls on 
a host of pollution sources?
    I would suggest that these options are not in any State's 
best interest. Therefore, let me respectfully suggest an 
alternative. In my view, the heart of the Court's decision lies 
in its interpretation of a single section of the Clean Air Act, 
Section 110(a)(2)(D)(i)(I). Boiled down to its essence, the 
decision concluded that the cost-effective region-wide trading 
approach on which CAIR was based did not accord with the 
requirement in that section that SIPs must prohibit sources 
within a State, within a specific State, from contributing 
significantly to non-attainment in another State.
    Now, for today's purposes, I will not argue the legal 
merits or demerits of the Court's decision. Rather, I 
respectfully suggest that Congress address the loss of the 
significant emission reductions guaranteed by CAIR by a 
surgical, laser-like amendment to Section 110. Such an 
amendment would essentially allow U.S. EPA to successfully 
repromulgate CAIR such that the certain and significant 
emission reductions would be re-established. Indeed, Ohio puts 
forward the following language as a starting point for 
legislative consideration and discussion.
    We propose a new Section 110(a)(2)(E), which would read: 
``Nothing in Section 110(a)(2)(D) shall be construed to 
prohibit the Administrator from requiring the development and 
implementation of a regional emission reduction approach 
(including but not limited to an emission reduction trading 
approach), which, in the Administrator's judgment, will 
eliminate or minimize any significant contribution to non-
attainment caused by the impacts of pollution from upwind 
States on downwind States. Inclusion in an implementation plan 
of the regional emission reduction approach may, in the 
judgment of the Administrator, satisfy a State's obligations 
under 110(a)(2)(D).''
    Again, I suggest this proposed language as a starting point 
for discussion.
    In conclusion, I assert that the loss of CAIR with its 
associated emission reductions is a startling and very 
dispiriting development. It is Ohio's hope that Congress, U.S. 
EPA, other States and other stakeholders can put other air 
pollution control issues temporarily aside, very temporarily 
aside, and quickly work together to arrive at a solution that 
will allow for the reinstatement of CAIR or something very much 
akin to it. And I thank you for your time.
    [The prepared statement of Mr. Korleski follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Senator Carper. Thank you, Mr. Korleski.
    It is not every day that we have witnesses who come before 
us who actually propose legislation, actually come with it 
written down. Who wrote that?
    Mr. Korleski. I did.
    Senator Carper. No pride of authorship.
    Mr. Korleski. I hope I wasn't too bold in doing so, but I 
felt compelled to bring at least some starting language.
    Senator Carper. Good. I appreciate that very much. You may 
be starting a trend here, you never know.
    Mr. Walke, we are delighted that you are here, thank you 
for your presence and for the work that you do.

    STATEMENT OF JOHN D. WALKE, CLEAN AIR DIRECTOR, NATURAL 
                   RESOURCES DEFENSE COUNCIL

    Mr. Walke. Thank you, Chairman Carper, Ranking Member 
Voinovich. I appreciate the opportunity to appear before you 
here today. My name is John Walke, and I am the Clean Air 
Director for the Natural Resources Defense Council.
    Chairman Carper, I especially appreciate your willingness 
to hold this hearing about the important subject of power plant 
air pollution, public health and the Court's overturning of the 
Clean Air InterState Rule.
    EPA's Clean Air InterState Rule, or CAIR, represented an 
important first step forward to reduce dangerous levels of SO2 
and NOx emissions from power plants, and to reduce the 
devastating public health and environmental toll caused by 
these emissions. NRDC and other public health and environmental 
groups accordingly had intervened on EPA's behalf in litigation 
in the United States Court of Appeals for the D.C. Circuit, 
defending CAIR against industry challenges that sought to 
weaken CAIR, reduce its scope and effectiveness and disrupt its 
implementation.
    The July 11th decision by the D.C. Circuit vacating CAIR in 
its entirety was a significant setback to public health and 
environmental gains embodied in CAIR and the crucial need to 
reduce dangerous emissions from power plants in the eastern 
half of the United States. But the Court's decision also 
represents an opportunity to get it right where CAIR did not, 
to take not just the first step, but the necessary steps, cost-
effective and feasible steps, to eliminate dangerous levels of 
power plant emissions and deliver healthy air to all Americans.
    With the long-overdue strengthening of the public health 
standards for PM 2.5 in 2006 and ozone in 2008, we now know 
with greater urgency what we already knew in 2005 when CAIR was 
adopted. Allowing power plants to produce air pollution at 
excessive and unhealthy levels for as long as two decades 
before reaching a 70 percent reduction target that still would 
remain unprotective imposes tremendous harms upon the American 
people. Even with the setback to CAIR represented by the Court 
decision, we can and must achieve greater than 70 percent 
reductions in SO2 and NOx emissions from power plants well 
before the end of the next decade.
    I want to make one simple point about the Court's decision 
and CAIR in order to highlight one mistake that we should not 
and cannot afford to make again. In faulting the unlawfulness 
of CAIR, the Court realized that the Administration had worked 
backward from a political agenda to institute the emissions 
caps and design features of CAIR. In this case, that political 
agenda was represented by the Administration's Clear Skies 
legislative proposal. The Court found that EPA had not worked 
forward from the Clean Air Act to achieve the emissions 
reductions necessary to address transported pollution at the 
levels and according to the schedules consistent with Clean Air 
Act obligations to downwind States, or consistent with the need 
to deliver healthy air to citizens in the affected States.
    The mistake was to let a political agenda dictate not just 
how EPA carried out the Clean Air Act, but how far EPA went to 
reduce transported air pollution from upwind States to 
victimized downwind communities. And finally, that political 
agenda dictated how far EPA went to protect public health.
    We can do better, we must do better. Let me be very direct 
why. EPA had projected that CAIR would avoid 13,000 American 
lives being cut short each year beginning in 2010 and avoid the 
loss of 17,000 lives each year starting in 2015. These are very 
impressive health gains that we are in danger of losing if we 
do not mandate the important pollution controls that CAIR would 
have required and do so expeditiously. My testimony includes 
State by State breakdowns of the early adult deaths avoided 
under CAIR. For New York and Ohio, for example, 1,200 deaths 
would have been avoided in each State each year, beginning in 
2010. And in 2015, 1,500 fewer people in each of those States 
would have had their lives cut short by power plant air 
pollution.
