    [Senate Hearing 111-1228]
    [From the U.S. Government Publishing Office]

                                                           S. Hrg. 111-1228

                        LEGISLATIVE HEARING ON S. 2995:
                      THE CLEAN AIR ACT AMENDMENTS OF 2010

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

                                 JOINT HEARING

                                   BEFORE THE

                           SUBCOMMITTEE ON CLEAN AIR
                               AND NUCLEAR SAFETY

                                    AND THE

                                  COMMITTEE ON
                          ENVIRONMENT AND PUBLIC WORKS
                              UNITED STATES SENATE

                         ONE HUNDRED ELEVENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 MARCH 4, 2010

                                   __________

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

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

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                   COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                         ONE HUNDRED ELEVENTH CONGRESS
                                 SECOND SESSION

                      BARBARA BOXER, California, Chairman
    MAX BAUCUS, Montana                  JAMES M. INHOFE, Oklahoma
    THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
    FRANK R. LAUTENBERG, New Jersey      DAVID VITTER, Louisiana
    BENJAMIN L. CARDIN, Maryland         JOHN BARRASSO, Wyoming
    BERNARD SANDERS, Vermont             MIKE CRAPO, Idaho
    AMY KLOBUCHAR, Minnesota             CHRISTOPHER S. BOND, Missouri
    SHELDON WHITEHOUSE, Rhode Island     LAMAR ALEXANDER, Tennessee
    TOM UDALL, New Mexico
    JEFF MERKLEY, Oregon
    KIRSTEN GILLIBRAND, New York
    ARLEN SPECTER, Pennsylvania

                        Bettina Poirier, Staff Director
                     Ruth Van Mark, Minority Staff Director
                                  ----------

                  Subcommittee on Clean Air and Nuclear Safety

                      THOMAS R. CARPER, Delaware, Chairman
    MAX BAUCUS, Montana                  DAVID VITTER, Louisiana
    BENJAMIN L. CARDIN, Maryland         GEORGE V. VOINOVICH, Ohio
    BERNARD SANDERS, Vermont             CHRISTOPHER S. BOND, Missouri
    JEFF MERKLEY, Oregon                 JAMES M. INHOFE, Oklahoma (ex
    BARBARA BOXER, California (ex            officio)
        officio)

                                C O N T E N T S

                                  ----------
                                                                       Page

                                 MARCH 4, 2010
                               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...     4
    Udall, Hon. Tom, U.S. Senator from the State of New Mexico.......    23
    Alexander, Hon. Lamar, U.S. Senator from the State of Tennessee..    23
    Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma,
      prepared statement.............................................   168

                                   WITNESSES

    McCarthy, Regina A., Assistant Administrator, Office of Air and
      Radiation, U.S. Environmental Protection Agency................    42
        Prepared statement...........................................    45
        Responses to additional questions from:
            Senator Cardin...........................................    51
            Senator Whitehouse.......................................    53
            Senator Inhofe...........................................    56
            Senator Vitter...........................................    63
    Rizzo, Albert A., M.D., FACP, FCCP, D'ABSM, Board of Directors,
      American Lung Association......................................    78
        Prepared statement...........................................    80
        Response to an additional question from Senator Cardin.......   118
    Durham, Michael D., Ph.D., MBA, President and CEO, ADA
      Environmental Solutions........................................   119
        Prepared statement...........................................   121
        Response to an additional question from Senator Cardin.......   131
        Responses to additional questions from Senator Inhofe........   131
    O'Mara, Collin P., Secretary, Natural Resources and Environmental
      Control, State of Delaware.....................................   135
        Prepared statement...........................................   138
    McManus, John M., Vice President, Environmental Services,
      American Electric Power........................................   141
        Prepared statement...........................................   144
        Response to an additional question from Senator Cardin.......   152
        Responses to additional questions from:
            Senator Inhofe...........................................   152
            Senator Vitter...........................................   155

      LEGISLATIVE HEARING ON S. 2995: THE CLEAN AIR ACT AMENDMENTS OF 2010

                                  ----------

                            THURSDAY, MARCH 4, 2010

                                   U.S. Senate,
             Committee on Environment and Public Works,
                  Subcommittee on Clean Air and Nuclear Safety,
                                                        Washington, DC.
        The full Committee met, pursuant to notice, at 10:05 a.m.
    in room 406, Dirksen Senate Office Building, Hon. Thomas R.
    Carper (chairman of the Subcommittee) presiding.
        Present: Senators Carper, Alexander, Voinovich, Cardin, and
    Udall.

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

        Senator Carper. Senator Voinovich and Senator Alexander and
    I are pleased to welcome all of you today to this hearing. We
    thank our witnesses for their preparation, for taking time to
    join us, and for your willingness to respond to our questions.
        As you know, today's hearing is focused on Clean Air Act
    Amendments of 2010. It is legislation that Senator Alexander
    and I have introduced with, I think, about a dozen other co-
    sponsors, a bipartisan group, legislation that reduces fossil
    fuel power plant emissions of nitrogen oxide, sulfur dioxide
    and mercury, and to alleviate air related health and
    environmental problems from ozone, acid rain, and mercury
    contamination.
        Senators will have roughly 5 minutes for their opening
    statements, and I will then recognize each panel of witnesses,
    led off by Regina McCarthy from EPA. Each witness will have
    roughly 5 minutes to offer her or his statement to our
    Committee, and following each panel's statement we will have
    two rounds of questions.
        I am going to start off with an opening statement, and we
    will see how close I can stay to 5 minutes.
        I want to very much thank Senator Alexander for being my
    partner in this endeavor now for years. I want to thank Senator
    Klobuchar for working with us on S. 2995, the Clean Air Act
    Amendments of 2010, and Senator Gillibrand, a member of this
    Committee, for co-sponsoring our efforts along with, I believe,
    10 other Members. We have tri-partisan support for our
    legislation, Democrats, Republicans and one Independent from
    Connecticut. We are very grateful for all of them. And I just
    want to thank our Chairman of the full Committee here, Chairman
    Boxer, for allowing us to hold this hearing today.
        Almost 20 years have passed since Congress made significant
    revisions to the Clean Air Act. During that time, many
    polluters have kept polluting, albeit at a somewhat slower
    rate, but our Nation's emission standards just have not kept
    pace. While there has been some significant environmental
    progress along the way, clearly we can still do better. If the
    legislation we are discussing today is enacted, we will do
    better. Much better. Millions of Americans will breathe easier
    as a result.
        Almost 8 years ago, when Senator Alexander and I began
    working together to clean up our Nation's air, we faced three
    monumental challenges. And even before he and I began working
    together, Senator Voinovich and I tried hard to work together
    during the first term of the Bush administration. If these were
    easy issues to resolve, we would have solved them a long time
    ago. It is not for lack of effort across the aisle.
        The first challenge is that air pollution knows no State
    boundaries. Air pollution emitted by our oldest and dirtiest
    fossil fuel power plants does not just affect the State in
    which they are located. As you will hear here today, States
    like Delaware have implemented tough Clean Air laws only to
    find pollution still in our air. It comes over from other
    States. In fact, mid-Atlantic and northeastern States like
    Delaware, Maryland, New Jersey, Connecticut, New Hampshire,
    Vermont, Maine, Rhode Island and others are located at what I
    call the end of America's tailpipe because we receive a heavy
    dose of pollution from other States.
        The second major challenge is that air pollution causes
    serious health effects nationally, effects such as asthma,
    cancer, brain damage, and in some cases even death.
        According to the American Lung Association, some 6 out of
    10 Americans are exposed to harmful air pollution every day.
    For those of you who cannot read the chart, public health is
    threatened overall in 6 of 10 Americans. About 186 million
    people live in areas where air pollution endangers their lives.
    Court challenges have delayed EPA action to reduce daily
    emissions and to protect Americans.
        The third challenge that we face is that EPA has struggled
    to tighten emissions standards beyond the Clean Air Act
    Amendments of 1990. Over the past 10 years EPA has attempted to
    regulate harmful power plant emissions, but court challenges
    have delayed action. Delays in action mean lives lost.
        Senators Alexander, Klobuchar, Gillibrand and I, along with
    a bipartisan--or rather tri-partisan group of Senators, believe
    we need legislative certainty to protect public health because
    too many lives are at stake. And that is why we introduced the
    Clean Air Act Amendments of 2010.
        Our legislation provides an aggressive--but we think
    achievable--schedule for fossil fuel power plants to reduce
    harmful emissions. First, our bill calls for reducing utility
    mercury emissions by at least 90 percent by 2015. Second, our
    bill calls for reducing utility sulfur dioxide emissions by at
    least 80 percent by 2018. And third, our bill calls for
    reducing utility nitrogen oxide emissions by at least 50
    percent by 2015.
        Those are significant reductions that the EPA agrees will
    save more than 215,000 lives over a 15-year period. Two
    hundred-fifteen thousand lives over a 15-year period saves
    more, we are told, more than $2 trillion in healthcare costs. I
    am trying to think quickly what the cost of healthcare
    legislation that the House and the Senate have been considering
    is, but it is about $850 billion over 10 years.
        We are talking here potentially saving more than twice what
    is in the healthcare bill legislation, twice in healthcare
    savings. And the cost to families? About $1.90 per month. About
    $1.90 per month. For less than $2 a month we can save three
    times the number of people who live in my hometown of
    Wilmington, Delaware.
        Passage of our bill also provides a certainty of
    predictability that industry in America needs. I think we have
    one more. Do we have one more chart? Thank you, Stephanie.
        Clean Air Act Amendments of 2010 will guarantee reductions
    in harmful SOx, NOx and mercury
    emissions, provide business certainty, something we have not
    had, and protect public health, all at once.
        Certainty allows companies to find the most cost effective
    reductions. Certainty puts Americans to work building clean
    energy equipment to sell here and export around the world,
    equipment that is stamped Made in the U.S.A. Combine business
    certainty with certainty that we will be protecting public
    health and we have ourselves what I think is a win-win
    situation.
        In closing, let me just say the time for delay and inaction
    needs to come to an end. We cannot wait for another 20 years to
    change our clean air laws and save lives and provide greater
    certainty to our business community. I look forward to working
    with all my colleagues on this Committee and off of this
    Committee, Democrat, Republican and a couple of those
    Independents as well, as we attempt to pass this legislation
    and move forward for the good of our country.
        All right. Normally I would yield to Senator Inhofe, who I
    think is going to be joining us, but since he is not here, I am
    going to ask Senator Voinovich, with whom I have labored in
    these fields for years and others, to good effect, I might add.
    One of the great joys of serving here in the U.S. Senate, and
    before that as Governor, was working with George Voinovich.
        We have before us, ladies and gentlemen, three recovering
    Governors, all of whom were Chairman of the National Governor's
    Association. We enjoy working together, and it is just one of
    the--this can be a frustrating job, as you might imagine, but
    one of the things that I love is working with George and
    working with Lamar.
        George.
        [The prepared statement of Senator Carper follows:]

                      Statement of Hon. Thomas R. Carper,
                    U.S. Senator from the State of Delaware

        I'd like to first thank Senators Alexander and Klobuchar
    for working with me on S. 2995, the Clean Air Act Amendments of
    2010 and Senator Gillibrand for cosponsoring our efforts.
        I'd also like to thank Chairman Boxer for holding this
    hearing.
        Almost 20 years have passed since Congress made significant
    revisions to the Clean Air Act. During that time, many
    polluters have kept polluting--albeit at a somewhat slower
    rate--but our Nation's emissions standards simply have not kept
    pace. While there has been some significant environmental
    progress along the way, clearly we can do better.
        If the legislation we are discussing today is enacted, we
    will do better. Much better. Millions of Americans will breathe
    easier as a result.
        Eight years ago, when Senator Alexander and I began working
    together to clean up our Nation's air, we faced three
    monumental challenges. The first challenge is that air
    pollution knows no State boundaries. Air pollution emitted by
    our oldest and dirtiest fossil fuel power plants doesn't just
    affect the State in which they are located. As we will hear
    today, States like Delaware have implemented tough clean air
    laws only to find pollution still in the air from other States.
    In fact, mid-Atlantic and northeastern States like Delaware,
    Maryland, New Jersey, Connecticut, New Hampshire, Vermont,
    Maine, and Rhode Island are located at the end of what I call
    ``America's tailpipe'' because we receive a heavy dose of
    pollution from other States.
        The second major challenge is that air pollution causes
    serious health effects nationally, effects such as asthma,
    cancer, brain damage, even death. According to the American
    Lung Association, 6 out of 10 Americans are exposed to harmful
    air pollution every day.
        Think about that. A majority of Americans--more than 186
    million people--live in areas where there is enough air
    pollution to endanger their lives or threaten their health.
        The third challenge is that the EPA has struggled to
    tighten emission standards beyond the Clean Air Act Amendments
    of 1990. Over the past 10 years, the Environmental Protection
    Agency has attempted to regulate harmful power plant emissions,
    but court challenges have delayed action. Delays in action
    means lives lost.
        Senators Alexander, Klobuchar, Gillibrand and I--along with
    a bipartisan group of Senators--believe we need legislative
    certainty to protect public health, because too many lives are
    at stake.
        That is why we introduced the Clean Air Act Amendments of
    2010. Our legislation provides an aggressive--yet achievable--
    schedule for fossil fuel power plants to reduce harmful
    emissions.
        First, our bill calls for reducing utility mercury
    emissions by at least 90 percent by 2015. Second, our bill
    calls for reducing utility sulfur dioxide emissions by at least
    80 percent by 2018. Third, our bill calls for reducing utility
    nitrogen oxide emissions by at least 50 percent by 2015. These
    are significant reductions that the EPA agrees will save more
    than 215,000 lives over a 15-year period.
        But if saving lives isn't enough, our bill also saves more
    than $2 trillion in health care costs over the next 15 years
    and will cost families less than $2 a month. For less than $2 a
    month, we can save three times the number of people who live in
    my hometown of Wilmington, Delaware.
        Passage of our bill also provides the certainly and
    predictability that industry in America needs. Certainty allows
    companies to find the most cost effective reductions. Certainty
    puts Americans to work building clean energy equipment to sell
    here and export around the world, equipment that's stamped
    ``Made in the U.S.A.'' Combine business certainty with
    certainty that we will be protecting public health, and we have
    ourselves a win-win situation.
        The time for delay and inaction must end. We cannot wait
    another 20 years to change our clean air laws and save lives.
        I look forward to working with my colleagues to pass the
    Clean Air Act Amendments of 2010 this year.

