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[Senate Hearing 106-471]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 106-471
 
                     NOx STATE IMPLEMENTATION PLANS

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
        CLEAN AIR, WETLANDS, PRIVATE PROPERTY AND NUCLEAR SAFETY

                                 OF THE

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 24, 1999

                               __________

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

                     U.S. GOVERNMENT PRINTING OFFICE
59-374 cc                    WASHINGTON : 2000
_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington DC 
                                 20402

               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       one hundred sixth congress
                 JOHN H. CHAFEE, Rhode Island, Chairman
JOHN W. WARNER, Virginia             MAX BAUCUS, Montana
ROBERT SMITH, New Hampshire          DANIEL PATRICK MOYNIHAN, New York
JAMES M. INHOFE, Oklahoma            FRANK R. LAUTENBERG, New Jersey
CRAIG THOMAS, Wyoming                HARRY REID, Nevada
CHRISTOPHER S. BOND, Missouri        BOB GRAHAM, Florida
GEORGE V. VOINOVICH, Ohio            JOSEPH I. LIEBERMAN, Connecticut
MICHAEL D. CRAPO, Idaho              BARBARA BOXER, California
ROBERT F. BENNETT, Utah              RON WYDEN, Oregon
KAY BAILEY HUTCHISON, Texas
                     Jimmie Powell, Staff Director
               J. Thomas Sliter, Minority Staff Director
                                 ------                                

  Subcommittee on Clean Air, Wetlands, Private Property, and Nuclear 
                                 Safety

               JAMES M. INHOFE, North Carolina, Chairman

GEORGE V. VOINOVICH, Ohio            BOB GRAHAM, Florida
ROBERT E. BENNETT, Utah              JOSEPH I. LIEBERMAN, Connecticut
KAY BAILEY HUTCHISON, Texas          BARBARA BOXER, California

                                  (ii)

                            C O N T E N T S

                              ----------                              
                                                                   Page

                             JUNE 24, 1999
                           OPENING STATEMENTS

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...     1
Lieberman, Hon. Joseph I., U.S. Senator from the State of 
  Connecticut....................................................     4
    Letters, Northeast Utilities System.......................... 13-21
Voinovich, Hon. George V., U.S. Senator from the State of Ohio...     2

                               WITNESSES

Harding, Russell J., Director, Michigan Department of 
  Environmental Quality..........................................    29
    Prepared statement...........................................    86
Hill, Hon. F. Wayne, Gwinnett County Commissioner, Lawrenceville, 
  Georgia........................................................    10
    Prepared statement...........................................    68
    Report, Gwinnett, GA, Air Quality Data....................... 72-79
    Responses to additional question from Senator Inhofe.........    70
Nye, Hon. Thomas, Mayor, Hamilton, Ohio..........................     9
    Letters:
        Hamilton Boiler No. 9....................................    46
        Hamilton Electric Plant..................................    51
    Prepared statement...........................................    41
    Responses to additional questions from:
        Senator Chafee...........................................    49
        Senator Inhofe...........................................    46
        Senator Voinovich........................................    50
Stahl, Jane, Deputy Commissioner for Air, Water and Waste 
  Programs, Connecticut Department of Environmental Protection, 
  Hartford, Connecticut..........................................    28
    Letter, NOx transport issues.................................    82
    Prepared statement...........................................    79
    Responses to additional questions from:
        Senator Baucus...........................................    83
        Senator Inhofe...........................................    83
        Senator Lieberman........................................    84
Treat, Hon. Sharon, Maine State Senate, Gardiner, Maine..........     7
    Prepared statement...........................................    37
    Responses to additional questions from:
        Senator Baucus...........................................    40
        Senator Inhofe...........................................    40
        Senator Lieberman........................................    40

                          ADDITIONAL MATERIAL

Article, Lifting the Veil of Smog, EM magazine...................   104
Memoranda, Hamilton, OH, Public Utility Data..................... 51-68
Reports:
    Gwinnett, GA, Air Quality Data............................... 72-79
    Role of Ozone Transport in Reaching Attainment in the 
      Northeast, NESCAUM.........................................88-104
Statement, Ohio Environmental Protection Agency..................    34

                     NOx STATE IMPLEMENTATION PLANS

                              ----------                              

                        THURSDAY, JUNE 24, 1999

                                       U.S. Senate,
                 Committee on Environment and Public Works,
   Subcommittee on Clean Air, Wetlands, Private Property,  
                                        and Nuclear Safety,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:07 a.m. in 
room 406, Senate Dirksen Building, Hon. James M. Inhofe 
(chairman of the subcommittee) presiding.
    Present: Senators Inhofe, Voinovich, and Lieberman.

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

    Senator Inhofe. The meeting will come to order.
    Today's hearing is to discuss EPA's NOx SIP Call and how it 
affects States. While we originally decided to have this 
hearing before the court issued the stay on the SIP Calls on 
May 25, the hearing is now even more timely in order to hear 
how the States are responding.
    There are a number of different issues concerning the SIP 
Call which are coming together and which will cause impacts on 
all the States involved.
    First, a SIP Call which originally required the States to 
submit their plans to the EPA by this September has been put on 
hold by the court while they consider whether or not to 
overturn the rulemaking. This has created confusion within the 
States. I know that some States are going to continue to go 
forward with the SIP; others are submitting SIPs which would 
not have been approved by the EPA, and other States have 
decided not to submit SIPs until the court case has been 
decided.
    A question I have for all the States is, if you go forward 
with something now, and either the courts or the EPA changes 
the rules during the process, what would be the effect?
    Second, absent the NOx SIP Call, the EPA is going forward 
with Section 126 petitions which will require reductions 
starting in December, based on the 1-hour ozone standard. Is 
this the best use of resources? Once again, if the SIP Call or 
a modified version is reinstated next year, will the States and 
industry have made irreversible decisions regarding control 
measures, which they will be forced to change in mid-course?
    And finally, overshadowing all of this is the NAAQS court 
case decision invalidating the new ozone standards. Much of the 
EPA's justification for both the SIP Call and the Section 126 
petitions was based on the 8-hour ozone standard, which has 
been held unconstitutional by the court--in spite of the fact 
that Carol Browner doesn't believe it. I think it is important 
to note that while the Constitutional decision was a split 
decision, all three judges agreed that the standard could not 
be enforced.
    I believe most of these problems could have been avoided if 
the EPA had bothered to work collectively with all of the 
regions affected by these decisions. Last year, a group of 
midwestern and southeastern Governors offered a compromise 
solution which would have addressed over 75 percent of what the 
EPA regulation would have accomplished, and this would have 
avoided the lawsuit and allowed the program to continue. 
Interestingly enough, the Senator to my right, Senator 
Voinovich, was the Governor who was the chairman of the 
committee of these regions, I believe, and was very much 
involved--was more involved, probably, than any other Governor 
of any State.
    Senator Voinovich?

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

    Senator Voinovich. Thank you, Mr. Chairman. I would like to 
thank you for conducting this hearing today on EPA's NOx SIP 
Call.
    I always like to preface my remarks--and I think the 
members of this committee are getting tired of this--but I 
consider myself to be an environmentalist. I am the father of 
the Ohio Environmental Protection Agency. When I was in the 
legislature, I was responsible for creating the House 
Environment Committee, and I have tried to be very responsible 
throughout my career in government to be an environmentalist 
and to try to protect the health and welfare of our citizens.
    I would like to give a warm welcome to Mayor Tom Nye of 
Hamilton, Ohio. Hamilton is a great city and is the seat of 
Butler County in southwestern Ohio.
    Mr. Mayor, I would like to congratulate you and your 
citizens. They had a choice of either building a coal 
generating facility, and decided to spend more money to build a 
hydroelectric facility on the Ohio River to provide energy for 
your community, and I think that's the best evidence. You can 
always tell where people's principles are when you see what 
they do with their pocketbooks.
    While I was Governor of Ohio I became concerned that the 
EPA was not taking into consideration cost benefits and sound 
science during their rulemaking process. I was particularly 
concerned about their ozone and particulate standards and the 
NOx SIP Call. In fact, Mr. Chairman, I spent over 100 hours in 
trying to convince EPA, the Clinton Administration, Members of 
Congress, and members of this committee that the cost of the 
new standards to this country far outweigh the benefits to 
public health and the environment. In fact, I think I spent 
some time with you a couple of years ago on this. In fact, 
according to EPA's own estimates, the cost for implementing the 
NAAQS standard for ozone exceeded the benefits. The President's 
own Council on Economic Advisors predicted that the benefits 
would be small, while the cost of reaching full attainment 
could total some $60 billion.
    I also do not believe the Administration knew enough about 
the science behind these rules to finalize them. In the case of 
PM2.5, after the rule was finalized, the 
Administration has consistently returned to Congress to ask for 
funding to research the effects of PM2.5, and it 
seems to me they should have done that scientific research 
before issuing the rule.
    I would like to note that at the time, Senator Inhofe 
provided significant help to the States by amending TEA-21 to 
help provide more reasonable timelines to implement ozone and 
particulate matter requirements.
    Just last month, a U.S. Appeals Court remanded EPA's ozone 
and PM2.5 standards, ruling that EPA did not justify 
its decision with sound scientific evidence. Ohio was a party 
to this lawsuit, which began when I was Governor. The court 
didn't say that EPA couldn't regulate at these levels, but that 
EPA didn't give justification for doing so.
    That's been my point all along. I have argued that the 
NAAQS standards and NOx SIP Call were going to be costly to 
implement, and that the investments to achieve them could not 
be supported by sound science.
    Shortly after the NAAQS decision, the same Appeals Court 
granted a State petition to stay the NOx SIP Call until it 
decided on the lawsuit by Ohio and other States.
    I believe one of the most obvious examples of EPA's lack of 
regard for reasonable approaches was witnessed by midwest 
States during the Ozone Transport Assessment Group process, and 
announcements of the final rules for the NOx SIP Call by the 
EPA. OTAG is a partnership among 37 States, including Ohio, 
environmental groups, and industry. It recommended NOx 
reductions in amounts up to 85 percent, along with completion 
of sub-regional models. Ohio concurred with this 
recommendation. I recall that at the time there were some 
people who argued that we shouldn't; we concurred with that, 
but we did say that we ought to look at sub-regional modeling 
to see what could be done to achieve the standard.
    However, USEPA chose to impose an across-the-board uniform 
85 percent reduction, despite data demonstrating little or no 
impact from the many States in OTAG. In essence, USEPA simply 
chose the level of pollution control it wanted utilities to 
achieve, and implemented it without regard to air quality 
impact.
    The midwest and southern Governors proposed an alternative 
NOx strategy that made much more sense for meeting the new 8-
hour ozone standard--by the way, that's the standard that the 
court has overruled. It required a good faith downpayment of 65 
percent reductions. In 2001, States would analyze whether 
additional controls were necessary to meet the 8-hour ozone 
standard by 2009. By the way, that's a full year earlier than 
permitted under the USEPA approach. Then if additional controls 
were necessary, they would have been implemented; however, if 
the 65 percent reductions met the standard, then additional and 
very expensive controls wouldn't be necessary. That's logical.
    The Governors thought it was a good and fair proposal that 
would have achieved attainment of the 8-hour standard, but EPA 
ignored this reasonable approach and finalized the most 
stringent controls possible for NOx in 2003. The final rule 
also sets up a system to wait until 2007 to determine whether 
it works. Ironically, USEPA's final NOx rule sets up the 
possibility that attainment of the 8-hour ozone standard would 
actually be achieved a year later than the one the Governors 
proposed as an alternative.
    How could EPA justify going against experts in the States? 
How are human health and the environment protected under a 
model that would achieve the standards a year later than the 
Governors' proposal? I think this is another example of EPA 
being arbitrary and capricious. Instead of trying to work with 
reasonable people who care about the environment, they went 
ahead and said that it had to be done their way. I strongly 
believe that if EPA had worked with the States--worked with 
us--the lawsuits, like the one invalidating the NOx SIP Call, 
wouldn't have taken place. We could have averted that. Now it's 
in the court's hand to determine the validity of the NOx SIP 
Call, but I think the underlying question is what's going to 
happen with the Section 126 petitions. We will hear some 
testimony about that today.
    Despite pending litigation, it seems to me that utilities 
and States are planning to move forward with reasonable NOx 
reductions. I think the message that EPA should get is that the 
States involved in this issue want to work and go forward. The 
question is whether they will be able to do that.
    I thank you, Mr. Chairman, and I look forward to today's 
testimony.
    Senator Inhofe. Thank you.
    Senator Lieberman?

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

    Senator Lieberman. Thanks, Mr. Chairman.
    This is one of those mornings on which we are reminded that 
America is a big country, different regions, different points 
of view, but I thank you very much for holding this hearing. I 
am personally pleased to welcome Jane Stahl from Connecticut's 
Department of Environmental Protection as one of the witnesses 
today. I look forward to hearing her testimony on this 
important issue.
    Ms. Stahl is here today, I suppose, for the same reason 
that I was very anxious to be here myself, which is to express 
our dismay that Connecticut is literally choking on the exhaust 
of others, that the health of our residents is at risk, and 
that our government has been rendered all but powerless to do 
anything about it.
    If that sounds strong, it is meant to. Although the subject 
and the vocabulary of our discussion this morning may seem 
arcane, sometimes theoretical, the consequences involved are 
real and they are threatening.
    The problems that I have just described are not new to 
Connecticut or its neighbors. We have been plagued by the 
transport of ozone air pollution, which is, as you know, the 
main harmful ingredient in smog, from midwestern States since 
the passage of the Clean Air Act Amendments of 1970. From our 
perspective, ``plagued'' is no exaggeration. Transported 
pollution into our region has been measured at levels that 
exceed the public health standard by 80 percent. Ground level 
ozone damages lung tissue, reduces lung function, and 
sensitizes the lungs to other irritants. Children are 
particularly vulnerable to these ailments.
    There is, in fact, a tremendous body of scientific research 
that has been developed and reviewed by the Ozone Transport 
Commission, a commission created by the Clean Air Act 
Amendments of 1990, which helps us understand both the sources 
and the consequences of transported pollution. Building on that 
research, a partnership effort by EPA, the States, industry, 
and environmental groups was instituted in 1995 to develop air 
quality modeling and recommendations for solving what we all 
acknowledged, including all of us here today, to be a 
complicated problem. In October of last year, EPA issued a 
final rule that reflected the input of these diverse 
stakeholders. The NOx SIP Call Rule, as it is known, 
established a regional cap-and-trade program for large sources 
of NOx emissions in 22 eastern States and the District of 
Columbia.
    In my view the rule is not only sensible, it is really 
essential as a tool to protect public health and retain 
flexibility in implementing pollution reductions. 
Unfortunately, as has been indicated just last month, the D.C. 
Circuit Court issued a partial stay on that proposed rule. The 
stay, as I read it, was not issued because there is a finding 
that the rule is not needed--the air is just as dirty today as 
it was before the ruling--it was issued because the rule is 
caught up in a separate dispute regarding delegation of 
authority in establishing new standards for measuring ozone 
pollution.
    Personally, I am hopeful that this challenge will be 
rejected; but in the meantime, I do think it's important to 
emphasize what is not being challenged, which is the need to 
establish standards to protect the public from the dangerous 
health effects caused by smog and soot. It is precisely this 
public health concern that means that we can't turn our backs 
on instituting a regional and responsible plan to curb 
dangerous levels of pollution. The NOx SIP Call Rule would, I 
think, achieve significant air quality benefits in an equitable 
manner.
    Approximately 67 million people east of the Mississippi 
River live in areas that have unhealthy levels of smog. EPA 
estimates that every year implementation of the controls 
proposed in the regional plan are delayed, there are between 
200 and 800 premature deaths, thousands of additional instances 
of moderate to severe respiratory symptoms in children, and 
hundreds of thousands of children suffering from breathing 
difficulties. This threat was localized over the Memorial Day 
weekend recently when the citizens of Connecticut suffered 
through several days of smoggy air that prompted State 
officials to ask people to drive less, avoid drive-up windows, 
and put off mowing the lawn. Health officials advised people to 
stay indoors and to avoid outdoor work and exercise. Just 
yesterday in our State's largest newspaper, the Hartford 
Current, there was a story about an epidemic of asthma among 
children living in Hartford, which I would guess has something 
to do, of course, with the quality of the air they're 
breathing.
    Court actions in this case are not just tying the hands of 
EPA. They also mean it is effectively impossible for the State 
of Connecticut to protect our own citizens, because Connecticut 
cannot achieve pollution standards required by law without 
regional action and regional help. In fact, there is one 
study--one modeling exercise--done that concludes that even if 
Connecticut removed every car from our roads, we would still be 
in violation of the 1-hour standard. Some say that required 
regional controls are extreme, burdensome, even draconian, some 
say, and will lead to a disruption of power service delivery; 
yet Northeast Utilities, which of course is a Connecticut 
company, has demonstrated that the reductions are achievable 
and that technology is available to meet the requirements 
without disruption to customers. The Tennessee Valley Authority 
has also announced plans to implement state-of-the-art controls 
to address ozone pollution.
    What may well be burdensome--and perhaps even draconian, at 
least in the contemplation of those who live in my State and 
neighboring States--are the costs that the northeast States 
will incur if we fail to adopt regional controls. Right now, 
utilities in the southern and midwestern States emit over 4.5 
times more NOx emissions than northeastern utilities. A study 
done by the Northeast States for Coordinated Air Use Management 
found that we will have to pay between $1.4 billion and $3.9 
billion for additional local controls to reduce ozone pollution 
if six upwind States fail to implement the NOx rule 
requirements.
    So, Mr. Chairman, ozone transport is a problem that is 
real, and from the point of view of our State of Connecticut, 
it is harmful. It can only be solved with a regional remedy.
    The NOx SIP Call Rule, in my opinion, is a reasonable and 
balanced remedy, allowing States flexibility in achieving 
reductions needed to protect public health.
    I look forward to hearing from our witnesses this morning 
about how we can work together to achieve the overriding public 
interest here, which is safeguarding public health.
    Thank you, Mr. Chairman.
    Senator Inhofe. Thank you, Senator Lieberman.
    I now ask our first panel to be seated at the table. The 
way we have divided the panels today is to start with the 
Honorable Sharon Treat, Maine State Senate, and you are the 
Senate Chair of the Joint Standing Committee on Natural 
Resources, I understand.
    Mr. Wayne Hill of Gwinnett County, in Georgia, the County 
Commissioner.
    And the Honorable Tom Nye, Mayor of Hamilton, Ohio. I have 
to say this to my friend, the Mayor, I was the mayor of a major 
city for three terms, and I know what a hard job it is. There's 
no hiding place.
    We will hear from each one of the witnesses. I would tell 
you that while we don't have many members here, all the members 
are represented here. You will receive questions for the 
record; we will keep the record open so that you will have an 
opportunity to respond to these. As you give your opening 
remarks, your entire statement will be made a part of the 
record, but I would ask you to try to confine your opening 
statement to 5 minutes, and that's why we have these cute 
little lights up here. After you all three have had your 
opening statements, we will have rounds of questioning from 
this table here, and I suspect other members will be coming in 
during the course of this.
    So we will start with you, Senator Treat.

  STATEMENT OF HON. SHARON TREAT, MAINE STATE SENATE, SENATE 
  CHAIR OF THE JOINT STANDING COMMITTEE ON NATURAL RESOURCES, 
                        GARDINER, MAINE

    Senator Treat. Thank you, Senator Inhofe and members of the 
subcommittee. Good morning. My name is Sharon Treat, and I am a 
State Senator in Maine, where I chair the Natural Resources 
Committee. I also serve as one of Maine's two representatives 
on the Ozone Transport Commission.
    As the only representative on this panel of more than 20 
States which are supporting EPA's efforts to control NOx 
pollution under Section 110 of the Clean Air Act, I will try 
today to present a regional perspective.
    At the outset, let me stress that the northeast States are 
not asking our upwind neighbors to take any regulatory actions 
that we are not willing to impose upon ourselves, nor are we 
asking upwind States to take actions that only benefit distant 
downwind States. The reality is that, upwind or downwind, ozone 
pollution is a problem that needs to be addressed. It affects 
our most vulnerable citizens, children and the elderly, and it 
knows no political boundaries.
    Already this year the smog has been really bad, as has been 
mentioned already, and summer just started on Monday. This is 
not just a northeast phenomenon. Between March 12 and June 12 
of this year, Ohio experienced 181 exceedances of the health-
based 8-hour ozone standard. Michigan had 76 exceedances; North 
Carolina had 43, and Georgia, 39. Also, North Carolina and Ohio 
on several occasions over the past weeks have exceeded the old 
1-hour standard. So clearly, any reductions in NOx emissions 
from upwind States will benefit the citizens of their States 
and their States' environment, regardless of EPA's standard.
    Over the past 25 years a significant amount of research has 
documented the long-distance movement of smog. Levels of ozone 
transported are clearly beyond the control of local reduction 
efforts within the northeast corridor. Maine is uniquely 
situated at the receiving end of much of this smog. Locations 
along the Maine coastline far removed from urban centers, such 
as Acadia National Park, typically exceed the 1-hour Federal 
ozone standard during the late evening and overnight hours, 
times during which ozone production is not possible due to the 
lack of sunshine, so it is not a local problem.
    How can we justify the continued operation of old 
grandfathered power plants without modern pollution control 
equipment in any of our States? Maine and many rural areas of 
the northeast will be unable to achieve clean air as long as 
these old power plants operate to 1950's standards.
    Let me be clear. Regional upwind control efforts are needed 
to augment--not to replace--additional local measures in 
downwind States. We are not asking somebody else to clean up 
our problem. We only ask that local measures go toward 
achieving clean air, and not for offsetting somebody else's 
pollution.
    I would like to put something in perspective here. Consider 
that NOx emissions from all source categories, including 
automobiles, trucks, and power plants, in Maine's largest city, 
Portland, totaled almost 28,000 tons in 1996. By comparison, a 
single power plant in southern Ohio emitted over four times as 
much NOx during the same year.
    While the State of Maine is itself not subject to the NOx 
SIP Call, Maine's Governor, along with other northeastern 
States, has committed to achieve the same NOx reductions from 
major stationary pollution sources within our State. In fact, 
in 1994 we joined with 11 other States and agreed to reduce NOx 
emissions from electric utilities and large stationary sources 
by up to 75 percent, roughly twice the mandatory reductions 
required under the Clean Air Act. Mainers and other 
northeasterners have been willing, time and again, to impose 
restrictions on themselves and their industries to control 
pollution, but without reductions in upwind States we will 
continue to have a smog problem.
    Speaking as an elected official--and I would say, a long-
time supporter of stringent in-State controls, both on 
stationary and mobile sources, not a politically unrisky 
position to take, I might add--I can report that this really 
creates a policy problem in our State. When scientific modeling 
and data demonstrate that implementing an IM program will not 
alter our attainment status, it is understandable that the 
inconvenience and cost of additional controls, such as IM 
programs, can be a tough sell, and it has been.
    This is not an abstract issue of meeting or not meeting 
Federal standards. It is a question of public health, as 
Senator Lieberman has pointed out.
    There is also a matter of our environment and our economy. 
Maine's economy is dependent on her natural resources: 
forestry, fishing, agriculture, and tourism. All are harmed by 
the effects of ozone and acid rain caused by NOx pollution. 
Loss of fall foliage damages a multi-million dollar fall 
foliage tourism season. Reduced sugarbush--maple syrup-
producing trees--comes from acid rain. Algal blooms in our 
marine ecosystems result in damage to our fisheries. Need I 
mention Maine lobster, to make my point more clearly?
    In conclusion, for over 20 years our country has 
perpetuated an illogical system in which pollution is free from 
the law as soon as it crosses State lines. After 20 years of 
collecting and reviewing the scientific data, EPA has finally 
responded with what we consider to be a measured first step to 
diminish the magnitude of NOx transport across State lines. All 
States will benefit from this cost-effective pollution 
reduction proposed by EPA.
    It is unfortunate that the inaction on the part of our 
neighbors has forced us in Maine and the northeast to turn to 
the Federal Government for relief. As a State legislator, I 
would have preferred solving this problem with my fellow 
legislators at the State level; sadly, that option has not--and 
apparently will not--present itself. It is precisely when 
States cannot solve problems on their own that Federal action 
is required. EPA should be commended for its recent efforts to 
bring science and fairness back to our air pollution control 
efforts.
    Thank you.
    Senator Inhofe. Thank you, Senator Treat.
    Mayor Nye?