    CAIR accomplished these significant health benefits by 
requiring power plant operators to spend, on average, $500 per 
ton of pollution reduced in 2010 and on average, $700 per ton 
of pollution reduced in 2015. Meanwhile, air quality regulators 
today, and for many years in recent memory, were requiring 
other types of businesses in other industrial sectors to spend 
$3,000 to $6,000, even $15,000 for the same ton of pollution 
reduced. Mr. McLean said that $500 cost per ton is highly cost-
effective.
    But here is the crucial insight: $2,000 per ton is also 
highly cost-effective relative to these other control costs 
borne by local businesses. The Administration refused to 
require power plants to achieve greater pollution reductions at 
modestly greater average cost per ton due to the 
Administration's political agenda that the Court later found to 
be unlawful.
    If this sounds like an economically unsound approach to air 
quality, it is. But it is also an irresponsible approach to 
public health. Just contemplate the thousands of additional 
American lives that we could save each year by bringing the 
amount that utility companies spend to reduce a ton of 
pollution more in line with the costs that other local 
businesses spend to reduce that same ton of pollution. Power 
plant companies still would end up spending much less per ton 
of pollution than other businesses. But we could actually 
deliver healthy air in a timely fashion to the entire eastern 
half of the Country and most of the western U.S. outside of 
certain challenging areas in California. And we could save 
thousands of additional lives over the next decade.
    One of the little-understood consequences of the 
Administration's political agenda that created CAIR, as well as 
actively harmful rules that I detail in my written testimony, 
is that thousands of additional lives were to be sacrificed to 
power plant air pollution each year in order to save utility 
companies' compliance costs that were and are one-half or one-
fifth or even one-tenth the compliance cost being borne by 
local businesses in the Midwest and Southeast and New England. 
These local businesses individually do not even emit 1 percent 
of the air pollution emitted by your typical power plant. So we 
are getting far fewer pollution reductions at far greater cost 
per ton from local businesses than from utility companies.
    The current Administration has managed to avoid answering 
for this, for the harmful, economically unsound and 
fundamentally unfair political choice that lies at the heart of 
the agenda for the electric sector. The next Administration and 
Congress will now have the opportunity to confront those facts 
and concerns honestly and fairly in order to solve the 
Country's air quality problems in the most effective way 
possible.
    I look forward to working with members of this Committee, 
Congress, EPA, States and other interested parties to 
accomplish these solutions. Thank you for the chance to appear 
before you today.
    [The prepared statement of Mr. Walke follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Senator Carper. We are delighted that you came. Thank you 
for your preparation and for your testimony today, and your 
willingness to respond to our questions.
    Mr. Korleski, I leaned over and I asked, I will start with 
a softball for you, my friend, but I leaned over and I said to 
Governor Voinovich, was Mr. Korleski, do you recall if he was 
part of the team in Ohio, the Department of the Environment, 
what is the name of your department?
    Mr. Korleski. The Ohio Environmental Protection Agency.
    Senator Carper. OK. I asked former Governor Voinovich, I 
said, do you recall if Mr. Korleski was part of the team that 
you led when you were Governor for 8 years, and he said, I 
don't believe so. How long have you been there?
    Mr. Korleski. Just quick background, I have been the 
Director for a year and a half, almost exactly a year and a 
half. Prior to that, I was environmental counsel for Honda, 
based in Ohio. And prior to that, I was an assistant attorney 
general doing trial work in the environmental enforcement 
section of the Ohio Attorney General's office.
    Senator Carper. So you have been in Ohio for a while?
    Mr. Korleski. Yes.
    Senator Carper. Did you grow up there?
    Mr. Korleski. Yes, I did. Alliance, Ohio.
    Senator Carper. When you think back on the years that you 
have been in Ohio and looking back on the 20th century, you 
think back on the great Governors that Ohio has had, does any 
one particular former Governor rise to the top?
    [Laughter.]
    Mr. Korleski. There are several that come to mind.
    Senator Carper. Are any of them in the room today? That's 
OK.
    [Laughter.]
    Senator Carper. I said this would be a softball. When 
Senator Voinovich was re-elected to his second term in the 
Senate a few years ago, I kept going up and asking him how many 
counties he carried in Ohio. There are a lot of counties in 
Ohio, is it 87?
    Senator Voinovich. Eighty-eight.
    Senator Carper. Eighty-eight, but who is counting.
    I finally got him to admit that he carried all 88 counties. 
And I was under a lot of pressure when I ran 2 years ago to try 
to make sure I carried every single county of Delaware. And I 
am happy to report I got all three.
    [Laughter.]
    Senator Carper. This man doesn't have bragging rights over 
me, at least not too many.
    On a more serious note, I want to telegraph a pitch. And 
the pitch is in our second round, when we come to the close of 
our second round, a question I am going to ask of you. This is 
a diverse panel, you bring a lot of expertise and a lot of 
caring to the issues that are before us. But one of the things 
I am going to ask you is, help us find consensus. Give us some 
advice to help us, not continue to disagree amongst ourselves, 
but how to find common ground, which will meet the needs that 
the industry has for some certainty, the needs that the States 
have and the need the American people have. So just be thinking 
about that and help us to see, despite the differences, where 
are some places that you agree and that you would suggest to us 
that we sort of build as a foundation. That will give you 
something to look forward to as we get to the end.
    The question I have for Mr. Svenson is, with the Court 
vacating CAIR, what do you see as the most significant impact 
for the electric sector?
    Mr. Svenson. Mr. Chairman, from my perspective, it is 
really the chaotic State that it leaves us in. We had some 
certainty with the rules, even though, as you heard in my 
testimony we still thought the CAIR was a second best solution. 
But it provided certainty as to the obligations on nitrogen 
oxide emission reductions, sulfur dioxide emission reductions 
and furthermore, by using a trading program, when you think of 
the electric power markets, electric power markets extend, for 
my market, PJM, all the way out to Illinois. It placed 
everybody under the same set of rules, and that is important 
from a competitive standpoint to have the same rules, State to 
State, across the region.
    So what this has done has now thrown that out the window. 