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

        Senator Voinovich. Thank you very much. I think the former
    Governors have a little different perspective on things.
        I am pleased that you and Lamar and the rest of the Members
    have gotten together on this legislation because I have, for a
    long time, sought a national policy that implements a
    comprehensive air quality strategy that helps attain our
    Nation's national ambient air standards so that we can achieve
    reductions in mercury from coal-fired plants and streamline the
    Clean Air Act requirements.
        I think most of you, and particularly Senator Carper,
    remember that I was the lead sponsor of the Clear Skies Act,
    and when that legislation stalled, I was supportive of the
    Administration's strategy to implement their policy by rule.
    And while there were differences of opinion on how these rules
    should have been implemented and whether the reduction
    requirements went far enough, they were generally supported by
    much of the regulated community affected States and
    environmental groups. It gave certainty.
        The courts' decisions when vacating these rules left no
    comprehensive or cost effective policy to address
    NOx compliance, untangle the complicated web of
    overlapping and redundant regulations affecting power plants,
    and bring about the public health benefits we had hoped to
    achieve. The current situation is precisely what I had feared
    and is why Senator Inhofe and I worked so hard to get the Clear
    Skies Act passed.
        Indeed, properly coordinating the compliance obligations
    for SO2, NOx and mercury promotes
    efficiency and enables many companies to meet a substantial
    portion of mercury emission reduction obligations through the
    co-benefits achieved through SO2 and NOx
    control, that is, scrubbers and SCRs. For these reasons, a
    three-piece strategy continues to make sense, and I am
    appreciative of the Carper-Alexander effort.
        For 11, 12, this is the 12th year that we have tried to do
    something about three Ps. Because the environmental groups
    wanted four Ps. I think you remember. We thought we had to take
    care of the Smokies, and we were going to take care of the
    Adirondacks, and they said no, we have to do four Ps. So, it is
    wonderful that we are now talking about three Ps.
        I do have concerns regarding the proposal. The concerns
    relate both to provisions that are in the bill as well as
    provisions that I think should be included in it.
        In regard to what is proposed, the level and the timing of
    the reductions are unprecedented and cannot be achieved without
    significant fuel switching and increases in electric rates. And
    I think that is something that we all ought to take into
    consideration, particularly with the economy that we have today
    and the fact that people are just not paying their electric
    bills anymore because they cannot afford to pay them.
        For example, the bill implements new SO2 and
    NOx reduction requirements in 2012, less than 2
    years from now. This leaves little time for planning,
    implementation or the installation of controlled equipment. For
    example, by 2015--less than 5 years from now--the bill requires
    a 74 percent reduction for SO2 and a 53 percent
    reduction for NOx.
        Adding to these concerns, the bill eliminates a key cost
    control feature established in the 1990 Clean Air Act
    Amendments, the allocation of emission credits to effective
    sources in favor of a Government auction. Under a cap-and-trade
    system, emissions are controlled by the level of the cap, and
    in this context auctions merely drive up electricity rates with
    no benefit to the environment.
        In regard to the bill's mercury provision, the bill
    requires a minimum of 90 percent reduction in emissions by
    2015. However, it is far from clear that a 90 percent control
    requirement can be met on a consistent and reliable basis
    across all types and plant configurations. In fact, while DOE
    has concluded that field testing has brought certain mercury
    control technologies ``to the point of commercial deployment
    readiness'' it cautions that there are ``many fundamental
    questions about the long-term consistency of mercury removal
    and reliability.''
        As told, industry projects this bill would force the early
    retirement of over 25 percent of the U.S. coal fleet with the
    difference being made up by natural gas. And I would like to
    submit for the record an analysis that has been done by Energy
    Ventures Analysis, Inc.
        Absent from the bill are provisions we all seek, regulatory
    certainty. In fact, the bill actually increases uncertainty and
    undermines options for cost effective emission reductions. For
    example, for both NOx and SOx the bill
    gives EPA broad authority to tighten emission caps after 2021.
    This gives industry no ability to project future emissions
    reduction requirements for planning and implementation
    purposes.
        And while the bill sets a minimum requirement for mercury
    reductions, no upper bound is established, again giving EPA
    broad authority to set limits that are out of Congress' reach
    and give industry little ability to forecast compliance
    requirements.
        That being said, Mr. Chairman, I want you to know that I am
    pleased that our staffs have been working together, and perhaps
    we can work something out. And to the environmental groups
    there that have been involved in this for a long period of
    time, maybe you will not get exactly what you want, but we can
    get close to it, and maybe we can get certainty in this area
    that has been hanging out there forever, and ever, and ever,
    and ever. And I am going to work my you know what off to see if
    we cannot make that happen.
        Thank you.
        [The referenced analysis follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Carper. Senator Voinovich, thank you very much.
        We have been joined by Senator Tom Udall of New Mexico.
    Tom, you are welcome to make a statement if you would like to.
    And thanks a lot for coming.

                 OPENING STATEMENT OF HON. TOM UDALL,
               U.S. SENATOR FROM THE STATE OF NEW MEXICO

        Senator Udall. Thank you, Senator Carper, and I know that
    you have been working on this a very long time and this is
    something close to your heart. So, I wanted to come here.
        Senator Carper. Thanks so much.
        Senator Udall. Thank you for holding the hearing.
        One of the things that I think that we are talking about
    here is how to save lives and create jobs by promoting
    pollution reduction investments. The three pollutants we are
    discussing, nitrogen oxide, sulfur dioxide and mercury, cause
    heart disease, stroke, lung cancer, asthma and developmental
    problems for pregnant women and young children.
        Interestingly, President Bush and his EPA appointees sought
    to develop and expand cap-and-trade systems for these
    pollutants during his administration. Federal courts struck
    down many of these efforts as failing to go far enough to
    protect public health as required under the Clean Air Act.
        While the Bush administration's actions primarily addressed
    eastern States, subsequent EPA action and Senator Carper's bill
    will likely also address coal plants in the Four Corners area
    and throughout the West. Reducing pollution there is a very
    good thing, and I look forward to learning more about how EPA
    plans to proceed, and Senator Carper, how your legislation
    would affect us in the West.
        So, thank you for doing this, and I cannot stay too long,
    but I am going to follow this closely and have my capable staff
    here with me.
        Senator Carper. Excellent. Thank you so much for being
    here, for your statement and for working with us.
        My partner, not in crime, but my partner in clean air and
    hopefully job creation and some other good things as well,
    Lamar Alexander.

              OPENING STATEMENT OF HON. LAMAR ALEXANDER,
                U.S. SENATOR FROM THE STATE OF TENNESSEE

        Senator Alexander. Thank you, Tom.
        Yesterday, I had a visitor come by who is an entrepreneur,
    and he brought these little things. These are pellets of
    limestone which are made from CO2. Not coal ash, but
    CO2. In other words, he says that he can take the
    CO2 that comes out of--the carbon that comes out of
    coal plant smokestacks, and turn it into limestone that can
    then be used in concrete and aggregate the way coal ash and
    others is. And I said, well, if you figure that out, you are
    going to make 2 or 3 billion dollars and solve a great big
    problem that we have.
        I only bring that up here today to point out that while
    this bill has nothing to do with carbon, this bill has a lot to
    do with our ability to continue to use coal as a primary source
    of low cost electricity in our country which I think we must do
    if we want to keep jobs here. And I am optimistic that before
    very long there will be more than one way to turn to solve the
    carbon problem. And hopefully it is going to be a low cost
    problem.
        We still have some disagreements over how to regulate
    carbon coming out of coal plants. But what I think Senator
    Carper and I are saying, along with the other 9 co-sponsors of
    the bill, is we can continue to talk about carbon, but in the
    meantime there is no excuse remaining for not moving ahead to
    do what we know how to do with SOx, NOx
    and mercury.
        We know what to do. An enormous amount of work has been
    done on this. Senator Voinovich has been working on this almost
    during his whole career here. And during that time it was said
    by the environmental groups, well, we want to deal with all
    four pollutants, including carbon. Well, we do not need to wait
    for carbon. We can go ahead with this and continue to work on
    carbon.
        And then some said, well, we would rather do it with a
    Democratic President and a Democratic Congress than a
    Republican President and a Republican Congress. Well, we have
    got one here. That is the condition that we have. So, there is
    really no excuse remaining for not going ahead and cleaning up
    the air, which we know how to do.
        So, we have got the expertise, we have got the bipartisan
    support, we have got a history of hard work, we have got
    conditions that are right, we have got Republicans and
    Democrats who would like to see it done. So, we should do it
    this year.
        And the reasons are pretty obvious. The Environmental
    Protection Agency, for one thing, is going to be toughening the
    ambient air quality standards; in other words, the conditions
    that metropolitan areas have to meet in terms of clean air,
    putting almost every major metropolitan area in America out of
    compliance.
        Well, what does that mean? Well, that means--Tom mentioned
    the three of us were Governors. When I was Governor and Nissan
    came to Tennessee, what was the first thing they did? Well,
    they went down to the Air Quality Board to get an Air Quality
    Permit to operate their paint plant. And if they could not have
    gotten an Air Quality Permit to operate their paint plant,
    because the air was too dirty around Nashville, they would have
    taken their plant to Georgia or to some other place where they
    could have gotten a permit.
        So, this is a jobs issue for us. It will enable us to give
    certainty so that we can continue to use low cost reliable
    coal, which comes from America so we do not have to depend on
    other countries, and we can figure out the carbon thing as we
    go along.
        It is very important for our health, as has been mentioned
    by the other Senators. And in our part of the world, in eastern
    Tennessee, where I live, we have 10 million tourists who come
    in every year to see the blue haze that the Cherokees used to
    sing about, and not the smog that comes from air pollution from
    coal plants. And they are not all TVA plants, either. A lot of
    it blows in.
        So, I want to give Knoxville and Chattanooga and Nashville
    and Memphis and all of our cities and metropolitan areas across
    the country a chance to be able to meet their air quality
    standards. They will not have that chance unless we have strong
    national standards on pollution from coal plants of
    SOx, NOx and mercury.
        So, my hope is to Senator Udall, Senator Voinovich, Senator
    Carper, all of us--I think this is not one of those occasions
    where we just take positions and shout at each other. We are
    not going to do that here. We have all done too much work on
    it. We have actually got a good chance to pass this bill this
    year.
        And I am looking forward to hearing from the Environmental
    Protection Administration and from the industry and from
    environmental groups and others how we can improve the bill. If
    we made some mistakes in it, we need to know that so we can
    improve it. That is what this hearing is about. If we are being
    unrealistic, we need to know that. I am very interested in what
    the actual cost will be. Those are my questions. I am for low
    cost electricity. I am for cleaning up the air. And I think
    this year is the time to do it.
        Thank you.
        Senator Carper. Thank you, Senator Alexander.
        I am going to ask for unanimous consent to enter for the
    record a number of letters of support for our legislation and a
    GAO report dated October 2009 on mercury control technology at
    coal-fired plants. Without objection, that will be part of the
    record. Thank you.
        [The referenced letters follow:]

      [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Carper. I am pleased to welcome our first witness.
    Thank you for your patience. Senator Alexander likes to call
    hearings, he says that we really should not call them hearings,
    we should call them talkings.
        [Laughter.]
        Senator Alexander. Because we do the talking.
        Senator Carper. We are trying to limit that here this
    morning. We want to welcome our first panel witness so we can
    be hearers, not just talkers, and we welcome Regina McCarthy.
    No stranger to this panel, Ms. McCarthy is the EPA Assistant
    Administrator for the Office of Air and Radiation. She has
    spoken before this Committee on a number of occasions on past
    Clean Air issues. So, we welcome her back.
        Ms. McCarthy, you will have 5 minutes to read your opening
    statement, and the full content of your written statement will
    be included in the record.
        Again, thank you for joining us.

       STATEMENT OF REGINA A. MCCARTHY, ASSISTANT ADMINISTRATOR,
      OFFICE OF AIR AND RADIATION, U.S. ENVIRONMENTAL PROTECTION
                                 AGENCY

        Ms. McCarthy. Thank you, Chairman Carper, and good morning,
    everyone. Members of the Committee, thank you for inviting me
    here to testify today, to talk to you about EPA's efforts to
    mitigate the impacts of emissions from power plants.
        As you will recall, I was here just in July of last year.
    Lots of time has passed, and I am pleased to report that EPA
    has made significant progress on our regulatory efforts. In my
    testimony I hope to discuss the status of that effort and
    provide the Committee with some information on the bill before
    you, the Clean Air Act Amendments of 2010.
        From the outset of this Administration, beginning with the
    American Recovery and Reinvestment Act, President Obama has
    made providing clean energy for Americans a top priority. Not
    only is this enterprise essential to protecting public health
    and the environment, but it also serves as the cornerstone of
    revitalizing the economy, spurring innovation and creating new
    21st century jobs. That is why your leadership on this issue,
    Senator Carper and members of the Committee, and that of the
    co-sponsors of S. 2995, is especially important.
        Every day, the emissions of sulfur dioxide, oxides of
    nitrogen, and mercury from power plants threaten the health and
    quality of life for millions of Americans. The benefits of
    reducing air pollution from these sources are not academic.
    Thousands of premature deaths can be avoided. Lower air
    pollution from power plants means that we will spend less on
    healthcare, hospitalizations, and emergency room visits.
    Reducing air pollution from power plants can mean that we are
    able to enjoy more sweeping vistas at our National Parks, and
    we can more confidently eat freshwater fish from my home State
    of Massachusetts.
        But like you, I know that air pollution is not the only
    thing affecting American lives. Jobs are hard to come by;
    businesses large and small are struggling. In fact, some people
    would argue that the U.S. cannot afford to make the investments
    in clean air, and now may not be the right time to make those
    investments.
        Well, President Obama, Administrator Lisa Jackson at EPA,
    and I disagree with that thinking. Making investments in our
    existing energy sources, updating them to create clean and
    efficient energy infrastructure, and making investments that
    create jobs here in America are, in fact, essential to keeping
    the United States competitive in the global economy.
        History clearly demonstrates that the economy can grow
    while we clean up the air. Since 1990 overall pollution
    emissions have been reduced by more than 50 percent, while the
    U.S. GDP, when it is adjusted for inflation, has increased 126
    percent.
        EPA will soon propose a rule to replace the Clean Air
    Interstate Rule (CAIR). It will reduce interstate transport of
    SO2 and NOx emissions in the eastern half
    of the U.S. to help States meet the current health based
    ambient air quality standards for fine particles and ozone.
    Working within the framework of the 2008 court decision of the
    D.C. court that remanded CAIR back to EPA, we are developing a
    new approach to reduce regional interstate transport of these
    long distance pollutants while we are guaranteeing that each
    downwind State non-attainment and maintenance area is getting
    the reductions it is entitled to achieve under the law. Past
    analysis shows that the benefits of reducing SO2 and
    NOx emissions from power plants in the eastern U.S.
    far exceed the cost.
        Similarly, following actions by the same court on the Clean
    Air Mercury Rule, EPA is developing a rule that we intend and
    hope to propose in March 2011 establishing MACT standards for
    toxic air emissions from power plants, including mercury, heavy
    metals and acid gases. We are still gathering the information
    needed to determine what the level of our MACT standard must
    be. But it is important to note that according to GAO, many
    coal-fired power plant boilers have already reduced their
    mercury emissions by more than 90 percent.
        As you have heard from EPA Administrator Jackson at last
    week's hearing before this Committee on the EPA's proposed 2011
    budget, we have not not completed our review of S. 2995 in its
    entirety. But fortunately, last summer, at your request, EPA
    conducted an analysis of several different emission reduction
    scenarios, some of which are very similar to the emissions
    levels in the time line in this bill.
        And based on that analysis, we analyzed emissions,
    electricity prices and costs, and we estimated the likely
    health benefits. And our experience in modeling similar
    emission reduction scenarios, as well as that analysis,
    indicates that S. 2995 would likely result in tens of thousands
    of lives saved and as much as hundreds of billions in monetized
    benefits each and every year, especially when compared to the
    base case which does not include major new regulations that are
    being contemplated. These benefits are significantly greater
    than the estimated costs of implementing the reductions
    required by the scenarios.
        I am confident that whether it is through legislation like
    S. 2995 or the Clean Air Act regulations that EPA is
    developing, that reductions in power plant pollution will drive
    smart investments in pollution control and energy efficiency as
    well as innovative generation technologies, all of which will
    pay back the American people in jobs, in economic growth, and
    in improved health and environmental protection for years to
    come.
        As EPA continues the air pollution rulemaking that reflect
    our commitment to protecting public health and the environment
    and heeding our legal obligations, and as you, Senator Carper,
    and your colleagues work to advance your legislation, I believe
    that our respective efforts will be mutually reinforcing. They
    will not only ensure the pollution reductions that we need but
    support the President's efforts to clean up our energy supply
    in a way that is consistent with economic growth.
        Thank you for your efforts. I look forward to answering
    your questions.
        [The prepared statement of Ms. McCarthy follows:]