      STATEMENT OF HON. THOMAS NYE, MAYOR, HAMILTON, OHIO

    Mayor Nye. Good morning, Mr. Chairman, Senator Lieberman, 
my own Senator Voinovich. My name is Tom Nye, and I am the 
Mayor of Hamilton, Ohio, a city of 65,000 people located in 
southwestern Ohio.
    Hamilton is a public power community that has owned and 
operated our nonprofit municipal electric system for our 
citizens since 1893. I testify on behalf of the Ohio Municipal 
Electric Association and its 80 public power communities on the 
need for USEPA to pursue cost-effective strategies for the 
control of NOx emissions.
    EPA's current NOx strategy has not adequately recognized 
the potential impacts on small public power communities. Public 
power communities urge EPA to adopt meaningful, yet reasonable, 
NOx reduction policies that mitigate the impact on small 
entities and localities.
    Like all communities, Hamilton seeks to provide a high 
quality of life for our citizens and to attract and maintain 
businesses and jobs; however, this depends on providing cost-
effective public services to residents and private sector 
employers. That is why Hamilton operates a municipal electric 
utility, and that is why we are very concerned that EPA's 
current policies may unduly raise costs to our customers and 
threaten the very viability and competitiveness of our public 
power system.
    Hamilton owns electric generation facilities totaling 206 
megawatts in capacity. This generation includes Hamilton Boiler 
No. 9, one 50-megawatt coal-fired boiler that will be subject 
to EPA's NOx SIP Call, FIP, and Section 126 control strategy. 
Hamilton also owns a 70-megawatt hydroelectric plant, located 
in the Greenup Locks and Dam Facility on the Ohio River. This 
is our primary source of power, backed up by Boiler No. 9 when 
river flow conditions do not permit generation.
    Hamilton's Boiler No. 9 is facing significant challenges 
under EPA's proposed NOx strategy, which I have detailed in my 
written testimony. I explain that Hamilton's plant could be 
seriously underallocated NOx allowances due to our voluntary 
pollution control activities and our reliance on the clean 
hydroelectric generation. Under EPA's proposed plan, we would 
be limited to operating for only 66 days out of 153 days in the 
summer ozone season, and face control costs of more than $7,000 
per ton of NOx removed.
    Hamilton's concerns mirror the overall concerns of Ohio 
public power about EPA's NOx control strategy. EPA's strategy 
goes beyond what is necessary to protect the health and the 
environment from ozone pollution and requires NOx controls that 
are not cost-effective. Indeed, EPA has recognized the 
potential for disproportionate impacts on small entities from 
these rules, and it has even issued guidance to the States 
calling for the mitigation of these impacts. However, EPA has 
not made sufficient efforts to implement such policies itself 
under its own NOx control strategy.
    Hamilton encourages Congress to continue playing a role to 
ensure that air pollution programs are effective and 
reasonable. Congress should consider the following four 
proposals.
    First, Congress should establish a NOx cap-and-trade system 
for the eastern United States. Localities, industry, and EPA 
agree that market trading of NOx emissions is the only cost-
effective manner to achieve NOx reductions. EPA is attempting 
to implement such a system; however, any system implemented by 
EPA under the current regulatory climate could be confusing, 
expensive, and ineffective, because it will be applied through 
a hodgepodge of voluntary State programs and Federal mandates. 
This situation deserves your Congressional attention.
    Second, Congress should examine whether the SBREFA act, the 
Small Business Regulatory Enforcement Fairness Act, is working 
at EPA.
    Third, Congress should consider phasing in NOx controls for 
small sources, such as Hamilton's. Small entities and sources 
need compliance flexibilities and extended deadlines to cost-
effectively comply with Clean Air Act regulations. Hamilton 
suggests that any regional NOx control strategy be phased in, 
similar to the successful SO2 acid rain program. In 
this way, larger sources of pollution are the focus of the 
initial reductions, which will ensure maximum environmental 
benefit, stimulate the development of control technologies and 
efficient pollution trading programs, and provide small 
entities with adequate time to meet their compliance 
obligations.
    Finally, Congress should establish a ``clean air 
partnership fund.'' EPA has proposed a new program that would 
provide grants directly to local governments for innovative, 
voluntary approaches to air quality improvement. This clean air 
partnership fund is exactly the type of assistance that 
localities like Hamilton need to make progress. We urge 
Congress to give serious consideration to this proposed 
program.
    In conclusion, Hamilton and the Ohio Municipal Electric 
Association support effective Clean Air Act requirements to 
reduce NOx and ozone pollution, but EPA needs to be more 
vigilant in identifying how these regulations might impact 
small businesses and local governments who need compliance 
flexibility in order to remain viable.
    Thank you.
    Senator Inhofe. Commissioner Hill?

STATEMENT OF HON. F. WAYNE HILL, GWINNETT COUNTY COMMISSIONER, 
                     LAWRENCEVILLE, GEORGIA

    Mr. Hill. Thank you, Mr. Chairman, and thank you, Senators, 
for giving me an opportunity to come today and share a little 
bit about my region.
    I am the chairman of a Board of Commissioners in a county 
that had 42,000 people in 1960; today, we have over 500,000----
    Senator Inhofe. Would you tell us where your county is?
    Mr. Hill. I am in the northeast section of Atlanta. I am 
part of the 10-county Metro Atlanta Region.
    I also serve as chairman of the Atlanta Regional 
Commission, and I am sure that with the air quality problems 
that you've heard about in Atlanta, you are very familiar with 
what we are dealing with there.
    While I am very sympathetic with others who are affected by 
reason of air quality, I realize there are some prices to pay 
for this. My very own granddaughter has respiratory problems, 
so I'm very aware of what ozone does. I think that because 
someone took a look at the air quality in the Atlanta area, we 
can truthfully say that the air quality is better in Atlanta 
than it was 25 or 30 years ago.
    As I mentioned earlier, I've been very involved with the 
State and the Atlanta region in trying to solve our problems, 
and ARC and our State EPD are working very hard to bring our 
region into compliance.
    I want to talk about a couple or three things here today: 
coordination and consistency at the Federal level; complexity 
of the clean air issues, and consequences of regulations--or 
change in budget, is the way I would phrase that.
    Let me talk about consistency. We appreciate what you folks 
do up here, but a lot of times we find out that different 
agencies interpret things very differently, and it throws us at 
the local level into a very hard position. Some of the 
decisions that have been made at the local level have thrown 
our county into very serious problems. Right now we have 
Federal projects that have been withdrawn because of some of 
the ozone problems that we have. We have four-lane roads going 
to two lanes; we will have a four-lane on each end. We have 
bridges that are two lanes, where we can't get our people 
across. I urge you to look at that as you move forward to 
change budgets and realize what effect it has already had on 
some regions.
    One of the other things that I want to talk about a little 
bit is that we've heard that Atlanta is the ``poster child for 
sprawl.'' I think some of the issues that we're dealing with 
here are creating more and more sprawl. As we push people 
farther out, then you're going to see our areas spread; and 
instead of combining the problems of 13 county areas, we're 
going to have problems statewide. To give you an example, I own 
a small cabinet company. I am three miles from the county line, 
or the attainment area. If I were three miles up the road, I 
wouldn't worry about clean air regulations in the Atlanta 
region. If we change these budgets, we're going to spread that 
even farther. People will move out even farther.
    Third, I want to touch on the consequences of regulations. 
As I mentioned earlier, we have roads that are being affected 
in our county. We in Gwinnett County have voted a sales tax, 
and it's very hard for me sometimes to explain to the public in 
general why we can't do things. The Atlanta area has never been 
in conformity. If we drop these budgets, we don't know if we 
ever will get into conformity. We have been working very hard 
for a long time to get our area to where we can meet the 
standards that we have today. If we're not able to meet those 
standards, we fear--and my own Senator Coverdale and I have 
discussed this--we fear we are going to shut our region down. I 
hope this group and the Congress will take into account what it 
is going to do to our economy.
    I am reminded of something that one of my close friends 
says: ``When we are hungry, we have one problem. When we are 
prosperous, we have many problems.'' I think that's where we 
are with some of these issues that we are dealing with here. If 
we were not a prosperous Nation, I'm not sure we would be 
paying as much attention to the clean air issues, or cleaning 
it up even further than we are today.
    So I would like to say about the 214-ton emissions budget 
we have in the Atlanta area, that we think that we can meet it. 
If it drops lower, we don't think we're going to make it; so we 
have to be very careful of what we do. Atlanta and our region 
pretty well drive the southeast. We do not need to be where we 
are hunting jobs or hunting places for people to travel to.
    We've got to find a way to do this other than just cars, 
but any time we move into the power plants, as the Mayor said 
here, the cost goes up. That affects our citizens. Everybody 
will tell you, ``Yes, we want cleaner air.'' I don't think 
you'll find anybody who won't. But when we put a cost on it, I 
think you're going to see people begin to think that we went 
too far.
    My theory is that if we are not careful--it's kind of like 
a pendulum--we'll swing over this way; if we go completely over 
here, people are going to want to throw out a lot of our 
standards completely. We have to get it back to the center. We 
have to be sensible and do the things we need to do.
    Thank you for letting me be here today and I look forward 
to any questions you might have. It's an honor, and I 
appreciate what you folks are trying to do.
    Senator Inhofe. Well, thank you, Commissioner. I think it's 
a good way to have this hearing, to have a State represented, 
and a city, and a county, because you have slightly different 
perspectives.
    I will start, Mayor Nye, with you. I understand that the 
EPA has an estimate that they have been using on cost per ton 
for removal of $1,468, and you had an independent engineering 
group that has come up with a figure of $7,554 per ton.
    I have been very critical of the EPA for using inaccurate 
figures. Back during the NAAQS fight, they originally were 
saying that it was going to cost $9 billion a year--that was 
the EPA's estimate--but the President's Economic Council came 
up with a figure of $60 billion a year, then the Reagan 
Foundation out in California came up with a range between $90 
billion and $150 billion.
    So I would like to ask you the obvious question here. What 
do you think accounts for this disparity in the cost? Then I 
would like to ask each of the others whether you have done some 
estimates, either on a statewide basis or a countywide basis, 
in your areas.
    Mayor Nye?
    Mayor Nye. I think there's a fairly easy answer to that. As 
I mentioned, we have the one boiler that will be affected by 
this NOx SIP Call. It is a 50-megawatt unit. The technology 
that we will have to purchase will be the same, whether for 50 
megawatts or whether it's 500 or 1,0000 megawatts, which is 
pretty typical for some of the IOUs, the Investor-Owned 
Utilities. We're going to have to spread those costs over our 
base, our citizens. We serve as a public power community; we 
serve our citizens. We are not serving our stockholders; we are 
serving our citizens, and we will have to spread that cost over 
a much smaller base than some of the bigger companies will. I 
think that's really the issue at hand here.
    Senator Inhofe. Well, how about you, Senator Treat?
    Senator Treat. Maine has been part of the OTAG process, 
which is a regional group put together to do the cost estimates 
for 37 States, including many of those represented here today. 
OTAG found that controlling pollution from power plants was in 
fact a most effective cost-effective way of addressing this 
issue. Obviously, there are a lot of other controls out there.
    I think we have to ask the question, what are the costs of 
not taking action? That's what I tried to point out in my 
testimony. We have a natural resource-based economy, and 
although we have some manufacturing, our environment is our 
economy, and there will be significant economic costs to the 
people in our State if we don't take action.
    Senator Inhofe. Mr. Hill?
    Mr. Hill. In the county we don't have anything that I can 
tie it to. I have to look at the overall region whenever I talk 
about costs. I do know that our power companies have come up 
with some numbers, and it's going to be pretty astronomical, 
what will be passed on to our citizens. But I don't have 
anything like the Mayor does that I deal directly with.
    Senator Inhofe. Well, Mayor, I'm going to ask you to submit 
to this committee your engineering report and any supporting 
documentation, and then I will use it for this committee, but I 
will also submit it to EPA to get their response, because I 
think that is significant when we come up with a disparity like 
that.
    Mayor Nye. Mr. Chairman, if I could just followup also, one 
of our concerns, as I mentioned earlier, is whether SBREFA is 
being taken into account here. We feel it is not, and we feel 
that EPA should be held responsible, relative to the SBREFA 
concept. Our unit--our municipal production--is really a small 
business, so we feel that that entire SBREFA issue should be 
looked at very carefully; and if you just look at that, I think 
that this issue would be deemed quite different.
    Senator Inhofe. All right.
    Senator Lieberman, go ahead an take any time you want, 7 or 
8 minutes; don't necessarily comply with the 5-minute rule.
    Senator Lieberman. Thanks, Mr. Chairman. I'll try to stay 
within 5 minutes.
    On the question of costs--Mr. Chairman, I would like to ask 
that I be able to submit for the record letters and study done 
by Northeast Utilities System on the costs of complying with 
some of these things.
    Senator Inhofe. Without objection.
    [The referenced material follows:]
                                Northeast Utilities System,
                                         Berlin, CT, July 31, 1998.
                                vp-98-51
Ms. Carol Browner Administrator,
U.S. EPA,
401 M Street SW,
Washington, PC 20460

Dear Ms. Browner: I understand that you met last Friday with several 
utilities in the Northeast to discuss the companies' experience with 
nitrogen oxide controls. We were unable to attend the meeting, but I 
wanted to relate to you our experience with Selective Catalytic 
Reduction (SCR) technology, which we installed at PSNH's Merrimack 
Station In 1995. Mr. Helms of your staff visited our Installation in 
October 1997.
    Three issues being debated are the technical feasibility of SCR, 
the feasibility of retrofitting many units by 2003, and potential 
impacts on electric system reliability. In our experience the Merrimack 
Station SCR system is effective in removing NOx, can be installed 
fairly quickly, and the installation has minimal impact on the 
availability of the generating unit.
    We decided to install an SCR system at Merrimack Unit 2 in response 
to New Hampshire's NOx RACT regulation. That regulation provided us 
with the flexibility to install and operate the least cost system to 
meet our emissions requirements. Despite no U.S. utility coal-fired 
boiler experience at that time, its international success made SCR our 
choice. The retrofit project took less than a year from inception to 
operation. While that was an accelerated time schedule, it is a 
testament to the capabilities of constructors and suppliers in today's 
marketplace. The Merrimack Installation was a fairly complex retrofit 
requiring considerable engineering effort, yet, despite the 
complexities of the site and the winter construction schedule, actual 
construction was completed in 5 months. The construction was timed to 
coincide with a scheduled maintenance outage; the SCR was built 
alongside the powerhouse while the generating unit was on line, and the 
final connections were made during the maintenance outage. Installation 
of the SCR only added 1 week to the pre-scheduled outage duration.
    Performance of the SCR has met all of our initial expectations. The 
unit met the design reduction levels, and did so at a total annual cost 
of about $400 per ton of NOx reduced. The cost per ton increases to 
about $600 if we only consider ozone season reductions. The SCR was 
designed to achieve greater reductions through the addition of more 
catalyst, which live did earlier in 1998. Preliminary results indicate 
a reduction of 85 percent from our original baseline emission rate.
    We expect that other companies' experiences will be similar to 
ours, once they commence the installation and operation of SCR's. There 
appears to be adequate vendor capability and interest to meet the 4-
year schedule envisioned in the SIP call. We don't think our 1-year 
project length will be unique; in fact, we are considering a second SCR 
at another coal-fired unit on our system. Should we decide to go 
forward, we would expect this second unit to be operational by June 
1999.
    The SCR system at Merrimack has had minimal impact on the 
reliability of the generating unit. During our 3 years of SCR 
operation, the generating unit has achieved some of the highest levels 
of availability in its 30-year history, and established new ``longest 
continuous operation'' benchmarks.
    In our opinion, installation of NOx controls to meet the proposed 
budgets across the 22-State region is entirely feasible, can be 
achieved before the 2003 ozone season, and can be achieved with little 
(if any) impact on system reliability. We hope to meet with you in 
September to discuss this and other Issues. Please call me (and/or 
another contact?) If you have questions or would like to discuss this 
prior to September.
            Very truly yours,
                                         William J. Nadeau,
        Vice President for Fossil/Hydro Engineering and Operations,
                                        Northeast Utilities System.
                                 ______
                                 
                                Northeast Utilities System,
                                                     June 25, 1998.
                                 d12678
Air and Radiation Docket and Information Centre,
Attention Docket A-96-56
Environmental Protection Agency,
401 M Street SW
Washington DC 20460

    Re: SPA Supplemental Proposal To Reduce regional Transport of Ozone

Dear Sir or Madam: The following comments on EPA's proposed rule to 
reduce regional transport of ozone through a NOx cap and trade program 
in the Eastern States are offered on behalf of the Northeast Utilities 
System (NU) companies, which include The Connecticut Light and Power 
Company, Holyoke Water Power Company, North Atlantic Energy Service 
Corporation, Northeast Nuclear Energy Company, Public Service Company 
of New Hampshire, and Western Massachusetts Electric Company.
    NU companies constitute the largest electric system in New England, 
serving 1.7 million customers. We currently participate in a variety of 
Clean Air initiatives, including EPA's Green Lights programs, and 
actively participated in the Ozone Transport Assessment Group (OTAG).
    NU has spent almost $40 million in the last 7 years to reduce 
fossil plant NOx emissions and comply with the Clean Air Act Amendment 
(CAAA). With those substantial efforts, NU has system-wide NOx emission 
rate which ranked tenth best among the 50 largest Eastern utilities, 
according to a 1996 NRDC Benchmarking Report ``Air Emissions of Utility 
Electric Generators in the Eastern U.S.''
    EPA's proposed rule represents an effective approach to addressing 
regional ozone transport by achieving the necessary NOx emissions 
reduction from all sources across the 22 eastern States. Our comments 
address the following areas:

    Allocation Method
    EPA's Corrected Allocation Figures
    Trading Program
    Voluntary Inclusion of Other States
    Phase II NOx Exemption
    Timing of Reductions

    In addition NU wishes to reiterate comments made in its March 9 
letter (attached) commenting on EPA's original proposal.
Allocation Method
    The recommended allocation method should be based on actual heat 
input (in mmBtu) of the unit as proposed. However, NU is concerned that 
EPA is apparently suggesting that the SIP approval process will be more 
difficult and time consuming for States that depart from the 
recommended approach. (63 FR 25931) EPA should not question a State's 
allocation method as long as the State's total allocations for a 
particular year do not exceed the appropriate aggregate tons of 
emissions.
    Over time, the allocation should shift from a fossil-based system 
to one which includes all energy sources, whether or not fossil-fuel 
generated. Such a system will provide an additional economic incentive 
for generation which does not emit NOx, such as nuclear, hydroelectric, 
and renewable sources.
Emission Allocation Numbers
    EPA's corrected emission allocation numbers are more acute then 
those projected for the 2007 baseline under the original proposal. 
These numbers include sources inadvertently omitted from the original 
inventory, including NU sources. Further, these numbers reflect a 
growth in the amount of generation in New England, especially in 
Connecticut. This is consistent with NU's projections for this area.
Trading Program
    EPA has done a good job minimizing the difference between its 
proposed trading program and that already approve by the Ozone 
Transport Commission (OTC). In this light, NU supports EPA's proposal 
to include sources over 250 mm/BTU/hr or over 25 megawatts with States 
reserving the right to also include as ``core'' sources, up over 15 
megawatts.
    EPA has requested comment on the inclusion of addition types of 
sources. States should have the right to add additional sources 
including municipal waste combusters, internal combustion engines, 
kilns, calciners, and process heaters. Included such additional sources 
world give these States incentives to reduce emissions below regulatory 
limits. If such sources are included, the State allocation should be 
revised as necessary.
    EPA has also requested comment on banking. The program should 
include a banking option to provide an incentive for covered sources to 
reduce emissions. Without it, reduction credits would be lost if not 
used in the year made.
    Any concern banking would lead to a large number of allowances 
flooding the market and causing ozone exceedances in a particular year, 
can be addressed through flow control. To prevent allowances from being 
bankable under one program but worthless under the other, EPA's flow 
control should be identical to the one contained in the OTC NOx budget. 
Under such a system EPA would set a ratio of two to one for banked 
allowances whenever the percentage of banked allowances exceeded 10 
percent of the trading program budget for that control period.
    Finally, generators should be allowed to bank early reduction 
credits in order to encourage air quality improvements as soon as 
possible. By September 30, 2002, the beginning of actual 
implementation, States would determine how many early reduction credits 
had been created, and would be required to reduce their allocations by 
this amount. This would prevent use of early reduction credits from 
casual ozone exceedances.
Voluntary Inclusion of Other States
    Utilities and large sources in States not covered by the rule 
should be allowed to opt into EPA's 110 trading program, provided they 
agree to adopt either the allocation formulae contained in the SIP call 
or the OTC's Phase III limits. These limits are comparable to those 
proposed for power generators and large industrial sources in the SIP 
call, so the reductions required would be similar. Additionally, 
allowing these sources to opt into the 110 trading program would allow 
for the seamless trading program discussed above. This issue is 
particularly relevant to Maine, New Hampshire and Vermont--the three 
northernmost States in the Ozone Transport Region. Excluding sources in 
these States from the trading provisions in the SIP call would lead to 
difficulties in maintaining a regional program.
Phase II NOx Exemption
    EPA should retain the authority to relieve boilers subject to the 
cap-and-trade rule from the Phase II NOx limits, as proposed. This 
approach is consistent with the purposes of the CAAA and would allow 
utilities to take advantage of the cost savings that result from 
flexibility, within a cap, to trade allowances among utilities, as well 
as among boilers owned by a single utility.
    However, the authority should only be exercised if compliance with 
the cap-and-trade program would achieve the same or greater overall NOx 
reductions in the same timeframe. This timing condition may be 
significant, in that NOx Phase II limits are effective in 2000, 3 years 
before implementation of the SIP call.
Timing of the Reductions
    The Agency should hold to, or accelerate, its proposed 
implementation schedule of September 2002 for requiring actual 
reductions. In any event delaying implementation beyond September 2002 
would be inconsistent with the CAAA as well as highly inequitable. 
First, the CAAA requires NAAQS be achieved ``as expeditiously as 
possible''. The timeframe proposed is both economically and 
technologically feasible (States Report on Electric Utility Nitrogen 
Oxides Reduction Technology Options for Application by The Ozone 
Transport Assessment Group: April 11, 1996). Second, under EPA's 
current Rate of Progress requirements and the proposed SIP call, many 
downwind nonattainment States, like Connecticut, will have achieved 
from 36 percent to 42 percent reductions from 1990 baseline emissions, 
after accounting for all growth, before the upwind, significantly 
contributing States would begin to implement control measures in 
September 2002. Third, the September 2002 date aligns with the OTC MOU 
Phase 3 schedule, requiring compliance with the uniform emissions rate 
by the 2003 ozone season.
    Although the rule requires that SIPs contain implementation of 
control measures no later than September 30, 2002 (40 CFR 
51.121(e)(3)), other sections in the rule, and EPA's ``Timeline for the 
Proposed Regional Ozone Transport Rulemaking'' suggest a later date is 
possible. In particular, the rule requires that that SIPs provide for 
compliance with the NOx budget during each ozone season beginning in 
2007. See 40 CFR 51.121(e)(2). Similarly, the rule and timeline state 
that each SIP revision must demonstrate that the State's measures, 
rules and regulations are adequate to provide for compliance during the 
2007 ozone season. (40 CFR 51.121(g)(1)).
    NU wishes to confirm that all control measures necessary to comply 
with NOx budgets will be fully applicable by September 30, 2002, and 
that the timeline would not in fact allow 5 more years for the States 
to comply. Additionally, if this is true, NU questions why States 
should have an additional 5 years to demonstrate compliance.
    In conclusion, NU believes EPA's proposed rule represents an 
effective approach to addressing regional ozone transport and urges the 
agency to go forward with rule implementation as soon as possible. 
Thank you for the opportunity to comment. If you have any questions, 
please contact Mr. Charles F. Carlin, Principal Engineer (860-665-5344) 
or Mr. Richard A. Miller, Manager Environmental Regulatory Affairs 
(860-665-5480).
            Very truly yours,
 Dennis E. Welch, Vice President for Environmental, Safety 
                                                and Ethics,
                                        Northeast Utilities System.
                                 ______
                                 
                                Northeast Utilities System,
                                                     March 9, 1998.
                                 d12150
Air and Radiation Docket and Information Center,
Attention Docket No. A-96-56
U.S. Environmental Protection Agency,
Washington DC 20460.