We are now in a mode where we are left to potentially State by 
State rules again, which may be different. And it has placed a 
cloud of uncertainty as to the confidence level in the industry 
relative to making investments. It has really penalized first 
movers. I think we would be reluctant to take early action in 
the future.
    Senator Carper. Maybe one more for you, then I have a 
question for Mr. Snyder, a question or two. PSEG has been a 
long-time supporter of a four-pollutant approach. We are 
grateful for that. What do you believe, and you spoke to this a 
little bit, but I want you to expand on it. Why does PSEG 
believe that a multi-pollutant approach is most appropriate?
    Mr. Svenson. Mr. Chairman, the reasoning for that is that 
the electric power industry is facing significant investments 
going forward to meet customer demand. And it is not just 
simply around NOx and SO2 that we are making investment 
decisions. We are looking at issues associated with where do 
you think CO2 pricing is going to be in the future, what do you 
think mercury is going to be.
    So when absent having regulation, specifically State what 
that is, or legislation, each company is left to make certain 
bets as to what you think that will be, and factor that into 
your investment decisions going forward. I think it would be a 
lot better having national legislation giving certainty rather 
than having 100 or so major companies in this Country that are 
electric power generators making separate guesses as to what 
some of those parameters are going to be.
    Senator Carper. Mr. Spence, do you want to add any thoughts 
on that question?
    Mr. Spence. I would just echo the uncertainty that was 
mentioned, as well as being thrown into a State by State type 
of an approach. And I would also agree that we need a venue for 
dealing with all four pollutants in the long term. And in the 
short term, my concern is if we try to incorporate some of the 
longer-term issues with a quick legislative fix on this 
particular issue, I think because of the complexity of those 
other issues, mercury and CO2 in particular, I would suspect 
that it wouldn't be a quick fix after all.
    Senator Carper. All right, thank you.
    My time has expired. I will have a couple more questions 
but let me yield to Senator Voinovich.
    Senator Voinovich. The last thing we talked about is how do 
you solve a problem. I have been a member of this Committee for 
10 years. I went through bills introduced by Senator Jeffords 
and others over the years. And I will never forget, maybe it 
was five or 6 years ago that we had the Jeffords Bill and we 
thought we had a compromise, but many of the environmental 
groups, Mr. Walke held out and said, we have to do something 
about greenhouse gases, and if you didn't get 4 Ps, we wouldn't 
go for 3 Ps. So we didn't get 3 Ps, and as a result of that, I 
believe that we have delayed the time when we could do 
something about NOx and SOx and also deal with the Adirondacks 
in New York and the Smokey Mountains in Tennessee and some of 
the other areas that could have benefited from that.
    Most recently, we spent a great deal of time on the issue 
of greenhouse gases and climate change. Again, we are going to 
be revisiting that. So from a practical point of view, looking 
at the picture as it really is, in your opinion, what would be 
the best thing for us to do at this time, understanding that 
Senator Carper has legislation in? And frankly, our biggest 
problem in coming to agreement on Clear Skies was he wanted 
lower reductions, I think it was, in SOx and NOx and moving the 
time table up and so forth.
    A lot of this is going to take a great deal of time to work 
out. I wish I could say that you could snap your fingers and it 
is going to happen. So here we are, in the real world, what do 
you think is the best thing for us to do at this time to deal 
with this problem, understanding that anything that we do 
ultimately will be again looked at by all of us in terms of 
whether or not it satisfies Mr. Walke, who said we should be 
doing better, or Mr. Snyder, you said we should be doing 
better. I understand that. So that is the question I am asking 
all five of you. What would you do? You are now a Senator from 
New York.
    [Laughter.]
    Senator Carper. I don't know which one of us is going to 
break the news to Chuck and Hillary.
    [Laughter.]
    Mr. Snyder. Going back to Senator Carper's opening 
statement, the quote from Albert Einstein, maybe this creates 
the opportunity, this is the moment in time, where the solution 
that has evaded Congress in the past is available because of 
everybody that you see in front of you who has an interest in 
solving the problem. We see that this is opportunity to address 
all four pollutants. We have inadequate regulation of all four 
pollutants right now. What we have seen over the last several 
years is what happens when we try to address, when EPA tries to 
address at least some of these pollutants with its 
administrative authority. The mercury rule gets thrown out by 
the court, and for good reason, if you would ask me. CAIR gets 
thrown out by the Court. EPA doesn't know what to do about CO2. 
So we have inadequate regulation of all these pollutants. We 
have an opportunity in time. And I think dealing with them all 
at once would facilitate industry planning, that industry would 
welcome the opportunity to know what the future holds for all 
these pollutants. Maybe they don't put scrubbers and SCRs on a 
medium-size coal-fired power plant if, because of carbon 
regulation, it makes more sense to shut that plan down and 
develop new, cleaner capacity instead.
    So I think it is worth a try to try and solve all these 
problems. That would be my opinion.
    Senator Voinovich. Mr. Svenson.
    Mr. Svenson. Yes, very much like Jared, my company would 
feel that there is an opportunity here to do better. And as you 
heard me in my testimony, CAIR was the second best solution. I 
do think that there is a, I will call it the pressure cooker 
effect here, that every one of us around the table wants to 
solve the problem. There has been a lot of uncertainty sitting 
out here even beyond CAIR, relative to the CO2, mercury, so it 
just added to the uncertainty. I think it is time for a 4P 
bill.
    Senator Voinovich. Mr. Spence.
    Mr. Spence. Yes, I would prefer a legislative solution, not 
a regulatory solution. I think that is the important point that 
I would try to make. I think also, we have also suggested 
through an appendix to my written testimony, I believe, some 
language on how to amend the Clean Air Act to basically codify 
the CAIR, but with the caveat that it would allow one 
difference between what was promulgated and what we would 
propose, is to allow for the States to petition the EPA to try 
to enforce those upwind States that aren't meeting the 
requirements to take action. That was one of the obviously 
contentious issues in the CAIR.
    So not only are we proposing an approach, but also try to 
accommodate some of the concerns from some of the parties to 
try to get back to a common place. No one, most folks I would 
say, are not happy with this. So I think you have the vast 
majority of us saying, this is not what was expected, it is not 
good for anyone, companies, the environment, individuals. But 
we do have to now deal with it and fix it. I prefer a 
legislative fix.