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        Senator Carper. Thank you so much for your testimony and
    for your service.
        I am going to go later in the questioning. But Senator
    Udall was good enough to join us, and he has another obligation
    to meet, so I am just going to give my time to him, and I will
    ask questions later.
        Senator Udall. Thank you very much, Senator Carper. I
    really appreciate that.
        Senator Carper. You are welcome.
        Senator Udall. Administrator McCarthy, you mentioned the
    fact that you like to fish and eat fish from the waters out in
    Massachusetts. In my old jobs, before I was in elected office,
    I liked to fish also.
        One of the things I found the most disturbing in New Mexico
    is I think today almost all of our streams are polluted with a
    level of mercury that you cannot eat the fish. And there are
    warnings out for pregnant women and other vulnerable
    populations on that. It really hits people in New Mexico when
    they read that, that all of their streams are polluted with a
    level of mercury that you cannot eat the fish except in very
    small amounts.
        So, I want to try to focus on the impact on the West, and
    my first question is, you know, the Bush administration's Clean
    Air Interstate Rule primarily affected eastern States, which
    are downwind from multiple coal plants in the Midwest. And as
    we know, the Federal courts have required EPA to start over and
    come up with a better rule.
        How is the Obama administration's response to the court
    ruling likely to affect the West, and what other EPA efforts
    are underway to reduce pollution from coal-fired power plants
    in the West?
        Ms. McCarthy. Senator, I appreciate your questions, and I
    sympathize and empathize with you about freshwater fish. I can
    remember getting into this business decades ago when fish
    advisories were almost unknown. And now they are everywhere.
    So, it is a challenge for all of us.
        I will tell you that the Clean Air Interstate Rule is still
    in development. We are looking at the number of States that
    need to be involved in that rulemaking in order to address the
    transport of these long range pollutants. It does primarily
    focus on the eastern States. It is not the only effort that EPA
    will have underway to address these issues.
        In particular, relative to the question of mercury we are
    also in the development stages, and we have put out some
    information requests to the power sector to look at a new
    utility MACT, which will be a maximum achievable control
    technology rulemaking process that we will begin in early 2011
    and hope to complete by November 2011, that will address what
    kind of technologies are available, are cost effective, that
    can be required for the utility sector across the country.
        But you are quite right that our efforts under CAIR have
    been mainly focused on the eastern part of the United States.
    But the proposal before you and the Senate bill S. 2995 would
    be a national program, getting at all 48 States plus D.C.
        Senator Udall. Thank you for that answer.
        Now, changing direction a little bit here in terms of
    asking you about natural gas. Recently we have learned that the
    U.S. has very large supplies of natural gas, and thanks to
    recent discoveries of shale gas, deep shale gas, some energy
    analysts now estimate we have more natural gas than we do coal.
        How do natural gas power plants compare with coal-fired
    plants for the purposes of these three pollutants we are
    talking about today, and is the EPA encouraged about these
    recent trends in natural gas supplies?
        Ms. McCarthy. Thank you, Senator. I see the same
    information that you do, which is, it is very encouraging to
    see that there is so much natural gas available so that we can
    have the fuel diversity that I think most people are looking to
    have in our fuel supply.
        Natural gas units tend to be the units that run the
    cleanest for the types of pollutants that we are talking about
    today. As you know, EPA, when it set standards for utility MACT
    and other standards, we actually look at the units in terms of
    what fuels they burn and what types of technologies are
    available for those types of fuels so that we can achieve the
    kind of reductions that we all hope to achieve.
        They certainly do have a better profile. I think efforts
    that are underway here, and that we have by regulation, will
    attempt to bring down the emissions from other fossil fuel
    units from oil and from coal units, provide them the ability to
    upgrade, provide them the certainty they need to know what
    kinds of reductions we are hoping to achieve, because our goal
    is to bring down the emissions profiles of all units.
        And obviously we are interested in how the market is
    looking at natural gas, what that means for the energy market
    in terms of what is competitive moving forward, and allow the
    market to make some of those critical decisions.
        Senator Udall. Thank you, Administrator McCarthy, and I
    look forward to working with Senator Alexander and Senator
    Voinovich and you, Mr. Chairman, and Senator Cardin, on these
    important issues. Thank you.
        Senator Carper. It will be our pleasure.
        Senator Udall. And thank you for your courtesies, too.
        Senator Carper. My pleasure. Thanks for joining us.
        Senator Voinovich.
        Senator Voinovich. Do you think that it makes sense to pass
    3-P legislation with strict targets and timetables while at the
    same time leaving in place many of the clean air regulations
    that will be imposed on power plants over the next decade?
    Should it not be a tradeoff? That is, if you are going to force
    tough reductions, should that not be accompanied with some
    certainty and flexibility in how plants make those reductions?
        Ms. McCarthy. Senator, I think that I share your goal to
    try to do my best to provide certainty so that investments that
    are being made in clean energy, whether it is cleaning the
    existing fleet or making decisions about what to invest in
    moving forward, are done with sound foresight. I think we are
    attempting to do that in the regulatory structure as best we
    can, and I am certain that is one of the reasons why the
    Congress is looking at this bill closely.
        We are happy to work with you to see how we can align those
    efforts. I will say that EPA is under obligation to look at the
    full suite of hazardous air pollutants under its utility MACT
    standard, not just look at mercury as a specific toxic. So, we
    do have, certainly, a broader agenda for us in the regulatory
    front and we are hoping to, in concert with what you do in
    Congress, work together to provide certainty that you are
    looking to achieve.
        Senator Voinovich. Well, I would think that that kind of
    commitment, as far as it can go, would make a big difference
    because, if I am going to come up with a new regime, I would
    like to know that is the regime and I am not going to have to
    be confronted with something next year or the year after in
    terms of what I am doing so that I can make my investments
    without worrying about, you know, making another 1, 2, or 3
    years in the future.
        In your statement you reference an economic analysis of a
    previous version of the Carper 3-P proposal. I note that this
    analysis was not performed on this bill and did not look at the
    costs that electricity customers would incur as a result of a
    90 percent mercury control requirement.
        And I remember the debate quite well in 2005 when Senator
    Lieberman and others tried to come forward with a new standard
    for mercury, and at the time the Energy Information
    Administration projected the cost for a 90 percent max standard
    as high as $358 billion with an average increase in national
    electricity prices of 20 percent. That was a big issue then.
    The additional reduction in U.S. mercury disposition was
    projected to be just about 2 percent, an almost immeasurable
    decline in people's exposure to mercury.
        I understand that the cost of technology has decreased
    since that time, but the potential economic impacts warrant
    evaluation, and I would like you to be aware that this is
    something that I would like to see if, and we are going to have
    a request to your office on this, and I think we are also going
    to be asking the Energy Information Administration to do the
    same thing.
        It is the cost and benefit. If you go to 90 percent, how
    much are you going to better the reduction of mercury in terms
    of human health, so we can capture that. So often, what we have
    found is that you will take it to maybe 90 percent and then 80
    percent, and then you go the next 10 percent, and what is the
    real benefit that you are getting in terms of improving health?
    This calculation is very important. Have you looked at that
    recently, in terms of the costs?
        Ms. McCarthy. We have not revisited this issue specifically
    since we took a look at last year's bill. We did look at
    scenarios that were very similar to the targets that you are
    trying to achieve in the time line. So, we do think that, while
    there is not certainty, there is still a sense that the costs
    associated with this would be in the 1.5 to 2.5 percent
    increase over the course of between when the bill starts and
    2025, which remains pretty minimal.
        I will tell you, however, Senator, that the Administrator
    has already pledged our full support and our technical
    assistance to re-look at these issues. I understand that costs
    will be a major consideration, and to the extent that we can
    provide technical assistance and work with staff to provide you
    additional information and re-look at those issues, we will do
    that to the extent that our resources allow.
        Senator Voinovich. I appreciate it. We talked about the
    concept of a lot of natural gas out there. But from my
    recollection, to go from coal to natural gas is a very
    expensive proposition.
        The other aspect of that is that we have to take these all
    under consideration with CO2 emissions, and if you
    move off from coal and you do not get the technology, then you
    go to natural gas which is about half the emissions for
    greenhouse gases. And all of these things work together.
        It is very interesting that with the commercial technology
    that is available today to deal with greenhouse gases, it takes
    about, it would take about one-third of a plant's electricity
    to deal with the greenhouses gases. So, you would reduce that
    by one-third, and then you would have to provide other energy
    to make up the one-third, which means you would have to
    replicate, if you are burning coal and other coal facility, to
    make up for the loss of energy that you have incurred as a
    result of bringing down the greenhouse gases.
        So, I think this is one thing, Senator Carper, that we, you
    know, look at in terms of how this is all going to fit
    together.
        Thank you.
        Senator Carper. Thank you.
        I am going to go ahead and ask my questions now and then
    yield to Senator Alexander next.
        And welcome to Senator Cardin. Thank you for being here.
        Just to follow up on what Senator Voinovich was saying, one
    of the virtues of a trading system and using market, the
    highest market forces, to enable us to ratchet down emissions
    is we give flexibility, in this case to the utilities. And if
    it makes sense to convert to what is now more readily available
    natural gas, they could do that. If it makes economic sense for
    them to change the technology out in their plants, they can do
    that.
        I think that the idea is that we are not going to stipulate
    what to do. It is not one size fits all. One size does not fit
    all. But we will let market forces help guide that. And
    innovation as well.
        One of the virtues of having to set some targets out there,
    to say these are our mission's targets, is it provides, we
    hope, the kind of certainty that we are looking for. It says to
    the technologists that are really smart people, including some
    folks in our audience and one of the witnesses in the next
    panel, it says, look, there is going to be a market. You spend
    the time and the money inventing this technology, there will be
    a market for it. And that is an important signal to send as
    well.
        I want to come back, in terms of certainty, to a point made
    by Senator Voinovich, and it is going to be raised later on in
    our panel today, in our second panel, by our representative
    from AP; I think it is Mr. McManus. The question is on
    certainty. We say, for example, in our legislation, we want to
    see mercury emissions reduced by 90 percent by a date certain.
    We will allow EPA to go beyond that.
        And Senator Voinovich says--and rightly so--well, that is
    the not the kind of certainty that he is looking for and maybe
    that AP is looking for. And I understand that there is a reason
    why EPA asked for that kind of flexibility. But it tends to
    infringe maybe on the flexibility, or the certainty if you
    will, of the utilities themselves.
        Would you talk with us a little bit about one and how we
    balance one against the other, please?
        Ms. McCarthy. I think, Senator, in our individual
    rulemaking, as well as our rules that impact sectors and have
    to work together, we have to look at the appropriate balance. I
    think in terms of mercury technologies and the challenges
    moving forward that we have seen tremendous change in our
    ability to be able to address mercury and be certain about the
    reductions that can be achieved using the newly developed
    technologies and assessing those appropriately for each
    facility.
        We will always struggle with that. The difficulty that we
    have is providing certainty on the basis of today's science and
    today's technology is one thing. Freezing that and thinking
    that science will not develop, we will not have better
    understanding of both the long-term transport questions as well
    as the localized impacts of some of these toxics is trying to
    freeze that in time or just rely on current technology or not
    look at what is coming up in trying to provide incentives for
    innovation. I think that is a mistake.
        I think that the Clean Air Act readily acknowledged that
    the science does change. We learn more; technology does provide
    opportunities for cost effective actions to reduce toxics. And
    we know well that there are localized impacts associated with
    some of these pollutants that we are asking the States to
    address, not just the long-term transport in national
    standards.
        So, a market based approach can work very well. We can try
    to coordinate with that and provide certainty for any
    additional actions that States or that EPA made may have to
    take to address localized impacts.
        Senator Carper. OK. Thank you.
        In the latter part of your testimony, I jotted down--I
    tried to jot down what you said; you were talking about the
    plan of the EPA to go down your regulatory road to write a
    follow up rule to CAIR and our effort to try to find a
    legislative path forward. I think what you said is our
    efforts--EPA and our legislative efforts--our efforts will be
    mutually reinforcing in cleaning up our air, which is very
    encouraging to me.
        Would you just talk about that a little bit more, please?
        Ms. McCarthy. Senator, I think that EPA is obligated by the
    courts and under the Clean Air Act to move forward to develop
    certain regulatory standards in a timely way. We are going to
    meet that obligation. We are going to try to do quite a bit
    than we have over the past few years at developing regulations
    that will stand the test of time legally.
        What we are seeing in the bill that you are contemplating
    is moving in exactly the same direction as our regulations
    would move. To the extent that we can align those efforts, that
    we can inform you about what we are seeing through our
    regulatory development process and the data that we are
    gathering to define these standards, it can inform what you
    think is available and readily available that you should move
    through your legislation. It will also inform us in our
    regulatory efforts.
        I think we are totally aligned in terms of the direction we
    are taking. We very much appreciate the standards and the time
    lines that you have set. We can adjust those moving forward and
    inform what one another does. And the United States works best
    when Congress does its thing and we follow the law and do ours
    as well. And I think we can align very well.
        Senator Carper. All right. Thank you.
        Senator Alexander.
        Senator Alexander. Thanks, Mr. Chairman.
        Administrator McCarthy, you are developing a mercury rule
    now, which, if we pass this law, the law would replace that,
    right?
        Ms. McCarthy. Senator, we are actually going through data
    gathering to develop a utility MACT standard which actually
    covers many more toxics than mercury. So, even if you move
    forward, we still have the regulatory requirement under the
    existing Clean Air Act to look beyond mercury and to do that in
    a way that meets the letter of the law.
        Senator Alexander. You are not planning to have a trading
    system for mercury, are you?
        Ms. McCarthy. Actually, we do not believe that trading for
    toxic pollutants is an inappropriate design for a rule moving
    forward, and the courts have spoken to that issue as well.
        Senator Alexander. Do you have evidence that mercury from
    power plants settles near the power plant?
        Ms. McCarthy. There is evidence of local impacts that is
    scientifically credible and has been peer reviewed, yes.
        Senator Alexander. Senator Voinovich was asking about
    further estimates by EPA of the costs, which I am very
    interested in as well. How long would it take to do that?
        Ms. McCarthy. I think, Senator, we need to have a good
    discussion with your staff to figure out exactly how detailed
    an analysis we need. We certainly will be sensitive to your
    time constraints and try to do that in as timely a way as we
    can.
        Senator Alexander. Yes, a lot of us would like to get on
    with the legislation, and we want to know what it costs before
    we do. So, that would be a big help if you could give a
    priority to that because, even those of us who are--maybe those
    of us who are proposing the legislation especially want to make
    sure we have a good understanding of the costs.
        The preliminary costs suggest, based upon EPA, well, the
    EPA analysis so far, shows that rates will rise between about
    1.5 and 2.5 percent by 2025 as a result of the SOx
    and NOx requirements. That is about $2 or $3 a
    month. Is that right?
        Ms. McCarthy. That is accurate. Based on the analysis that
    we did----
        Senator Alexander. Now, in saying that, is that just actual
    costs, or do you balance that against other benefits and
    include those benefits in your analysis?
        Ms. McCarthy. That is the actual cost.
        Senator Alexander. That is just the actual cost?
        Ms. McCarthy. Retail cost, yes.
        Senator Alexander. And then on mercury, Senator Voinovich
    was asking about that and acknowledging that there has been
    some improvement in the technology based upon what we can see
    from the General Accounting Office. TVA customers in our region
    would expect an increase in rates of 13 cents to 33 cents per
    month over 15 years. So, do you have any analysis of what the
    separate mercury requirements would cost?
        Ms. McCarthy. I do not at this point, Senator.
        Senator Alexander. What about the--are you familiar with
    any studies that, and this may be more appropriate for the next
    panel, that reflect on how rules such as the one we are
    proposing would impact on the efficiency of coal plants? In
    other words, whether a plant would have to reduce its
    efficiency in order to meet the rules.
        Ms. McCarthy. That is a good question, Senator. I am not
    sure that I am able to answer it. I can tell you that when we
    are looking at the impact of the Clean Air Interstate Rule we
    are relying on a few things. One is the ability for some of the
    existing plants to increase their heat rates, which we think
    they have an ability to do. We are also relying a great deal on
    continued investment in energy efficiency overall, which
    impacts demand and can help us stay within those caps.
        Senator Alexander. Do you think it provides sufficient
    certainty to utilities to just leave it to the EPA after 2020
    to decide what the rules should be, the standards should be?
        Ms. McCarthy. Senator, I think the best we can do is make
    our rules on the basis on what we know now about the science
    and technology and costs and do that as far out as we feel
    comfortable doing. I do not think we can really be expected to
    do more than that. The science does change. The capacity to be
    able to bring cost effective solutions to the table changes.
        And so we will do our best to provide certainty over time
    as you are attempting to do with this legislation. But looking
    beyond a 2025 time horizon may not be something that we feel
    comfortable doing on the basis of information that we have.
        Senator Alexander. Well, my major request to you, and I
    said this to the Administrator yesterday, is that you put a
    very high priority on doing whatever EPA can do to help Senator
    Carper, Senator Voinovich, any of us to understand the actual
    cost of the proposed rules on electric rates.
        I mean, if it is $2 to $3 a month by 2025, you know, that
    is one thing. If it is $20 to $25 a month, that is another
    thing. And if it is, my own view is that I want the coal plants
    to operate, but they just should not be operating without
    strong rules on SOx, NOx and mercury. And
    if we can do it at $2 or $3 a month by 2025, we ought to get on
    with it.
        Thank you, Mr. Chairman.
        Ms. McCarthy. Thank you, Senator.
        Senator Carper. Senator Alexander, is that your first
    round? OK.
        Senator Cardin, thanks for joining us.
        Senator Cardin. Well, Mr. Chairman, Senator Carper, I want
    to really thank you for your extraordinary leadership on the
    subject. You have been tenacious in keeping us focused on
    dealing with these pollutants, and I thank you.
        I think there is not a member of our Committee who has not
    had the opportunity to talk with you directly about this issue.
    And you have brought together Democrats and Republicans in an
    effort to deal with these important areas.
        So, I just first want to thank you very much and let you
    know how much I appreciate my neighbor, Delaware, providing the
    leadership because, as you know, we are all in this together.
        Airborne pollutants do not stick to the geographic area in
    which they are located. In fact, the quality of air in our
    entire region, mercury reductions are critically important to
    all of us. We have the Chesapeake Bay. We know of fish