    References: EPA Proposal To Reduce Regional Transport of Ozone
Dear Sir or Madam: The following comments on EPA's proposed rule are 
offered on behalf of the Northeast Utilities System (NU) companies, 
which include The Connecticut Light and Power Company, Holyoke Water 
Power Company, North Atlantic Energy Service Corporation, Northeast 
Nuclear Energy Company, Public Service Company of New Hampshire, and 
Western Massachusetts Electric Company.
    NU companies constitute the largest electric system in New England 
serving 1.7 million customers. We currently participate in a variety of 
Clean Air initiatives including EPA's Green Lights programs, and 
actively participated in the Ozone Transport Smear Group (OTAG). In 
1996 NU won an EPA Environmental Merit Award for installing Selective 
Catalytic Reduction at Merrimack Station in New Hampshire. NU has spent 
almost $40 million in the last 7 years to reduce fossil plant emissions 
and comply with the Clean Air Act Amendments (CAAA). With these 
substantial efforts, NU has a system-wide NOx emission rate which 
ranked tenth best among the 50 largest Eastern utilities, according to 
a 1996 NRDC Benchmarking ``Air Emissions of Utility Electric Generators 
in the Eastern U.S.''
    NU believes that the proposal represents an effective approach to 
addressing regional ozone transport by achieving the necessary NOx 
emissions reductions from all source sectors across the 22 eastern 
States. Our comments address several areas, including NU efforts to 
reduce NOx, the severity of the transport problem, specific comments on 
EPA's proposal, and NU experiences in installing NOx controls on 
multiple units.
1. NU Background
    Over the past decade NU power plants have implemented a variety of 
pollution controls, including water injection, overfire air, modified 
burners, low NOx burners, modified operation., and selective catalytic 
and non catalytic reduction outruns.
    Further, since passage of the Clean Air Act, NU has improved air 
quality by adding the capability to burn additional natural gas and 
using low-sulfur fuels.
    In addition to these direct efforts, NU has indirectly reduced 
pollution through substantial investments in customer conservation and 
energy-efficiency improvements. Specifically, NU companies have 
invested over $555 million since 1982 in a variety of programs, thereby 
avoiding air emissions from our power plants of approximately 20,800 
tons of NOx. Further, nuclear operations on the NU system, from 1968 to 
the present, have enabled us to avoid emitting over 400.000 tons of 
NOx.
    As part of the Ozone Transport Commission (OTC), NU's service 
territory States, Connecticut, Massachusetts, and New Hampshire, have 
committed to:

   by 1999, reducing ozone season major source NOx emissions by 
    65 percent (from 1990 levels) or emitting at a rate no greater than 
    .20 ls. per million BTU (whichever is less stringent), and
   by 2003, reducing ozone season major source NOx emissions by 
    75 percent (from 1990 levels) or emitting NOx at a rate no greater 
    than 0.15 lbs. per million BTU (whichever is less stringent).
    NU will comply with these OTC requirements and any requirements 
imposed by the current EPA rulemaking.
2. Severity of the Transport Problem
    On certain days, ambient ozone levels in each of the three States 
served by NU have exceeded the 1-hour ozone standard and would have 
exceeded the new 8-hour standard. These exceedannces occur despite very 
substantial and expensive reductions made by NU and other businesses 
over the past 25 years. Significant further local reductions are 
planned and will occur. However, stopping all anthropogenic emissions 
within these States will not attain the ozone air quality standards. 
Clearly, the influx of transported ozone and its precursors must be 
reduced to give all of the States a chance to provide healthy air for 
their citizens.
    In addition to the negative health impacts of ozone, States in non-
attainment suffer economic consequences. The cost of the added 
pollution controls and offsets made necessary by a States's non-
attainment status are disproportionately borne by the industries and 
residents within that State. Many existing sources in our region, 
including NU customers, have installed RACT for NOx or VOC, and new or 
modified sources are subject to BACT/LAER and offsets. Some sources 
recently have had to spend over $13,000 per ton to control ozone 
precursor emissions. In considering additional requirements for States 
such as Connecticut and Massachusetts, EPA must recognize that these 
States have already made considerable expenditures. In contrast, 
sources in upwind States, which significantly contribute to non-
attainment in NU's service territory, but which are themselves located 
in attainment areas, have avoided such costs to date. This inequity 
exists because the costs of downwind pollution are not captured in the 
costs of operating upwind sources. Imposing equal control requirements 
across the SIP call region will internalize these environmental costs 
and level the playing field among regions.
    The contribution of Midwest and Southern emissions is substantial 
and is likely to grow with electric utility restructuring and open 
competition. According to OTAG modeling, on high ozone days, 40 percent 
of the ozone in Eastern States is transported from Midwestern and 
Southern States. In 1996, the Federal Energy Regulatory Commission 
predicted that increased production of low-cost power in the Midwest 
and South might lead to NOx emission increases of over 500,000 tons per 
year. This prediction seems now to be coming true. According to a 
recently issued NESCAUM report, between 1995 and 1996 (when the Federal 
government opened up access to interstate transmission lines for 
wholesale competition), one Midwestern company alone, American Electric 
Power, increased emissions of NOx from coal-fired plants by over 51,000 
tons (See ``Air Pollution Impacts of Increased Deregulation in the 
Electric Power Industry: An Initial Analysis,'' January 15, 1998). This 
figure is significantly greater that the total 1996 NOx emissions from 
all NU sources, 31,964 tons.
3. Specific Comments
    The NOx reductions proposed by EPA are necessary for environmental 
protection, justified by modeling, and fully supported by law. The 
reductions will also have the ancillary benefits of reducing, regional 
haze, acid deposition, and eutrophication of water bodies such as Long 
Island Sound and Chesapeake Bay. Based on our experience with similar 
controls, the reductions are also technically and economically 
feasible. Specific comments below address the following: cap and trade, 
OTAG's recommendations, growth in utility production, timing of 
reductions, sanctions, transitional SIP issues, and mobile sector 
emissions.
            A. Cap And Trade
    The importance of capping regional NOx emissions cannot be 
overstated. The NO caps EPA proposes, however sweeping, are necessary 
to produce the ozone transport reductions needed to come into 
compliance with the CAAA. NU endorses the use of this system, rather 
than a ``command and control'' method to obtain reductions.
    Use of a cap and trade system is especially important in our 
industry. As we restructure, the utility industry is entering a period 
of uncertainty, particularly with respect to future use of generating 
units. It is critical that this operating uncertainty does not create 
uncertainty in the environmental benefits of EPA's rulemaking.
    The availability of an emission trading mechanism will provide 
flexibility to ensure cost-effective and timely compliance with EPA's 
proposal. Emission trading is proven means of reducing the total 
societal cost of a reduction program. One look no further than the Acid 
Rain Program to find an effective and workable system.
            B. OTAG Recommendations
    EPA's proposed rulemaking accurately and fairly reflects OTAG's 
recommendations.
    The results of OTAG modeling, air quality analysis and State 
attainment modeling have proven:

     The existence of widespread transport of ozone precursors 
    over the Eastern United States.
     The persistence of a summertime reservoir of elevated 
    ozone levels throughout upwind areas such the Ohio River Valley 
    which are carried by prevailing winds to the OTR;
     The existence of elevated ozone levels at the boundaries 
    of the OTR often as high as 80 percent of the 1-hour NAAQS and 
    sometimes actually exceeding the standard,
     The achievability of NOx controls on utilities of up to 85 
    percent reductions from the proposed 2007 baseline.
            C. Growth in Utility Production
    The Agency has accounted for expected growth to 2007 in setting the 
State-level caps. This is an appropriate approach and should allay 
State concerns that EPA's NOx budget might restrict future economic 
growth. However, the actual growth factors that EPA projects for some 
of the smaller States are questionable.
    Growth in utility production was projected using the IPM model. 
This model does a good job on a large scale, but, as indicated by EPA's 
State-to-State breakdown, can give some questionable results. For 
example, the IPM model forecasts a growth of 22 percent for 
Connecticut, compared to 71 percent for Connecticut's neighbor, 
Massachusetts. NU expects generation to be built in New England, but 
cannot predict where exactly within the region, it will be sited. To 
account for this uncertainty, NU suggests that EPA use region-wide IPM 
numbers--perhaps based on the regional categories used by North 
American Electrical Reliability Council.
            D. Timing of the Reductions
    The Agency should hold to its proposed date of September 2002 for 
utility reductions. This would align the implementation with Phase III 
of the OTCs NOx agreement, and simplify the process for these affected 
OTC States. Implementation any later than this date will only allow 
pollution levels in affected States to continue to be unhealthy and 
cause these States to remain in non-attainment.
    Delaying implementation beyond 2002 would be inconsistent with the 
CAA as well as highly inequitable. First, the CAA requires NAAQS be 
achieved ``as expeditiously as possible''--not whenever implementation 
is politically feasible. Second, under EPA's current Rate of Progress 
requirements and the proposed SIP call, many downwind nonattainment 
States, like Massachusetts and Connecticut, will have achieved from 36 
percent to 42 percent reductions from 1990 baseline emissions 
accounting for all growth), before the upwind, significantly 
contributing States first begin to implement control measures in 2002.
            E. Sanctions
    Because implementation of the reductions proposed will not occur 
until after the next (1999) milestone, EPA should not sanction Eastern 
States that cannot attain the standards because of significant 
contributions from upwind States. Specifically, EPA should not ``bump 
up'' such States, including Connecticut, Massachusetts, and New 
Hampshire, for failure to demonstrate attainment in ``serious'' 
nonattainment areas. Similarly, for these States, EPA should not 
require that offset ratios be increased for new construction and should 
not cutoff Federal highway funds or grants to State air programs. 
Finally, EPA should not require States affected by significant 
contribution from upwind States to make demonstrations of attainment 
and reasonable further progress (RFP) until after implementation of 
this proposal. Demonstration of attainment is impossible until upwind 
reductions are made, and imposing RFP reductions is inequitable until 
upwind States make comparable reductions.
            F. Transitional SIP Issues
    Although not part of the ozone transport proposal, EPA has recently 
issued a ``Concept Paper'' on implementing the New Source Review 
program in transitional and other areas, that relates in important ways 
to EPA's Section 110 proposal.
    Unfortunately, this Concept Paper would undermine many of the 
benefits of this Section 110 proposal. For instance, the paper proposes 
to allow States to designate reductions from the implementation of 
regional ozone control measures to be placed in an ``offset pool'' 
which could then be used by new sources. Reductions should not be 
displaced by the construction of new sources, except to the extent that 
the reductions are surplus and go beyond the regional control 
obligations.
    Further, the Concept Paper would allow sources in transitional 
areas to satisfy BACT rather than LAER. This is inequitable, as sources 
in other non-attainment States must meet LAER. Further, the Concept 
Paper suggests that the NOx threshold for BACT would be 100 tons in 
transitional areas, significantly higher than the 40/25 ton threshold 
in non-attainment areas.
    It questionable whether EPA has authority to make such concessions 
to any State, and unfair to give such concessions to only certain 
States. If indeed, EPA has authority to make such concessions, it 
should grant them to all States in non-attainment. OTC States, such 
Connecticut, Massachusetts and New Hampshire, which have expended 
millions of dollars in improving air quality, and warrant such 
concessions more than do new non-attainment States which have not made 
any progress to date.
            G. Mobile Sector Emissions
    EPA must require reductions from all source sectors commensurate 
with their contribution. Nationally, in 1995, the mobile sector 
contributed 48.7 percent to NOx emissions (National Air Quality 
Emissions Trends Report, 1995). However, the proposal would not mandate 
any State controls on mobile sources (though it assumes large 
reductions will be obtained through existing SIP measures and federally 
required programs). Even assuming the Federal reductions hoped for from 
the mobile sector, this sector will grow and will constitute a larger 
piece of the NOx pie totally. For example, if the reductions proposed 
in this rule are implemented, in Connecticut in 2007, mobile emissions 
would be eight times utility sector emissions. Accordingly, EPA must 
compel further reductions from the mobile sector.
4. NU Experience with NOx Controls
    Proposed requirements are reasonable, based on similar NOx controls 
installed at NU-installed various types of NOx controls on its fossil 
fuel units in 1993-95. These controls were required by RACT regulations 
in the three States in which we operate. The units, controls, 
effectiveness, and costs are listed in the attached table.
    At the start of our effort, we were concerned that NOx controls 
would be technically difficult and extremely expensive. We began with 
an exhaustive program to identify feasible control options for each of 
our units, and found that reductions were not only achievable but also 
less expensive than first thought. As the table shows, we installed a 
wide range of NOx controls from simple combustion modifications to 
selective catalytic reduction. We have operated with these controls for 
approximately 3 years, and have seen little if my impact on unit 
availability.
    It is important to note that all of our controls were installed 
concurrently, and at a time when many other units in the Ozone 
Transport Region were also installing controls. We were able to manage 
this program without exhausting the vendor supply, and without an 
impact on system reliability. Most of the work was done during 
previously scheduled maintenance outages, which in some cases had to be 
extended slightly.
    Thank you for the opportunity to comment. If you have any 
questions, please contact Mr. Charles F. Carlin, Principal Engineer 
(865-665-5433), Mr. Richard H. Pershan, Environmental Analyst, (860-
665-5296), or me.
            Very truly yours,
         Richard A. Miller, Manager, Environmental Affairs,
                                        Northeast Utilities System.
                                 ______
                                 
                                Northeast Utilities System,
                                                    March 19, 1996.

    D09723

Mr. Peter Tsirigotis
Air Docket Section (A-131)
Attention Docket No. A-95-28
U.S. Environmental Protection Agency,
Washington, DC 20460.

Dear Mr. Tsirigotis: Northeast Utilities Service Company (NUSCO), as 
agent for Public Service Company of New Hampshire (PSNH), Holyoke Water 
Power Company (HWP). Western Massachusetts Electric Company (WMECO) and 
The Connecticut Light and Power Company (CL&C), is pleased to offer the 
following comments on EPA's proposed NOx emission limits under Title IV 
of the Clean Air Act Amendments (CAAA). We are encouraged that this 
proposal from the EPA is requiring further controls on major emitters, 
and very much agree with the Agency's approach of setting emission rate 
targets rather than specifying a particular technology such as low-NOx 
burners. This allows companies to determine the most economic controls 
for their specific units. On balance, the proposed rule is a reasonable 
one and should be adopted.
    Our comments comprise three major points:
    A. Based on our experience with installing NOx controls, the 
omission limits you have proposed are reasonable and attainable.
    B. Since this rule is not aimed at attaining the ozone standard 
under Title I of the CAAA, it should not be used a substitute for NOx 
control recommendations currently emanating from the Ozone Transport 
Assessment Group (OTAG) process.
    C. There are significant secondary benefits to be gained from 
controlling NOx emissions beyond reductions in acid rain, ozone and 
ozone transported to upwind States.
    Additionally, we suggest some potential improvements that may make 
the rule easier to implement.
    A. NUSCO operates six coal units that will be covered by the 
proposed rule. Each is already attaining State limits similar to the 
limits EPA has proposed, utilizing NOx controls that were installed 
under State rules for NOx RACT required by Title I of the CAAA. In 1990 
and 1991, we were concerned about the expense and difficulty of 
installing these controls. However, we found that the installations 
were substantially less costly than we had thought. We currently are 
operating a Selective Catalytic Reduction (SCR) unit on Merrimack 2, a 
Selective Non-Catalytic Reduction (SNCR) unit on Merrimack 1, a Low NOx 
Burner/Over Fire Air (LNB/OFA) system on Mt. Tom, and combustion 
modifications with OFA on three units at Schiller Station. Cost 
information on each installation is shown on the attached table, as 
explained in the table ``Notes'' these numbers are estimated. Our 
estimated control cost ranged from $141 per ton at Schiller (Combustion 
Modifications/OFA) to $603 per ton at Merrimack 1 (SNCR). All of our 
control costs are well within the range that EPA cites in the preamble 
of its proposal, and are generally at the low end of the range.
    B. It is important to keep in mind that NOx emissions limits 
proposed here for coal fired power plants do not address attainment of 
the ozone standard. While the resulting reductions will move in the 
direction of attainment, they do not go far enough to reach these 
goals. The Title IV reductions should not be the only regional NOx 
reduction program, it is realized by those of us living and working in 
the Northeast that a more comprehensive NOx/ozone program is required.
    C. There are secondary benefits (beyond reducing acid deposition) 
to lowering NOx emissions from coal fired power plants. Concern over 
ambient concentrations of the particulate is heightening, and airborne 
nitrate is a large potion of the total concentration. Airborne nitrate 
also contributes to degradation in visibility. Additionally, there is 
mounting evidence that NOx emissions contribute to nutrient loading in 
water bodies such as Chesapeake Bay and Long Island Sound.
    We are grateful to have this opportunity to comment on this issue 
and trust these thoughts are considered in making the final ruling. 
Please call Mr. Charles F. Carlin, Principal Engineer, at (860) 665-
5344 to discuss this further or if you would like additional 
information.
            Very truly yours,
                                            R.G. Chevalier.
    Senator Lieberman. Thank you.
    I am going to read just briefly from it. I want to make 
clear that this was March 19, 1996, but I believe the data is 
still relevant. It was a submission to EPA.
    But interestingly, Northeast points out that it operates 
six coal units that will be covered by the proposed rule. It 
says that ``each is already attaining State limits similar to 
the limits EPA has proposed, using NOx controls that were 
installed under State rules.'' Then the writer of the letter 
says, ``We were concerned about the expense and difficulty of 
installing these controls; however, we found that the 
installations were substantially less costly than we had 
thought.'' I'm jumping ahead here--they do include cost 
information and the tables, that will now be a part of the 
record.
    The concluding sentence reads, ``Our estimated control 
costs range from $141 per ton at Shiller,'' which is the 
location of one of the coal-fired plants, ``to $603 per ton at 
Merrimac.''
    The final sentence, ``All of our control costs are well 
within the range that EPA cites in the preamble of its 
proposal, and are generally at the low end of the range.''
    So that's just the experience of one utility company, to 
add to the mix of data that we've received.
    Senator Treat, let me begin with you and ask you this. I 
understand that emissions of NOx have actually increased 1 
percent nationally between 1990 and 1997, but that in Maine you 
have actually cut NOx emissions by nearly 14 percent. Presuming 
that it's true, how have you done it?
    Senator Treat. Well, we've done it by putting additional 
controls on our power plants and facilities. We have done it by 
moving to cleaner fuels. We have done it by adopting the 
California Low Emission Vehicle standards, way in advance of 
what the Federal Government is going to do. We are going to 
have cars on the road that are going to meet the Federal 
standards 10 years earlier than that.
    So I think that it's a multifaceted strategy. It has been 
difficult politically to get it through, but we know we have to 
do it. We also know we have to do it if we're going to be 
asking folks in the midwest and other parts of the country to 
help out, as well.
    Senator Lieberman. Do I understand correctly that even with 
all that you have done, as you described--and done with some 
success, especially with the 14 percent reduction--it is still 
hard for Maine to achieve the national standards without a 
regional control strategy?
    Senator Treat. Yes, it is. I believe we're currently in 
attainment right now, but we could move out of it with a single 
exceedance in the area at issue. So we're right on the edge 
right now. We've already had some of the earliest exceedances 
that I've ever known; on that same Memorial Day I was kayaking 
and having a hell of a time with my own breathing, and was not 
surprised to find out that that was a day when we had very high 
levels of ozone in our State.
    Senator Lieberman. Right. Thanks.
    Commissioner Hill, you have talked about some of the air 
quality problems in the greater Atlanta region, and I looked at 
some of the EPA tracking of data from your area. An ozone 
monitor in Gwinnett County revealed 27 days during 1998 in 
which ozone levels significantly exceeded the ozone health 
standards, and a monitoring site in neighboring Rockdale County 
actually saw more than a month of bad air days.
    No court as yet has challenged the legitimacy of the 8-hour 
standard as a measure of public health protection. The 
disputes, as you know, are over the level to set, the 
threshold.
    I presume from your opening statement that those 
exceedances concern you as a public health issue for your 
region, and I just wanted to invite you to talk a little bit, 
not only from the regional point of view but your local point 
of view, how you think you can clean up the air.
    Mr. Hill. The exceedances that you were talking about on 
the 8-hour standards were high. We are controlled so much by 
temperature and humidity in the Atlanta area. Let me give you 
an example. I was in Harold Reheis' office, who is head of EPD. 
One day we were standing there talking, and he said, ``Wayne, 
right there is the problem.'' I said, ``What?'' He said, ``The 
trees. All the pine trees we have put off certain things that 
cause ozone.'' I said, ``Certainly you're not telling me we 
need to cut all the trees.'' He said, ``No, but if we lived in 
an area with no trees, we wouldn't have the problem we have 
today.''
    So we are hampered not only by the things that are being 
done. When you look at the station in Gwinnett County, I think 
we are one of the stations that don't exceed it as much as some 
of the other areas. Now, the 8-hour standards, I don't believe 
there's any way that we are ever going to meet those, simply 
because of the natural hindrances that we have that deal with 
those.
    Now, we do have a plan that we're bringing forward that 
will bring us into conformity with the standards that we have 
today, but it's going to be 2003 before we get there. It deals 
with power companies and it deals with vehicles, and if you'll 
look at the vehicles, they are not as big a part as they have 
been. With the growth that we've had in our area, I think we've 
done great.
    I fly a small plane. I don't see the dirty air like I did 
in the 1970's. We have actually done a good job in the Atlanta 
region. Now, at the county level we have a lot of people who 
say, ``Quit building roads, and you won't have any more cars.'' 
That will not solve our problems. We're actually creating more, 
and that's part of what I was touching on. When we have road 
projects that are stopped and we cause more congestion, we're 
actually hurting matters. So we're fighting a losing battle 
sometimes.
    Senator Lieberman. You know, I wanted to talk to you about 
your call for consistent guidelines in order to plan for 
activities like roadbuilding.
    My understanding was that the State Implementation Plans 
were really intended for the exact purpose of preserving State 
flexibility, and that they assume a multi-year budget of 
allowable emissions and give the States the opportunity, while 
they are trying to reach attainment of the Clean Air Act goals, 
to make some choices about what they want to do at what times. 
That's what I wanted to ask you, what you think about the NOx 
SIP Call Rules in the sense that they preserve flexibility, I 
believe, for some of the transportation sector decisions that 
you've talked about. Of course, we face that in Connecticut all 
the time ourselves.
    Mr. Hill. We have an air quality group that meets, and we 
were sitting in a meeting the other day. One group was 
interpreting the rule one way and one another way. We've got to 
find a way to get these groups together if we're ever going to 
solve problems. That's what I was referring to there. This 
particular issue dealt with how they model something. One group 
was modeling one way and one another, and we couldn't bring the 
two points together. So that's one of the issues when I say 
``consistency.'' If it was interpreted the same way, or 
somebody had the power to do that, it would make it easier.
    Flexibility is great, but if you can't meet the 1-hour 
standards, I'm not sure you're ever going to meet the 8-hour 
standards.
    Senator Lieberman. Thanks, Commissioner.
    May I take advantage of the Chairman's generosity and just 
ask a quick question of Mayor Nye?
    I find in Connecticut--and I bet that you find in Georgia, 
Commissioner, and you do in Ohio, and my friend and colleague 
from Ohio said it; he's an environmentalist--that these things 
matter to people, our constituents, particularly when they 
connect it to their health. Looking over some of those same EPA 
monitoring and tracking numbers, 26 counties in Ohio don't meet 
the 8-hour standard. Under the SIP Plan, all but one of them 
would be brought into attainment.
    Doesn't that make it in the interest of your area to be 
supportive of this NOx SIP Call?
    Mayor Nye. I think that's a very good question and a very 
fair question. Certainly, as Mayor, I hear the complaints of 
the citizens. I go to the barber shop and people pick my brain. 
I can't go out to dinner without people coming up to me saying, 
``I hate to interrupt your dinner, but''--so I hear all those 
kinds of comments.
    That is one of the reasons that in Hamilton, we have taken 
very proactive steps. Senator Voinovich mentioned our 
hydroelectric plant on the Ohio River. We did that in 1981, 
voluntarily. We spent almost $30 million more by building a 
hydroelectric plant than we would have for a coal-fired plant. 
We chose that; we chose to do that. We are also doing various 
other environmentally friendly things now, and I think that's 
one of our concerns. We feel that we are being penalized by 
this because we did so many of these things in advance, and now 
we are going to be asked to reduce our NOx emissions by 85 
percent. Simply by going to the green power that we did, we 
reduced our NOx by 50 percent right out of the gates. We don't 
feel that we should voluntarily reduce it by 50 percent, and 
then be asked to reduce it by 85 percent more. That's very 
onerous.
    The other issue in that regard is, during the baseline 
years of 1995 through 1997, we were upgrading Boiler No. 9, 
which I referenced, to be more environmentally friendly--again, 
voluntarily. Those were the baseline years that were used, and 
we weren't using our Boiler No. 9. Again, we feel that we are 
being penalized because those were abnormal years.
    Certainly, to the credit of the EPA--I have been to EPA and 
they have listened to our concerns. They are reviewing them 
right now, and we certainly hope that they will take those 
unusual circumstances into account.
    Senator Lieberman. OK. In some ways we all have common 
interests here. I wish we could work out a system where we 
weren't in apparent conflict, in spite of our common interests.
    I would say finally that on the question of constituents 
coming up to you while you are out, last year I was out for 
dinner with some friends and people kept coming up and asking 
questions. Finally one of the people that was there with me 
said, ``Boy, this is a real nuisance. People keep bothering you 
while you are out here for dinner.'' I said, ``One thing that 
would be worse would be if nobody came up to say hello.''
    [Laughter.]
    Mayor Nye. Amen.
    Senator Lieberman. Thank you.
    Mayor Nye. Senator, if I could follow up on that--being 
Mayor, I would like to pipe up here. You talked about common 
ground, and I think Senator Treat talked about why the States 
can't do this themselves. I think then-Governor Voinovich's 
National Governors' Association alternative is the exact type 
of program that we need to look at. I think it was a very 
reasonable approach. It addressed the concerns of the 
environment, but it also did it in a cost-effective manner. The 
Governors got together, with Governor Voinovich's admirable 
leadership. I think we need to look at that long and hard. I 
think that could mitigate much of the trouble that we're having 
right now.
    Senator Inhofe. I think that probably answered Senator 
Voinovich's first question.
    [Laughter.]
    Senator Voinovich. Well, it's interesting, depending on 
where you're at and your perspective on this.
    First of all, Senator Treat, I would like to congratulate 
you for the steps that your State has taken to try to solve 
your own problem. I would like to pint out that while I was 
Governor of Ohio, we doubled the budget of the EPA. When I came 
in as Governor, 26 regions of the State weren't attaining the 
1-hour ozone standard, and when I left, all of them but one had 
been approved, and we are waiting for a rule from EPA for that 
one area right now. In 1997, I vetoed legislation to remove 
Ohio's emission testing program, which we put in in 1996. So I 
know a little bit about the heat that one takes in moving 
forward with environmental policy.
    I would also like to point out that up through 1995, our 
utilities spent $3.7 billion, which at that time was more than 
all of the northeastern States put together had spent on 
investing in their power plants.
    Last but not least, we have, Senator Lieberman, come up 
with a plan to deal with the new 8-hour standard that the court 
just said wasn't reasonable. As Mayor Nye has mentioned, we 
think it's a reasonable approach to deal with the problem.
    I think the issue now, with this court business going on, 
is whether there is a possibility in terms of the 126 petitions 
that were filed to work something out so that we can move 
forward with this, or is this going to be hung up in court for 
the next 2 or 3 years, which in my opinion doesn't do anything 
for the environment?
    So that's the real issue here: can we work together, 
through the EPA, to come up with something that is reasonable?
    I would also like to point out one other thing, because I 
spent a lot of time on this issue. Back in 1997--I don't know 
whether you're familiar with this or not--there was a memo from 
the Commissioner of Maine's Department of Environmental 
Protection to Governor King, and it stated that ``the auto and 
utility emissions from Massachusetts and New Hampshire have the 
greatest impact on Maine air quality.'' In addition, the memo 
acknowledges that the New England States--well, I'm not going 
to get into the issue of the 126 petition.
    But the fact of the matter is that--you know, we could shut 
down all our power plants; and, Senator Lieberman, I don't 
think that your State would be reaching the 1-hour ozone 
standard. I think that we all ought to get together and try to 
work at coming up with a solution that is reasonable, and move 
forward. I think that, to me, would be the most important 
thing, Mr. Chairman, that could come out of this hearing. This 
other thing is going to be hung up and we don't know what we're 
going to do about the 8-hour and the particulate and so on.
    But there is a sense of cooperation here, of moving 
forward, by the midwest States and the Governors, and I think 
that it would behoove all of us to maybe get the OTAG group 
together again and talk about moving forward while all of this 
court thing is going on.
    Senator Treat. Did you want a response or a comment on 
that?
    Senator Voinovich. Yes.
    Senator Treat. Thank you.
    I have a real concern that I'm not sure that we have any 
standard right now. In my testimony it was ``this standard, 
that standard'' being violated. They are; it's not clear that 
we have a Federal standard. So certainly we need to be thinking 
about what's going on right now.
    But as to the question of ozone coming from Ohio, and 
whether it is reaching Maine or not, obviously it is not flying 
over all those other States and landing in Maine, causing all 
of our problems. But it is reaching States to the south of 
Maine, and those States are going over the standard, and a slug 
of air is coming up from them. How much of that is attributable 
to Ohio or some other State? Most of it certainly is coming 
from the States directly south of us, but we would not be 
getting that pollution from them but for the fact that they're 
getting a great deal of the ozone from outside their own 
borders.
    So it is a complicated scientific thing, but certainly it 
has been recognized that at least 500 miles worth of ozone 
transport is justifiable, and that goes a long way outside of 
our own borders, if you're starting from the south of the 
State.
    Senator Voinovich. Well, it's interesting that the SIP Call 
in your own region--you agreed to 75 percent, and yet the EPA 
is setting 85 percent for the midwest, and you just wonder 
about that.
    I think OTAG has also shown that most transport impacts 
occur within 150 miles of the source. The 126 petition seeks 
controls over 600 miles away.
    So I just thing that we get into a lot of this 
technicality. The main thing is, how do we work together to 
have a cleaner environment and do more for public health than 
we're now doing? There's no question that we've had exceedances 
in Ohio; we had them all over the country when the hot weather 
came in. We had the same thing--don't use your lawnmower, stay 
inside, and the rest of it. But that happens around the 
country. How do we all, as a country, work together to see if 
we can't do something about that, and at the same time 
understand that it has to be reasonable and meet good science 
and good cost-benefit analysis?
    Senator Inhofe. Well, let's just briefly have another short 
round here. Something that Senator Voinovich said sparked an 
interest in me, having been a Mayor and having also been in the 
State legislature, so I understand how these things work.
    How is all this affecting your planning? You have a 
situation where the EPA has issued a stay, but they're going 
forward with Section 126; of course, that would just be on the 
1-hour. If they should win their appeal, then it's going to be 
on the 8-hour? How do you anticipate this? Because you can't 
just wake up one morning and say, ``All right, now we're going 
to implement this.'' Are you having problems? Isn't it a little 
bit confused right now, Senator Treat?
    Senator Treat. Well, it is confused. I think one thing of 
interest here is that for some States, the old 1-hour standard 
was actually harder to meet than the new 8-hour standard. So 
it's not so clear that going back to the old standard is going 
to help everybody out in terms of meeting those standards. It 
really depends on the State and where they are and the weather 
patterns and all of these things.
    So it is an unclear thing. I think we need to, at least 
initially, make sure that there is some kind of standard out 
there, because this is a matter of public health. We just can't 
wait around for 2 or 3 years with nothing in place.
    So certainly it would be good to have some sort of rules 
out there for the time being. I don't have any problem with 
additional discussions amongst the States and with EPA. I think 
generally it is a benefit. We do think, though, that what EPA 
did overall made sense for us. You can talk about the timeframe 
for compliance, and I understand how hard that can be, 
especially on smaller businesses, but the fact is that many of 
the northeastern States have been asking for action to be taken 
for 10 or 20 years.
    So for us, we see it as coming long after it perhaps should 
have. The upwind States, I can understand their perspective. 
It's a lot to swallow all at once. It is tough.
    Senator Inhofe. Any comments on that? Commissioner Hill?
    Mr. Hill. I'd like to change hats and get my ARC hat on. 
That's one of the things that we deal with when we're talking 
about planning. We are talking about planning; most of our 
plans for the region are laid out over a 20-year period. When 
we have these things continually changing, it's very hard to 
deal with them. The thing that we've been dealing with lately 
is, we have a standard; we have a 1-hour standard. The minute 
we make the 1-hour standard, it drops to the 8-hour standard, 
and it is very hard to plan. It's a very tedious thing. We're 
working very hard, but some of those things don't have answers 
yet.
    Mayor Nye. I would agree with that. Right now Ohio is going 
through electric deregulation, which is also making our job 
very challenging. But to plan for something that may or may not 
occur is quite challenging.
    If the EPA regulations go through as presented now, it 
could literally put us out of business. After being in the 
public power business for 110 years, we might have to close our 
doors. To try to plan for that eventuality, and then try to do 
the appropriate things, we can't plan ahead. We can't buy a 
project that would be paid for over 20 years if, in 2 or 3 
years, we are going to be out of business.
    Senator Inhofe. Senator Lieberman, do you have some further 
questions?
    Senator Lieberman. I have no further questions for this 
panel, thanks.
    Senator Inhofe. All right.
    Senator Voinovich?
    Senator Voinovich. I have no more. Thanks very much.
    Senator Inhofe. All right. Well, thank you very much.
    Senator Inhofe. We will ask the second panel to come up to 
the witness table.
    Panel II includes Mr. Russell Harding, Director, Michigan 
Department of Environmental Quality, and Ms. Jane Stahl, Deputy 
Commissioner of the Connecticut Department of Environmental 
Protection.
    We will start with Ms. Stahl. You heard our instructions to 
the first panel; if you would try to keep your opening comments 
to 5 minutes, your entire statement will be submitted for the 
record.