    Senator Voinovich. Mr. Korleski.
    Mr. Korleski. I also very strongly believe that a 
legislative fix is appropriate. I think as I listened to my 
fellow----
    Senator Voinovich. Do you agree that the legislative fix, 
though, and that is the other thing, has to include mercury and 
greenhouse gases?
    Mr. Korleski. That was going to be my concern. If I thought 
that a legislative fix addressing all those issues could be 
arrived at expeditiously, I would say have at it, let's get it 
done. But again, less than a year from now, I am looking at 
trying to comply with ozone standards and shortly after that, I 
am going to have particulate kicking in. My instincts, just 
based on 20 years of doing environmental law and watching the 
process, is that it would be very unlikely that the parties 
could address mercury, carbon, SOx and NOx expeditiously. So if 
that could happen, I would be all for it.
    In lieu of that, because again, I will be somewhat 
skeptical here, in lieu of that, what we are proposing here is 
again a laser-like fix to reinState CAIR. I think we all agree 
here at the panel that CAIR was productive. It wasn't perfect, 
it didn't go as far as many people would have liked. I am not 
familiar with the Clear Skies Initiative, I was a manufacturing 
lawyer at the time, was not involved in that.
    But at this point, we can argue or not whether CAIR should 
have been, would have been. But it was something. And it was 
significant, and we have lost it. And my primary recommendation 
is that we do something quickly to get it back quickly. If we 
can expeditiously address other issues, Ohio would be happy to 
support that concept. But after 20 years, I confess I am 
somewhat dubious whether that can be achieved in the very short 
timeframe that I think we are faced with to try to get this 
done.
    Senator Voinovich. Mr. Walke.
    Mr. Walke. I think it is imperative that we pursue parallel 
regulatory and legislative paths, so that all the actors can 
try to get the right solutions. On the regulatory path, I think 
it is imperative that EPA stop going backward by pursuing some 
of these harmful rules. I also think it is imperative that EPA 
and the States work together, as Mr. Korleski said, to make 
sure that these controls, that we already have them installed 
and already have it planned or actually operated so that they 
protect the public. I am confident that we can do that in a 
faster timeframe.
    On the legislative front, I think we also have two options 
available to us, or two sequences. One would be a shorter term 
and one would be a longer term. On the longer term front, we 
think it is imperative to reduce all the pollutants from the 
power sector, including global warming pollutants. We look 
forward to working with members of the Committee to do that.
    On the shorter timeframe, we are facing some urgent public 
health needs in 2009 and 2010, and we would be happy to 
participate in constructive conversations that we think could 
well lead to consensus about ensuring that those protections 
are in place, at least in the next few years, to give us all 
time to kind of step back and think about what the longer term 
answers are, to allow the regulatory system to unfold, to 
achieve the necessary reductions, still before 2015, but 
according to the levels that we need, so that we could have 
those short-term protections for the public at the same time 
that we figure out what the right answer is.
    Senator Voinovich. Thank you.
    Senator Carper. Let me just ask, I am going to ask my last 
question first, or I am going to ask it next. It is really sort 
of a variation of what Senator Voinovich has just asked. The 
question is this: what do you think, at least on this panel, 
where do you think the major points of agreement are? Mr. 
Snyder, do you want to lead it off?
    Mr. Snyder. I think the major points of agreement, from 
hearing everybody today, are that we need to deal with the 
public health concerns relating to fine particulate matter and 
ozone, and the need for the States to comply with the standards 
that are applicable. I was involved in the NOx SIP Call 10 
years ago, and the dynamic now is very different than it was 
then. This is sort of going to that question that you had about 
the places of consensus. Then it was really upwind versus 
downwind. And that division doesn't really apply any more. The 
State of Ohio is an upwind and a downwind States. New York is 
an upwind and a downwind State. The reductions that we will see 
here will serve the public health all across the eastern United 
States.
    One of the exhibits to my testimony is a map of the United 
States showing in 2015, even after the second phase of CAIR is 
implemented, the non-attainment areas for particulate matter. 
And it is most of the major metropolitan areas in the Midwest 
and the South, will still be non-attainment for PM and 
suffering the loss of life and illness as a result. So I think 
we are all converging on the need to deal with that issue. It 
is really a national issue now, rather than an us against them 
issue.
    And I think we all have concerns about mercury and carbon 
dioxide. It is just a question of, are we able to resolve those 
at the same time or not. I guess my point was, it is worth 
giving it a try. But the public health needs are really 
paramount in the short term.
    Senator Carper. Thank you.
    Mr. Svenson, where do you think this panel agrees, major 
points?
    Mr. Svenson. First of all, just an observation is that 
nobody is here saying hallelujah, that the rule went away. 
Everybody is saying, there is a public health issue here and 
there is an environmental issue, that needs to be addressed. So 
certainly the consensus is that we have a problem that needs to 
be fixed.
    The second piece here is that everybody, I think, is 
saying, geez, if there were sufficient time, let's try to do 
something better. There were some shortcomings in the CAIR 
rule, but they are very concerned, I think every one of us is 
concerned about time, time from a public health standpoint and 
an environment standpoint.
    I like what Jared said about, give it a try, see where we 
can get it in terms of doing more. But time is of the essence.
    Senator Carper. Thank you.
    Mr. Spence, where do you think this panel agrees?
    Mr. Spence. I would echo both comments. I think the 
urgency, there is a great sense of urgency that we need to do 
something here rather quickly. The environmental benefits, but 
I would also add the detriment to the companies involved here 
with the emissions market being now thrown into a State of 
chaos, something we need to think about. Because that is a 
fundamental premise upon which we have achieved, in my view, 
some fairly significant NOx and SOx reductions over the prior 
years under the Clean Air Act. I don't want to miss that 
opportunity as we go forward to continue to have those 
foundations, be productive and get us to where we need to be.
    Senator Carper. Mr. Korleski, where do you think there is 
consensus here on this panel?
    Mr. Korleski. The bottom line consensus that I think 
everyone agrees on is that the loss of CAIR is a very negative 
development for public health, for air pollution protection. 
There are nuances on what we should do, where we should go. But 
I think that is the bottom line from every member of this 
panel.
