[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






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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

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                                                                   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:]
    
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    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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