    advisories that have been given because of the high levels of
    mercury content. It is an extremely important issue for us to
    do a much more effective job.
        On sulfur dioxide, we know the impact that acid rain has on
    plants in our community, the impact that it is having on the
    Bay, the impact that it is having on our environment. With the
    NOx, it clearly is affecting air quality,
    respiratory issues, and I can go through the list and list
    them. And it is for that reason the Maryland legislature and
    other States have taken action on this issue when we enacted
    the Healthy Air Act in July 2007.
        I mention that because I know that there was a lot of
    concern when the Maryland legislature enacted this, and
    Maryland implemented it because there was a concern as to
    whether we could reach the type of standards that were applied
    at the State level.
        The State has moved forward aggressively, and quite frankly
    with minimal problems in dealing with the reductions in all
    three of these pollutants. Clearly, with mercury and sulfur
    dioxide, the limits in Chairman Carper's bill complement what
    we have done in Maryland, and I find it very, very helpful that
    we have national policies established by Congress in this area.
        I also find that true with NOx, although I must
    tell you I would hope that we could be more aggressive on the
    limits on NOx. I think we could be more. I think the
    Maryland experience has shown us that we could be more
    aggressive in that area, and I hope, Mr. Chairman, we can work
    together to take a look at that particular issue.
        I guess this discussion, Administrator McCarthy, I find
    very helpful. I mean, when you are trying to answer the cost
    issues, it is difficult because we do not know what is going to
    happen with energy efficiencies, we do not know what is going
    to happen with alternative fuels, we do not know what is going
    to happen as far as the mix in this country is concerned, which
    obviously affects the cost issues when you are trying to reduce
    airborne pollutants.
        If the sources are no longer used as frequently because of
    an energy policy, that is going to have a dramatic positive
    impact on the cost issues. And we all hope that we are going to
    enact an energy policy for this country that is going to make
    us less dependent upon fossil fuels and that should make your,
    all of our jobs a lot easier and less costly to the consumer.
    And that is what we are all fighting for.
        I want to sort of engage you in a discussion as to how
    Congress, working with EPA, can do this most effectively. You
    point out, and rightly so, you have a responsibility to act,
    you are acting, you are going to act, as you are required to
    under the Clean Air Act. Congress has responsibilities, and I
    think Senator Carper is right in pursuing legislation here to
    deal with these three pollutants.
        How do we complement each other as we go forward in this so
    that we certainly allow you to do what is necessary from a
    regulatory view under existing law, but then we come in and
    complement what you are doing through the efforts of
    legislation that our Chairman has proposed?
        Ms. McCarthy. Senator, you ask a very good question, and I
    think one of the most basic things that we can do together is
    to share information and to answer the questions that you are
    asking about what it means for Maryland and what it means for
    other States moving forward if Congress takes this action. What
    kind of time line should we be looking at? What emissions
    reductions are necessary?
        One of the challenges that the court told us when we do the
    rewrite of the Clean Air Interstate Rule was we had to be
    certain and provide data to show that the reductions we were
    achieving through that program needed to ensure that no upwind
    State was emitting pollution across its boundaries in a way
    that would significantly prevent a downwind State from
    achieving or maintaining attainment with the Clean Air Act
    standards.
        And so it challenged us to go to a different level and a
    more detailed level of data gathering and analysis that when
    the Clean Air Interstate Rule is ready to come out, and we are
    hoping in a very short period of time that we will be able to
    share that information and we will be able to inform one
    another's discussion about how well to move forward.
        Now let me, if I could, just for another minute, just say
    that the other thing that we can do is to really look at
    history and what that has shown us about market programs like
    the Acid Rain Program and what did a market based approach do
    to help us achieve pollution reductions in a cost effective
    way.
        And I think one of the things we learned is that the
    certainty question is an interesting one because, back when the
    Acid Rain Program was beginning, in 1990, we estimated that the
    cost would be $8 billion a year. In 2004 the actual cost was $2
    billion a year. And that program has achieved benefits at a
    cost ratio of benefits to cost at a ratio of 40 to 1. It has
    been enormously successful. We did not even anticipate that
    right, never mind the over-caution on the part of industry
    about what it might cost.
        So, what we have learned is, the certainty question is
    something that you really cannot get right if you are
    predicting that far into the future. You need to understand
    that the innovation is there. The business models, the markets
    will grow, if you send the right signals.
        And the other issue with certainty is that, frankly, there
    is very little certainty now. There have been too many laws
    that have been remanded and vacated; there are too many laws
    that people are waiting with bated breath to see how they are
    going to look. And we have an obligation on the part of EPA to
    be as quick and as forthright as we can in sort of laying out
    that regulatory pathway. But there is no certainty right now.
    The utility companies are having difficulty getting permits to
    do major modifications and to site new facilities because of
    this uncertainty.
        And so we should not worry too much about whether it is
    going to be certain 20 years from now as much as acknowledge
    that we have uncertainty now that is impacting the market, that
    is preventing us from making the transition to a clean energy
    future, that this bill, and through regulation, we can try to
    provide a much more balanced approach and much more certainty
    moving forward.
        Senator Cardin. I think that was an excellent answer. I
    appreciate that very much. I really do think that Senator
    Carper's bill helps us in moving forward on the predictability
    you mentioned in regards to the three pollutants.
        But I tell you, and I think we are working together, but if
    we want to give the maximum predictability then we should get
    an energy policy enacted in dealing with the global climate
    change issues because then you really have, I would suggest, a
    much broader area of predictability to allow the market forces
    to really work for the desired results.
        But I think your answer as to the need for us working with
    EPA, Congress together, to give the community a stronger
    direction, is well taken, and I thank you for your reply.
        Senator Carper. Senator Cardin, thank you for your
    questions, and thank you for your very kind words. I appreciate
    the nice things that you said about my involvement in these
    issues. I would just--I do not think you were here when we said
    this, but Senator Voinovich and I worked on this for, I think,
    for about 4 years during the first part of the Bush
    administration and for a long time and since then, Senator
    Alexander has been very much----
        Senator Cardin. I know Senator Voinovich's work and Senator
    Alexander's work in this area, and it just points out again how
    Senator Voinovich is going to be missed after this year. He has
    been an incredibly valuable member of the Committee. I
    certainly want that to be reflected in my comments.
        Senator Carper. All right. I think that there are not many
    things that we agree on, but that would be one of them. So,
    thank you for that.
        Senator Voinovich.
        Senator Voinovich. I just want to comment, as a Governor, I
    dealt with this all the time. In fact, when I became Governor,
    we were not compliant with the national ambient air standards,
    and the first thing was to try and get us into compliance
    because we had businesses that would just fly over the State
    and say I do not want to be in that area.
        So, in Senator Carper's example, you used Tennessee and
    said that if were able to do this, the air would be cleaner,
    and as a result of that the businesses would have less expense
    because of the fact that they would not have to put on various
    types of gizmos to keep their emissions down. And so you have
    to take that and weigh the costs of reducing NOx,
    SOx and mercury and then just see how that folds
    into the cost of energy.
        This is a reality. If you have a situation like my State,
    and the ambient air is down because the economy stinks, but if
    the economy comes back, a lot of these businesses are going to
    look at what their costs are in terms of, their energy costs,
    and they will conclude, as one company before we complied with
    the ambient air standards, Cooper Tile, and I will never forget
    it, they were going to move. But then we go that worked out,
    and they stayed, and they expanded.
        But you will see the movement of businesses to other parts
    of the country where they do not have the problem. So, this is
    a delicate balance, and probably I think more about some of
    these issues than say Senator Carper and some of the other
    Senators because we are a manufacturing State. And one of the
    reasons why we are a manufacturing State is we have cheap
    energy.
        So, that is where I am at right now, that is why this cost
    is very, very important to me. How is going to play out? And I
    am not--I am well aware of the health benefits that are here,
    and sometimes I do not mention them enough. But how do we put
    this together so that we can do the health and at the same time
    do not kill the goose that laid the golden egg in a place like
    my State with, you know, 10.4 percent unemployment. And we want
    to come back.
        Senator Carper. Thank you.
        Did you want to kind of respond to anything that Senator
    Voinovich has said?
        Ms. McCarthy. I guess, Senator, I just wanted to agree with
    you. I mean, I think we are focusing equally, and certainly on
    the cost and benefits associated with our rules. We are looking
    at the economy as well and looking at energy prices. We know
    the economy is difficult right now, and we want to be able to
    make the improvement in air quality.
        But we certainly want to do it in a way that creates jobs
    in a way that enhances the economy and then provides a much
    more level playing field across the Nation so that the kind of
    changes that you worry about, the relocations, do not happen.
    Certainly we want to grow our manufacturing base here in the
    United States.
        The only thing I will mention is that I think the President
    has been pretty eloquent at talking about clean energy as a
    transition, as an approach that moves toward clean energy and
    brings in renewables and looks at efficiency. But he has also
    recognized that that is a transition that we need to
    accommodate and that coal will be a piece of that transition
    strategy. I mean, it will challenge us, but it is an issue that
    he is putting on our plate.
        Now, he has recently brought together a task force for
    carbon capture and sequestration. He understands that we need
    to provide some assistance here, some regulatory certainty on
    that pathway as well. But it is a balance, and it is one that
    we will be most sensitive to.
        Senator Voinovich. Well, the issue is where is our economy,
    and how long is it going to take us to get out from under where
    we are today. And you know, I think I have talked to you, and I
    have written to Carol Browner twice on another matter, but it
    is the cost of the combined sewer overflows in the water area.
        I have communities in my States, 100 of them, and a 13
    percent increase in their water and sewer rates, 13 percent
    this year, 13 percent next year. And there is not any kind of
    sensitivity. Some of them, they have had businesses that have
    closed, and so the cost of that is now coming down on the folks
    that remain in the community.
        And there seems to be--I think we need to have some
    consideration given into all of this. It may be, frankly, to
    move the date down 1 or 2 years to realize that we are going
    through this situation. We cannot just deal with things and
    close our eyes to what is going on in terms of the people that
    are out there in our country today that are really hurting.
        Ms. McCarthy. The only other thing I will assure you,
    Senator, as we are going through our rulemaking process, we
    will ask those questions. We will fully explore where the
    technologies are available, whether they are cost effective,
    how quickly can we anticipate making the kind the shifts and
    reductions that we are hoping to achieve. And we will make our
    decisions with our eyes wide open, both in terms of the
    environmental benefits but also in terms of the costs
    associated with any strategy that we move forward with.
        Senator Voinovich. Thank you.
        Senator Carper. I have just a couple of questions to follow
    up. Earlier in your testimony I think you mentioned a couple of
    figures that I thought were striking. And a question that
    relates to what Senator Voinovich is getting to, how do we
    strengthen our mission standards, how to reduce the emissions
    of unhealthy substances into our air, and at the same time not
    impede our economic growth? You cited a statistic. I think it
    was since 1990 maybe. Can you just go back and say that again?
    I thought that was an especially pertinent point.
        Ms. McCarthy. We talked about GNP, right?
        Senator Carper. Yes, or GDP. You talked about emissions
    were down by so much, and GDP was up by a remarkable amount.
        Ms. McCarthy. Basically, the economy can grow, obviously,
    while we clean up the air. Overall pollution emissions have
    been reduced by 54 percent since 1980. At the same time, U.S.
    GDP, when it is adjusted for inflation, has increased 126
    percent.
        Senator Carper. You say adjusted for inflation?
        Ms. McCarthy. Yes.
        Senator Carper. Well, that is good. That is a pretty
    striking point.
        Another point I want to come back to, one of the burdens
    that businesses carry in this country, particularly compared to
    other nations with whom we compete, is the cost of healthcare.
    I was struck by a number on one of charts that we went through
    earlier where we actually could reduce our healthcare costs in
    this country by about $2 trillion over the next 15 years.
        And I said earlier the cost of the Senate passed healthcare
    bill is about $850 billion over 10 years, fully paid for, fully
    offset. But that is roughly 2.5 times more in savings than we
    are talking about the cost of our healthcare. That is really
    striking.
        I want to go back to a point raised by Senator Udall when
    he was here, just to follow up on some of his concerns about
    the West. Will the new air quality standards that the EPA has
    proposed for sulfur dioxide and ozone impact the States outside
    of the CAIR region? Could you just come back and talk with us
    about that? Will the new air quality standards that EPA has
    proposed for sulfur dioxide and ozone impact the States outside
    the CAIR region?
        Ms. McCarthy. At this point, Senator, we are still in the
    process of doing the modeling and analysis on the new CAIR
    program. But at this point, I can tell you, it looks like it
    will be focused in a very similar region as the original CAIR
    proposal.
        Senator Carper. OK. Thanks very much.
        All right. Any other questions for Senator McCarthy? Well,
    there was a Senator McCarthy, there has been a couple of them
    actually, but----
        Ms. McCarthy. I do not want to remember that.
        Senator Carper. Well, actually, one of them was pretty
    good. Clean Gene.
        [Laughter.]
        Senator Carper. But we are glad that you could be with us
    today. Thanks for working with us. And among the takeaways, for
    me, obviously, the points I asked you to come back to, how much
    have we seen emissions go down since 1980, what has happened to
    our GDP corrected for inflation, coming back to the uncertainty
    raised by Senator Voinovich will be raised by Mr. McManus as
    well.
        When we get to, say, 2015 and mercury standards, 90
    percent, that is our cap, and the idea that the EPA at some
    point in the future, 2020, 2025 could be beyond that, that is
    of concern to some in the utility industry. And we have to
    figure out how to address that. By the same token, technology
    will get better. We will figure out how to reduce emissions
    further.
        I remember being here, I think George and I were both here,
    for a hearing, I think he chaired it, our clean air
    subcommittee, it was a hearing looking at technology for
    mercury, about 4 or 5 years ago. And we were trying to figure
    out, could we get to an 80 percent reduction, was that
    feasible? And that point in time there were a lot of people
    saying we cannot even get to 80 percent. Well today, there are
    dozens of utilities and plants where we are at 90 percent.
        So we know that the technology will get better. We can do
    better. The question is how can we avoid tying EPA's hands in
    anticipation of that improved technology and actually be able
    to provide you with healthier air to breathe and at the same
    time be responsive to the needs for certainty on the part of
    the utilities? I think we can figure that out, and we will just
    work on that.
        Ms. McCarthy. Senator, I would be remiss if I did not point
    out that the CAIR rule is not the only rule that EPA is looking
    at at this point. As you know, we are looking at a new ozone
    standard which would be a nationwide standard. We are looking
    at the SO2 standard. So, as we are improving these,
    the challenge will be a nationwide one. But CAIR itself will be
    eastern focused.
        Senator Carper. All right. Thank you so much. It was great
    to have your here, and we look forward to working with you
    going forward in what you described as a mutually reinforcing
    partnership. Thank you.
        Ms. McCarthy. Thank you for your leadership, Senator.
        Senator Carper. Thanks so much.
        I am going to ask our second panel to go ahead and come to
    the table, and if someone will put their name cards right where
    they belong so that they will know where to sit, that would be
    great. Thank you.
        Welcome to our second panel. I think I have had a chance to
    shake all of your hands. It is nice to see you, some of you for
    a second or third time. Secretary O'Mara, I see him a lot back
    in the First State. It was great of all of you to come, and I
    have had a chance to read your testimony, and I look forward to
    hearing from you and having a chance to ask some questions.
        I am going to give a short introduction, and as I said to
    Ms. McCarthy I am going to ask you to keep your testimony to
    about 5 minutes. If you go a little bit over that, I will not
    rein you in. If we are talking about 10 minutes, we will
    probably have to blow the whistle. But the full content of your
    written statements will be included in the record.
        The first witness we will hear from on the second panel is
    Dr. Albert Rizzo. Dr. Rizzo is here with us today on behalf of
    the American Lung Association. He is the Chief of Pulmonary and
    Critical Care Medicine of the Christiana Care Health Systems in
    Delaware, a real fine outfit. Dr. Rizzo's private practice
    includes a strong interest in asthma, in pulmonary
    rehabilitation and in lung cancer, and he has led national
    research studies related to lung health.
        I am going to go ahead and just introduce each of the
    witnesses, and then I will come back to you to make the first
    statement.
        Next we have Dr. Michael Durham, President of ADAES. What
    does that stand for?
        Mr. Durham. ADA Environmental Solutions.
        Senator Carper. ADA Environmental Solutions. OK. All right.
    His firm is developing environmental technology to enable coal
    fueled power plants to enhance existing air pollution control
    equipment, maximize capacity and to improve operating
    efficiencies. Dr. Durham has over 30 years of experience in the
    measurement and the control of air pollution from utility and
    industrial sources.
        Our third witness tells us he once spent some time in
    Syracuse, and we stole him from San Jose to come to Delaware
    and be our Secretary of Natural Resources a year ago. We are
    glad that he came, and his wife let him and came with him,
    although she misses the weather in San Jose.
        We had about 3 feet of snow in Delaware last month. We do
    not have that very often. She sent him a text message. He was
    in Europe, I think on a trade mission with the Governor. She
    sent him a text message from Delaware where we were suffering
    under 3 feet of snow, and there was one word in that message.
    What was that word?
        Mr. O'Mara. Liar.
        [Laughter.]
        Senator Carper. Well, hopefully things are going to get
    better. It is going to be in the 50s this weekend, so maybe you
    will get out of the dog house. We are glad you are here and we
    are glad you are in Delaware, too. Collin O'Mara, Secretary of
    the Department of Natural Resources and Environmental Control,
    where he oversees air, energy and other environmental matters.
    He also leads the Governor's effort to create a thriving green
    economy and sustainable natural environment.
        And George, you may be pleased to hear that our--and you
    may know this, but our fourth witness, John McManus, is a
    Buckeye. He and his family live in Columbus, the Columbus area,
    and he has a son who is going to graduate just in--what? A
    month or so?
        Mr. McManus. Two weeks.
        Senator Carper. Two weeks from the Ohio State University.
    We are both graduates, law school and undergrad, from Ohio
    State, so we give you a big Ohio yell to welcome you here
    today. And good luck to your son. I have got two that are still
    in college and the days that they graduate will be days that we
    celebrate for more reasons than one. Others who have kids in
    school, you know what I mean.
        Mr. McManus is the Vice President for Environmental
    Services of the American Electric Power Service Corporation,
    and we are very happy that you could be with us here today and
    look forward to your testimony.
        Dr. Rizzo, you are up first, and we are going to ask Mr.
    McManus to hit clean up. So, let us take it from our left to
    our right.