    Senator Carper. Mr. Walke.
    Mr. Walke. The benefit of batting cleanup is I am able to 
endorse so much of what my fellow panelists said. But I do 
think there is that core consensus around the public health 
imperative, the need to address these deadly problems of smog 
and soot pollution. I sense a constructive willingness to have 
those conversations with this Committee and with the relative 
stakeholders. I don't perceive much difference in our positions 
on an astonishing number of issues.
    I even detect consensus around the need to address global 
warming, pollution and the need to do so. We probably differ 
about the best way to go about doing it after that. But I think 
that there is real consensus here that we should try to seize.
    Senator Carper. All right.
    My next question is going to be sort of the opposite of the 
first one. We have indicated some areas where we agree. Where 
do you see the major sticking points? Not just for where you 
think the major sticking points are, but how would you suggest 
that we deal with those in trying to find a middle ground? Mr. 
Snyder, do you want to start with that?
    Mr. Snyder. Setting aside the mercury and carbon dioxide 
issues for a moment, just focusing on the NOx and SO2, I think 
that the sticking points are on accelerating the CAIR deadlines 
and making the reductions steeper. I think that those are 
sticking points that we could probably work toward resolution 
on. We have a dialog between the OTC States and the States, 
including Ohio in the Midwest, a group called LADCO. We are 
engaged in a dialog and developing----
    Senator Carper. That is all we need, another acronym.
    [Laughter.]
    Mr. Snyder. And don't ask me what it stands for.
    But we are engaged in a dialog of trying to identify 
control strategies that both groups can implement. We are 
identifying strategies that, as Mr. Walke has pointed out, are 
much more expensive than the control strategies of CAIR. So 
going beyond CAIR provides an opportunity to get cheaper, more 
efficient reductions than many of the other things that we are 
exploring. I think Ohio would probably agree with that. More 
analysis in that area I think would help and would result in 
some consensus. That is not analysis that we need to assign to 
EPA. We can just have that dialog with each other.
    I think we should also all recognize that we are facing 
these new compliance obligations and the new standards in time 
lines that are shorter than CAIR: 2013, 2014. I think we have 
to be able to reach consensus that we need to do better than 
CAIR to achieve compliance with those standards.
    So that is just identifying the possible points of 
difference and a way to come to resolution on those.
    Senator Carper. Thank you.
    Mr. Svenson, particular points of difference and a way to 
address those?
    Mr. Svenson. Yes, Mr. Chairman. I think that what I would 
think the key point of difference might be is about the extent 
the different parties would be willing to take the time to 
actually explore more. I think there are different points of 
view as to how fast, whether shall we quickly jump to an 
immediate fix of legislation right now, specific wording that 
would codify CAIR, maybe phase one or something like that.
    I think that my point of view is that we need to truly 
explore more. I think the way to do that is by doing what you 
are doing here today, get more people around the table, in 
addition to PPL, PSEG, more other points of view from the 
industry to speak on the issue. And also get different members 
of the environmental community as well. That is one of the 
things I have found out over the years, is that there are many 
views within the environmental community as well, and amongst 
the States. So I think more dialog is going to be needed here 
on this.
    But I would certainly encourage, I think we should be 
taking some up-front time to explore more, not less.
    Senator Carper. Thank you.
    Mr. Spence, same question.
    Mr. Spence. I think one of the key differences might be 
what to include in any kind of legislative fix. And clearly, in 
my view, including mercury and CO2 makes it more problematic to 
get a quick fix in the short term. So how do we address that? 
Maybe an approach is to put something in place on an interim 
basis that specifically addresses the CAIR issues with some 
type of process for working on all four pollutants on a longer 
term structure or process legislation that could work for all 
of us.
    Senator Carper. Thank you.
    Mr. Korleski.
    Mr. Korleski. Mr. Chairman, I very much would agree with 
Mr. Spence. To me, this is really an issue of a bird in the 
hand versus two in the bush. Well, it is not a bird in the hand 
now, but it would be relatively easy, I think, to make CAIR a 
bird in the hand, versus holding out for something more, 
something greater, the time that will take, the parties that 
would have to be involved, the negotiations that would have to 
happen. It is an election year. All those factors, to me, 
mitigate toward it is going to take a while to get that done.
    So Mr. Spence's suggestion of, in the interim, let's 
restore CAIR, and then let's begin working on the other issues.
    Senator Carper. At least one of us up on this panel is an 
attorney. But I am not. And I am not sure if EPA appeals the 
D.C. Circuit Court of Appeals decision if that stays the 
vacating, if you will, of CAIR. Can someone advise us on that?
    Simply by appealing the decision, what effect does that 
have on the vacating of CAIR?
    Mr. Walke. Senator Carper, ordinarily the D.C. Circuit does 
not issue its mandates in a ruling that make that effective as 
a matter of law until they have decided how to deal with any 
requests for appeal that have been filed. As EPA said, they 
have until the end of August. You should not expect to see the 
mandate from the Court before then,and depending upon the 
resolution of that appeal by the Court, you would see the 
mandate when they decide to either grant, if they deny the 
appeal, they would grant the mandate soon after. If they grant 
the appeal, then the mandate would be withheld and the decision 
would not take effect.
    Senator Carper. All right, thank you.
    Back to my earlier question, if you will. Thank you for 
your response on that one, but back to my earlier question. 
Again, points of difference, major points of difference and how 
to get through those to develop consensus. We have plenty of 
consensus on a number of things here. I am encouraged by that. 
But there are obviously some areas we disagree. How would you 
suggest we go about dealing with those?
    Mr. Walke. I echo the assessment of Mr. Snyder and Mr. 
Svenson that I believe there are disagreements over whether 
locking in the reduction levels and schedules in the second 
phase of CAIR is the right medium-term or long-term solution. 
So any effort to do that through legislative codification I 
think would run into a variety of different opinions. I detect 
more consensus around the benefits of CAIR in the earlier term, 
and I think that there might be consensus there.
    Obviously there are different views about carbon regulation 
in the short term. But in the long term, I think that we could 
have some consensus.
    Senator Carper. All right, thanks. I have gone on too long. 
Senator Voinovich.