STATEMENT OF JANE STAHL, DEPUTY COMMISSIONER FOR AIR, WATER AND 
    WASTE PROGRAMS, CONNECTICUT DEPARTMENT OF ENVIRONMENTAL 
               PROTECTION, HARTFORD, CONNECTICUT

    Ms. Stahl. Thank you Mr. Chairman, members of the 
committee. I will use up a little bit of my time to thank 
Senator Lieberman not only for his support of many of our 
efforts in the Department of Environmental Protection----
    Senator Inhofe. Your time in thanking Senator Lieberman 
will not be counted against you.
    [Laughter.]
    Ms. Stahl. Thank you so much.
    Senator Lieberman. Thank you, Mr. Chairman.
    Ms. Stahl. I also suggest that he does such a good job that 
many of my comments can in fact be cut back, so thank you, sir.
    Senator Lieberman. I want to state for the record, Mr. 
Chairman, that this is a Republican State administration that 
Ms. Stahl is speaking on behalf of.
    [Laughter.]
    Ms. Stahl. Well, let me state that I believe I am speaking 
on behalf of all of the citizens of Connecticut.
    I would like to start by highlighting the two points that I 
really do want to make here this morning, the first being that 
Connecticut and the other northeastern States cannot achieve 
our health-based air quality standards without actions by our 
sister States. The regional transport of air pollutants is real 
and harms all of our citizens.
    The second point is that reduced air emissions are 
technologically achievable and economically feasible without 
compromising electric reliability. Those are lessons that, 
unfortunately, we learned the hard way in Connecticut, but they 
are in fact lessons well learned.
    The State of Connecticut has been deeply involved in the 
search for a regional consensus-based solution to the problem 
of interstate transport of ozone. As a member of the Ozone 
Transport Commission, we have participated on the Ozone 
Transport Assessment Group from its inception, and fully 
support the development of market-based approaches to air 
quality management. We are disappointed by recent events that 
threaten the promise of cleaner air for all.
    To inject a sense of immediacy into this discussion, I 
would like to point out--and I deviate from my comments here 
because in the past day we've had another exceedance, bring us 
to a total of nine exceedances of the 8-hour standard, and 
additional exceedances of the 1-hour standard. This is very 
early in the season for us to have had those impacts, and it 
looks to be a long, hot, dry haul for us based on weather 
patterns. So it's not getting better.
    We in Connecticut have been engaged in a prolonged struggle 
to protect the public health of our citizens by bringing 
ground-level ozone concentrations down to levels which comply 
with the 1-hour ozone standard. We have taken great strides to 
control the primary pollutants that produce ozone by meeting, 
and often exceeding, the numerous requirements imposed by the 
Clean Air Act Amendments.
    Despite our vast improvements in our air quality, we 
continue to remain noncompliant with 1-hour standards. The 
chief source of the continued noncompliance is the overwhelming 
transport of ozone and its precursors.
    There are two maps attached to my testimony. Without going 
into great detail, and perhaps we can do that later, they do 
demonstrate the regional transport of ozone based on some 
significant monitoring and modeling throughout the years.
    So we are at a distinct geographic disadvantage in 
achieving our reduced levels of ozone all on our own. We are 
also geographically blessed, but we will save that for another 
time.
    Air quality monitoring data collected since the 1970's 
shows a significant contribution in the northeast originating 
from pollution sources outside the region. Transported ozone 
entering the northeast corridor has been measured aloft by 
aircraft at levels exceeding 80 percent of the 1-hour ozone 
standard, and over 100 percent of the unenforceable 8-hour 
standard.
    The issue of interstate transport of ozone and its 
precursors has not gone unnoticed by Congress who, in 
structuring Sections 110 and 176(a) of the Clean Air Act, 
recognized that Constitutional limitations prevent individual 
States from addressing problems associated with interstate 
transport of air pollution.
    In the absence of Federal leadership, Connecticut has 
reinstituted its 126 petition. We were hopeful of being able to 
do this kind of work in a more consensus-building atmosphere. 
We believed that the NOx SIP Call would allow us that regional 
approach and atmosphere, but still need to address the issue 
through whatever vehicles are available to us.
    Regardless of the future of the NOx SIP Call, Connecticut 
suffers from some of the worst air quality in the Nation. We 
have sensitive subpopulations who are affected by environmental 
pollutants such as ozone. Compliance with the 1-hour standard 
will only minimize, not eliminate, adverse health effects 
because many sensitive subpopulations are being stressed by 
other environmental constraints.
    Air quality modeling indicates that peak ozone levels will 
barely comply with the 1-hour standard in the year 2007, only 
if the NOx SIP Call as set forth in the NOx rule is fully 
implemented.
    I see that the red light is on. I am hoping that during 
questions and answers we will be able to address some of the 
economic information and technological feasibility that has in 
fact been demonstrated.
    I will stop here. Thank you.
    Senator Inhofe. Mr. Harding?

STATEMENT OF RUSSELL J. HARDING, DIRECTOR, MICHIGAN DEPARTMENT 
                    OF ENVIRONMENTAL QUALITY

    Mr. Harding. Thank you, Mr. Chairman and members of the 
committee. It is a distinct pleasure to be here this morning. 
My name is Russ Harding, Director of Michigan's Department of 
Environmental Quality.
    I would like to start out by thanking Senator Voinovich for 
his leadership as Governor, and now Senator, in these clean air 
issues, particularly in the challenge of the 8-hour standard, 
on which we have prevailed in court.
    Michigan has always been a leader in environmental 
protection. In fact, our air rules and regulations are much 
stricter than the Federal Government's. We have reduced 
emissions in our State by 75 percent in the last decade. 
Southeast Michigan is in attainment with the 1-hour standard, 
the largest industrialized area in the Nation to get that 
attainment status.
    However, EPA has continuously placed roadblocks in the way 
of States and played fast and loose with Congressional 
mandates. We have been forced to seek relief through the 
courts. Our position has been vindicated; the 8-hour standard 
for low-level ozone, as you know, was declared unscientific. 
The NOx SIP Call, which required midwest and southeast States 
to impose expensive and unneeded controls to prevent transport 
of ozone, has been stayed indefinitely.
    EPA's methodology for determining the culpability of States 
is significantly and scientifically flawed. EPA is defining 
``significant'' by cost. We have repeatedly asked them, what is 
``significant''? We are more than willing to meet whatever our 
culpability is. They come back and define ``significant'' as 
what it costs for controls. That's ludicrous.
    I convened a meeting last week of 11 State Environmental 
and Air Directors. I am not aware of a single State in the 
entire group that is unwilling to meet whatever our scientific 
culpability is in the northeast. This has not been a question 
of cost for us; it has been a question of doing the right 
thing, but doing the right thing that the science and 
technology require, not on a ``one size fits all'' mandate from 
Carol Browner. That mandate puts Alabama, Ohio, Michigan, 
everyone into the exact same prescriptive approach, which is 
not technically justified.
    We have conducted extensive modeling in our State to find 
out exactly what our contribution was. We were very 
instrumental and worked hard in OTAG. I personally attended 
many of those meetings over several years. We learned a lot 
about the transport of ozone. Using those models, we know 
exactly what our culpability is and are willing to meet that, 
and so are other States.
    Let me explain a little bit what our plan would do. Senator 
Voinovich, you touched on that earlier, and I appreciate that.
    We took a very aggressive position. Six Governors signed on 
to a plan; many other States had a very similar plan. We 
brought that forward. It is an environmentally superior plan to 
the EPA NOx SIP Call. We agreed to an early down-payment to do 
65 percent reductions. We further agreed to do all the fine-
grid modeling necessary to meet any culpability we had, to even 
meet the new 8-hour standard, which the courts have set aside 
now. It was a very, very responsible position on the part of 
the States. We worked long and hard for a long time to get to 
that. We committed to that. We were not even given the 
opportunity to discuss that in any meaningful way with the 
agency; it was summarily rejected. They said, instead, ``You're 
going to do it the way we want it done, and it's going to be 
done in a prescriptive manner and with the controls prescribed 
by us.''
    It was interesting, as I visited with States on this issue 
last week, every State has plans in the works to take care of 
their problems. Some are doing it different than others. For 
instance, North Carolina mentioned that they're going heavily 
at mobile sources. They want enhanced I&M throughout their 
State. In the case of Michigan, we are going ahead with a rule, 
which we will have promulgated this fall, which does a 65 
percent reduction in NOx. That will more than take care of 
culpability in the northeast, according to all the technical 
modeling. It will allow us to continue to meet clean air goals 
in our State. We have stepped forward to do that in the past 
and have achieved that. We are committed to that. We believe 
the citizens want that. It will also give us the opportunity 
for economic growth. We have worked closely with Dennis Archer, 
Mayor of Detroit, who has very much opposed these EPA rules and 
mandates without the kind of flexibility--and one thing that 
people often forget, on the NOx SIP Call, is that it imposed a 
budget cap and restriction on NOx on all of the States. Given 
that, it would be impossible to redevelop Detroit, impossible 
to continue to make progress on our brownfield sites that we 
have made to turn those back into a world-class city.
    What can Congress do? Quickly, there are several things 
that I would like to ask you to do. Again, I believe that Carol 
Browner has built a house of cards of unreasonable politics and 
bad science. That house of cards is falling, thanks to the 
courts.
    We do need some adult supervision at EPA. I believe that 
Congress needs to rein in the agency. It is clearly exceeding 
its Congressional authority. We need to heal the breach in 
regulatory ethics. Carol Browner has been in an advocacy role 
to the northeast States; she should be in an adjudicatory role. 
These petitions, for instance the 126 petition, should be 
looked at independently and not in an advocacy role.
    I think that a good faith effort--and I heard what can be 
done--a good faith effort right now would be for USEPA not to 
promulgate a rule on the 126 petitions, but instead meet with 
both the northeastern, midwestern, and southern States involved 
in this issue so that we can come up with a plan to address 
clean air in this Nation. We are more than ready and willing to 
work on that, as we have been for several years.
    In summary--I see my time is up--we appreciate your 
interest on this and look forward to working with you in the 
future.
    Thank you.
    Senator Inhofe. Thank you, Mr. Harding.
    We have an interesting panel up here in that we have an 
eastern State and a midwestern State, and then a southwestern 
State. While it might be said that I don't have a dog in this 
fight, I think we all want the same thing, and that's clean 
air. We look at the whole Nation, not just our individual 
areas.
    There is a meeting that is going to be called where we will 
have to leave at 20 minutes before the hour, so I am going to 
go ahead and defer to my two colleagues.
    Senator Lieberman?
    Senator Lieberman. Thanks, Mr. Chairman. I will be brief.
    Ms. Stahl, thanks for your testimony and your kind words.
    Just to make the point quickly, am I right that 
Connecticut's ozone levels would exceed the National Ambient 
Air Quality Standards even if all manmade emissions were 
eliminated by Connecticut?
    Ms. Stahl. That is in fact what our monitoring and modeling 
have shown us. Of course, if Senator Voinovich would like, 
perhaps we can model what would happen if those midwestern 
plants that he referred to earlier did in fact shut down, but 
that wasn't on our plate at the time. I hope he takes that in 
the humor in which it was offered.
    Senator Voinovich. I do.
    [Laughter.]
    Senator Lieberman. That's New England humor, you know.
    Senator Inhofe. You mean like adult supervision?
    [Laughter.]
    Ms. Stahl. But in fact, our monitoring has indicated and 
identified for us the fact that transport is a major cause--I'm 
not going to use the term ``significant'' here--but is a major, 
major cause of the ozone situation in Connecticut. We have 
monitors that have no sources anywhere in the vicinity, and yet 
they are tripped during certain wind patterns, clearly 
identifying both the direction of the transport and the extent 
of the transport's impetus. It is information like that on 
which we rely when we make statements like ``shutting down all 
of the manmade sources in Connecticut,'' but still not allowing 
us to achieve our goals.
    Senator Lieberman. Yes. I know from the statistics that 
while the national numbers on emissions of volatile organic 
compounds have dropped 8 percent between 1990 and 1997, in 
Connecticut we have reduced them by 19 percent. The NOx 
emissions have increased, as I mentioned to the last panel, by 
1 percent over that period, but we in Connecticut have cut them 
by 8 percent--not quite to Maine's standards, but a pretty good 
result. So that's part of the conflict.
    Let me just finally try to engage you and Mr. Harding in 
the discussion we have been having this morning.
    I hear what you have said. The State of Michigan has been 
taking steps to try to reduce NOx. Part of the problem is that 
it is such a large problem. The numbers that I have seen say 
that utilities in the south and midwest emit four and a half 
times more NOx than the northeastern utilities. One utility 
source in Michigan, Belle River in St. Claire County, emits 
almost six times more NOx than all of the electric utilities in 
Connecticut.
    The question is how to reconcile the numbers with the 
effort and come to a reasonable point. From our point of view, 
as you can imagine, Mr. Harding, we just think that what is 
happening is unfair. While I acknowledge, certainly, that 
you're making an effort, we feel we need more of an effort in 
light of all that we're doing--Maine, Connecticut, the other 
northeastern States, New York, New Jersey--to try to clean up, 
and still we're frustrated in that.
    Maybe I will start, Ms. Stahl, by asking you if you are 
able at this point to answer the question about--not only about 
what Michigan is doing not being enough, but more directly, if 
you had a chance to review some of the southeast and midwest 
proposals, the alternate proposals at this point, and proposals 
from the upwind States, why Connecticut feels those are not 
enough.
    Ms. Stahl. Again, I have to rely largely on the monitoring 
and modeling that we've done. We do recognize, and Mr. Harding 
and I have agreed on as many points as we have disagreed on 
over time in our roles in the States.
    This is one where our modeling shows us that regardless of 
what or how many more controls we institute in Connecticut or 
in the northeast, that unless the full reductions called for in 
the SIP Call as it is currently configured are effectuated, we 
will still not reach our health-based standards.
    So it is very cut and dried in terms of the modeling. So 
that's one answer.
    The other answer is that this is in fact a national 
problem, and because there are some--forgive me, and take it in 
the manner in which it is given--there are cost-effective 
solutions available to the midwestern States that are no longer 
available in the northeastern States. We have already grabbed 
that ``low-hanging fruit,'' if you will. Again, not to say that 
Michigan and other States have not done anything, but there is 
still available to them significant reductions at lower costs 
than there are available at similar costs in the northeast. So 
there is some amount of just contribution. There is a 
contribution to our problem; we are hopeful that there will be 
a contribution to our solution.
    The final point that I would make is that we will continue 
to institute new requirements in the State of Connecticut, but 
what we are hoping is that with some support from the midwest 
region, our efforts will not be used to offset the transport of 
additional pollutants, but in fact to further improve air 
quality.
    Senator Lieberman. Thanks. In light of the time, maybe you 
want to wait and respond to Senator Voinovich's questions.
    Senator Voinovich. Well, I think I would have asked Mr. 
Harding to respond to that as well.
    Senator Lieberman. The question is, we are acknowledging 
that you are taking steps which are clearly constructive and in 
the right direction--I would ask it real personally--why should 
they be enough for us, who are still feeling that we are in a 
dangerous health situation?
    Mr. Harding. Well, a couple of things. First of all, one of 
the basic tenets of the Clean Air Act has always been that the 
Federal Government sets the standards, and the States are left 
with trying to figure our how to meet that. This NOx SIP Call 
absolutely turns that upside down, and that's one of the things 
that is so objectionable to the States.
    I have visited extensively with the States on this issue. 
There are a lot of different strategies being employed for a 
lot of different good reasons. Atlanta, Georgia is not the same 
as Lansing, Michigan.
    To give you an example of our problem with this, in saying 
that the 85 percent level requirements are necessary to fix 
this problem with utilities--and by the way, we don't think 
that's going to fix the problem, we're convinced of that--EPA 
actually did zero out all emissions from the midwest and the 
south to use that. Now, that is not even realistic.
    Again I would say to you, Senator, the way to fix this 
problem in my opinion would be to develop the scientific and 
technical principles that we all would agree that we would 
apply across the board, and then the States agree to make the 
necessary reductions to the extent that we are culpable in each 
State. That's going to vary; it's not going to be the same in 
Alabama as it is in Ohio and Michigan. I think if we could 
agree to those kind of principles--and I can't speak for all 
the States, but I haven't heard any State in the midwest or the 
south step forward and say they would not be willing to put in 
whatever controls are necessary in our States to help out the 
northeast. We've always agreed to that.
    In the case of Michigan, we might use a different strategy 
than Ohio would use or Alabama or North Carolina. We would be 
willing to meet that, but we need to do it based on what the 
science and technology say, not on the whim of EPA that one 
size fits all. In fact, my technical staff tells me that they 
are convinced that this 85 percent across-the-board reduction 
on utilities is not the right strategy, and Michigan is not 
going to achieve the desired results.
    So again, I don't think this debate is about how much it 
costs. Cost is not the point. We need to be worried about that; 
we always want to do things cost-effectively, but the point is 
we need to do them with some common sense and we need to do 
them based on sound technical principles. I believe the States 
are willing to step up and do those. I know we are in Michigan, 
and I think that's the way to resolve this.
    Any help that Congress can give us to ask the agency to do 
that in good faith, we would certainly appreciate that.
    Senator Inhofe. Senator Voinovich?
    Senator Voinovich. Mr. Chairman, first of all, I would like 
to ask that the statement from the Director of the Ohio 
Environmental Protection Agency, who couldn't be here this 
morning, be inserted in the record.
    Senator Inhofe. Without objection.
    [The referenced statement follows:]
  Statement of Christopher Jones, Ohio Environmental Protection Agency
    I am Christopher Jones, director of the Ohio Environmental 
Protection Agency. I want to thank Senator Inhofe and the committee for 
holding this hearing, and for inviting Ohio's testimony.
    As you may know, Ohio is one of eight States which appealed the NOx 
SIP call. One of our primary reasons for doing so is that we believe 
the 85 percent reduction in utility emissions required in the rule is 
neither within U.S. EPA's authority to mandate nor justified by 
scientific data.
    The Clean Air Act gives U.S. EPA the authority to establish 
national ambient air quality standards, but it reserves for the States 
the authority to develop their own control strategies that will achieve 
the standards. For U.S. EPA to effectively mandate in the SIP call the 
specific sources that must be controlled and the degree to which they 
must be controlled is a clear infringement on the States' rights. This 
is particularly egregious because the NOx SIP call is not based on 
sound science. In fact, it largely ignores the work of the Ozone 
Transport Assessment Group--OTAG.
    In 1996, 37 States in the eastern United States formed OTAG to 
analyze persistent ozone problems east of the Mississippi River. After 
2 years of study, including extensive modeling, OTAG presented a series 
of findings and recommendations to U.S. EPA. Some of the more pertinent 
findings include:

    1. Regional NOx controls are effective in producing ozone benefits.
    2. Ozone benefits diminish with distance, particularly at distances 
over 150 miles.
    3. The following NOx controls would be effective in reducing ozone:
    A. Utility emissions controls between those required under Title IV 
    of the Clean Air Act controls and 85 percent;
    B. Large non-utility controls between 55 percent and 70 percent;
    C. Reasonably available control technology for mid-sized sources;
    D. States should have a choice of regulatory systems whether it be 
    using emission rates or a statewide emissions budget; and
    E. States should have the ability to conduct regional modeling to 
    determine the level of control needed to meet air quality 
    standards. After these recommendations were presented to U.S. EPA, 
    the Federal agency proposed the NOx SIP Call, requiring that 22 
    States develop State Implementation Plans to reduce utility 
    emissions by 85 percent in the year 2002. The one-size-fits-all 85 
    percent requirement ignores OTAG's finding that ozone reduction 
    benefits diminish with distance, as well as the recommendation for 
    regional modeling to determine effective control levels. Rather, 
    the SIP Call mandates the most stringent level of control for every 
    State, instead of considering other options that might prove 
    equally effective.
    Ohio, West Virginia, Michigan, Virginia, South Carolina, Indiana, 
Illinois, Kentucky, Tennessee, and Alabama initiated a series of 
meetings to develop an alternative plan to reduce NOx emissions. In 
June 1998, six States known as the Midwest/Southeast Governors' Ozone 
Coalition submitted a plan that contained these main elements:

    1. A Phase I early reduction program, with utilities achieving a 55 
percent reduction by 2002 and a 65 percent reduction by 2004.
    2. A Phase II plan to aggressively pursue attainment of the 8-hour 
ozone standard, which includes:
    A. Complete ``first look'' modeling completed by July 2001;
    B. Submission of a final plan by July 2003;
    C. Additional controls installed by April 2007; and
    D. Attainment of the 8-hour standard by October 2009.
    In submitting the plan, we put forward a rational approach to more 
than adequately address long-range transport, provide a substantial 
down payment on the 8-hour standard, and determine whether additional 
reductions of nitrogen oxides or volatile organic compounds are needed 
to meet the new air quality standards.
    U.S. EPA rejected this commonsense approach and, in the fall of 
1998, U.S. EPA adopted its final rules virtually unchanged except for 
providing an additional 6 months for utilities to comply, until Spring 
of 2003. The rule required State Implementation Plans to be submitted 
to U.S. EPA by September 30, 1999.
    Ohio had no choice but to appeal. The deadline itself precluded 
virtually any response but rote agreement with U.S. EPA's approach, and 
the rule is more burdensome than the Governors' plan without being more 
protective. On May 25, 1999, the Court issued a stay of the requirement 
to submit a SIP and will hear oral arguments on our appeal on November 
9, 1999.
    Because the implementation of the NOx SIP call has been stayed by 
the U.S. District Court of Appeals, Administrator Browner has announced 
her intent to require essentially the same NOx reductions in 12 States 
through rulemaking under Section 126 of the Clean Air Act. Ohio does 
not believe that U.S. EPA in fact has the authority to take this 
action. U.S. EPA's interpretation of Section 126 is that there is a 
``typographical error,'' and that the what the law says is not what 
Congress intended it to mean. Ultimately, only Congress can clarify 
whether the law reflects its intentions, but in the meantime, Ohio will 
argue that it must be administered as it stands.
    I want to assure the members of the committee that Ohio wishes to 
be a partner with U.S. EPA and the States in establishing protective 
air quality standards and devising cost-effective strategies to meet 
them. Regrettably, Ohio has been characterized as more interested in 
litigation than in clean air. This is not at all the case. The plan we 
presented would have achieved the 8-hour ozone standard a full year 
sooner than the Clean Air Act allowed. I remain open to discussion with 
U.S. EPA and other affected States about the best way to reduce ozone 
levels both in the northeast and in the Midwest.
    Thank you for this opportunity to present this testimony to the 
committee.
    Senator Voinovich. I think we need to put this all in 
perspective. No. 1, the court has ruled that the 8-hour 
standard and the 2.5 particulate standard exceeded their 
authority, for whatever reasons, and that will be hung up in 
court for who knows how long.
    We have a separate matter, and that's the 126 petition that 
has been filed by the northeastern States. The agency has taken 
a position that they're going to back off from the SIP Call 
based on the 8-hour standard and the PM2.5 because 
it's in court, but they're going to go forward anyhow with the 
SIP Call at the 85 percent requirement. By the way, that's 
based on the 8-hour standard and the 2.5.
    The reality of it is that that will be contested in court, 
and I don't know how the court will rule, one way or the other. 
We have a situation, I think, where overall southern States and 
the midwest have said, ``We want to go forward, and we're 
moving forward on the basis of an 8-hour standard,'' and I'm 
not sure if your State will ever meet the 8-hour standard, 
regardless of what you do in your State----
    Ms. Stahl. We'll keep trying.
    Senator Voinovich. I know, but the point is that you have 
this situation where things are in limbo and we do have a 
chance to move forward reasonably with a reasonable SIP Call, 
and I think most of the southern and midwestern States would be 
willing to do that if we could work something out with the 
agency. But the agency says, basically, ``85 percent, take it 
or leave it, goodbye.''
    Now, we can let that hang out there for who knows how long, 
and we don't do anything for Ohio's environment or your 
environment or the country's environment, or we can sit down 
and say, ``Here are these people who are taking a reasonable 
approach. It may not be exactly what the agency dictates, the 
one-size-fits-all, but it's a reasonable approach that we can 
get started with.'' I think that's the real issue that needs to 
be addressed today. I don't know whether you do that through 
legislation, or maybe the members of this committee on a 
bipartisan basis, people from your part of the country and our 
part, write a letter to her and say, ``Look, here's the deal; 
could you sit down and work something out? These people seem to 
be willing to go forward and start dealing with this problem.'' 
Or we can just let it hang out there and nothing is going to 
get done, although I know you are moving forward in Michigan 
and I know Ohio is moving forward. Our utilities, many of the 
are going to do it anyhow, but it would be nice if it could be 
worked out with the Environmental Protection Agency.
    Do either one of you want to comment on that? Mr. Harding?
    Mr. Harding. Well, Senator, I absolutely agree with that. I 
think, again, there could be some common ground, and it is 
certainly worth the effort. I think the result of not doing 
that is the result that we have had, and that is litigation 
which is preventing further clean air in this country. In fact, 
we don't have a standard now; many of us were of the opinion 
when the 8-hour standard was promulgated, that this was going 
to cause a problem.
    So we do need to move forward and I very much agree with 
your statement.
    Senator Inhofe. I would like to comment also that there are 
a lot of us who would like to propose and work and craft 
legislation that would replace the SIP Call and the 126 
petitions, and we would certainly call on everyone who has been 
testifying here today from all of the regions to help us work 
on this. I would make that as an official request.
    If it's all right, Senator Lieberman, we've had the 
Majority Leader call a meeting and we're going to have to go to 
that. Normally we like to visit personally after things are 
over since the witnesses have gone to so much trouble and 
inconvenience in being here, but there won't be time for us to 
do that. So I just want to thank you for being here today and 
for the testimony you have offered.
    You will receive questions for the record from members of 
this committee. That will become a part of the record of this 
hearing.
    Thank you very much.
    [Whereupon, at 10:37 a.m., the subcommittee was adjourned, 
to reconvene at the call of the Chair.]
    [Additional statements submitted for the record follow:]
             Statement of Maine State Senator Sharon Treat
                              introduction
    Good morning. My name is Sharon Treat, and I am a State Senator in 
Maine, where I am the Senate Chair of the Legislature's Joint Standing 
Committee on Natural Resources. I also chair the National Conference of 
State Legislatures' Science, Energy, and Environmental Resources 
Committee, although I am not here today to speak on that committee's 
behalf. I serve as one of Maine's two representatives on the Ozone 
Transport Commission, and am a regular participant in regional forums 
through the Northeast States for Coordinated Air Use Management 
(NESCAUM), an organization representing the air pollution control 
programs in the eight northeast States.
    Thank you for the opportunity to speak to you from the perspective 
of a Northeast State about ozone transport and its regulation. There 
are three ideas which I think must shape any response to this issue. 
First, the regional transport of ozone is a very real and significant 
problem. Second, the amount of ozone flowing into the northeastern 
States from the west prevents them from effectively limiting their 
ozone levels. Third, without effective federal regulation of ozone 
transport levels the northeastern States will never be able to attain 
compliance with existing or proposed EPA standards.
    It is unfortunate that testimony on each panel is limited to only 
one representative of the more than dozen States that support the 
Environmental Protection Agency's efforts to control NOx pollution 
under Section 110 of the Clean Air Act. Our perspectives and experience 
do differ, and it would have been helpful for the committee to hear 
from additional supporting States. My comments, therefore, are from the 
regional perspective of the Northeast States and reflect the regional 
approach Maine is taking in collaboration with our neighbors. I am 
honored to be here to present both Maine and the Northeast States' 
support for sound and equitable solutions to our Nation's shared air 
quality concerns.
    At the outset, it is important to stress that the Northeast States 
are not asking our upwind neighbors to take any regulatory actions 
under Section 110 that we are not willing to impose upon ourselves. Nor 
are we asking upwind States to take actions that only benefit distant 
downwind States. The reality is, whether downwind or upwind, ozone 
pollution is a problem that needs to be addressed. It affects our most 
vulnerable citizens, children and the elderly, and it knows no 
political boundaries.
    Already this year, the smog has been really bad--and summer just 
started Monday. Between May 1 and June 12 of this year, Ohio 
experienced 181 exceedances of the health-based 8-hour ozone standard, 
with 12 days over 0.085 parts per million (ppm); Michigan had 76 
exceedances, with 15 days over 0.085 ppm; North Carolina had 43 
exceedances, with 7 days over 0.085 ppm; and Georgia had 39 exceedances 
with 15 days over 0.085 ppm. North Carolina and Ohio also have multiple 
exceedances of the one-hour standard during this time frame. Clearly, 
any reductions in NOx emissions by upwind States will directly benefit 
the health of their citizens and the quality of their environment.
                        regional ozone transport
    The scientific community has long recognized the regional nature of 
the smog problem. Over the past 25 years, a significant amount of 
research has appeared in the peer-reviewed scientific literature 
documenting that the long-distance movement of smog affects not only 
the Northeast, but areas in the Midwest and Southeast as well.
    Scientific observations have documented ozone transport across the 
eastern United States. In 1980, George Wolff, now with the General 
Motors Research Laboratories, coined the term ``ozone river'' to 
describe three July 1978 ozone episodes in which ``a distinct area of 
high ozone concentrations was observed flowing northeastward in a 
'river', extending from the southwest Gulf Coast to New England.'' In 
1979, scientists using aircraft measurements followed a mass of high 
ozone from central Ohio into the Northeast Corridor where incoming 
ozone levels reached 90 parts per billion. Most recently, scientists 
with the North American Research Strategy for Tropospheric Ozone 
(NARSTO) observed ozone levels above 80 parts per billion entering the 
western (upwind) boundary of the Northeast Corridor on the morning of 
high ozone days during the summer of 1995.
    These levels of transported ozone have been observed for a number 
of years, are a significant fraction of the 120 parts per billion one-
hour federal ozone standard, and are clearly beyond the control of 
local reduction efforts within the Northeast Corridor. Of course, the 
Northeast is not alone in suffering the ill effects of transported smog 
and its precursors. The Oklahoma Department of Environmental Quality's 
May 1999 issue of its Air Quality Update recognized that long range 
ozone transport also affects Oklahoma. The Department discovered during 
a review of its ozone data from 1998 that pollution from wildfires in 
southern Mexico likely contributed to high ozone levels in the Oklahoma 
City area (attached). It isn't a big leap in logic to recognize that 
forest fires and the burning of fossilized trees (coal) have similar 
transport impacts when the wind blows.
    Recently, the chief of the air pollution control division in Ohio, 
Robert Hodanbosi, explained during a June 1999 high ozone event in the 
city of Columbus that ozone levels built up because ``the sun is very 
bright today, there are no clouds, and the wind isn't blowing.'' (The 
Columbus Dispatch, June 10, 1999) That is correct. When the wind blows, 
the Northeast receives this pollution.
    Just as the flow of ozone from points west overwhelms the pollution 
control efforts of Pennsylvania, Maryland, New York and others, 
emissions from those States take their toll on New England. Ultimately, 
each State's air quality is inexorably linked to that of its neighbors 
as emissions and ozone cascade from west to east.
                           transport to maine
    Maine is uniquely situated at the receiving end of much of this 
smog. Locations along the Maine coastline far removed from urban 
centers, such as Acadia National Park, typically exceed the one-hour 
federal ozone standard during the late evening and overnight hours. 
Indeed, some of the highest levels of ozone in the State and in the 
country have been measured in Acadia Park. These are times when the 
ozone could not possibly be formed locally because there is no 
significant sunshine available to drive the ozone-forming chemical 
reactions. Maine and many rural areas of the country will be unable to 
achieve clean air unless all major smokestacks in the Eastern United 
States are required to implement cost-effective modern pollution 
control equipment. In fact, it was the 37 State OTAG (Ozone Transport 
Assessment Group) process that identified large fossil fuel fired 
utility and non-utility boilers as the most cost-effective method to 
reduce the transport of ozone in the eastern United States
    Let me be perfectly clear that regional upwind control efforts are 
needed to augment and not replace additional local measures. Our demand 
is simply that the bulk of our local measures go toward achieving clean 
air and not offsetting someone else's pollution. To put things in 
perspective, the NOx emissions from all source categories (e.g., 
automobiles, trucks, power plants) in Portland, Maine's largest city, 
totaled almost 28,000 tons in 1996. By comparison, a single power plant 
in southern Ohio emitted over four times as much NOx during the same 
year.
                maine's response to air quality problems
    While the State of Maine is itself not subject to the NOx SIP Call, 
Maine's Governor Angus King has made a commitment to achieve the same 
level of NOx reductions from major stationary pollution sources within 
the State. Maine has also signed an Ozone Transport Commission 
Memorandum of Understanding (MOU) committing the State to achieve 
similar NOx reductions from our major stationary sources. The State 
joined with 11 other States in 1994 and agreed in an MOU to reduce NOx 
emissions from electric utilities and large stationary sources by up to 
75 percent, roughly twice the mandatory reductions required under the 
Clean Air Act for sources located in nonattainment areas.
    It is my understanding that all the NESCAUM States are seeking to 
implement NOx controls in the timeframes envisioned in EPA's final 
rule. While the recent injunction imposed by the D.C. Circuit Court has 
temporarily delayed the federal requirement for action, it has not 
diminished the activity of those Northeast States committed to 
achieving clean air in the most cost-effective manner possible.
    Maine has received some criticism of its other air quality control 
measures, particularly after the failure of the aborted Car Test 
program. However, the fact is Maine has implemented a motor vehicle 
emission inspection and maintenance program and has adopted the 
California Low Emission Vehicle Program. Maine ceased the use of 
reformulated gas (RFG), but only after an extensive drinking water 
testing program showed clear evidence of widespread MTBE contamination. 
The low RVP fuels now required in Maine will meet EPA requirements 
without the use of MTBE. Additional mobile source reductions are 
achieved through a Stage II Vapor Control System.
    Maine can and will impose tough restrictions on both NOx and VOC 
emissions, but without reductions in upwind States will still have a 
smog problem. Speaking as an elected official, who has herself long 
supported stringent in-state controls on stationary and mobile sources, 
I can report that this creates a major public policy problem in our 
State. Mainers and other northeasterners have been willing, time and 
again, to impose restrictions on themselves and their industries to 
control pollution. But when scientific modeling and data demonstrate 
that implementing an I/M program will not alter attainment status, and 
that the emissions from a single uncontrolled Midwestern power plant 
can emit twice as much NOx per day as all sources in Vermont combined, 
it is understandable that the inconvenience and cost of such a program 
can be a tough sell for the downwind State.
                  negative impacts of low air quality
    Exposure to chronic ozone levels below the one-hour standard harm 
the public's health in a number of ways. These include:

   Increased airway responsiveness in the general population.
   Increased severity and incidence of asthma attacks.
   Increased severity and incidence of respiratory infections.
   Increased prevalence of chronic respiratory symptoms.
   Development of chronic respiratory bronchiolitis.,

    For example, in Maine ozone causes breathing difficulty for 395,000 
people--approximately one-third of our population--who have respiratory 
ailments, are elderly or are children. The American Lung Association of 
Maine recently stated that ``one out of every 12 kids in Maine has 
asthma''--a frightening statistic for our next generation.
    In addition to ozone health effects, Maine as well as the entire 
Northeast is affected by other environmental and public health impacts 
caused by NOx pollution. Maine's economy is dependent on our natural 
resources--forestry, fishing, agriculture and tourism. Chronic exposure 
to elevated smog levels may be accelerating the death rates of some 
tree species in our eastern forests, which could alter the forests' 
value as timber and recreational resources. A study by the National 
Academy of sciences recently reported that leaves of ozone-damaged 
plants often die and fall off in late summer, reducing the beauty of a 
forest's fall foliage. Fall foliage tourism in Maine is a multi-million 
dollar industry.
    Nitric acid formed from NOx is a constituent of acid rain that 
contributes to long-term damage in many eastern lakes and forest soils. 
Indeed, acid rain has been pointed to as the culprit in the diminished 
productivity and value of northern Maine and Vermont sugarbush (maple 
syrup producing trees). Nitrogen deposited from the air into bays and 
estuaries leads to oxygen-depleting algal blooms, harming aquatic life 
in some of our most economically productive marine ecosystems.
                               conclusion
    In conclusion, for over 20 years our country has perpetuated an 
illogical system in which pollution is free from the law as soon as it 
crosses State lines. The illogic and inequity of punishing downwind 
States for forces beyond our control has led to a host of tortured 
policies, like EPA's decision in 1982 to designate the State of Rhode 
Island to be in ``attainment but for transport.'' In human speak this 
means the air was clean but for the pollution. After 20 years of 
collecting and reviewing the scientific data, EPA has finally responded 
with a measured first step to diminish the magnitude of NOx transport 
across State lines. All States will benefit from the cost-effective 
pollution reductions required under the EPA approach.
    It is unfortunate that the inaction on the part of our neighbors 
has forced us to turn to the federal government for relief. As a State 
legislator, I would have preferred standing shoulder to shoulder with 
my upwind counterparts to announce that States had joined together in a 
necessary effort to protect public health. Sadly, that option has not 
and apparently will not present itself. It is precisely in the cases 
when States can not reach rational outcomes alone that federal action 
is required. EPA should be commended for its recent efforts to bring 
science and fairness back to our air pollution control efforts. Thank 
you.
                                 ______
                                 
 Response by Senator Sharen Treat to Additional Question from Senator 
                                 Inhofe
    Question: Senator Treat, Mr. Harding, from Michigan testified on 
the second panel that OTAG recommended that the States be given 
additional time to conduct ``subregional'' modeling. Were the States 
given the additional time to conduct this modeling?
    Response. In it final report, OTAG recommended that States be given 
additional time to conduct local and subregional modeling and air 
quality analysis. It seems evident that the OTAG membership understood 
that even after transported emissions were controlled, there would 
continue to be some areas with ozone air quality problems. These areas 
would obviously need to undertake additional efforts to evaluate the 
nature and extent of their air quality problems through local or 
subregional planning efforts. In fact, EPA's timeline for implementing 
the 8-hour ozone standard provides for additional modeling time that is 
very consistent with OTAG's recommendations.
                                 ______
                                 
Response by Sharon Treat to Additional Questions from Senator Lieberman
    Question 1. How difficult will it be for Maine to achieve the 
standards without a regional control strategy?
    Response. Attainment of the 8-hour ozone standards in Maine is 
almost wholly dependent upon the implementation of a regional control 
strategy. While local emissions certainly have an impact on ozone air 
quality in Maine, regional air quality modeling conducted by the U.S. 
Environmental Protection Agency (EPA), the Ozone Transport Assessment 
Group (OTAG), and others has shown conclusively that pollution 
transport is responsible for most of our air quality problems. Air 
quality modeling conducted by EPA predicts that regional controls will 
allow most or all of Maine to meet the 8-hour ozone standard; at least 
four counties will violate this standard without regional controls.
    Although the 1-hour ozone standard has been revoked throughout 
Maine, the long-term maintenance of this standard is also largely 
dependent upon upwind emission reductions. Regional controls of the 
magnitude required by the NOx SIP Call and Section 126 rulemakings will 
play a key role in ensuring that Maine continues to meet this standard, 
and will become even more important should the standard be reinstated.

    Question 2. Could you please describe how the proposal from the 
Southeast/Midwest Governors would affect Maine's efforts to control 
acid rain and air pollution? How does the proposal compare to the 
current NOx reduction requirements scheduled to begin in 2000 under the 
existing Acid Rain Program?
    Response. The Southeast/Midwest Governors' proposal would 
significantly hamper our efforts to control acid rain, ozone and 
particulates. In addition to requiring less stringent controls, the 
Governors' proposal does not contain a cap on emissions. As a result, 
emissions would continue to grow in future years. Even if fully 
implemented, this proposal would result in emissions levels that were 
21\1/2\ times higher than those under the NOx SIP Call in 2007. In 
fact, by 2007 this growth would return NOx emissions back to the same 
levels achieved by the Acid Rain Phase II NOx control levels in 2000. 
Clearly, the acid rain benefits provided by the Govemors' proposal fall 
far short of those provided by the NOx SIP Call.
                                 ______
                                 