     STATEMENT OF ALBERT A. RIZZO, M.D., FACP, FCCP, D'ABSM, BOARD
                OF DIRECTORS, AMERICAN LUNG ASSOCIATION

        Dr. Rizzo. Thank you, Senator Carper. Thank you for the
    opportunity to testify today.
        Senator Carper. You bet.
        Dr. Rizzo. I am Dr. Albert Rizzo, and as Senator Carper
    mentioned I am the Chief of Pulmonary and Critical Care at
    Christiana Care Hospitals in Delaware. I have been practicing
    medicine and treating patients with lung disease for about 25
    years in Delaware.
        But today I am here as a volunteer of the American Lung
    Association's National Board of Directors. In that regard, I am
    also here as an advocate for my patients, particularly a
    patient like Kristen, a 16-year-old from Middletown, Delaware,
    who, despite as much as she can manage her asthma, she wonders
    why she has trouble with sports. Also for Joan and Steve who
    are from North Wilmington, older patients of mine who have
    emphysema. And they get frustrated by the fact that they become
    prisoners of their air conditioned apartments during the summer
    months when the bad days of air quality occur.
        These are quality of life issues, certainly important, but
    only a small part of the larger more tragic burden of emergency
    room visits, hospitalizations and premature deaths that you
    have already heard about, mainly from polluted air.
        The American Lung Association urges Congress to pass S.
    2995, the Clean Air Act Amendments of 2010. We are proud to
    support this bill because we fight for healthy air and
    healthier air as a result of this bill will save lives.
        We see a compelling and urgent need for Congress to clean
    up air pollution from the power plants. Power plants emit tons
    of sulfur dioxide, nitric oxides and mercury. Mercury leaves
    the smokestacks and settles into our rivers and lakes. It is a
    potent neurotoxin that inflicts permanent damage on kidneys,
    the nervous system and affects development of the brain.
        Sulfur dioxides and nitric oxides leave the smokestacks and
    become fine particles in the air, so tiny that they bypass the
    body's natural defenses and lodge deep within the lung tissues,
    causing damage. Most at risk for these particles are infants,
    children, the elderly, and especially those with heart and lung
    disease.
        Nitrogen oxides from power plants are a key ingredient in
    the formation of ground level ozone or smog that blankets much
    of our country during the summer and acts as a powerful
    respiratory irritant. When inhaled, ozone damages the lung
    tissue much like the summer sun burns our skin.
        Ozone pollution at levels in the United States today
    contributes to early death. The EPA estimates that the particle
    pollution reductions of this bill would prevent between 12,000
    and 30,000 premature deaths each year by the year 2025. Even as
    early as 2012, the EPA predicts that as many as 6,300 to 16,000
    lives will be saved.
        The American Lung Association publishes a State of the Air
    Report each year. In our 2009 report, we showed that 186
    million Americans, or 60 percent of our population, live in
    counties that receive a failing grade for ozone or particulate
    matter.
        As Senator Carper knows, thousands of our neighbors in
    Delaware are at risk from air pollution. Our report found that
    all three of Delaware's counties fail for ozone, and New Castle
    County where I live, and I believe where Senator Carper lives,
    fail also for daily levels of particulate matter. In New Castle
    County alone, more than 11,500 children with asthma are at risk
    from the air pollution that can either progress their disease
    more rapidly and more importantly can also trigger life
    threatening asthma attacks.
        Senator Alexander has been very strongly committed to clean
    air, and we thank him. His home State has 15 counties that
    earned failing grades for air pollution. Blount County, home to
    Great Smoky Mountains National Park, bears a sizable burden of
    air pollution. Blount County suffered 77 days with unhealthful
    levels of ozone from 2005 to 2007 and roughly 26,000 children
    and 17,000 seniors in Blount County are at risk from pollution.
        Attached to my testimony are the summaries from our State
    of the Air Report for each member of the Committee.
        The Carper-Alexander bill sets stringent caps for sulfur
    dioxide and nitrogen oxides and ensures that toxic mercury
    levels will be cut. Importantly, the EPA has the authority to
    set tighter levels, if needed, to protect the public or the
    environment.
        The mercury provisions provide a critical backstop for the
    forthcoming mercury Maximum Achievable Control Technology or
    MACT rule. This legislation builds upon and strengthens the
    existing Clean Air Act. The EPA and the States retain their
    critical tools and enforcement authorities. We will not
    support, in fact, we will vigorously oppose any changes that
    would undermine the enforcement of the new Source Review
    Program or other provisions of the Clean Air Act.
        Some suggest it would be better to wait for EPA to
    promulgate the Clean Air Interstate Replacement rule and the
    MACT. We urge Congress, however, and EPA, to move forward
    sooner to implement the law and maximize the reduction of these
    pollutants.
        Our concern is getting the pollution out of the air. Delays
    have a real and dramatic cost, a tragic human toll paid in
    thousands of lives lost each year. The public has waited too
    long for power plants to clean up. The Clean Air Act Amendments
    of 2010 demonstrate broad bipartisan support of this goal.
        It is well past time to clean up the Nation's power plants,
    and please pass this life saving legislation.
        Thank you again.
        [The prepared statement of Dr. Rizzo follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Carper. Dr. Rizzo, thank you very much. Thanks for
    what you do with your life and looking out for the health of so
    many of us in the First State.
        Dr. Durham, welcome. It is good to see you again. Thanks
    for joining us. Please proceed.

              STATEMENT OF MICHAEL D. DURHAM, PH.D., MBA,
             PRESIDENT AND CEO, ADA ENVIRONMENTAL SOLUTIONS

        Mr. Durham. Good morning. I am Mike Durham, President of
    ADA Environmental Solutions. I would like to thank Senator
    Carper and the Committee for inviting me to update you on the
    status of commercial mercury control technology.
        ADA is a company that develops and commercializes emission
    control technologies for the power industry. We have been
    involved in mercury control since the early 1990s and have
    recently installed over 50 mercury control systems at coal-
    fired power plants generating over 20,000 megawatts of electric
    power.
        We are currently constructing what is to be the largest and
    cleanest activated carbon production facility ever built to
    provide high quality, U.S. produced activated carbon to the
    power industry. The plant, which is located in northwest
    Louisiana, is scheduled to begin producing activated carbon in
    the spring.
        To provide you with a quick summary of the status of
    commercial mercury control technology, I would like to focus on
    the following points.
        The commercial market is well underway with over 150
    contracts awarded to date for mercury-specific control
    technologies driven by regulations in 19 States for existing
    power plants and Federal regulations on new power plants.
        The accelerated development of mercury control technology
    has been a major success story with significant improvements in
    technologies resulting in higher mercury capture at lower
    costs. One such advancement was the use of bromine enhancements
    to enable high efficiency reduction of mercury emissions from
    western coals at relatively low costs.
        As highlighted by the recent GAO report, multiple control
    technologies are now commercially available to meet the needs
    for controlling mercury from different coals and from various
    equipment configurations.
        Another important facet of mercury control is the fate of
    the mercury once it has been captured. DOA and EPA have
    conducted a number of extensive studies on this issue and
    confirm that once the mercury is captured onto fly ash,
    scrubber sludge, or activated carbon it does not leach out of
    these materials, and therefore is effectively removed from the
    environment.
        I should point out that there are still challenges
    remaining in mercury control, especially for high sulfur
    bituminous coals. These provide additional opportunities for
    technology innovations and further cost reductions.
        I commend the Committee for addressing mercury in a multi-
    pollutant approach as this takes advantage of mercury capture
    that can be achieved as a co-benefit with other emission
    control systems. Therefore, costs can be minimized under a
    regulatory framework in which decisions about mercury control
    can be integrated with decisions to control emissions of sulfur
    dioxide, nitrogen oxide and fine particles.
        You should also be aware that all power plants are not the
    same ,and because of the differences in the age, location and
    design of the 1,100 plants in the U.S. fleet there will be
    significant plant-by-plant variations in the costs and
    technical difficulties of achieving high levels of emission
    control.
        However, flexibility in the mercury control regulation can
    be used to address these differences in plant configurations
    and operations with the benefits of reducing overall costs of
    implementation, overcoming technical challenges of the most
    difficult applications, minimizing impacts on the reliability
    of electricity supply, while obtaining overall high mercury
    removal.
        Flexibility can be as simple as allowing two plants
    operating side by side, one achieving 85 percent mercury
    reduction and the other 95 percent reduction, to average their
    missions to meet compliance. This would achieve the same
    environmental benefit while potentially saving the plant tens
    of millions of dollars. The recent mercury control regulations
    enacted in a number of States provide good examples of
    providing flexibility in the form of safety valves, phase in
    periods, and averaging between plants.
        Let me conclude by stating that the regulations provide
    certainty that drive investments, innovations, cost reductions
    and the implementation of emission control technology.
    Certainty in a mercury control regulation will also impact
    growth of new jobs as previous regulations of other pollutants.
        In response to State regulations, ADA began building our
    first activated carbon plant that created close to $400 million
    of construction jobs in an economically depressed parish in
    Louisiana. We estimate than a 90 percent mercury control
    regulation would require capital investments for additional
    activated carbon plants, creating $2 billion in construction
    costs and additional high quality operating jobs to run the new
    facilities as well as mining jobs to supply the feedstock
    material to make the activated carbon.
        In order to finance these operations, it will be necessary
    to have certainty in the regulations. Building a large scale
    activated carbon plant is a 3- to 5-year process which must
    begin prior to the regulation. However, construction cannot
    begin until the regulations are final. We have found that
    obtaining debt financing is challenging when lenders are
    concerned that the EPA regulation creating the market for the
    product could disappear as a result of legal challenges as was
    the case with CAMR.
        I thank you.
        [The prepared statement of Mr. Durham follows:]

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        Senator Carper. Thank you. That last point was especially
    welcome and timely. Thank you.
        Secretary O'Mara, welcome. Please proceed.