    Senator Voinovich. If you really look at the situation that 
we have today, this may be the last week we are in until we 
take our August break. Then we get back after the Republican 
convention, we will be back here until September 26th, 
according to Harry Reid and Speaker Pelosi, and we are gone. 
And I suspect there are some folks out there that have the 
opinion that we will have a new President, it may not be a 
Republican, it may be a Democrat. There are some people who are 
speculating that we may have more Democrats in the House and 
maybe more Democrats in the Senate and that probably to achieve 
some of the things that Mr. Snyder wants and Mr. Walke wants 
and some of the others, it is probably going to be more likely 
that they can get that with a new political environment here in 
the Congress, and maybe at the White House. Who knows.
    But I have to say to you that I don't think anything is 
going to get done between now and March, April, May of next 
year. I don't think that Senator Carper and I can get together 
after the hours we spent trying to--and we are good friends--
working things out, that we are going to be able to get that 
done just like that.
    Now, I can understand, Mr. Walke, you are looking down the 
road in terms of where is this taking us and it is not deep 
enough, it is not quick enough. But I would like to suggest to 
all of you that we are living in the real world, the political 
world that we find ourselves, and I would like to suggest to a 
lot of you who are sitting in this room that care about this 
one way or the other, may represent environmental groups, you 
may represent industrial groups, and we all have to reflect the 
people that are out there right now who are really hurting in 
this Country. I would like you to think about it. What is the 
best thing that we could do right now to handle this situation? 
Is it a Draconian situation if we let this thing sit for 6 
months or so? What impact is that going to have on the 
environment, public health, businesses' decisions about what 
they are going to do going forward or whatever?
    That is it, that is where we are at right now. Mr. Walke, 
you are a pretty outspoken leader in the environmental groups. 
I would really like to sit down with some of your friends, try 
and look at this thing from a practical point of view and say, 
what are we going to do about this thing. I would sure be 
interested in your consensus and I know Senator Carper would. I 
see some representatives of Edison Electric industry that are 
here, other groups. We would sure like to hear from you about 
what do you think we ought to do now. Or should we just do 
nothing and wait until we come back after January and start to 
work on some of these other issues?
    Senator Carper. I think we are getting close to the end. I 
have one more question I would like to pose for Mr. Korleski, 
and I don't know if anybody else will want to chime in. I think 
somewhere within your statement, you said that it is your 
intention to work with utilities on a one on one basis to lock 
in controls already planned or in place pursuant to CAIR. How 
do you intend to lock in controls?
    Mr. Korleski. Mr. Chairman, what we are contemplating is 
having discussions where we would better understand the 
economic ramifications from their side about where they are 
with their controls, is it cost-effective to run them. But in 
order to get the benefits, we would have to have legally 
enforceable mechanisms in place, making sure that those 
controls were installed and operated and did provide the 
benefits. On a statewide basis, you could do that.
    The easiest way to do that, assuming the parties agreed 
that that was the appropriate step, would be to do that through 
findings and orders. You would make enforceable findings and 
orders where everyone would agree, OK, these controls are going 
in by these dates, or these controls that have already been 
installed will begin operating on such and such. And we would 
try to see how much of CAIR we could recoup through a State 
enforceable mechanism.
    But as I also said, we have not had those discussions yet. 
I don't think those will be easy discussions. Certainly based 
on the comments from the power industry representatives here 
today, I certainly can't guarantee that the utility companies 
are going to come in and say, no problem, we will be happy to 
go forward with that. But we think it is important to try to do 
that, to at least have those discussions.
    Senator Carper. Does anyone else have a comment you would 
like to make on this point? Mr. Walke, please.
    Mr. Walke. As I indicated in my testimony, there are tools 
available to States to deem the controls that are already in 
place and planned reasonably available control technology. I 
think it will be intuitive to most members of the public that 
the fact that a scrubber is already at the site, ready to have 
the switch flipped is reasonably available.
    A second point is, it is worth commending the companies 
that have already announced that they are going to continue 
with these scrubbers. Dayton Power and Light in Senator 
Voinovich's State, 3 days after the Court's decision on Monday 
announced that they were going to go ahead with a very 
protective scrubber project. They are going to take a $20 
million hit from allowances, but they are helping to offset the 
cost of the scrubbers by switching to higher sulfur coal that 
is actually taken from the region. So they are providing jobs, 
they are providing scrubbers to protect the public, and they 
are doing it in order to protect their customers and the 
residents that live around them.
    So I am hopeful that Mr. Korleski and the industry will 
come to that decision through mutual agreement, as he suggested 
in his testimony. But if not, I think it is imperative that we 
draw upon the legal tools that are available under the statute 
to make those comments and decisions.
    Senator Carper. Anyone else? Mr. Snyder.
    Mr. Snyder.
    [off microphone] Senator Carper, as I mentioned in my 
testimony, in New York we have a State law program in place 
that will achieve most of the same reductions that CAIR would 
achieve in the first part. We can evaluate that, see if any of 
it needs to be strengthened. We will be working with the other 
OTC States to identify ways to ensure that the emission 
reductions remain in place in the OTC States, and we plan to 
have that, to initiate that dialog with our partners in the 
LADCO States to see if there can be some multi-State 
understanding worked out that keeps in place at least the kind 
of air quality protections that we would see in the first part 
of CAIR, as this process plays out in Congress.
    Senator Carper. Mr. Spence.
    Mr. Spence. I would just maybe make a point that among the 
electric utilities, you have those that are merchant plants, 
those that don't have the backstop of regulation versus those 
that are still in ``regulated'' States. And on the merchant 
generators, of which we are one, we rely on many things in the 
marketplace to help us guide our decisionmaking. When the 
regulatory, in this case the rulemaking set the foundation upon 
which we were making what I think were the right business 
decisions on behalf of our public and the company's 
shareholders, now I just want to point out that whatever we do, 
I would like to see us restore some type of confidence in the 
underlying emission markets or whatever the new construct is, 
so that people that don't have the ability to pass these costs 
on to customers and have to get them through market price 
mechanisms have that ability or at least the presumption that 
we are going to have that ability going forward.
    Senator Carper. All right. This has been a timely and 
important and informative hearing for me, and I suspect for my 
colleagues. Senator Voinovich, do you want to make any closing 
comments before we wrap it up?