  Response by Sharon Treat to Additional Question from Senator Baucus
    Question: What advantages and disadvantages do you believe that the 
``Governors' proposal'' on NOx reductions, as alluded to in the 
hearing, would have relative to EPA's proposed NOx SIP call?
    Response. As I understand it, the Govemors' proposal promises early 
``substantial reductions'' by 2002 (the lesser of a 55 percent 
reduction or a 0.35 lb. per million Btu emission rate), with additional 
controls by 2004 (the lesser of a 65 percent reduction or 0.25 lb. per 
million Btu emission rate). Although this proposal touts its ``early 
reductions,'' it offers no more than a marginal short-term advantage 
over the NOx SIP call. Since the NOx SIP call amounts to the equivalent 
of an 85 percent NOx reduction from power plants in the 3-year period 
prior to May 2003, we could expect that two-thirds of these reductions 
(or a 57 percent reduction) would already be achieved by May of 2002. 
The Govemors' proposal offers no real short-term advantages.
    Over the long term, the Governors' proposal will result in 
significantly more transported pollution, since emissions are not 
capped. By 2007, NOx emissions under the proposal will have grown to 
the same level seen under the Acid Rain Program Phase 11 NOx controls. 
Even worse, any future reductions are contingent upon upwind State's 
modeling efforts. Maine and the other northeast States would once again 
be at the mercy of upwind States that have no incentive to address 
impacts beyond their own borders. Implementation of this program would 
expose millions more to unhealthy air pollution, and cost the northeast 
and Mid-Atlantic States millions of dollars to mitigate the effects of 
transported emissions.
                               __________
         Statement of Mayor Thomas Nye, City of Hamilton, Ohio
    Good morning, Chairman Inhofe, Senator Graham, my own Senator 
Voinovich, and other members of the Subcommittee. My name is Thomas 
Nye, and I am the Mayor of the City of Hamilton, Ohio. Hamilton is a 
city of approximately 65,000 located in Butler County in southwest 
Ohio. Hamilton is a public power community that has owned and operated 
a non-profit municipal electric utility for its citizens since 1893. I 
appreciate the opportunity to testify on behalf the Ohio Municipal 
Electric Association and its 80 public power communities, on the need 
for the United States Environmental Protection Agency (EPA) to pursue 
cost effective strategies for the control of NOx emissions. EPA's 
current NOx strategy, calling for up to 85 percent reductions in 
electric utility NOx imposed through a State Implementation Plan Call, 
and backed up by the imposition of controls under a Federal 
Implementation Plan or Clean Air Act Section 126 action, has not 
adequately recognized the potential impacts on small public power 
communities. Public power communities therefore urge EPA to adopt 
meaningful, yet reasonable, NOx reduction policies that recognize and 
mitigate impacts on small entities and localities. We also urge the 
Congress to promote cost-effective air quality regulations that provide 
maximum flexibility and assistance to local governments and small 
businesses.
         the city of hamilton and its municipal electric system
    The City of Hamilton owns and operates a municipal electric system 
for its residents, commercial businesses and industries. Hamilton's 
economy is supported by industrial operations including Champion 
International, International Paper, Hamilton Caster, Hamilton Die Cast, 
Krupp-Hoesch, Krupp-Bilstein, Hamilton Fixture, and General Electric, 
to name a few.
    The City of Hamilton is pursuing economic development strategies to 
recycle abandoned and underutilized industrial and commercial 
properties by actively participating in the redevelopment of 
``brownfields.'' Placing these environmentally challenged properties 
back into productive re-use will allow Hamilton to be actively involved 
in the revitalization of our industrial corridor and central city. 
Benefits of the redevelopment of brownfields sites in the City of 
Hamilton include the creation of family-wage jobs, increased private 
investment, the retention and expansion of existing businesses, and 
recruitment of new high technology companies. The reuse of existing 
properties in our center city can also help reduce sprawling growth 
outside the City and throughout the region, which will help slow the 
increase in traffic over the long-term, in turn reducing air pollution 
from vehicles.
    However, Hamilton's quality of life, and our ability to attract 
jobs through brownfields redevelopment and other business recruitment 
efforts, depends in large part on providing cost-effective public 
services to residents and private sector employers. That is why 
Hamilton operates a municipal electric utility, and that is why we are 
very concerned that EPA's current Clean Air Act policies may unduly 
raise the costs of service to our customers, and threaten the viability 
and economic competitiveness of our public power system.
    Hamilton's municipal electric system consists of local electricity 
transmission and distribution wires, and three electric generation 
facilities totaling 206.7 megawatts in capacity. This electric 
generation includes 135 megawatts at the fossil-fired Hamilton 
Municipal Power Plant, 70.2 megawatts at Greenup Hydroelectric Plant on 
the Ohio River and 1.5 megawatts at the Hamilton Small Hydro located on 
the Ford Hydraulic Canal. Hamilton's Municipal Electric Plant 
contributes significantly to the local economy, generating purchases 
from local businesses of at least $2.6 million, contributing $12.8 
million in household earnings, supporting 371 full and part time jobs 
in the greater Cincinnati region, and contributing up to $160,000 for 
the local tax base. Boiler #9, a 50 megawatt coalfired boiler subject 
to EPA's NOx SIP Call, FIP and Section 126 control strategy, is the 
largest and most cost-effective unit in Hamilton's fossil fuel plant. 
The Greenup hydroelectric facility is our primary source of power, 
backed up by Boiler #9 when river flow conditions do not permit 
generation.
    In addition to overall concerns about EPA's NOx strategy that we 
explain below, Hamilton is very concerned that EPA's NOx strategy may 
adversely impact the Hamilton electric system by improperly 
overcontrolling Boiler #9 under EPA's proposed NOx cap-and-trade 
program. A second concern of Hamilton is that EPA's NOx control 
strategy will neither recognize the role of our hydroelectric 
facilities in our electric system, nor the massive decrease in NOx and 
other air pollution emissions that our generation system has made since 
1981, when we purchased the Greenup hydroelectric facility and began 
producing the majority of our power through clean hydroelectric 
generation. See Attachment 2 (demonstrating reductions of more than 
7,200 tons in NOx, SO2, particulate and VOC emissions during 
EPA baseline years of 1995-97, including 2,700 tons of NOx). EPA is 
currently considering Hamilton's requests, and we are hopeful that the 
Agency will take into account our reasonable and justifiable concerns.
    Today, I wish to emphasize that Hamilton's specific concerns are 
symptomatic of the overall impact of the federal NOx control strategy 
on public power communities and other small business entities: a 
stringent, costly and uniform federal mandate will inevitably have 
negative impacts on the smallest entities and localities. In our 
belief, EPA has not done an adequate job of identifying and mitigating 
these impacts.
    Hamilton's first specific concern involves the potential over-
control of Hamilton's Boiler #9 under EPA's proposed method for 
establishing a baseline of emissions for affected units, and allocating 
NOx trading allowances to cover the emissions that would be allowed 
from that baseline. Under EPA's proposed NOx trading system, Boiler #9 
will be allocated allowances based on its historic usage. However, due 
to exceptional circumstances during EPA's proposed baseline utilization 
period, Boiler #9 could receive a serious underallocation of 
allowances.
    Specifically, the 1995-97 baseline years, upon which the EPA NOx 
budgets established for individual States have been calculated, were 
unusual years for the operation of Boiler #9. In 1995, there was a 
major rehabilitation of Boiler #9 during the summer ozone season, 
reducing operation by 30 percent. In 1996, the utilization of Boiler #9 
was reduced nearly 50 percent, due to boiler control upgrades necessary 
for a dry desulfurization pollution control project. Likewise, in 1997, 
the availability of Boiler #9 was only 59 percent due to a rebuild of 
the associated generator and final tie-in of the desulfurization 
project. Unless these exceptional circumstances at the Hamilton plant 
are taken into account in EPA's allowance allocation, Boiler #9 will be 
starting at a serious disadvantage under an already stringent 
regulatory program. (See also Attachment 3, explaining Hamilton's 
situation under EPA NOx control strategy).
    Hamilton's second specific concern is that EPA's federal NOx 
allowance trading program will not take into account the role of our 
Greenup hydroelectric facility at our electric system, or the 
substantial reductions in NOx and other air pollutants that Hamilton 
has already undertaken through this hydroelectric system, at great cost 
to our community. Hamilton relies on the Greenup hydroelectric facility 
as its primary source of electric generation. Hamilton has 
substantially reduced the municipal utility's emissions of NOx and 
other air pollutants through its large investment in the hydroelectric 
facilities at the Greenup Locks and Dam on the Ohio River and at 
Hamilton's Ford Hydraulic Canal. The amount of power generated from 
this ``run of the river'' Greenup facility (unlike at darns with 
impoundment reservoirs) depends on river flow conditions and Ohio River 
navigation requirements regulated by the Army Corps of Engineers. The 
facility can only generate when there is sufficient distance between 
the upstream and downstream pools based on flow conditions, and when 
the Army Corps permits flow into the lower pool. As such, generation of 
electricity is a secondary function of the Greenup Locks and Dam, in 
which we are making use of an existing facility for the 
environmentally-preferable production of clean energy. However, in 
those cases in which the run-of-the-river does not permit electric 
generation, the Greenup facility is backed by Hamilton's coal-fired 
Boiler #9.
    As a result, EPA's proposed allowance allocation to Boiler #9 may 
not provide sufficient to the unit if utilization is increased to 
substitute for hydroelectric output in order to ensure that electric 
demand and reliability are met. This situation imperils the City of 
Hamilton's ability to provide cost-effective service to its citizens if 
the hydroelectric plants, due to flow conditions and navigation 
requirements beyond Hamilton's control, are unable to meet the 
production levels accomplished during the EPA 1995-97 baseline 
emissions period. Extended hydroelectric plant outages are likely to 
occur during the ozone season when stream flows are low, which may 
leave the City with insufficient NOx allowances to meet its needs. (See 
also Attachment 3).
    Hamilton's switch from sole reliance on fossil-fired electric 
generation to small hydroelectric generation during the early 1980s has 
made its 1995-1997 heat input baseline artificially low. Hamilton has 
actually decreased its use of fossil fuels approximately 40 percent 
from 1981 levels while still supporting an increase of 50 percent in 
electric demand over the same period. (See also Attachment 3). This is 
a significant accomplishment by a public power community and represents 
an approach that is significantly different than the course of action 
typically taken by investor-owned utilities during this period. 
Hamilton has not accomplished this without cost to the community, as 
our $ 170 million investment in hydropower has imposed an additional 
$29.534 million in operating and capital costs than had a similar sized 
coal-fired facility been developed during the 1980's. These voluntary 
pollution prevention expenditures are in addition to Hamilton's 
voluntary investments in advanced coal scrubbing technology, composting 
facilities? and other environmental initiatives that have resulted in 
more than $2.5 million in yearly debt service. (See Attachments 4 & 5).
    Since EPA's proposed allowance allocation is based on historical 
heat input, and Hamilton has already cut its heat input by 50 percent , 
the municipal electric system is expected to receive only 50 percent of 
the allocations that Hamilton must have to support its required 
generation. (See Attachments 3 & 6). In short, EPA's proposed NOx 
control and trading strategy may significantly overcontrol Hamilton's 
Boiler #9, despite the large investments we have made in clean power 
hydroelectric generation.
    We believe that if EPA's proposed NOx control strategy is imposed 
on Hamilton, it may threaten the viability of our municipal electric 
system. For example, even if Hamilton installed technology to meet 
EPA's 0.15 lb/mmBtu limit--which is a cost-prohibitive option--EPA's 
proposed allowance allocation to Boiler #9 (87 tons per ozone season) 
will permit Hamilton to operate the unit for only 66 days during the 
ozone season without purchasing significant additional allowances. 
Further controls on Boiler #9 are not cost effective. An independent 
engineering Bern has estimated the cost-per-ton of NOx removed for 
Hamilton's Boiler #9 at $7,554. This is well in excess of EPA's 
estimated cost of $1,468/ton removal for large electric generating 
units.
    Likewise, if Hamilton must purchase additional NOx allowances to 
cover its typical generation, it will be placed at a different starting 
point from other affected utilities, and at a significant competitive 
disadvantage. The City may be forced to pay extraordinary allowance or 
substitute electricity prices during those periods when the City cannot 
rely on its hydroelectric generation to cover typical demand -if those 
commodities are even available. Such a situation could wreak havoc on 
municipal budgets. Such risks can, of course, be controlled by 
purchasing options and through other market tools. However, small 
public power communities lack the resources and expertise to play the 
commodities markets. Our citizens want us to be public servants, not 
Wall Street hawks.
    I would also like to note with appreciation that both Senator 
Inhofe and Senator Voinovich have monitored Hamilton's concerns 
regarding the impact of the NOx control strategy on our municipal 
system, and urged EPA to take our situation into account. EPA is 
expected to issue a final rule on a federal NOx trading system in July, 
which could take Hamilton's requests into account. We appreciate the 
Senators' attention to this matter, and the Agency's consideration of 
our situation.
    Hamilton's concerns about the potential impacts of EPA's NOx 
control strategy are not unique among Ohio public power communities, 
and we believe that these concerns are shared by public power systems 
throughout the proposed EPA NOx control region, as explained further 
below.
     epa's nox control strategy may adversely impact public power 
                              communities
    From an overall perspective, Ohio's public power communities are 
concerned that EPA's NOx control strategy goes beyond what is necessary 
to protect public health and the environment from ozone pollution, and 
requires NOx controls that are not cost-effective for small businesses 
and localities.
    The impact of EPA's strategy could be particularly difficult for 
smaller sources and entities. EPA itself has recognized the potential 
for disproportionate impact on small entities, in its final Regulatory 
Impact Analysis for the 8-hour ozone standard (at pp. 11-27, 11-28, 11-
29):
    Small entities, all other factors being equal, generally have less 
capital available for purchase of add-on pollution control technology 
than large entities. In addition, the control cost per unit of 
production for small entities will likely be higher than for large 
entities due to economies of scale. Thus, control measures requiring 
the use of add-on control technology may cause small entities affected 
by State rules to experience disproportionate economic impacts compared 
to large entities if no strategies to mitigate potential small entity 
impacts are available for implementation by States.... Consequently, 
EPA is encouraging States to exercise regulatory flexibility for small 
entities when developing strategies to meet the standards adopted 
today. While some States may need to turn to small businesses for 
emission reductions, small businesses will likely be among the last 
sources the States will choose to control. States may consider controls 
on small businesses only if such businesses are a significant part of 
an area's nonattainment problem and attainment cannot be reached 
through application of all available cost-effective measures to major 
sources.
    To the extent States consider controlling small businesses, EPA 
believes there are many ways States can mitigate the potential adverse 
impacts those businesses might experience. For example, States could 
choose to exempt or apply less stringent requirements to small 
businesses.... States could also extend the effective date for control 
requirements for small businesses to 2010 or later.... States could 
also choose to apply control requirements to other businesses first, 
before requiring them for small businesses.
    Hamilton and the Ohio Municipal Electric Association strongly agree 
with this EPA recognition in the ozone impact analysis, and thus calls 
upon EPA to take more meaningful action to ensure that this message is 
translated into the Agency's ozone and NOx implementation policies. 
Although EPA has taken the proper step of exempting the smallest 
utility sources (less than 25 megawatts) from NOx controls, EPA has not 
assessed the impacts of its NOx strategy on small entities, like 
Hamilton's municipal utility, that may own both small and larger 
utility units. Given the stringent nature of EPA's NOx control 
strategy, and the disproportionate impacts to small businesses and 
localities that may result, Hamilton supports approaches like the so-
called ``Governors' Alternative'' NOx control strategy that was 
proposed by then-Governor Voinovich, which is being pursued by Ohio and 
other States. Although Ohio public power believes that all approaches, 
including the Governors' Alternative, must better assess and mitigate 
impacts on small entities, we believe that the Governors' Alternative 
can achieve substantial reductions in utility NOx emissions of 65 
percent over the next 5 years, in a fashion that is cost-effective and 
feasible for affected municipal electric systems. We call on EPA to 
consider working cooperatively with States like Ohio to achieve needed 
NOx reductions through this reasonable alternative plan.
epa's clean air act implementation should better recognize and identify 
                impacts on small entities and localities
    Given the potential for adverse, disproportionate impact on small 
entities from EPA's NOx control strategy, Hamilton and the Ohio 
Municipal Electric Association urge the Agency to consider more fully 
how to mitigate such impacts. Most importantly, EPA should commit to 
performing a full analysis of small entity impacts under the Small 
Business Regulatory Fairness Act, or ``SBREFA.''
    Indeed, EPA has encouraged States to identify and mitigate impacts 
of Clean Air Act regulations on small entities. In April, 1998, EPA 
issued ``Guidance on Mitigation of Impact to Small Business While 
Implementing Air Quality Standards and Regulations.'' This guidance 
calls for ``implementation strategies that mitigate adverse impacts on 
small sources . . . wherever possible and appropriate, including the 
exemption of small sources from regulations, compliance flexibility, 
extended compliance deadlines, and compliance assistance for small 
entities. EPA has issued this guidance to States, but has not made 
sufficient efforts to ensure that States implement the guidance, and 
has not made adequate efforts to implement such policies itself.
    EPA's effort to identify and mitigate impacts on small entities 
should begin with the performance of a full SBREFA analysis for the NOx 
SIP call. Second, EPA should ensure that any SBREFA analyses for the 
NOx control strategy include the proper universe of public power 
communities. Specifically, the definition of ``small entity'' under 
SBREFA with respect to electric utilities includes those utilities that 
sell less than 4 million megawatt hours of power annually. This SBREFA 
standard includes Hamilton, as well as all other municipal electric 
generators in Ohio. However, EPA's SBREFA analysis conducted under its 
proposed FIP and its Section 126 rules does not appear to have used 
this standard, and as a result has not properly identified impacts of 
the NOx control strategy on public power communities like Hamilton. 
Third, once these impacts are properly identified, the Agency should 
consider the use of compliance flexibility and assistance for small 
public power systems, to ensure that they can comply in a cost 
effective manner, and that they are not faced with a competitive 
disadvantage against larger electric systems as industry deregulation 
and competition looms on the horizon.
congress should promote clean air act policies that are cost-effective, 
  with compliance assistance targeted to small entities and localities
    Hamilton greatly appreciates the efforts of this Subcommittee to 
oversee the implementation of EPA's NOx control strategy, and 
encourages you to continue playing an appropriate role to ensure that 
air pollution regulations are effective and reasonable. In addition to 
oversight, Congress should consider how it can enact legislation that 
will promote air quality strategies that are clear, cost-effective and 
supportive of market-based emissions control systems. Specifically, 
Congress should consider:

   Establishing a NOx cap-and-trade system for the eastern 
    United States. Localities, industry and EPA agree that market 
    trading of NOx emissions is the most cost-effective manner to 
    achieve NOx reductions. EPA is attempting to implement such a 
    system. However, any system implemented by EPA under the current 
    regulatory climate could be confusing and counter-productive, 
    particularly for small entities. EPA's proposed federal NOx trading 
    system will not be applied uniformly over the eastern United 
    States, but instead through a hodgepodge of voluntary State 
    programs and federal mandates. The implementation of EPA's proposed 
    system could be particularly confusing given recent federal court 
    rulings regarding the 8-hour ozone standard and the NOx SIP Call, 
    as well as the on-going litigation with respect to the SIP Call. In 
    these uncertain circumstances, a NOx trading program could be 
    ineffective, resulting in NOx credits that are too expensive and 
    difficult to obtain for entities like Hamilton that will need them. 
    This situation deserves congressional attention.
   Examination of SBREFA at U.S. EPA--EPA's performance of its 
    obligations under the SBREFA statute has not adequately identified 
    impacts from Clean Air Act regulations on entities like Hamilton. 
    Congress should consider whether EPA is effectively administering 
    its obligations under SBREFA and take appropriate oversight or 
    legislative action to ensure that SBREFA does its job.
   Phasing In NOx Controls for Small Sources--As EPA has 
    recognized, small entities and sources may need compliance 
    flexibility and extended deadlines in order to cost-effectively 
    comply with Clean Air Act regulations. Hamilton suggests that a 
    regional NOx control strategy should be phased in, with the largest 
    utility units controlled first, followed by smaller sources. Like 
    the successful SO2 Acid Rain program, a phased approach 
    for NOx will focus on the most significant sources of pollution 
    first, stimulate the development of control technologies and 
    efficient pollution trading markets, and provide small entities 
    with adequate time to meet their compliance obligations.
   Clean Air Partnership Fund--EPA has proposed a new program 
    that would provide grants and other assistance directly to local 
    governments for innovative approaches to air quality improvement. 
    This ``Clean Air Partnership Fund'' is now being considered by 
    Congress in EPA's budget proposal. The Fund could be available to 
    assist local initiatives to clean the air through activities 
    including the use of advanced technologies, energy efficiency and 
    renewable energy projects, clean vehicles, and assistance to small 
    businesses in reducing emissions. This sort of fund for local clean 
    air innovation is exactly the type of assistance that localities 
    like Hamilton need to make progress, without having to face 
    increasingly stringent command and control mandates. I am certain 
    that Hamilton could put the Fund to use to reduce emissions of NOx 
    and other air pollutants, and we urge Congress to give serious 
    consideration to this proposed program.
                               conclusion
    On behalf of the City of Hamilton and the Ohio Municipal Electric 
Association, I once again thank the Senators for the opportunity to 
testify today. Hamilton supports effective Clean Air Act requirements 
to reduce NOx and ozone pollution, but EPA needs to be more vigilant in 
identifying how these regulations might impact small businesses and 
local governments who need compliance flexibility in order to remain 
viable.
                                 ______
                                 
                         Letter from Mayor Nye
                                                      July 1, 1999.

Hon. James Inhofe, Chairman,
Committee on Environment and Public Works,
Subcommittee on Clean Air, Wetlands, Private Property and Nuclear 
        Safety,
Washington, DC 20510.

Re: NOx Removal Costs for Hamilton Boiler 9

Mr. Chairman: During the course of my testimony and the following 
    question and answer period, there seemed to be great interest by 
    co-committee members regarding the estimated cost per ton of NOx 
    removed for Hamilton Boiler 9. It was requested that Hamilton 
    provide documentation of these estimated costs for entry into the 
    public record.
    Based on capital and O&M cost estimates prepared by the engineering 
firm SET, Inc. for the City of Hamilton's Boiler 9 (attachment 1), the 
total annual cost to install and operate a selective catalytic 
reduction system (SCR) to comply with the 0.15 lb/mmBtu NOx limit is 
$771,929 debt service and an additional $656,100 O&M (based on a 56.6 
percent capacity, which is typical for Boiler 9). The debt service is 
calculated on the estimated cost as provided by SET, Inc., adjusted by 
3 percent per year inflation for the period from 1995 to 1998 and 
amortized over 20 years at 4.5 percent interest (attachment 2). This 
equals 3.2 percent of the 1998 electric revenues for the entire 
Hamilton Municipal Electric System. Further, when calculated on a cost 
per ton NOx removed, the cost was over $7,554/ton. The basis for this 
is as follows:
    1. Ozone season NOx production for Boiler #9 pre-SIP, FIP or 126 = 
0.40 lb/mmBtu x 729 mmBtu/hr x 24 hr/day x 153 day/season x 0.565 
(historic capacity factor of Boiler 9) x 1 ton/2000 lbs = 302 tons.
    2. After installation of controls: 0.15 lb/mmBtu x 729 mmBtu/hr x 
24 hr/day x 153 day/season x 0.565 (historic capacity factor of Boiler 
9) x 1 ton/2000 lbs = 113 tons.
    3. 302 tons--113 tons = 189 tons removed under EPA performance 
standard.
    4. $1,427,689 annual cost/ 189 annual tons removed = $7,554 per ton 
NOx removed.
    Part of the higher that expected removal cost is associated with 
our capacity factor of the boiler, but that is a reality based on the 
fact that Boiler 9 backs up our hydroelectric generation. However, even 
without the capacity factor issue the cost/ton NOx removed would be 
$4,274. Both are significantly higher than USEPA's estimated removal 
cost of $1,500/ton NOx.
    Should there be anything additional that I may provide concerning 
this issue, do not hesitate to contact me at (513) 868-5834. 
Alternatively, feel free to contact Mary Moore, Utilities Environmental 
Administrator, at [email protected] or at (513) 868-
5908 ext. 1830.
            Very truly yours,
                                        Thomas E. Nye, O.D.
                                           Mayor, City of Hamilton.
                                 ______
                                 
  Responses by Thomas Nye to Additional Questions from Senator Inhofe
    Question 1. Mayor Nye, in your testimony you were critical of the 
EPA's efforts to implement SBREFA. You stated that the EPA ignored the 
definition of a ``small entity'' with respect to electric utilities. If 
they had adequately considered SBREFA how would it have improved your 
situation?
    Response. In its NOx SIP Call, EPA failed to undertake any of the 
analyses and outreach required by the Small Business Regulatory 
Enforcement Fairness Act of 1996 (``SBREFA''). Congress enacted SBREFA 
in order to protect small businesses, small organizations and small 
governmental jurisdictions, collectively referred to as ``small 
entities,'' from disproportionate or unanticipated adverse impacts of 
Federal rulemaking activity. The analyses required by SBREFA must be 
undertaken prior to publication of any general notice of proposed 
rulemaking and must ``contain a description of any significant 
alternatives to the proposed rule which accomplish the Stated 
objectives of applicable statutes and which minimize any significant 
economic impact of the proposed rule on small entities.'' U.S.C. 
Sec. 603(c). In addition, agencies must conduct extensive outreach and 
coordination with small entity representatives during the regulatory 
process for significant rules. Likewise, agencies must publish final 
SBREFA analyses, including an assessment of alternative approaches to 
mitigate impacts on small entities, when a final rule is promulgated.
    Such analysis and outreach for the EPA NOx SIP Call would have 
assured that the impacts on small entities were given due 
consideration, and mitigated where reasonable. The SIP Call will 
directly and undoubtedly impact small entities, like public power 
communities. However, EPA shirked its SBREFA obligations by arguing 
that the SIP Call will not directly ``regulate'' small entities, 
because the specifics of the SIP Call will be imposed by States who are 
being commanded to implement the program, rather than by EPA. EPA's 
approach to SBREFA in the SIP Call is, Hamilton believes, clearly 
contrary to the intent of Congress. Although this issue is currently in 
litigation (including through petitions raised by small public power 
communities), it may be necessary for Congress to clarify SBREFA to 
ensure that agencies like EPA are not able to evade the analysis and 
outreach that is necessary to mitigate the disproportionate impact of 
regulations as significant as the SIP Call on small entities.
    Even where EPA has performed analyses for SBREFA (such as in the 
CAA Section 126 and NOx FIP rules), the analyses were limited in scope, 
and they used the wrong standard. Specifically, Hamilton was not 
permitted to submit comments to the Small Business Advocacy Review 
Panels that met to assess the potential impacts of the Section 126 and 
FIP rulemakings on small businesses. In order to submit any comments to 
these panels, our comments had to be submitted through our State trade 
association, American Municipal Power-Ohio (AMP-Ohio). No direct 
comments were accepted. The timeline for response to these panels were 
extremely short as well. The original letter from Thomas E. Kelley 
inviting comment was dated July 30, 1998, and the comments were due by 
August 11, 1998.
    In addition, EPA used the wrong standard to define ``small entity'' 
in the utility industry in its SBREFA analysis. It appears that EPA 
assessed the potential impact of the Section 126 rule and FIP rules on 
small utilities by defining as ``small'' those utilities that own or 
operate small units, of less than 25 megawatts in size. And, because 
EPA proposed to exempt such small units from regulation, the Agency 
assumed that there will be minimal impact of the NOx rules on small 
utility entities. However, SBREFA and applicable small business 
regulations define ``small entity'' in the utility industry as an 
entity that sells less than 4 million megawatt/hours annually--whether 
that entity owns small utility units, large utility units, or both. In 
Hamilton's case, for example, our municipal utility system is a ``small 
entity'' under SBREFA that owns one ``large'' unit, Boiler 9 at 50 MW, 
and several small, less than 25 MW units. Many other public power 
communities would likewise fall under the SBREFA standard, even though 
they may own some larger utility units (which, of course, are fully 
subject to EPA's Clean Air Act regulations).
    However, EPA has failed in its SBREFA analyses for the Section 126 
and FIP rules to identify how its NOx strategy may have 
disproportionate impacts on small utility entities, and how these 
impacts can be mitigated. The Agency has not properly assessed how the 
typical lack of capital, lack of staff resources, lack of pollution 
control expertise, and diseconomies of scale of these smaller systems 
may make it more difficult for them to cost-effectively implement 
Federal regulatory mandates and remain competitive in the utility 
industry. EPA itself has recognized the potential for disproportionate 
impacts to small entities from its Clean Air Act rulemaking, and even 
issued guidance to States to urge them to mitigate such impacts.
    If EPA had performed a full SBREFA analysis for its NOx rules as 
Congress intended, I believe the impacts on public power communities 
like Hamilton (e.g., larger cost per ton removal, less staff to track 
and administer the program, less customers over which to spread the 
costs of compliance, and Hamilton's significant debt load for voluntary 
environmentally favorable projects, to name a few) would have been 
recognized, and could have been mitigated. A more flexible pollution 
control program could have been developed to ameliorate impacts on 
Hamilton and other small entities. Commenters like Hamilton have 
attempted to offer suggestions to EPA for compliance flexibility for 
small public power communities. However, as conducted by EPA in its NOx 
rulemaking process, we do not perceive that the Agency's SBREFA work 
has had any meaningful effect on these rules.
    In sum, EPA has either evaded its SBREFA obligations or performed 
inadequate analysis and outreach that have not identified the 
disproportionate impacts on small utility entities that may take place 
under its NOx control strategy. The Agency has acknowledged the real 
potential for such impacts. If EPA conducts a full and proper SBREFA 
analysis for its NOx program, it could better identify how to avoid 
small entity impacts through compliance flexibility for small public 
power communities.