    STATEMENT OF COLLIN P. O'MARA, SECRETARY, NATURAL RESOURCES AND
                ENVIRONMENTAL CONTROL, STATE OF DELAWARE

        Mr. O'Mara. My name is Collin O'Mara, and I serve as the
    Secretary of the Department of Natural Resources and
    Environmental Control under the leadership of Governor Jack
    Markell in the great State of Delaware. I would like to thank
    Senator Carper for the opportunity to share our thoughts on the
    proposed amendments to the Clean Air Act to establish a multi-
    pollutant regulatory program for the electric generating
    sector.
        I would also like to introduce my Air Director, Ali
    Mirzakhalili, who has been integral to the air emission efforts
    in reducing emissions in the State of Delaware.
        Senator Carper. Let the record show that I can barely see
    Ali sitting right behind Collin. I can barely see his lips
    moving while you speak.
        Mr. O'Mara. I will take responsibility for butchering his
    last name again.
        [Laughter.]
        Mr. O'Mara. I would be remiss not to begin my comments
    without recognizing first Senator Carper's steadfast dedication
    to our environment in Delaware and his tireless efforts to
    ensure that all Americans have the right to clean, healthy air.
    I specifically want to recognize his leadership in the area of
    diesel emission reductions and the introduction and funding of
    the Diesel Emission Reduction Act which has enabled us in
    Delaware to implement a number of diesel retrofit activities,
    activities that would not have otherwise been possible without
    his leadership.
        So, thank you, Senator, for----
        Senator Carper. You are very nice to say that, but I have
    been joined at the hip with this man over here, George
    Voinovich. I have been drafting on him, as we say in NASCAR,
    drafting on him on diesel emissions for a long time, and
    together we have done great work. And we applaud what Delaware
    is doing----
        Mr. O'Mara. On behalf of Delaware, thank you, Senator
    Voinovich, as well.
        Every year, millions of people across the country and the
    800,000 residents of Delaware are exposed to unhealthful levels
    of air pollution, resulting in lost work days, hospitalization,
    respiratory and cardiac diseases, premature mortality, and
    billions of dollars of adverse impacts on our economy. Delaware
    is not immune to these challenges by any stretch, and these
    challenges are correlated to the air pollution that we face in
    the State. And unfortunately, in Delaware we face some of the
    highest rates of cancer and respiratory disease in the Nation.
        To provide cleaner air to our citizens, Delaware has
    adopted many regulations ranging from rules for inspection and
    maintenance of automobiles, standards for consumer products,
    requirements applicable to many industrial sources, and we are
    advancing energy efficiency, renewable energy activities as
    rapidly as possible.
        As a result, we have seen our air quality improve over the
    years. And last year Delaware had no exceedances of the old
    0.08 8-hour ozone standard, and we are working hard to figure
    out what is needed to meet the future ozone standard which will
    certainly be lower than the 0.075 parts per million.
        One of the greatest regulatory successes that we have had
    is the adoption of multi-pollutant regulations for the coal and
    oil fired electrical and gas generating units. The outcome-
    driven regulations establish performance standards for
    NOx, SOx and mercury to be met by each
    unit. We found that these controls are necessary to meet the
    regulatory limits. But they are also technically feasible and
    highly cost effective.
        The coal-fired units are all meeting the mercury emission
    reductions in excess of 80 percent and on track to meet
    additional reductions of 90 percent by 2013. The units that are
    remaining in operation are also meeting the first phase of the
    nitrous oxide and sulfur dioxide reductions and are on track
    for the final compliance phase which begins at the end of 2011.
        For these and other efforts, Delaware is recognized as
    having one of the more robust air pollution control programs in
    the country. We have also worked with our regional partners in
    the Ozone Transport Commission and have adopted programs to
    reduce emissions generated within the Ozone Transport Region.
        And most notable, and perhaps most effective of such
    programs, was the OTC NOx Budget Program which
    targeted NOx emissions from the EGU sector, which
    was later mirrored and adopted by the EPA in the NOx
    SIP Call.
        Unfortunately, despite this progress, Delaware's air
    quality still fails to meet attainment standards, mostly
    because of high levels of pollution imported from other States.
    As Senator Carper often says and said this morning, Delaware
    sits at the end of America's tailpipe. We are heavily impacted
    by the air emissions coming from the West. The most significant
    contributors of these are the emissions and air pollution from
    the hundreds of uncontrolled or poorly controlled electric
    generating units in upwind States.
        In addition to air quality and associated health cost
    impacts from these sources, this inequity places consumers in
    Delaware who depend on power from cleaner EGUs in Delaware at
    an economic disadvantage compared to those in upwind States who
    have failed to implement such controls. And this argument is
    central to our pending 126 petition with EPA.
        As Senator Carper has said, air pollutants do not recognize
    State boundaries. And it is with this backdrop that we are here
    today to lend our support to a bill that proposes a national
    solution to an elusive national challenge of improving air
    quality by addressing the emissions of multi-pollutants from
    the EGU sector.
        Previous attempts to gain reductions from this sector prove
    that controls are feasible and highly cost effective.
    Unfortunately, previous efforts did not go far enough. Today,
    80 percent of the SO2 emissions nationwide come from
    uncontrolled coal-fired EGUs and only 25 percent of the EGUs in
    the Nation have controlled SCR to control NOx.
        Significant emission reductions are possible and achievable
    from this sector and without a significant lead time. And after
    the adoption of Maryland's Healthy Air Act, as Senator Cardin
    referenced earlier, nine scrubbers and eight SCRs were
    installed on the affected EGUs within 2 years.
        The Clean Air Act Amendments of 2010 introduce a tough and
    meaningful national SOx cap which we anticipate will
    result in installation of controls on many of the currently
    uncontrolled EGUs. SOx emissions are a precursor to
    fine particle formation and reductions associated with this
    bill will have a significant public health benefit in Delaware
    and across the country.
        The bill also proposes an aggressive 90 percent reduction
    in mercury and builds upon the best practices of Delaware,
    Maryland and other East Coast States. The bill preserves
    States' rights under section 110 and 126 of the Clean Air Act
    and it does not interfere with the New Source Review
    provisions.
        The certainty that comes along with this legislation will
    aid States and industry for planning for the design,
    permitting, fabrication and installation of controls which is
    important to both regulators and industry alike. By focusing on
    outcomes, this bill is likely to spur great innovation because
    it will provide predictable targets for industry to meet and
    sufficient lead time for commercialization of even more cost
    effective technology, as my colleague just mentioned.
        The bill provides EPA with the authority needed to
    implement phase one of the CAIR rule, and we would encourage
    the consideration of additional EPA authorities for adjusting
    the sulfur dioxide emission budgets and annual and/or seasonal
    NOx budgets as necessary to protect public health,
    meet current and new standards, and address transport emissions
    as new science becomes available.
        Finally, I would like to mention briefly the 53 percent
    nationwide reduction in NOx. This is an important
    step forward. On this point, please let me share our experience
    with you in Delaware.
        What we have learned through our collaboration with the OTC
    is that controlling NOx emissions from EGUs may be
    the silver bullet for meeting ozone standards. We have learned
    that significant NOx reductions are feasible, cost
    effective and necessary for us to reach attainment, and readily
    achievable through existing cost effective technology that is
    improving every day.
        We believe that adopting a more aggressive approach or a
    more accelerated implementation time line for NOx
    would help States like Delaware achieve attainment of the ozone
    standard even more quickly than would be otherwise possible.
        In conclusion, we would like to thank Senator Carper for
    his leadership. We believe that the proposed legislation
    represents a very important step forward in reducing harmful
    emissions from EGUs across our Nation and will improve health
    outcomes in Delaware and across the country.
        We look forward to working with the Committee as you
    continue to refine and strengthen this significant legislation.
    We thank you for the opportunity to be with you today, and we
    look forward to your questions.
        [The prepared statement of Mr. O'Mara follows:]

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        Senator Carper. Thank you for your very thoughtful
    testimony and for your very kind words as well. We appreciate
    your leadership and your energy, the energy that you have
    brought to Delaware and clean energy, clean energy to our
    environment into our economy.
        Mr. McManus, again, welcome. Sometimes, when I find out
    folks at the witness table are from like Ohio or Ohio State, I
    will start off their introduction by saying OH to see how they
    respond.
        Mr. McManus. IO.
        Senator Carper. OK, he is an Ohio State guy. For those of
    you who have never been to an Ohio State football game, one
    side of the stadium the fans call out OH and the other side IO
    and they do it forever, especially when we are playing
    Michigan. And it is quite an exciting moment.
        But we are delighted that you are here, and in the spirit
    of trying to figure out how to work through this together and
    come up with a way that will enable our industries to make
    money and for us to clean up our environment, and provide some
    certainty not just for AP but also for the company that Mr.
    Durham represents and for the folks that are counting on us to
    help clean up our air as we go forth.
        So, thanks, and we welcome you.

       STATEMENT OF JOHN M. MCMANUS, VICE PRESENT, ENVIRONMENTAL
                   SERVICES, AMERICAN ELECTRIC POWER

        Mr. McManus. Thanks, Chairman Carper, and the Committee. I
    appreciate the opportunity to participate in today's hearing.
        AEP has achieved very substantial emission reductions over
    the last two decades. Our efforts began in the 1990s under the
    Acid Rain Program and continued with the NOx SIP
    Call and the CAIR Program in the past decade. In the last 10
    years our annual SO2 emissions have been reduced
    600,000 tons, and our annual NOx emissions have
    declined 365,000 tons. We also know that we have achieved
    significant mercury emission reductions as a result of our
    SO2 and NOx emission controls.
        As the first phase of CAIR has taken effect in 2009 and
    2010 amid some of the most difficult times our country has
    faced, our customers have shouldered the cost increases
    associated with these significant investments. We expect this
    transformation of our coal fleet to continue in the coming
    decade, even without new legislation.
        We know that there will be new requirements for further
    emission reductions in the future. We heard from Administrator
    McCarthy this morning about what EPA is working on. Although
    committed to working with EPA on the development of future
    control requirements, we have concerns about the timing of
    compliance associated with multiple and overlapping programs,
    as well as the stringency and structure of the underlying
    regulatory requirements.
        Clean Air Act Amendments that achieve environmental
    objectives with reasonable schedules and compliance flexibility
    could be extremely helpful. We have concerns about the Clean
    Air Act Amendments of 2010 as currently proposed. While the
    bill would retain the flexibility of regional emission programs
    for SO2 and NOx, other provisions in the
    proposal are troublesome and would unnecessarily increase the
    cost of compliance.
        AEP applauds the structure of the SO2 and
    NOx programs in the bill, with the reliance on an
    allowance based system. However, the schedule for implementing
    the new program's more stringent emission caps may be too fast.
    Under the proposal, the first tighter caps apply in 2012 with
    EPA rules to establish allocation due at the end of 2011. This
    allows only 1 year for implementation.
        Increasing the stringency of the caps in 2012 may create
    major logistical challenges for the electric power sector.
    Companies will not have sufficient time to schedule outages and
    install emission controls that may be necessary for meeting new
    reduction requirements. The bill should provide a longer
    planning horizon before tightening the SO2 and
    NOx emission caps.
        The bill would establish a much more aggressive allowance
    auction program than currently exists under the Acid Rain
    auction. This program to auction both SO2 and
    NOx allowances will unnecessarily add to the costs
    of compliance with no incremental environmental benefit and we
    believe should be eliminated from the program.
        The bill prohibits EPA from distributing NOx
    allowances to affected units based on heat input fuel
    adjustment factors under the annual NOx cap-and-
    trade program. The elimination of fuel adjustment factors would
    penalize coal-fired generation and provide a windfall of
    NOx allowances to gas- and oil-fired generation. The
    bill should direct EPA to use fuel adjustment factors in
    allocating NOx allowances as provided in the current
    CAIR rule.
        The bill requires EPA to promulgate, by January 2012,
    source-specific standards for reducing mercury from coal-fired
    units with an objective of achieving at least a 90 percent
    reduction overall in emissions from the entire source category.
    AEP agrees with the bill's focus on reducing mercury emissions
    from coal-fired power plants. However, we have significant
    concerns about the achievability of a 90 percent reduction
    level for the source category as a whole.
        We are also concerned about the January 2015 deadline to
    achieve the mercury performance standard. This deadline
    provides only 3 years to achieve compliance once EPA
    promulgates the new standards. The bill should provide affected
    utilities with more time to develop and implement a compliance
    strategy for meeting the mercury control requirements.
        As the bill is currently written EPA is not relieved from
    the plan to set standards for other non-mercury hazardous air
    pollutants. Regulation of these non-mercury HAPs is a
    significant concern.
        The focus of only mercury in the bill is consistent with
    the results of the study that EPA conducted under section
    112(n)(1)(A) of the Clean Air Act which concluded that there
    was not sufficient public health risks for non-mercury
    hazardous air pollutants emitted from coal-fired power plants.
    Given the results of that study, we believe the bill should
    expressly limit EPA's ability to regulate non-mercury HAPs
    emissions from coal-fired power plants.
        In summary, AEP recognizes that there are many
    environmental drivers for additional emission reductions from
    our power plants, and we are already planning for many of these
    reductions. However, it is critical that any comprehensive
    program like the one envisioned in the Clean Air Act Amendments
    of 2010 be structured in a way to allow for cost effective
    implementation of reductions on a reasonable schedule so as to
    minimize the impacts on our customers and on the reliability of
    the electricity grid.
        I would like to thank the Committee would the opportunity
    to participate today. I welcome your questions.
        [The prepared statement of Mr. McManus follows:]