    Senator Voinovich. I think it has been a good hearing. I am 
anxious to hear from a lot of folks about what they think we 
ought to do. I am interested in the rates that individuals are 
paying in States where they are able to pass them through. Mr. 
Korleski, I don't know what impact it is having on utility 
rates in the State of Ohio. All I know is that when I go home, 
people are really up in arms. They are telling me that their 
standard of living has changed, with gasoline, with the cost of 
heating, air conditioning. I go to Perkins on Sunday after Mass 
on Sunday for breakfast, and the guy said, I don't know if I am 
going to make payroll this week, because people aren't coming 
in any more.
    So there is a lot of hurt going on in the Country today. I 
think that anything that we should do should be, that that 
situation should be taken into consideration. And if we don't 
do that, I don't think we are going to have the political will 
to get the job done that we would like to do for the 
environment. So Mr. Walke, you have been hearing me talk for a 
long time. Can we harmonize our environment, our energy, our 
economy and now even our national security? How can we come 
together and figure out how to get this done?
    I am going to be around, I know hopefully for another 2 
years, God willing. I am willing to do that, I know Senator 
Carper is. But somehow we really have to come together here and 
figure this out. The climate change, I worked to make sure that 
didn't pass, I worked very hard to do that. But I can tell you 
that there are several of us on a bipartisan basis that are 
working our tail off to try and see if we can't come up with a 
compromise between now and when the next President comes in. 
The next President is going to have one great challenge. You 
just think about all the domestic challenges, and the 
international.
    And I think some of us that have been working on a lot of 
these problems for a long time could really do the Country a 
great favor. I have talked to some of my colleagues in the 
Senate about coming up with some compromises on some things and 
present them to the President and say, you know, we worked on 
this, it is not perfect. It doesn't go as far as we want it to 
go. But here is something that will move us down the field to 
deal with some of these issues that have been around for a long 
period of time. That is my hope and vision.
    Thank you, Mr. Chairman.
    Senator Carper. You bet. Thank you.
    Senator Voinovich and I agree on a whole lot. One of the 
things we agree on is that technology will help us, if we are 
smart enough, develop it and apply it, implement it, can help 
us address a lot of the problems we face, not all, but a lot of 
the problems that we face as a society. It wasn't that long ago 
when we were harvesting corn, we got about 50 bushels of corn 
to the acre. Today we are up to about 150. Probably within the 
next decade or so, we will be up as high as 300. And that 
doesn't mean we ought to take little kernels of corn and turn 
them into ethanol. But there is plenty of plant waste out 
there, and the ability to be smart about it, to be able to feed 
ourselves and to provide the fuels that we need.
    Another thing that he and I agree on is the importance of 
trying to maximize benefit with respect to costs. There are 
ways that we heard, very encouraging numbers here in terms of 
the amount of the cost of implementing these improvements, 
these ways to reduce our SOx, NOx, mercury, if you will, and 
the public health benefit that flows from that is really rather 
extraordinary. We need to keep that in mind.
    We started off today's hearing, as you may recall, and I 
quoted Albert Einstein. I want to close today by quoting three 
other people. One of those is Winston Churchill. He used to 
say, and I am going to paraphrase him here, but he used to say, 
democracy is the worst form of government devised by wit of man 
except for all the rest. And dealing with these issues, we 
involve the President, actually a former Governor with whom 
George and I served, in October 2000, a month before the 
election, announced in Saginaw, Michigan, that if elected 
President, he would lead an Administration that would address 
sulfur dioxide emissions, nitrogen oxide emissions, mercury 
emissions and carbon dioxide emissions from power plants.
    So we had that strong initial thought from a fellow who was 
going to be elected President shortly after that. And the 
Congress got involved, we ended up after 7 years not making 
nearly enough progress on any of those fronts. The courts have 
now become involved, the Federal court has become involved. So 
here we have democracy at its best, maybe at its worst, I am 
not sure. But in any event, what we have done is we have 
squandered 8 years, I think, unfortunately. It is important we 
not squander the next 8 years.
    I want to close by quoting not Churchill, but two other 
notable British citizens, Jagger and Richards, who I heard just 
yesterday on the radio saying these words, can't always get 
what you want, but if we try sometimes, we can get what need. 
Here in this Country, among our needs, the utilities need 
certainty. States need the Federal support to help them meet 
air quality standards. And the rest of us just need cleaner air 
to breathe. And if we work hard, and I am certainly fully 
intent on doing that with Senator Voinovich, to make sure that 
during our watch, we get this job done and we get started on it 
sooner rather than later.
    To our panel of witnesses, thank you for coming on such 
short notice. Thank you for helping us to better understand 
what lies ahead.
    Senator Voinovich. Would you mind? I know you want to get 
the last word in.
    Senator Carper. I am always happy to yield to you.
    Senator Voinovich. I have two mottoes, one of them that I 
took on when I was mayor of Cleveland was, together we can do 
it. And Mr. Korleski, we have another motto in Ohio, which is, 
with God, all things are possible. I think that working 
together and with God's help and inspiration, I think maybe we 
can take on some of these things for the benefit of our Country 
and frankly, the world.
    Senator Carper. And to that, I would say amen and this 
hearing is adjourned.
    [Whereupon, at 12:40 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows.]

           Statement of Hon. Christopher Bond, U.S. Senator 
                       from the State of Missouri

    Mr. Chairman, thank you for holding this hearing today to 
see what we can do regarding the Clean Air Interstate or (CAIR) 
[pronounced CARE] regulations recently overturned by the 
courts.
    Those clean air regulations by the Bush administration 
would have cut smog, soot and acid rain pollution from electric 
power plants across the eastern half of U.S. by up to 70 
percent.
    EPA predicted that by the year 2015, CAIR would have 
provided almost $100 billion in annual health benefits and 
annually prevented 17,000 premature deaths, millions of lost 
work and school days, and tens of thousands of non-fatal heart 
attacks and hospital admissions.
    Instead, the court's decision to throw out these rules has 
thrown these environmental and health benefits into turmoil. 
Utilities are suspending pollution cleanup efforts, hundreds of 
communities across America will face dirtier air, and thousands 
of lives that would have been saved from cardiac and 
respiratory illness are now in danger.