    Question 2. Mayor Nye, now that the EPA has issued the stay for the 
SIP call, how does that affect your planning? Will you go forward with 
the Governors proposal or try and implement the EPA's plan?
    Response. Hamilton's only realistic choice is to follow the rules 
that are adopted and implemented by our State, although we are very 
concerned that the confused regulatory situation will make it difficult 
for us to plan for our future pollution control and utility operations. 
At this point, we do not know whether we will be asked to implement the 
Governors Alternative, a future SIP Call plan, a future Federal 
Implementation Plan, or the newly crafted EPA Section 126 plan for 
Ohio.
    As I have testified, the only cost-effective way for Hamilton to 
comply with either EPA's rules or the Governors Alternative is through 
a NOx allowance trading program that provides easily available, and 
affordable, NOx credits. Obviously, Hamilton feels that the Governors 
Alternative is a more reasonable and achievable plan, with its proposal 
for a 65 percent reduction in NOx emissions. However, even the 
Governors Alternative is unfavorable to small entities in many 
respects. For example, it might impose controls on the smallest of 
utility units, and it does not identify how NOx trading can make 
compliance achievable for small entities.
    Therefore, from Hamilton's perspective, we must have two things to 
enable us to plan for NOx control: a clear sense of the rules that will 
apply, and a set of rules that provides for cost-effective NOx trading 
as a means of compliance. For us, the judicial stay of the SIP Call is 
merely continuing the uncertainty of our future regulatory obligations, 
and potentially preventing parties from working together to craft a 
workable NOx trading program. In the meantime, Hamilton is still 
awaiting EPA's final Federal NOx trading rule, and the outcome of our 
discussions with EPA regarding the allowance allocation process under 
that rule (as I discussed in my written testimony). The final scope and 
design of any trading program will determine the full impact of the SIP 
(or FIP or 126) rules on Hamilton. Alternatively, if Ohio implements a 
Governors Alternative approach, we need to discuss with Ohio EPA the 
specifics of implementation, such as allowance allocation, trading and 
compliance deadlines in order to achieve a small entity favorable (or 
at least neutral) program.

    Question 3. If the EPA plan is upheld by the courts, what kind of 
lead time do you need in order to plan for the reduction?
    Response. Since Hamilton's only cost-effective method to comply 
with the NOx SIP is through the proposed NOx allowance trading program, 
the lead time necessary for Hamilton compliance may not be as 
significant as if Hamilton planned to comply through the installation 
of pollution control equipment or substantial operational changes.
    However, the uncertainty that may be associated with a 
reinstatement of the EPA SIP Call (and its May 2003 compliance date) at 
the end of the current litigation is a significant concern to Hamilton. 
I reiterate that Hamilton feels that a phasing of the NOx control 
program for small entities is justified on both environmental and small 
entity fairness grounds. Phasing in NOx reduction requirements for the 
largest sources of emissions first, and then later for small entities, 
would ensure that the bulk of emission reductions are achieved up 
front. Further, a phased program will also allow a workable NOx trading 
program to be fully implemented before small entities become subject to 
the program. This approach could also broaden the compliance options 
for small entities: if a new, less-costly NOx reduction technology can 
be developed during the phase-in period, then a small entity may be 
able to choose the technology instead of being limited to the trading 
program as the sole compliance option.
    Hamilton would also need lead time for its NOx compliance if U.S. 
EPA's forthcoming Federal NOx trading program does not grant Hamilton's 
request that its allowance allocation for Boiler 9 be adjusted to 
reflect Hamilton's unique circumstances, as explained in my written 
testimony. If Hamilton is required to meet NOx requirements as early as 
May, 2003 with a substantial underallocation of NOx allowances, the 
City will need to consider other options, including the shut down or 
sale of our fossil-fired electric plant, which could in turn threaten 
the viability of our system, established in 1893.
    Likewise, Hamilton would need lead time to plan, if the State of 
Ohio implements a NOx control plan that does not provide for easily 
available, cost-effective NOx allowance trading by Hamilton. Again, 
without such an option, Hamilton may face a crisis.
    In any of these scenarios, Hamilton is harmed by the lack of 
regulatory certainty of the current situation, which is only 
exacerbated by the prospect of continuing litigation over the Federal 
NOx program.

    Question 4. The EPA is going forward with Section 126 petitions, at 
this point they will only address the 1-hour standard, because of the 
recent NAAQS decision. If they win the appeal, presumably they will re-
address the 8-hour standard, plus the SIP Call at a later date, what 
effect does this have on your city's short- and long-term planning?
    Response. The City of Hamilton is struggling with two major issues 
regarding our electric system as I respond to this question. The first 
is, can we compete under electric deregulation? Governor Taft signed a 
bill on June 6, 1999 deregulating the electric utility industry in Ohio 
effective January 2001. Municipal electric utilities have to right to 
``opt out'' from competition under this deregulation bill. Given the 
significant debt load under which the Hamilton Electric System is 
operating due to our decision to invest in hydroelectric power, and the 
potential disproportionate costs that will be incurred to comply with 
any regional NOx reduction strategy, our ability to compete is in 
question. However, with our need to attract and maintain jobs for our 
community though the provision of low-cost electric service, do we dare 
not open our city to competition? Thus, the uncertainties associated 
with the ozone NAAQS, the SIP Call, Section 126 are placing the City in 
a significant planning quandary, both short and long term.
    Hamilton is also concerned with a second issue, which is affected 
by the uncertainly of the current regulatory situation. Hamilton has 
decided to delay indefinitely the installation of low NOx burners on 
Boiler 9, which are necessary for our compliance with Phase 2 NOx 
reductions requirements under Clean Air Act Title IV. Phase 2 rules 
applicable to Boiler 9 mandate compliance with a 0.40 lb/mmBtu limit 
for NOx emissions effective January 1, 2000. The installation of low 
NOx burners is a cost-effective method of complying with this new 
limit. Hamilton, however, could not justify investing additional 
capital dollars in our generating system should deregulation and/or 
further NOx requirements cause us to go out of business. We will be 
complying with the Title IV requirements by co-firing natural gas. For 
the long term, this is not the most cost-effective mode of operation 
but, given all the uncertainties, no other prudent decision could be 
made.
                                 ______
                                 
  Responses by Thomas Nye to Additional Questions from Senator Chafee
    Question 1. In your testimony you reference the EPA's proposed NOx 
Trading program. Could you elaborate on how you think that proposed NOx 
Trading program could be improved?
    Response. For Hamilton and most small public power electric 
generators, compliance with any regional NOx control strategy must be 
achieved through the trading and purchase of NOx allowances through a 
NOx Trading program. Therefore, the trading program must be well 
conceived and well implemented.
    However, any system implemented by EPA under the current regulatory 
climate could be confusing and counter-productive, especially for small 
entities. EPA's proposed Federal NOx trading system will not be applied 
uniformly over the eastern United States, but instead through a 
hodgepodge of voluntary State programs and Federal mandates. For 
example, the State of Michigan currently does not plan to participate 
in any regional NOx trading approach. In Ohio, there is a trading 
committee currently meeting to determine if Ohio is going to have 
trading as an option in its rulemaking approach; thus it is unknown if 
trading will be an option for Hamilton. Likewise, it is not clear at 
this point whether EPA mandates may be imposed on selected States 
through SIP Call responses, applications of NOx FIPs to individual 
States, and/or the application of Section 126 controls to individual 
sources.
    In this confused context, if fewer States choose to participate in 
a regional NOx trading program, or if the individual State programs are 
not consistent, it will surely result in an inefficient market with 
higher cost allowances. For example, Hamilton understands that NOx 
allowances are currently trading in the $6,000-$7,000 range right now 
under the Ozone Transport Regional system in New England, which is a 
smaller market. Moreover, a poorly designed trading program could 
potentially allow competitors, particularly large utilities with 
multiple plants, to hoard allowances and further drive up costs for 
small entities.
    For these reasons, Congress should consider establishing the NOx 
cap-and-trade program for the entire 22 State region involved in the 
regional NOx reduction strategy to alleviate the confusion and 
inefficiencies that differing voluntary State, and federally mandated, 
programs will cause. Such a regional trading system can build upon 
EPA's proposed Federal NOx trading plan and the successful SO2 
trading program. A legislatively established system should also provide 
incentives for the early retirement of fossil-fired electric plants, 
including small plants. Incentives should also be put in place for 
verifiable, voluntary emissions reductions activities like energy 
efficiency and investments in green power, including small 
hydroelectric generation projects like Hamilton's Greenup Locks and Dam 
facility. The NOx trading system should also provide assistance and 
incentives to small entities, like public power systems, that are 
covered by the regulatory program yet burdened by diseconomies of scale 
and other disadvantages. For example, allowance allocation formulas can 
be developed that provide additional credits to smaller entities, or 
more flexibility in the use of such credits.
    Finally, I must again emphasize that even if Congress establishes a 
NOx trading program as Hamilton and other small entities recommend, it 
is critical that Hamilton's NOx allowance situation be resolved. Due to 
our significant investment in hydroelectric generation and unusual 
circumstances during EPA's chosen baseline utilization years for 
affected utility sources, Hamilton may be placed at a severe 
competitive disadvantage in relation to similar units. Thus, any cap-
and-trade program must provide a method for the adjustment of baselines 
for individual units who demonstrate certain unusual circumstances 
during baseline years, such as extended outages or atypically low 
utilization.

    Question 2. In your testimony you cite environmental improvements 
that were made to the Hamilton Public Utility made as far back as 1981, 
including investments in hydro power. What year do you propose to start 
getting credit for voluntary or mandatory actions that you have already 
completed?
    Response. While Hamilton feels that recognition of our early 
efforts is appropriate under EPA's NOx trading program, we are not 
requesting that allowances be provided from day one of the operation of 
our hydroelectric plant. Nor do we suggest a specific year at which EPA 
should begin crediting voluntary action by utilities who reduced NOx 
early, in expectation of potential future requirements. Hamilton does, 
however, believe that our voluntary emissions reduction activities 
should be considered with respect to our reasonable request for an 
adjusted allowance allocation to Hamilton's coal-fired, 50 megawatt 
Boiler 9. As I have testified, Boiler 9, which is the primary source of 
back-up generation to Hamilton's hydroelectric plant, experienced 
unusual and atypically low utilization during the 1995-97 baseline 
period chosen by EPA for allowance allocations.
    We understand that no entities, aside from Hamilton and a handful 
of Michigan public power communities, have requested adjusted allowance 
allocations based on unusual circumstances in the proposed EPA baseline 
period. Hamilton's situation is thus fairly unique. We ask that 
Hamilton's situation be considered in light of our significant 
investment in clean hydroelectric power, because our hydroelectric 
plant is essentially hitched to the same yoke as our affected Boiler 9. 
Hamilton is not asking for a change in how the overall, regional 
allocation process occurs, and thus our request should not have any 
significant effect on EPA's final NOx trading rules or the public 
health and environment.
                                 ______
                                 
 Responses by Thomas Nye to Additional Questions from Senator Voinovich
    Question 1. What will be the effect of EPA's NOx control strategy 
and regional trading program on Hamilton's coal plant, as it is now 
proposed?
    Response. As explained in my testimony, the only way Hamilton can 
cost effectively comply with EPA's proposed strategy is through the 
purchase of NOx trading allowances. However, the way EPA has proposed 
allocating those allowances will seriously shortchange Hamilton due to 
exceptional circumstances at our plant and our decision to invest in 
hydroelectric generation. We have raised these concerns with EPA, and 
we are appreciative that they have listened and understood our 
concerns. However, if EPA does not account for Hamilton's situation in 
its final NOx trading program, which we expect them to announce on July 
15, I can say that the very viability of our Hamilton electric system 
will be threatened. For a community that has been in the electric 
generating business since 1893, and that has been progressive in its 
decisions to protect the environment, it would be truly ironic, and 
unfair, for this proposed rulemaking to cause us to cease operations.

    Question 2. What is Ohio Public Power's overall concern with EPA's 
NOx control strategy?
    Response. Ohio Public Power recognizes that there are local ozone 
problems that involve short range regional NOx transport (e.g., from 
Ohio to Pittsburgh). We are committed to working with State regulatory 
agencies to solve these problems in a cost-effective manner for public 
power facilities.
    However, Ohio Public Power believes that EPA's NOx control strategy 
will impose cost-prohibitive and unwarranted controls on electric 
utilities, particularly small public power entities. First, Ohio Public 
Power does not feel that the reductions called for by EPA's NOx control 
strategy are warranted by the science. The one-size-fits-all 85 percent 
reduction requirement ignores OTAG's finding that ozone reduction 
benefits diminish with distance. Second, EPA's NOx control strategy has 
not adequately assessed the potential disproportionate costs and 
impacts on small entities, like public power communities. Nor has the 
Agency adequately identified how to mitigate such impacts. Such 
assessment could have taken place if the Agency had performed required 
SBREFA analysis and outreach for the SIP Call, as Ohio Public Power 
believes Congress intended in that 1996 law. It is clear that small 
electric utilities will bear a disproportionate impact from this SIP 
Call regulation, as EPA has acknowledged, and as evidenced by the 
estimated $7,500+ cost per ton of NOx removed for Hamliton Boiler 9.

                               __________
          Statement of F. Wayne Hill, Gwinnett County, Georgia
    Thank you for allowing me to speak today about the Clean Air Act 
and proposed regulatory changes. My name is F. Wayne Hill, Chairman of 
the Gwinnett County Board of Commissioners in Lawrenceville, GA, and 
Chairman of the Atlanta Regional Commission, the metropolitan planning 
agency for the Atlanta area. I am currently serving my second term as 
Gannett County Commission Chair. I have lived my entire life in 
Gwinnett County and built my business there.
    In 1960, Gwinnett County had a population of 42,000. Today, our 
population has swelled to more tom 500,000. More than ever, I 
understand and agree that standards are necessary to preserve air 
quality to protect the public health. I'm especially sympathetic to 
others who are affected by the region's air quality. While I serve as 
Chairman of Gwinnett County's Board of Commissioners, my bigger role is 
that of husband, father and grandfather. Sadly, my granddaughter 
suffers from upper respiratory problems, and that causes my wife and I 
a great deal of concern.
    On behalf of the residents in Gwinnett County, including my wife, 
children and other family members, I want to commend you and earlier 
members of Congress who decided to tackle the problem. Because of you, 
air quality is better today that it was 25 or 30 years ago.
    As I mentioned earlier, I also serve as Chairman on the Atlanta 
Regional Commission. In that capacity, I have been very involved with 
Atlanta's efforts to comply with the requirements of the Clean Air Act. 
I can assure you that both the ARC and Georgia State agencies have been 
working diligently to ensure compliance in the region.
    As we work to address this matter, let's remember that air quality 
is a very complicated issue, involving a number of interconnected 
sources. My discussion today will cover three major areas: 1) 
coordination and consistency at the Federal level, 2) complexity of 
Clean Air issues and 3) consequences of regulation.
    First, let's talk about coordination and consistency. I am very 
comfortable with Congress's intent on the Clean Air issue. Sometimes, 
though, your intent may be blurred by how Federal agencies implement 
your legislation. It's not unusual for two Federal agencies to take 
different approaches to an issue that can leave a local government hung 
between two conflicting sets of regulations. Specifically related to 
the Clean Air Act, we request that Congress emphasize a coordinated 
approach that balances all the many factors that should be considered, 
including public health, highway safety, mobility, economic impacts, 
cost and the will of the American people.
    Such coordination can help reduce certainty about future 
requirements, which is one of the most difficult things for local 
governments to handle. In Gwinnett and the rest of the Atlanta region, 
we have been thrown into chaos by a combination of decisions at our 
level and the Federal level and legal challenges to those decisions.
    Federal funding for a number of previously approved projects has 
been withdrawn. The State of Georgia and local governments like mine 
are faced with the prospect of worsening congestion and increased 
danger of travel while we attempt to meet the revised guidance from the 
Federal level. You can imagine our frustration! While we are told 
repeatedly that we must plan for the long-term, our plans have to be 
based on Federal requirements that can change rapidly.
    I understand that legislation has been proposed to address the 
Court decision regarding EPA's rule dealing with ``grandfathered'' 
projects. I urge that Senate Bill 1053 be passed for the good of areas 
all across the United States.
    The second point for discussion is the complexity of the issue. All 
of you know that this is a complicated, interconnected problem. It is 
easy to create unintended results. For example, there is a lot of 
discussion about the evils of ``sprawl'' development and its 
contribution to air pollution through encouraging auto-dependent 
travel. Yet dealing with the extra requirements brought on by 
designation as an area with air quality problems can drive businesses 
and people to move farther out.
    My small business, a cabinet shop, is a point-source for certain 
pollutants because we use glues and stains. We were sent 30 to 40 pages 
of papers to file about the number of gallons we use. If we were three 
miles to the north, we would be in a county that is outside the non-
conforming Atlanta area, and we would not have to file these documents. 
Some businesses will supply choose at some point to move rather than 
deal with the extra regulations. As companies move further, so will 
people, resulting in more and more sprawl of development.
    Third, I want to touch on the consequences of regulation. As noted 
earlier, Federal funding for certain transportation projects in the 
Atlanta area has been withdrawn. This leaves many local governments, 
including Gwinnett, with gaps in the transportation network, for 
example, two-lane road sections connecting four-lane sections.
    Delaying such projects puts the public at risk. Not only is there 
increased likelihood of vehicle accidents but the response time of 
emergency vehicles climbs. Greater congestion also leads to exactly 
what we're trying to prevent--emission of more pollutants!
    We must also consider the public's will. Gwinnett County voters 
approved a one-cent special purpose local option sales tax for the 
purpose of improving the transportation infrastructure. It's tough to 
explain why we cannot utilize tax dollars as the public wishes.
    Another consequence is the potential effect on the nation's 
economy. At some point, the uncertainly of future transportation 
improvements, the impacts of increased congestion on the public and the 
burden of additional legislation will cause the business activity of 
Atlanta to shift and slow. The same will be true for any area in the 
United States facing non-conformity under Clean Air standards.
    Vital to economic development is the ability for industry to get 
its product to market. If road projects are discontinued, that will 
virtually shut down Atlanta's transportation network. Industries all 
over the Southeast rely on our interstate and rail systems and the 
close proximity to Hartsfield International Airport. If that network is 
crippled because of delayed or canceled road projects, it could 
conceivably paralyze the economy for the southeast region. Of equal 
concern is the perception of businesses considering relocations or 
expansions. Executives know that it is less expensive for a business to 
locate in an attainment area than a non-attainment area.
    I'm not suggesting that we slow efforts to improve air quality, but 
that we carefully consider the economic impacts. My business background 
taught me that I have to have enough money to pay the bills. My time as 
an elected official has shown me that it takes money to run an 
effective government, and a healthy economy lets us accomplish 
important projects that we could not otherwise do. This applies at all 
levels of government, as you all know better than I do.
    In summary, I agree that regulations are necessary to address air 
quality. I commend the committee and subcommittee members for 
addressing a complex and unpopular issue. Thank you for your time today 
and for allowing me to voice my thoughts and suggestions.
                                 ______
                                 
 Responses by F. Wayne Hill to Additional Question from Senator Inhofe
    Question. What advantages and disadvantages do you believe that the 
``Governors' proposal'' on NOx reductions, as alluded to in the 
hearing, would have relative to EPA's proposed NOx SIP call?
    Response. The overall purpose of EPA's September 24, 1998 Final 
Rule, ``Finding of Significant Contribution and Rulemaking for Certain 
States in the Ozone Transport Assessment Group Region for Purposes of 
Reducing Regional Transport of Ozone'' (known as the NOx SIP Call), is 
to reduce regional transport of NOx that contributes to ozone 
nonattainment in multiple eastern States. Ground-level ozone tends to 
be a problem over broad regional areas, particularly in the eastern 
United States, where it is transported by the wind. When emitted, NOx 
reacts in the atmosphere to form compounds that contribute to the 
formation of ozone. These compounds, as well as ozone itself, can 
travel hundreds of miles across State boundaries to affect public 
health in areas far from the source of the pollution. Thus, cities or 
areas with ``clean'' air, those that meet or attain the national air 
quality standards for ozone, may be contributing to a downwind city's 
ozone problem because of transport.
    EPA's rule requires 22 States (including Georgia) and the District 
of Columbia to submit State Implementation Plans (SIPs) that address 
how they will reduce the transport of NOx emissions across State 
boundaries. These areas were identified by the EPA as ``contributing 
significantly'' to ozone problems in downwind areas. The rule requires 
emission reduction measures to be in place by May 1, 2003. By improving 
air quality and reducing emissions of nitrogen oxides, the actions 
directed by these SIPs will decrease the transport of ozone across 
State boundaries in the eastern half of the United States, thus 
assisting downwind States in meeting the ozone standard.
    The Atlanta metro area, for example, will not meet the 1-hour 
standard in 1999 (the attainment deadline for Serious areas) partly 
because of the impact of pollution entering Georgia from several upwind 
States, including Alabama, Kentucky, North Carolina, South Carolina, 
and Tennessee. Consequently, Georgia will request an extension of 
Atlanta's attainment date to 2003, when controls on those upwind States 
are required by the NOx SIP Call and other local controls can be in 
place. Thus, full implementation of the control measures required by 
the NOx SIP Call in upwind States is very important to Atlanta's 
achievement of the ozone standard.
    Full implementation of the NOx SIP Call, as amended on May 6, 1999, 
will reduce total NOx emissions by about 25 percent (or 1.142 million 
tons). EPA projects that these regional reductions will bring the vast 
majority of all new ozone nonattainment areas into attainment with the 
8-hour standard without having to implement local controls.
    EPA's rule established NOx budgets for each State by determining 
the amount of NOx emissions that would remain after application of 
highly cost-effective controls to utilities and other sources of NOx. 
For utilities, EPA chose a control level (0.15 lb/mmBtu) which is 
achievable using available, cost-effective technology. This equates to 
an 85 percent reduction in emissions from these sources. For non-
utility sources, EPA chose a control level that represents a 60 percent 
reduction from uncontrolled levels for large industrial boilers and 
turbines, a 90 percent reduction from stationary combustion engines, 
and a 30 percent reduction from cement kilns. States will be able to 
decide the best mix of controls to meet their overall NOx budget. 
However, utilities and large non-utility point sources would be one of 
the most likely sources of NOx emissions reductions.
    The rule also creates a pool of emission ``credits'' for each State 
to use. This pool of credits encourages early compliance and also 
provides flexibility by allowing these credits to be used by sources 
that might not otherwise meet the deadline. In addition, States can 
choose to participate in a multi-state ``cap and trade'' program that 
allows facilities that reduce emissions early or in greater amounts 
than required to sell their emissions reductions to other facilities 
that cannot reduce emissions as quickly or cost-effectively. According 
to EPA, the ``cap and trade'' program will allow States to achieve over 
90 percent of the emissions reductions required by the SIP call.
    During the comment period on the proposed NOx SIP Call in 1998, 
several States requested that the EPA consider an alternative proposal, 
called the ``Alternative Proposal by the Southeast/ Midwest Governors' 
Ozone Coalition.'' This ``Governors' proposal'' suggests a two-phase 
approach over a slightly longer implementation period.
    As a first step, it calls for a 55 percent (or 0.35 lb/mmBtu) 
reduction from utility sources by May 1, 2002. In Step Two, the 
proposal calls for a 60 percent (or 0.25 lb/mmBtu) reduction by May 1, 
2004. Controls on non-utility sources would not be required until Step 
Two. In addition, the proposal calls for considering further reductions 
that would be needed to attain the 8-hour standard in Step Two. This 
proposal does not establish emission budgets (or caps), only emission 
reduction rates.
    Compared with EPA's final rule, this proposal would allow States 
more time to implement control measures. It also calls for less 
emissions reductions than the final rule. As a result, there may be 
economic advantages, such as less extensive (and less costly) scrubber 
systems for utility plants.
    It is not clear whether the States involved are suggesting that the 
Governors' proposal apply to only the States supporting the proposal or 
to all 22 States and the District of Columbia. If it were applied to a 
limited number of States, areas with 1-hour standard attainment 
deadlines of 2003 may not be able to demonstrate attainment if less 
emissions reductions are achieved in upwind States by then.
    Even if the proposal were applied to all 22 States and the District 
of Columbia, it achieves less total reductions than EPA's final rule 
and spreads the reductions out over a longer period of time. It does, 
however, propose considering further reductions to meet the 8-hour 
standard in Step Two. Nonetheless, downwind States may still be 
required to implement additional local controls to make up the 
difference in order to attain the 1-hour standard, and attainment of 
the 8-hour standard could be delayed.
    Finally, the proposal does not require the establishment of State 
emission budgets, only reduction rates. This makes it possible for 
power facilities in Ozone Transport Commission States (in the 
northeast) that already have emissions caps to shift their power 
production to facilities in the midwest, thereby continuing to increase 
emissions in the midwest.