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        Senator Carper. We were glad that you could come. Thank you
    for joining us, and thank you for your testimony.
        I am going to ask Senator Voinovich to lead off the
    questioning for this panel.
        Senator Voinovich. Thank you, Senator Carper.
        Mr. McManus, GAO has done a study--and it has been
    mentioned several times in the testimony written--supporting a
    90 percent stack by stack reduction in mercury emissions. But
    that study focused on a small subset of units, 25 out of
    several hundred coal units. GAO even acknowledged in their
    study that the results only applied to about three-quarters of
    the coal fleet based on their extrapolation of boiler
    configurations and coal type.
        In sum, their results do not support that all units can
    achieve this 90 percent removal. Can you speak to your
    company's experience with mercury coal technology and the
    impacts that Senator Carper's proposal might have on the costs
    to your customers?
        Mr. McManus. Yes, Senator. We have been very active in
    trying to understand mercury control technology since the Clean
    America Rule was proposed. We have tested, on one of our large
    units, it has an SO2 scrubber and an SCR for
    NOx----
        Senator Voinovich. Is that the Gavin plant?
        Mr. McManus. At Gavin plant, yes, and the coal benefit
    reduction in mercury. And we have seen substantial reduction in
    mercury, but it does not reach quite 90 percent. So, that is
    one concern we have, that if a lot of the reduction is to come
    from this combination of SO2 and NOx
    controls, can you reach 90 percent with that combination? We
    got in the 80s, but we did not quite get to 90.
        We also have looked at activated carbon injection into
    existing precipitators. We work with ADA, actually, on some of
    that program. And we have seen varied results there on a unit
    at the Conesville plant, which burns a high sulfur coal. We saw
    a little mercury reduction because of an interference with
    sulfur dioxide and the GAO report actually points out that that
    is a complication on some high sulfur coal units.
        We have also tested it on a unit with primarily Powder
    River Basin coal, and we saw substantial reductions there. We
    have actually implemented full scale on two 1,300-megawatt
    units in Indiana and activated carbon injection system. We are
    in early stages of operating that and do not have good data yet
    on the overall mercury reduction, but it has been very
    promising.
        So, I think the developments in technology are very
    promising. The GAO report points to that. But it is on a
    limited number of units. And I did find interesting that three
    of the specific areas that they identified as a challenge,
    sulfur trioxide, interference with higher sulfur coal, units
    with hot side precipitators and lignite units, we have all
    three of those circumstances on the AEP system. And while we
    see promise in the technology and improvement, we have
    significant concerns still as we look at our system and how you
    would apply this.
        A key aspect of it would be what kind of flexibility can
    you provide in the rules. So, we would really encourage, as you
    look at this provision in the bill, providing guidance to EPA
    on what types of flexibility they can provide as they establish
    the standard, because flexibility would be very important.
        Senator Voinovich. The last time I looked at this real
    carefully, one of the arguments that was made was that the
    stage of the technology it would be extremely expensive for you
    to bring that technology in and that you were far better off
    putting the money into NOx and SOx
    because you got the coal benefits in terms of mercury.
        And you are saying that, say the Gavin plant, you have done
    that, it has taken you up to what, 80 percent? And at this
    stage of the game, you probably have to find, depending on the
    time limit, some other technology that Mr. Durham may be
    selling or somebody else, to put that in. And of course if you
    do that, then you have got some impact, I would suspect, on
    your rate payers.
        Mr. McManus. Yes, that is correct. With Gavin as an
    example, if we can achieve, you know, 80 to 85 percent with the
    coal benefits, to try and put an incremental technology on
    there to get that small difference to get to 90 percent, the
    sort of cost benefit of that is it is going to be more
    expensive because you are trying to get just a small increment.
        The activated carbon technology--and Dr. Durham's testimony
    shows this--it is a relatively low capital cost and really
    looks like a good approach. But if you have to go to more
    extensive control technologies that are much higher capital
    costs, that is when the costs go up very high, and the impact
    on the rate payers would be significant.
        Senator Voinovich. Thank you.
        Senator Carper. Let me just follow up with that.
        Dr. Durham, do you want to comment at all on the exchange
    we just heard between Senator Voinovich and Mr. McManus?
    Anything you want to add or observe?
        Mr. Durham. I think what is pointed out is the
    characteristic that all plants are not created equal. And so a
    lot of the data is around a lot of averages so, and as with
    every average there are performers that do a lot better and a
    lot worse. For example, the activated carbon, and what was
    mentioned in the GAO report, is looking at ones that are very
    low capital costs, relatively low operating costs, and some of
    those are getting well above 90 percent.
        But there are these other cases. When you get up to a
    certain level, that could be an 80 percent, an 85 percent, and
    once you hit that roof, then the costs really go up to try to
    get further. We talk about variability in costs. We are not
    talking about 10 or 20 percent. When we come to a difficult
    situation that is operating at 80 or 85, it may be $1 million
    or $2 million a year of activated carbon to get to that level.
    To continue to push that up may take three times that amount
    just to go that much further.
        So, those kinds of examples are why you need to be able to
    average that plant that was overachieving and getting 95
    percent with that one that is getting 80 or 85 percent. That
    averaging does not create hot spots, because, as you know, when
    you are looking at an overall 90 percent reduction you cannot
    have many 80s or 70s in there and still maintain 90 much less
    0. So, we are really talking about chasing very small numbers
    with very large dollars if you do not have that flexibility.
        Senator Carper. Secretary O'Mara is quite familiar with the
    large coal-fired plant, actually four plants, that we have in
    the southeastern part of Delaware at the Indian River Inlet and
    has been very actively involved with NRG, the utility, to cause
    them to dramatically reduce their emissions in the years ahead.
    And as it turns out it has become a major stakeholder in
    offshore wind provider, which will hopefully be developed
    enough for the first windmill farm off the coast of our country
    in about 2 or 3 years.
        At Indian River we have four plants. Some of them are
    pretty small, but one of them I think is quite large. But if I
    understand the flexibility you are talking about, Dr. Durham,
    they are all coal-fired plants. Hypothetically, if they had to
    reach a reduction of 90 percent mercury by 2015, if two of the
    plants were under 90 percent and two could be over, but if they
    are all co-located, the deal is at the end of the average of
    the four has to be 90 percent. Is that correct?
        Mr. Durham. That is correct, or some whatever its average
    within the plant or larger, but the environmental benefit is
    the reduction in mercury and whether you have got a few pounds
    from one and few more pounds from another, the environmental
    benefit of the reduction is the same.
        Senator Carper. OK. Now what if instead of having those
    plants all co-located together in one part of Sussex County
    they had one or two in Sussex County, another north in Kent
    County, and another one all the way further north in New Castle
    County. Now, in that case, they could not, they would not have
    flexibility to balance one another off, would they?
        Mr. Durham. Well, it depends on how you write the
    regulation. But again, if you are getting up to the 70-80
    percent level at every one, what you have to do in order to
    achieve an overall 90, you are still only talking about very
    small differences between those plants.
        Senator Carper. All right. Thank you.
        If I could, I want to come back to Mr. McManus again, if I
    may, about the question, particularly on SOx
    targets, may be too far too fast. Talk with us, if you will,
    about the ability under the Acid Rain Program to bank
    allowances. My understanding is that utilities have, I think
    under the Acid Rain Program the cap on SOx is about
    9.3 million tons. Does that sound about right?
        But I understand that utilities have been below this mark
    for the last several years, allowing companies to bank a large
    number of sulfur dioxide allowances. And you know better than
    we do what you all have in the bank. But how might that help
    you, or help AEP and others, to meet this challenge of too far,
    too fast?
        Mr. McManus. The banking provision is clearly very helpful
    to be able to rely on title IV allowances that are in the bank
    and have not been used to meet these caps.
        The concern we have, and it really kind of goes to the
    first cap, EPA would have until the end of 2011 to establish
    new allocations going forward, and without knowing what those
    allocations are until 1 year before that cap kicks in, it is
    hard to say whether the bank is going to fully cover the needs
    in that first cap period.
        And what we have seen in the title IV program, in the
    NOx SIP Call and the CAIR Program, is companies tend
    to develop their compliance plans based on the allocations they
    receive and not assume that they can rely on the overall market
    to cover their needs because of the risk of relying on a
    market. If the market is not there, you do not have controls
    installed. And so again, with just 1 year between that
    allocation deadline when EPA sets the new allocations in the
    first cap, it creates uncertainty and concern.
        On the NOx side, I think our concern there is
    maybe more on the Western Zone than the Eastern Zone because
    the NOx SIP Call is in place, and the CAIR
    NOx Program is in place now in the Eastern Zone. We
    have seen significant reductions. As I indicated, the
    reductions on our system in the last 10 years, it has been 75
    percent reduction in our NOx because of the
    NOx SIP Call and CAIR's annual program. So, we have
    seen significant reductions.
        We do have some plants in Oklahoma that would be in the
    Western Zone. If that is a brand new program in 2012 that would
    require them to put controls on to meet a new NOx
    cap; that is a very short amount of time to allow us to do
    that.
        Senator Carper. OK. Thank you.
        Senator Alexander.
        Senator Alexander. Thanks, Tom. These are very helpful
    conversations.
        Mr. McManus, how many coal plants do you have in AEP?
        Mr. McManus. We have about 20 or so coal plants, the total
    number of coal units is in the 40s.
        Senator Alexander. How many have SOx and
    NOx controls on them now? Roughly.
        Mr. McManus. Probably roughly about a dozen, and they tend
    to be our largest units----
        Senator Alexander. Big ones?
        Mr. McManus. From 700 megawatt to 1,300 megawatt. So, it
    makes up a significant percentage of our total capacity.
        Senator Alexander. So, typically that is a scrubber and SCR
    both?
        Mr. McManus. In our eastern fleet, scrubber and SCR,
    because we do have the NOx requirements in the east.
    We do have two units in our western fleet that just have
    scrubbers.
        Senator Alexander. They just have scrubbers. And as I
    understand what you are saying, and I have heard from others,
    you are saying on some of those coal plants if you put on both
    the scrubber and the SCR, the SOx and NOx
    controls, you can get a lot of the mercury. Does it get into
    the 80s? Is that what happens? Well, let me not put words in
    your mouth. How much can you get with just those two devices?
        Mr. McManus. The data that we have is for our Gavin Plant
    which is in southeastern Ohio, and it showed reductions in the
    80 to 85 percent range. But it was based on short-term
    emissions tests, not on long-term monitoring data. So, we are
    very encouraged by that level, but we do not have a good sense
    for what we can achieve and maintain from a long-term
    perspective.
        Senator Alexander. But to reach 90, then, you would have to
    buy some other technology like Mr. Durham's technology and add
    it to the SCR and scrubber?
        Mr. McManus. Correct. We would have to do something to
    supplement what we are getting in the coal benefits.
        Senator Alexander. But Mr. Durham, I understand you to be
    saying that--you are sort of arguing against yourself, aren't
    you, if you argue for an average because if they can get it to
    85 without your device on some plants, that is what they would
    do, and then they would not buy your product. Is that not
    right?
        Mr. Durham. Well, our best interests are based around
    keeping coal as a viable option for power generation. So, it is
    in our best interests to make this as inexpensive as possible
    and still achieve the goals of reducing emissions.
        Senator Alexander. Yes, and I think our country's best
    interest is the same, which is to continue to have coal as a
    low cost big supplier of electricity. So if under our
    legislation we do not allow you to go below, you have to be at
    90 percent smokestack by smokestack, so would it be possible to
    say, to put a floor under that? Would it make any sense to say
    that while you might be able to average your smokestacks to 90,
    but that in no case would any smokestack go below a certain
    level? Mr. Durham, what would you think of that?
        Mr. Durham. I think any form of flexibility helps. Because,
    you know, for example, on the scrubbers and SCRs, there are
    units that are getting over 90 percent. But if you are stuck at
    that 80 percent, the additional equipment, to give you an
    example, a new power plant that is being built that has to meet
    a 90 percent because of Federal regulation will have not only
    that SCR and a wet scrubber, they will have to add activated
    carbon injection, they will have to add adding another chemical
    alkaloid to control the SOx, they will have to add a
    wet ESP. And so you are talking about these huge incremental
    changes to get from that 85 to a 90. That is a must just to
    make sure you can get there.
        Senator Alexander. I understand. But you would not want,
    Mr. Durham, but you would not want to let any smokestack go
    very much below 90 because there is some evidence, maybe a lot
    of evidence, that mercury sort of goes up and comes down,
    unlike the SOx and NOx, which blows away,
    and so the people who live in the area of that coal plant would
    be exposed to more mercury.
        What would be a reasonable level below 90 that any
    smokestack could--what would be the floor?
        Mr. Durham. Well, again, if you are looking at having to
    average 90 percent, you can see you cannot get--you know, this
    is kind of like trying to maintain an A average in school and
    how many 70s----
        Senator Alexander. But Mr. McManus has 40 plants, so you
    might have one that is 40 percent and the rest at 90, and the
    people who live around the one at 40 percent would not be too
    happy.
        Mr. Durham. I think that would be difficult to do.
        Senator Alexander. Mathematically difficult.
        Mr. Durham. Mathematically difficult to do.
        Senator Alexander. Mr. McManus, any comment on the
    averaging from you about the opposing kinds?
        Mr. McManus. I agree with the point that if the target is
    90 percent you cannot have many units that are significantly
    below 90 percent and meet your average. But to the extent that,
    in the direction that is given in the bill to EPA as it
    establishes these rules, you can encourage them to provide as
    much flexibility as possible. It certainly would help.
        The Clean Air Mercury Rule had a national trading program
    for mercury, and we still do not understand why that was a
    concern for many people. But does it make sense to do something
    that is on a smaller regional basis that would allow a form of
    trading or averaging a number of sources across a fleet or
    across a State? Those types of things, I think, can only help
    to meet the target.
        Senator Alexander. I appreciate the comment, Mr. Chairman.
    Just my own thought, I am not in favor of trading mercury, but
    some averaging might be worth our thinking about.
        Senator Carper. Thank you. Laura Haines is sitting behind
    me, on our staff, and reminded me that we do provide under our
    legislation some flexibility for EPA on this front, and I do
    not think they go in and do it on a boiler by boiler basis. But
    they are sort of interested in the overall site.
        And I use my example of the Indian River Inlet facility
    where they have four plants. And one could be at 80, and the
    others could be at like 93. Would they be in compliance? But
    your point is well taken, and we think that we have invited
    some flexibility there for EPA, and we will look to see if
    there is some reasonable way to do a bit more.
        Mr. Durham. Senator Carper, that plant is a good example
    because it is different ages of plants, equipment
    configurations, and so if you had that flexibility, just the
    planning process, it would be cheaper to get mercury control of
    some than the others. So, looking at each one of those as a
    separate entity makes that easier.
        Senator Carper. I want to come back to Secretary O'Mara, if
    I could, and Dr. Rizzo, if you would want to comment on this as
    well, that would be fine.
        We have heard, at least from some northeastern States, that
    our nitrogen oxide targets for the East are not strong enough
    to help States meet new EPA ozone air quality rules. And I
    would just say, if we made some adjustments, made some
    adjustments to the Seasonal Ozone Program, Secretary O'Mara, do
    you think that somehow we could address those concerns?
        Mr. O'Mara. Senator Carper, I think that it helps a lot.
    The challenge that Delaware faces is, frankly, if we controlled
    every unit in the States to the highest possible of 100
    percent, we are still not in our attainment because of the
    import of emissions. And so I think that having seasonal
    allowances established by EPA would help.
        I think there are some challenges with the approach that we
    need to work with EPA through. For example, EPA right now is
    looking at lengthening the ozone season for some States that
    are out of attainment. So, for example, Delaware's ozone season
    could be from March to October, compared to Massachusetts being
    from April to September.
        And we also need to look at the winter peaks from
    NOx that could result. But I think that clearly it
    is a step that helps address some of the concerns that we have
    to get into attainment as quickly as possible to bring the
    benefits of clean air to our residents as fast as we possibly
    can.
        Senator Carper. Mr. McManus, let me just ask you to kind of
    react to that a little bit. Do you think that it might be
    possible for us to meet a tighter mark for NOx in
    the East, and again, going to this idea of having some seasonal
    adjustments, adjustments to the Seasonal Ozone Program, is that
    a live option in your view?
        Mr. McManus. Yes, Senator, I think it is an option. The key
    to an issue like that is the timing. We have had, as I have
    indicated, we have put selective catalytic reduction on a lot
    of our units, our biggest units. But we do have a lot of
    smaller units that do not have that technology. We use more
    combustion controls, low NOx burners, that type of
    control, but they do not achieve the level of reduction that a
    SCR does.
        If we want to look at putting additional SCRs on, that is a
    long lead time capital program to do that. So, the timing of
    meeting an entire cap is pretty critical as much as sort of the
    level of that cap.
        And then the other factor is, we do have a lot of smaller
    units that are of the 1950s vintage. We are looking at a lot of
    those units, and a lot of other companies are as well, in terms
    of how much longer would we continue to run those? Would you
    invest in the pollution control technology, the cost of higher
    capital scrubbers and SCR in those units? Would you make a
    decision to shut them down at some point, convert to natural
    gas, replace them with natural gas?
        So, the timing of that is important as well in terms of our
    need to have capacity available to meet electric demand in
    balance, putting controls on, maybe retiring some units,
    building new units. So, timing is critical. But a lower cap, I
    think, clearly could be achieved.
        Senator Carper. Do you want to comment on that at all,
    Secretary O'Mara? You do not have to, but if you want to.
        Mr. O'Mara. Well, I tend to agree that a lower cap could be
    achieved. The experience in Delaware has been that it is
    possible to put controls on these units at a fairly rapid pace.
    And some of the choices that have been faced by NRG, for
    example, that you referenced there, are raising some
    interesting issues about energy supply in the State of
    Delaware.
        The one example I will use is a conversation we have been
    having in the State about Unit 3 at the Indian River Power
    Plant that you referenced.
        Senator Carper. That is the largest of the four, is it not?
        Mr. O'Mara. Right. And they were planning on going ahead
    with all of the air controls, they did not see a major impact
    from the price of the air controls, they were still fairly
    competitive. They also had some interests in water issues at
    that location, concerns about fly ash, concerns about carbon
    emissions as well. And the company has decided that it is much
    more effective to put their investment into offshore wind and
    other cleaner sources of power than to try to rehabilitate an
    older unit.
        Now, contrast that with a unit that is 15 years newer than
    that unit where they have decided to put on the emission
    controls that are required similar to what would be required in
    this bill, and that unit is still competitive, providing, you
    know, cleaner, but also cost competitive electricity.
        And so I think that it does make sure that it protects the
    consumer, but it also encourages investment in innovative
    areas. But it gives people the flexibility to make that choice
    and ensure that we have both clean air and reliable power.
        Senator Carper. Good. Thank you.
        If I could, for Dr. Rizzo, as a physician, as a leader in
    our medical community in Delaware, but also here representing
    the American Lung Association, can I just ask why does the
    America Lung Association support NOx caps?
        Dr. Rizzo. Well, as a non-profit and as a vision of a world
    without lung disease, anything that will improve pollution--and
    the lower nitric oxide is, the less ozone there is at ground
    level--will improve how people feel on a day to day basis, not
    only those who already have lung disease, but all of us are
    affected by these in different degrees. And seasonal variations
    occur because of the heat and certainly because of the ozone in
    the region that we deal with in the Northeast.
        But improving NOx and sulfur dioxide, anything
    to get those much, much lower than they are and with more rapid
    enactment of these is what the Lung Association pushes.
        Senator Carper. All right. Thanks very much.
        Senator Voinovich.
        Senator Voinovich. These units--how many units do you have,
    coal-fired units?
        Mr. McManus. We have total, around 50, I believe.
        Senator Voinovich. Fifty coal-fired units?
        Mr. McManus. Coal-fired units, yes.
        Senator Voinovich. OK. And many of them are smaller in
    terms of--what would you say the average megawatts would be
    from them, the smaller ones?
        Mr. McManus. The smaller units tend to be 100- to 250- or
    300-megawatt units.
        Senator Voinovich. If we did something with the technology
    on modular nuclear, those might be some alternatives for those
    facilities?
        Mr. McManus. We have looked at that; can you put in place a
    technology that can handle the full gas from a number of units
    on one site and get the economy of scale benefit from a cost
    perspective. So, that is a possible approach that could be
    used.
        Senator Voinovich. OK. One of the things that we talked
    about is that--particularly when we were talking about carbon--
    is that in most of those plants you could make them more
    efficient. But the reason you do not is because, and Dr. Rizzo
    said, for God's sake, do not bother with New Source Review. So,
    what happens is that the utility decides to kind of keep it
    where it is at and not try to improve the efficiency. In other
    words, they would be producing more electricity, and you are
    getting the same amount of NOx, SOx,
    mercury and greenhouse gases.
        So, with the New Source Review, your alternative would be
    on these smaller coal-fired plants to shut them down and to
    move toward natural gas. Is that correct?
        Mr. McManus. If ultimately you decide not to make the
    investment on pollution control technology, the alternative
    really is to shut them down, and the lead time to build new
    plants now, the lead time for a new natural gas plant is
    shorter than a coal plant. So, there would be a tendency to
    look at natural gas because you can get it in place quicker,
    again to meet the energy demand that we are trying to meet.
        Senator Voinovich. Do you think as this legislation been
    drafted that you are going to see a lot more utilities shutting
    down and moving to natural gas? And if you do, what impact
    would that have at all in terms of the costs to the customer?
        Mr. McManus. I think under this legislation, under the
    existing regulatory program that Regina McCarthy talked about
    this morning, and just looking at the market in general, and
    then thinking ahead to possible CO2 requirements,
    that we will see more and more units being shut down and a move
    to natural gas.
        One example of that is that Progress Energy late last year
    announced their plans to retire a number of their smaller,
    older units by the 2017-18 period, in large part due to
    anticipated environmental cost exposure. So, to me that was
    sort of an early indicator of where we may seem more in the
    industry go in the future.
        Senator Voinovich. So, if it was passed this way, you think
    there would be a tendency to shut them down and move toward
    natural gas?
        Mr. McManus. I think that is a real possibility, yes.
        Senator Voinovich. I do not know the difference between the
    cost of producing electricity and natural gas versus coal. Is
    it about the same or a little bit more? What?
        Mr. McManus. Natural gas will tend to be more expensive.
    The key there will be the gas price. And what we have seen in
    recent years is wide fluctuations in natural gas prices. Most
    recently it has come down a little bit, in part because the
    economy just is not that robust now.
        The shale gas resource is going to be pretty critical going
    forward in terms of, you know, can you meet the gas demand and
    at what price. So, that is a big uncertainty. But a potential,
    clearly a big potential going forward, to be able to rely on
    natural gas at a more acceptable cost than what we have seen in
    the past in gas prices.
        Senator Voinovich. And the, in terms of natural gas, tell
    me, is it substantially--I should know this but I do not--in
    terms of NOx, SOx, mercury, greenhouse
    gas emissions. Let us just do the three Ps. How much, using
    natural gas, would bring down those pollutants?
        Mr. McManus. Burning natural gas for electricity, you do
    not have any SO2 emissions, you do not have any
    mercury emissions, you do have nitrogen oxide emissions, but
    they would be lower than typically in a coal plant, but that
    will depend on what nitrogen oxide control technology you have
    on the plant.
        Senator Voinovich. All right.
        So, Mr. Rizzo would be real happy with more gas because of
    the fact that it would take care of the three pollutants that
    we are talking about in this legislation, I would suspect?
        Mr. McManus. I will pass. I will let Dr. Rizzo answer for
    that.
        Dr. Rizzo. Yes.
        [Laughter.]
        Senator Voinovich. Well, I think that is about it. The only
    other last question would be that, I thought under the CAIR
    rule, that States like Delaware, they took into, for example--I
    mean, do you have an idea of what percentage--you are not
    meeting the ambient air standards right now? And you have done
    your thing, with getting them to come down and lower their
    levels of emissions. You still have a lot of automobiles and
    other things. But about what percentage of your problem that
    you have and not meeting your ambient air standards comes as a
    result of transport of ozone?
        Mr. O'Mara. I am just making sure I have the right number.
    On some of these, we have estimated that it could be as high as
    90 percent from out of State sources given the size of the
    State compared to the generating sources that are close to us.
    And that is even with the improvements to Maryland's air
    quality in the past few years.
        Senator Voinovich. Ninety percent from transport?
        Mr. O'Mara. Ninety percent.
        Senator Voinovich. I will be darned. Because I know that I
    thought that under the CAIR rule that we were going to absolve
    you from that. In other words, identify what is coming in, you
    doing your thing, and does that 90 percent include----
        Mr. O'Mara. That includes some of the transportation sector
    itself on the I-95 corridor. And we have actually tried to
    explore all the tools at our disposal starting in State. But we
    have filed a petition with EPA under 126----
        Senator Voinovich. 126.
        Mr. O'Mara. And the challenge with a 126 is, the question
    is what is the region? And so for us it is really the
    Philadelphia metro region. But many of the emissions are coming
    from further upwind from States further to the west.
        And so far EPA is struggling with this question because the
    original legislation really required them to look at that
    immediate region. But we are asking for--because as Senator
    Carper said we are that kind of tailpipe, across many States,
    not just the adjacent ones.
        Senator Voinovich. Thank you.
        Senator Carper. I would just say, George, one of the
    frustrations for us is that I can remember times when we
    literally shut down our State's economy and would still be out
    of attainment because of the transport of the emissions from
    other places upwind.
        Sometimes I like to close out a hearing. This has been, I
    think, a real good hearing, and I think we had good
    conversation and a productive one, a very constructive
    conversation. And what I am going to do in closing out here is
    just ask each of our witnesses if there is a point that you
    want to reiterate, make again, or if maybe you have sort of a
    different thought that you want to share with us as we close
    that has been brought out by the interaction that we have had
    with the panelists and those of us who are privileged to sit up
    here.
        Is there anything else that would like for us to keep in
    mind as we walk away from here today, Dr. Rizzo?
        Dr. Rizzo. I think the important thing is to not delay in
    whatever we can do to improve the situation. I think there were
    a lot of good ideas that have been talked about today, but
    certainly moving ahead and enacting laws that will help
    pollution. Every day is another life lost or more. Thank you.
        Senator Carper. Thank you.
        Dr. Durham.
        Mr. Durham. Well, just to reiterate. What we are saying, as
    equipment has been installed and operating, is performance is
    getting better, costs are going down, we are having to redo our
    projections on the size of the market because the amounts of
    activated carbon are actually going down from the sites. There
    are still a number of difficult sites, and we are looking
    forward to trying to develop those challenges. But it sometimes
    helps having you adjust the laws of man because the laws of
    chemistry and physics that we are dealing with are not quite as
    flexible.
        Senator Carper. OK. Thank you.
        Secretary O'Mara.
        Mr. O'Mara. Thank you, Senator. I think that the message
    that we would like to relay is that, from the Delaware
    experience, that this can be very cost effective. We have seen,
    you know, the cost rate of being roughly about $5,000 a ton for
    NOx. That is cheaper than about $10,000 a ton to buy
    a NOx credit on the open market for an equivalent
    amount.
        The technology works, and we are seeing incredible
    reductions on the units that we have. The challenge is that the
    scattershot State by State approach is not always successful.
    Pennsylvania really took--tried to have some very aggressive
    mercury legislation a few years ago that would have had a major
    benefit to the State of Delaware. That was struck down by the
    courts, and we continue to have pollution into our State.
        So, without a national solution, we will continue to have
    these issues. Not any individual State can solves this
    challenge alone. And we have talked a lot today about the
    costs. We have not talked as much about the benefits. And our
    analysis shows that for roughly every dollar we spend on
    pollution control, we are going to save $10 or more on health
    benefit savings.
        So, the $2 trillion number that you mentioned today, those
    are real dollars, and those are dollars that come out of
    people's pockets in Delaware and across the country. And those
    are dollars that could be more productively used in other parts
    of the economy.
        And so when you look at the whole picture, we believe that
    this is an important step forward and we look forward to
    working with you on it.
        Senator Carper. Thank you so much.
        Mr. McManus.
        Mr. McManus. Thanks, Senator. I think I will step back and
    look at a little broader perspective here. Administrator
    McCarthy this morning mentioned the transition to an energy
    economy, and clearly it is a goal of the current
    Administration. It is an opportunity, from our perspective,
    that we see when you look at the electric sector. We see a
    clear transition occurring that will continue this year.
        But it is more than just putting controls on existing power
    plants. It is what new power plants do we want to build, fossil
    fuels versus renewables versus nuclear. It is the smart grid
    concept, how do we make the way we use energy more efficient,
    demand side management. There is a lot going on across that.
        All of that is going to take money to implement. In a very
    struggling economy right now, the challenge I see, really, is
    the timing of all of this. To achieve this transition over the
    next decade, it is a complex equation. And how do we move
    forward and set time lines that make sense, that allow us to be
    making the best choices.
        You talked about certainty this morning. Certainty would be
    great, but we recognize that you cannot have certainty in
    everything. But a little better direction in timing that helps
    us do this transition would be extremely helpful, and we would
    welcome an opportunity to work with you to look for ways to
    implement appropriate timing for a lot of this.
        Senator Carper. Good. Well thank you for those closing
    comments.
        In terms of--I certainly learned, I think I knew it before
    I was Governor, but I really learned it as Governor, is that
    businesses do need certainty and predictability. They did then
    and they do now.
        We also need some certainty in figuring out how to ratchet
    down and rein in the growth of our healthcare costs. We are not
    competitive with the rest of the world when we spend twice as
    much as the rest of the world for healthcare and do not get
    better results, get worse results. And we have all these people
    who do not have healthcare coverage. You know, we have got to
    do better than that. We need some certainty toward getting us
    to a better spot there as well.
        Dr. Durham mentioned certainty for him and his company
    going to the capital markets to try to raise money for another
    facility that they want to build. If we do not do anything, if
    we still end up battling it out in court with EPA and the CAIR
    rules and stuff like that, that is not the kind of certainty
    that he needs. And God knows what it is like following in
    Secretary O'Mara's shoes, trying to deal with all of this.
        So, I am by nature an optimistic person. And I am leaving
    here today optimistic that we are on the right track here, that
    we are on the right track here. And I think that we have folks
    that are working in a spirit of cooperation. We know that we
    are in this together. And we know that we can do better. And we
    have got to do better.
        I do not want to spend another 12 years in the wilderness,
    in and out of court, trying to figure out what regulations are
    going to be in effect and what are not, or are we ever going to
    legislate around here. I want us to legislate.
        And in a season here in Washington where there is, frankly,
    not a lot of work across the aisle, unfortunately, I hope we
    can provide a model for how we can still do that, reach across
    the aisle, Democrats, Republicans, Independents, environmental
    community, medical community, non-profits, our utility sector,
    and we can still figure out how to get this done. And we need
    to. That is why the people in this country sent us here. And we
    are going to do our dead level best to do that.
        I look forward to talking with Senator Boxer. I appreciate
    her very much letting me chair this hearing today. She has been
    very encouraging in her comments to me as to the way forward on
    this legislation. So, we are going to take it from here.
        That having been said, it is almost lunchtime. We thank you
    all for spending so much time with us. Some of our colleagues
    who were not here, and some of those who were here, will want
    to submit some questions for the record. They have 2 weeks to
    do that. And I would just ask that, as you receive those
    questions, please do your best to respond to us promptly and
    fully.
        Thank you again, and with that, this hearing is adjourned.
        [Whereupon, at 12:27 p.m. the Committee was adjourned.]
        [An additional statement submitted for the record follows:]