    I hope as we hear testimony from the witnesses, we will 
remember certain lessons that are already clear. First, the 
environmental and health protections of these rules would not 
be at risk if members of this Committee had not blocked efforts 
to enact them into law. In 2003, President Bush proposed 
putting these smog, soot and acid rain pollution cuts into law.
    Providing specific statutory authority would have prevented 
a court from overturning them for that reason, as they have now 
done. Instead, the Democrat members of this Committee blocked 
that clean air legislative proposal. Democrats blocked the 
ability to guarantee new environmental environmental 
protections on power plants.
    Democrats preferred to hold environmental protection 
hostage to their climate change demands. Others demanded even 
stricter controls. For some, 70 percent gains were not enough. 
They wanted 90 percent gains. Now, instead of 90 percent of the 
loaf of bread, we are left with no loaf of bread, and efforts 
to cut smog, soot, and acid rain are set back years.
    The second lesson of this situation is that ``regulate'' 
and ``litigate'' failed the environment and the people. A 
strategy to block amending the Clean Air Act, and instead force 
new regulations under the current Act, and then litigate the 
details of those regulationshas backfired terribly. Regulate 
and litigate has left the environment weakened, air quality 
will be worse then it would have been, and thousands of lives 
unnecessarily threatened. This failed regulate and litigate 
strategy is the same that advocates are pressing the EPA to use 
on carbon dioxide. The environment deserves better, the 
American people deserve better.
    Thank you.

            Statement of Hon. Bernard Sanders, U.S. Senator 
                       from the State of Vermont

    Senator Carper, Senator Voinovich, you have convened an 
important hearing today. As we all know, the recent Court 
decision, which vacated the Clean Air InterState Rule, has left 
many worried that the air across much of the country, 
particularly the northeast, will get worse--not better.
    Quite frankly, I think there is widespread agreement that 
Congress must step in and provide some order when it comes to 
the Country's air pollution policies. The Bush administration 
has failed on so many levels when it comes to clean air 
policy--starting with the so-called, inappropriately, I might 
add, ``Clear Skies'' proposal that this Committee voted down in 
a 2005 bipartisan vote. And, while I would like to say for 
certain that we won't see any other bad proposals, who knows 
what the Administration might try in its final days --but we 
will be watching.
    Mr. Chairman, we must seriously address the pollution that 
is being spewed from power plants. The public health is 
threatened every single day that we don't. Let me just provide 
one example: As we know, nitrogen oxides contribute to the 
formation of ground-level ozone. As we also know, as of June of 
this year, 132 million people in 293 counties lived in places 
where ozone was at dangerous levels. In fact, as many as 2,300 
premature deaths are caused each year from respiratory and 
cardiovascular conditions related to ozone. That is just one 
example. We could also talk about the deaths associated with 
carbon dioxide, which we all know is the primary contributor to 
global warming. Or, we could talk about the threat that mercury 
pollution from power plants poses to pregnant women and our 
ecosystems, especially aquatic ecosystems. The point is this: 
Congress must move forward to protect the public health and 
environment from the pollution that fossil fuel power plants 
put into the air everyday. The exciting part is that the 
answers are at our finger tips.
    We could be building concentrated solar power plants in the 
southeast. We could be building more wind power in the Midwest. 
We could put solar photovoltaic units on roofs all across the 
country. We could utilize geothermal --both utility scale in 
the southwest, as well as residential scale all over. We could 
use our biomass resources more. We should be doing all of it--
and if we did, the emissions of harmful air pollutants--the 
very ones the Clean Air InterState Rule addressed--would be 
reduced tremendously, if not completely.
    Now, I know that the Chairman has spent a significant 
amount of time and energy on clean air policy and I am sure 
that he wants to move forward in an expedited fashion to fill 
the gap left by the Court's recent decision. In fact, as he has 
mentioned, he has a bill that would reduce emissions of four 
harmful pollutants --nitrogen oxides, sulfur dioxide, carbon 
dioxide, and mercury. Sen. Alexander also has a 4P bill. And, I 
too have a 4P bill. While they differ in some of the details, I 
think it is pretty clear that there is a strong interest in 
attacking power plant pollution and I suggest that we get right 
to business working together to solve the problem.
    Let me talk a little bit about my legislation, the Clean 
Power Act (S. 1201), which is cosponsored by Senators 
Lieberman, Leahy, Feingold, and Clinton. It is modeled after 
legislation spearheaded by my predecessor and ardent protector 
of the environment and the public health, Senator Jim Jeffords. 
Similar to the Chair's legislation, the bill would limit the 
pollution of the four major pollutants emitted by power plants: 
sulfur dioxide, nitrogen oxides, carbon dioxide, and mercury.
    While we wait for a new Administration to put forward a 
comprehensive approach to addressing global warming, I strongly 
believe power plants should begin reducing their emissions of 
greenhouse gases and other pollutants now. While there are some 
power plants that are reducing emissions of SOx 
NOx, and mercury, the technology exists for them to 
make deeper reductions --reductions that would be more 
protective of the public health and environment. And, the 
legislation specifies the levels that these pollutants must 
drop to.
    Additionally, the Clean Power Act lays out a roadmap for 
how many of the required reductions in emissions of harmful 
pollutants can actually be made. For example, the bill would 
increase the use of renewables like wind and solar by 
establishing a Renewable Portfolio Standard of 20 percent by 
2020. I find this to be a rather modest goal. It also would 
establish a carbon dioxide performance standard for new power 
plants that would prevent the construction of traditional 
carbon dioxide-intensive coal plants. In addition, it seeks to 
implement an energy efficiency performance standard that would 
reduce electricity use by 9 percent by 2020. I think that it is 
many of these policies that make my legislation preferable to 
other similar pieces of legislation.
    Before I finish my remarks, I want to mention that I am 
glad that a variety of national organizations support my 
legislation, including the Clean Air Task Force, National 
Wildlife Federation, Environmental Defense, National 
Environmental Trust, the American Lung Association, Natural 
Resources Defense Council, and Environment America (formerly US 
PIRG).
    Again, Mr. Chairman, I think that the Congress must step in 
to bring some order to clean air policy and after we hear from 
today's witnesses, I hope that we get right down to business.

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