                      Statement of Hon. James M. Inhofe,
                    U.S. Senator from the State of Oklahoma

        Chairman Carper, thank you for holding this hearing today
    to discuss S. 2995, ``The Clean Air Act Amendments of 2010,''
    which you introduced along with Senator Alexander and others.
    On the day this legislation was introduced, Senator Voinovich
    and I released a statement extending a hand of cooperation in
    passing multi-pollutant legislation. As we said, ``The goal of
    combining greater regulatory certainty under the Clean Air Act
    with significant advances in public health and the environment
    is a worthy and attainable one. We stand together today to
    begin a dialogue aimed at achieving that goal.''
        Today I repeat that pledge, and I'm sure Senator Voinovich
    will do the same. I hope that you, Senator Carper, as well as
    Senator Alexander and others, will join us in trying to reach
    agreement on this important issue.
        There's a good deal of history behind legislative efforts
    to reduce sulfur dioxides, nitrogen oxides and mercury. I won't
    belabor that history, but I will note that several of us,
    including Senator Carper, made a good faith effort to reach
    bipartisan agreement on the Clear Skies bill in 2005.
    Ultimately that didn't happen, and instead we settled for a
    regulatory approach to reduce emissions. But without explicit
    authorization from Congress, the regulatory program, known as
    the Clean Air Interstate Rule, or CAIR, was struck down by the
    D.C. Circuit because EPA lacked the necessary legal authority
    under the Clean Air Act.
        So where do we stand? We have emissions control projects on
    hold and a depressed allowance trading market. Without a new
    law from Congress, the ability to secure additional emissions
    reductions from power plants over the next decade remains
    unclear. Moreover, EPA is preparing a new emissions rule to
    answer the D.C. Circuit's CAIR decision, but again, without
    specific legal authorization from Congress, just what EPA can
    propose in light of that decision is highly uncertain.
        We have a heavy burden on our shoulders to get this done.
    Yet I believe we can provide EPA with the legal authority it
    needs to get CAIR up and running again. At the same time, we
    can find common ground and pass a bipartisan 3-P bill. Now this
    won't be easy; Senator Voinovich and I have several concerns
    about S. 2995. I would say my leading concern is that the bill
    superimposes fairly strict emissions reductions over a short
    timeframe on top of several impending EPA regulations facing
    power plants. In my view, we should require significant
    emission reductions from power plants, but we also should
    provide flexibility for how those plants meet those targets.
        So again, I say to my colleagues, let's work together on
    achieving the long sought goal of passing 3-P legislation. This
    could be a significant milestone that would produce real health
    benefits as well as ensure affordable, reliable electricity to
    consumers.
        Thank you.

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