                               __________
   Statement of Jane Stahl, Connecticut Department of Environmental 
                               Protection
Introduction
    Good morning. My name is Jane Stahl. I am the Deputy Commissioner 
for Air, Water and Waste Programs at the Connecticut Department of 
Environmental Protection. I appreciate the opportunity to present the 
perspective of the State of Connecticut on EPA's NOx SIP Call rule.
    As you know, the NOx SIP Call would require 22 States and the 
District of Columbia to amend their respective State Implementation 
Plans to reduce emissions of oxides of nitrogen (NOx--a precursor 
pollutant to the formation of ground-level ozone). These reductions 
would be achieved through the implementation of a regional, market-
based, emissions allowance trading program. Such a program would yield 
emission reductions more cost effectively than a program based on 
traditional command and control measures.
    The State of Connecticut has been deeply involved in the search for 
a regional, consensus-based, solution to the problem of interstate 
transport of ozone. The State of Connecticut, as a member of the Ozone 
Transport Commission, participated in the Ozone Transport Assessment 
Group (OTAG) from its inception and fully supports the development of 
market based approaches to air quality management. We are, however, 
disappointed by recent events that threaten the promise of cleaner air 
for all.
    To inject a sense of immediacy into this discussion, I would like 
to point out that so far this ozone season (the period from May 1-
September 30 when ambient ozone levels are of greatest public health 
concern) the State of Connecticut has experienced three (3) days with 
exceedances of the 1-hour health-based National Ambient Air Quality 
Standard for ozone (1-hour ozone NAAQS) and eight (8) days with 
exceedances of the more protective (yet unenforceable) 8-hour ozone 
NAAQS. The peak 1-hour ozone levels in Connecticut have reached 158 
ppb; that is 27 percent higher than the minimum threshold determined by 
the United States Environmental Protection Agency (EPA) as necessary to 
protect public health. The peak 8-hour ozone levels in Connecticut have 
reached 133 ppb, that is 58 percent above the public health threshold 
set by EPA.
                               background
I. Connecticut fails to meet the 1-hour ozone NAAQS
    The State of Connecticut has been engaged in a prolonged struggle 
to protect the public health of its citizens by bringing ground level 
ozone concentrations down to levels which comply with the 1-hour ozone 
NAAQS. The State of Connecticut has taken great strides to control the 
primary pollutants that produce ozone by meeting (and often exceeding) 
the numerous requirements imposed on the State by the Clean Air Act 
Amendments of 1990 (Act). For example, the Department of Environmental 
Protection (CTDEP) is currently implementing and plans to implement 
many aggressive ozone abatement programs, including:

   Reformulated gasoline (including ozone season reid vapor 
    pressure limits) statewide;
   Enhanced Centralized Motor Vehicle Inspection and 
    Maintenance statewide;
   Stages I and II Gasoline Vapor Recovery statewide;
   New Source Review (with Offset requirements) at reduced 
    major source thresholds as low as 25 tons per year (and in some 
    instances technology review at 5 tons per year);
   Reasonably Available Control Technology on NOx Stationary 
    Sources;
   Reasonably Available Control Technology on VOC Stationary 
    Sources;
   California Low Emission Vehicle Program (Cal LEV) with 
    National LEV Compliance Option; and
   OTC NOx Budget Program (1999 Phase II reductions and 2003 
    Phase III reductions).

    Despite the vast improvement in Connecticut's air quality as a 
result of the implementation of these programs, Connecticut remains in 
noncompliance with the 1-hour ozone NAAQS established by the EPA. The 
chief cause of such continued noncompliance with the 1-hour ozone NAAQS 
is the overwhelming transport of ozone and its precursors, primarily 
NOx, into our State from upwind States.
    There are two maps attached to this testimony which clearly 
demonstrate the geographic link between high ozone levels and NOx 
emissions from electricity generating plants:
    Figure 1 is a map of average maximum daily ozone (in parts per 
billion, 1-hour average) measured at ozone monitoring sites in the 
Eastern United States during the months June through August, 1991-1995. 
You will note that the most persistently high ozone levels extend along 
two axes: one is from the lower Ohio River Valley eastward across the 
Appalachians to Connecticut; and the second extends northeastward from 
the Piedmont of North Carolina to Connecticut. A third broad area of 
high ozone exists in the vicinity of Atlanta.
    Figure 2 displays two types of information. The red arrows indicate 
wind flow (direction and persistence) during periods of high ozone 
episodes; and the circles represent locations and magnitude of NOx 
emissions from electric generating stations. Note the size of the 
circles is proportional to the quantity of emissions from each power 
plant; and that there are a series of power plants along the Ohio River 
Valley and along the Piedmont closely paralleling the high ozone map.
    It is quite obvious that Connecticut is at a distinctive geographic 
disadvantage in the struggle to lower ozone levels unless we can get 
upwind areas to assist with reducing ozone precursor emissions.
II. Decisive Federal Action Is Necessary to Address Interstate 
        Transport of Ozone
    Air quality monitoring data, collected since the 1970's, shows a 
significant contribution of ozone in the Northeast originating from 
pollution sources outside the region. Transported ozone entering the 
Northeast Corridor has been measured aloft by aircraft at levels 
exceeding 80 percent of the 1-hour ozone NAAQS (and over 100 percent of 
the unenforceable 8-hour ozone NAAQS). Reaching attainment in 
Connecticut and throughout the Northeast is unlikely if States must 
first compensate for the polluted air blowing across their boundaries. 
This is not one State's attempt to lay blame for its poor air quality 
on another State. Nor is it a choice between reductions from upwind 
sources or additional reductions from sources in Connecticut and 
throughout the Northeast. This is specific recognition of the fact that 
ozone pollution is a regional problem requiring regional solutions. 
Simply put, we do not live in a vacuum and our actions affect others.
    The issue of interstate transport of ozone and its precursors has 
not gone unnoticed by Congress, who in structuring sections 110 and 
176A of the Clean Air Act recognize that constitutional limitations 
prevent individual States from addressing problems associated with 
interstate transport of air pollution. There are distinct economies of 
scale in regional approaches to air pollution control that offer the 
most flexible opportunities to meet the ozone NAAQS at the lowest 
possible cost. However in the absence of federal leadership to control 
interstate transport of air pollution, States such as Connecticut will 
be constrained to seek relief under section 126 of the Act from 
transported air pollution which contributes significantly to 
nonattainment of the 1-hour ozone NAAQS in Connecticut. I would like to 
be clear that Connecticut's 126 petition is not the preferred option to 
address ozone transport and that the State of Connecticut would rather 
participate in a program based on a regional consensus-built solution 
to this problem. Although I believe that Connecticut's section 126 
petition is meritorious and would yield reductions in interstate 
transport of air pollution, it will do so in a manner that is 
ultimately wasteful of the resources of all involved parties given the 
resultant litigation.
III. What the NOx SIP Call Means to the State of Connecticut
    The State of Connecticut is fully aware that there are political 
and industrial interests aligned against the NOx SIP Call. There is 
also a judicial review of the NOx SIP Call pending before the United 
States Court of Appeals for the District of Columbia Circuit. The NOx 
SIP Call faces an uncertain future.
    Regardless of the future of the NOx SIP Call, this does not change 
the fact that Connecticut suffers from some of the worst air quality in 
the nation. When the CTDEP is forced to issue warnings for its children 
and elderly citizens to stay inside on sunny summer days, when 
incidences of hospital admissions for asthma and related respiratory 
illnesses increase on days with poor air quality, when all of this 
persists in the face of one of the nation's premier air quality 
programs, it is obvious that it is beyond the power of the State, 
acting alone, to correct. This situation is shared by our sister States 
in the Northeast.
    Against this backdrop, Connecticut emphatically endorses EPA's 
attempt to effectuate Congress' recognition of the regional nature of 
the ozone problem and offers the following comments in support of the 
NOx SIP Call:
            A. The NOx SIP Call is necessary to protect the public 
                    health of Connecticut's Citizens
    There are indications of the existence of sensitive subpopulations 
which are affected by environmental pollutants such as ozone. Ozone-
related health effects can include: moderate to large decreases in lung 
function (e.g. resulting in difficulty breathing and shortness of 
breathe); respiratory symptoms such as those associated with chronic 
bronchitis (e.g. aggravated/prolonged coughing and chest pain); 
increased respiratory problems (e.g. aggravation of asthma and 
susceptibility to respiratory infection--resulting in increased 
hospital admissions and emergency room visits); and chronic 
inflammation and irreversible structural changes in the lungs upon 
repeated exposures.
    Connecticut's Ozone Attainment Plan relies on the NOx SIP Call, in 
conjunction with the control measures identified in Part I of this 
testimony and elsewhere in the Connecticut State Implementation Plan, 
to meet the 1-hour ozone NAAQS. Compliance with the 1-hour ozone NAAQS 
will only minimize, not eliminate, the adverse health effects described 
above because many sensitive subpopulations may be adversely effected 
by ozone levels below the 1-hour ozone NAAQS. Air quality modeling 
indicates that peak ozone levels will barely comply with the 1-hour 
NAAQS in the year 2007 ONLY IF the NOx SIP Call, as set forth in EPA's 
final rule, is fully implemented.
            B. The NOx SIP Call is a technically feasible and cost-
                    effective program
    One of the arguments put forth by detractors of the NOx SIP Call is 
that control technologies are not feasible to meet the level of 
emission reductions needed to reduce ozone transport to acceptable 
levels. However, the fairly extensive experience in the United States 
with advanced post-combustion controls (such as Selective Catalytic 
Reduction or SCR, and Selective Non-Catalytic Reduction or SNCR) 
demonstrates that these technologies can provide significant NOx 
reduction capability for virtually every coal-fired boiler in the NOx 
SIP Call region at a very attractive cost effectiveness. There are a 
number of studies, including one sponsored last year by the States of 
the Northeast States for Coordinated Air Use Management (NESCAUM--a 
regional association of the eight States of Connecticut, Massachusetts, 
Maine, New Hampshire, New Jersey, New York, Rhode Island, and Vermont) 
which indicate that control technologies are both technically feasible 
and cost effective. The NESCAUM study showed that there are 
significantly more low-cost opportunities for reducing NOx emissions 
from upwind regions than in the Northeast. The cost analysis found that 
power plants in the Midwest can meet the emission targets at an average 
cost of $662 per ton of NOx reduced versus more expensive options in 
the Northeast that would amount to $1,031/ton. Furthermore, the market-
based system of allowance trading which EPA has developed is intended 
to provide source owners the flexibility to decide for themselves if 
technology or trading is more cost-effective.
Conclusion
    Thank you for providing the opportunity to present the perspective 
of the State of Connecticut on the NOx SIP Call. As public officials we 
have a duty to do everything in our power to limit exposures to 
environmental pollutants and the resultant risks to public health 
associated with such exposures. It is simply sound public health 
practice to limit exposures to any environmental pollutant that is 
within our means to control. When an opportunity to protect public 
health on this scale presents itself and contains the added benefits 
associated with a technically feasible and cost-effective program such 
as the NOx SIP Call, that opportunity must be seized. Therefore, I urge 
the members of this subcommittee to fully support EPA's efforts to 
protect public health and address this regional problem. I would also 
urge the members of this subcommittee and Congress to avoid any 
initiatives to weaken the NOx SIP Call.
                                 ______
                                 
                         letter from jane stahl
                                                     July 22, 1999.

Committee on Environment and Public Works
Washington, DC 20510.

Mr. Chairman: Thank you for the opportunity to present the views of the 
State of Connecticut on the EPA NOx SIP Call to the Subcommittee on 
Clean Air, Wetlands, Private Property, and Nuclear Safety, Committee on 
the Environment and Public Works.
    In response to your correspondence of July 7, 1999, please find 
enclosed the responses of the State of Connecticut Department of 
Environmental Protection to the questions raised by several Members of 
the Committee. I would like to take this opportunity to reiterate the 
need for a regional solution to the problem of interstate transport of 
nitrogen oxides (NOx--a precursor to the formation of surface level 
ozone). Through July 21 of this year, the State of Connecticut has 
experienced eight (8) days where air quality exceeded the 1-hour 
health-based National Ambient Air Quality Standard for ozone (1-hour 
ozone NAAQS). The peak 1-hour ozone levels detected in Connecticut have 
reached 178 ppb; that is 44 percent higher than the 1-hour ozone NAAQS, 
which is designed to protect public health. Given that much of this 
pollution is transported into Connecticut on prevailing winds, reaching 
attainment of the 1-hour ozone NAAQS is unlikely if our State must 
first compensate for transported air pollution.
    As you may know, following the committee's hearing EPA convened a 
meeting of the environmental commissioners and secretaries of all the 
States implicated in or by the NOx SIP Call. I believe this was an 
unanticipated yet positive outcome of the hearing. It is in the spirit 
of ongoing discussions between the States, and in the hope for an 
agreed upon regional resolution to air quality issues that I provide 
these additional comments.
    Again, thank you for the opportunity to present the views of the 
State of Connecticut on the EPA NOx SIP Call. If you or any other 
member of the Subcommittee on Clean Air, Wetlands, Private Property, 
and Nuclear Safety, Committee on the Environment and Public Works 
should have any additional questions or require any additional 
information, please do not hesitate to contact me at (860) 424-3009.
            Sincerely,
                        Jane K. Stahl, Deputy Commissioner,
                                 ______
                                 
  Responses by Jane Stahl to Additional Questions from Senator Inhofe
    Question 1. Ms. Stahl, in your testimony you cite a study 
commissioned by the Northeast States which claims that the average cost 
of reductions in the Midwest would be $662 dollars per ton. This is in 
direct conflict with Mayor Nye's real-world example that it would cost 
them $7,554 dollars per ton. You also state that the Northeast can do 
it for $1,031 dollars per ton. If Mayor Nye's estimate is correct do 
you still believe that they should go forward at that cost, or would it 
be more cost-effective for the Northeast to make the reductions?
    Response. As I stated in my testimony, the regional, market-based, 
emission trading program included with EPA's NOx SIP Call will enable 
emission reductions across the region to be achieved in a more cost-
effective manner than a program mandating a specific emission limit at 
each and every Affected facility (i.e., as would be the case under 
traditional command and control requirements). Under command and 
control, sources such as the one cited by Mayor Nye could face control 
costs significantly greater than the average cost incurred by the group 
of all Affected facilities. However, the market-based approach 
available under EPA 's NOx SIP Call will enable such sources to comply 
by purchasing surplus allowances from other sources that are able to 
economically reduce emissions beyond the rule's presumptive norm. The 
costs of allowances on the open market are expected to be within the 
range of those cited in my testimony. (Note: The control costs 
referenced in my previous testimony are from the attached NESCA UM 
report, ``The Costs of Ozone Transport: Achieving Clean Air in the 
East''--see page 9)
    The real-world cost of a 65 percent NOx reduction at Northeast 
Utility's Merrimack coal-fired power plant in New Hampshire was $404/
ton using selective catalytic reduction (SCR). [Source: NH Dept. Env. 
Services] The projected cost for an additional level of SCR control to 
achieve an 85 percent NOx reduction is less than $800/ton of NOx 
reduced on an annual basis. Clearly, this real-world example of actual 
costs and reductions demonstrates how many large coal-f red power 
plants can comply at low cost with the NOx SIP Call and generate 
allowances for smaller sources to purchase in lieu of installing 
expensive controls that are of concern to Mayor Nye.
    Furthermore, the situation described by Mayor Nye is not 
necessarily a direct result of the NOx SIP Call. States have the 
flexibility to choose where and how NOx reductions are made, and can 
implement a NOx ``cap and trade `` program to encourage greater 
reductions from the cheapest sources to control. The excess allowances 
can then be made available to smaller sources, such as the Hamilton, OH 
municipal power plant, for complying with the NOx SIP Call. The high 
cost cited by Mayor Nye for his particular situation would only apply 
(assuming the estimated cost is realistic) if the State of Ohio, not 
the U.S. EPA, specifically required the source to install specific 
controls under a ``command and control `` approach. The choice is 
Ohio's, and is not mandated by the NOx SIP Call. In fact, the State of 
Ohio need not require any reductions at all from the Hamilton, OH power 
plant. The NOx SIP Call provides each State the flexibility to meet its 
State NOx budget through greater reductions at less cost from other 
sources in the State if it chooses to do so. Nothing in the NOx SIP 
Call requires a specific level of reductions from the Hamilton, OH 
municipal power plant or any other power plant.
    The success of the market-based approach to compliance has 
previously been demonstrated by sources subject to the Clean Air Act's 
Title IV acid rain program, as well as by sources in Connecticut (and 
elsewhere in the Northeast) covered by Phase I NOx RACT rules and OTC's 
current Phase II NOx control requirements. For example, several sources 
in Connecticut, which would have faced comparatively high control costs 
under a command and control scenario, were able to comply with the 
State's 1995 Phase I NOx RACT requirements by purchasing emission 
reduction credits on the open market at a much lower cost.
                                 ______
                                 
  Responses by Jane Stahl to Additional Questions from Senator Baucus
    Question. What advantages and disadvantages do you believe that the 
``Governors' proposal'' on NOx reductions, as alluded to in the 
hearing, would have relative to EPA's proposed NOx SIP call?
    Response. The primary disadvantages of the Southeast/Midwest 
Governors Alternative Plan (hereafter the Alternative Plan) compared to 
EPA 's NOx SIP Call are:

   No mandatory emissions cap. Unlike the NOx SIP Call, the 
    Alternative Plan does not include a mandatory cap on emissions. 
    Therefore, even if fully implemented, future growth to 2007 would 
    essentially wipe out any overall NOx emission reductions 
    attributable to the Alternative Plan. As a result, overall NOx 
    emission levels in 2007 would be virtually equal to Acid Rain 
    Program Phase II NOx levels in 2000 (see the attached Figure 1, 
    produced by the Ozone Attainment Coalition), which were found by 
    EPA to be inadequate to address ozone transport concerns in the 
    Northeast. Furthermore, with uncapped emissions, NOx emissions 
    would continue to grow in future years under the Alternative Plan, 
    eroding any minimal benefits provided by the proposed reductions 
    through 2007. EPA 's SIP Call budget considers projected economic 
    growth through 2007 and spreads responsibility without creating a 
    bar to growth. In addition, note that the Alternative Plan results 
    in 2007 emission levels approximately 2.5 times higher than 
    emissions under the NOx SIP Call. The bulk of this difference in 
    emissions is attributable to sources located in the Midwest and 
    Southeast States (see Figure 2, also produced by the Ozone 
    Attainment Coalition).
   Early reductions are minimal at best. The ``early 
    reductions'' contained in the Alternative Plan don 't appear to be 
    much greater than would be accomplished in the same timeframe under 
    the NOx SIP Call. The Alternative Plan promises early ``substantial 
    reductions'' by 2002 (the lesser of a 55/0 reduction or a 0.35 lb/
    MMBtu emission rate for affected sources), with 65 percent 
    reduction or 0.25 lb/MMBtu by 2004. However, under the NOx SIP 
    Call, prudent planning dictates that the 85 percent reduction 
    (required by 2003) would be evenly spread over a 3-year period. As 
    a result, by the second year (i.e., 2002), a 57 percent reduction 
    would likely be accomplished under the NOx SIP Call. Therefore, the 
    ``early reductions `` of the Alternative Plan do not appear to 
    offer anything more than what the NOx SIP Call already provides.
   Need for further reductions already demonstrated. Under the 
    Alternative Plan, the need for any future NOx reductions is 
    contingent upon future modeling efforts conducted by the upwind 
    States in the Southeast and Midwest. However, the need for region-
    wide emission reductions equivalent to the budget set in the NOx 
    SIP Call to achieve the 1-hour ozone standard has already been 
    demonstrated using both monitored data and modeled projections. 
    Connecticut's ozone attainment demonstration, in addition to 
    utilizing in-state control measures identified in my earlier 
    testimony which are more stringent than those required by the Clean 
    Air Act, relies on reductions associated with the region-wide 
    budget set forth in the NOx SIP Call to meet the l-hour ozone 
    NAAQS. Using an emissions budget greater than the level that serves 
    as the basis of the NOx SIP Call, Connecticut is unlikely to 
    demonstrate attainment of the 1-hour ozone standard. On a regional 
    basis, the NOx SIP Call only reduces total NOx emissions by 25 
    percent from projected 2007 levels. Connecticut must still 
    compensate for 75 percent of the remaining transport problem even 
    with the full NOx SIP Call. Any control program less stringent than 
    the full NOx SIP Call will require additional regional control on 
    other source sectors, or it will be virtually impossible to achieve 
    the public health standard for ozone.
                                 ______
                                 
 Responses by Jane Stahl to Additional Questions from Senator Lieberman
    Question 1. Why not implement a program of fewer reductions as 
proposed by the Southeast/Midwest Governors?
    Response. Many 1-hour ozone attainment demonstrations by Northeast 
States, Connecticut included, are relying on the full NOx SIP Call 
reductions to achieve attainment by 2007. Connecticut's demonstration 
just barely achieves attainment, indicating that the Southeast/Midwest 
Governors' proposal promising fewer reductions is not likely to achieve 
that goal.
    Shortcomings of the Southeast/Midwest Governors Alternative Plan 
(hereafter the Alternative Plan) compared to EPA's NOx SIP Call 
include:

    No mandatory emissions cap. Unlike the NOx SIP Call, the 
    Alternative Plan does not include a mandatory cap on emissions. 
    Therefore, even if fully implemented, future growth to 2007 would 
    essentially wipe out any overall NOx emission reductions 
    attributable to the Alternative Plan. As a result, overall NOx 
    emission levels in 2007 would be virtually equal to Acid Rain 
    Program Phase II NOx levels in 2000 (see the attached Figure 1, 
    produced by the Ozone Attainment Coalition), which were found by 
    EPA to be inadequate to address ozone transport concerns in the 
    Northeast. Furthermore, with uncapped emissions, NOx emissions 
    would continue to grow in future years under the Alternative Plan, 
    eroding any minimal benefits provided by the proposed reductions 
    through 2007. EPA 's SIP Call budget considers projected economic 
    growth through 2007 and spreads responsibility without creating a 
    bar to growth. In addition, note that the Alternative Plan results 
    in 2007 emission levels approximately 2.5 times higher than 
    emissions under the NOx SIP Call The bulk of this difference in 
    emissions is attributable to sources located in the Midwest and 
    Southeast States (see Figure 2, also produced by the Ozone 
    Attainment Coalition).
    Early reductions are minimal at best. The ``early 
    reductions'' contained in the Alternative Plan don 't appear to be 
    much greater than would be accomplished in the same timeframe under 
    the NOx SIP Call. The Alternative Plan promises early ``substantial 
    reductions `` by 2002 (the lesser of a 55 percent reduction or a 
    0.35 lb/MMBtu emission rate for affected sources), with 65 percent 
    reduction or 0.25 lb/MMBtu by 2004. However, under the NOx SIP 
    Call, prudent planning dictates that the 85 percent reduction 
    (required by 2003) would be evenly spread over a 3-year period. As 
    a result, by the second year (i.e., 2002), a 57 percent reduction 
    would likely be accomplished under the NOx SIP Call. Therefore, the 
    ``early reductions'' of the Alternative Plan do not appear to offer 
    anything more than what the NOx SIP Call already provides.
    Need for further reductions already demonstrated. Under the 
    Alternative Plan, the need for any future NOx reductions is 
    contingent upon future modeling efforts conducted by the upwind 
    States in the Southeast and Midwest. However, the need for region-
    wide emission reductions equivalent to the budget set in the NOx 
    SIP Call to achieve the 1-hour ozone standard has already been 
    demonstrated using both monitored data and modeled projections. 
    Connecticut's ozone attainment demonstration, in addition to 
    utilizing in-state control measures identified in my earlier 
    testimony which are more stringent than those required by the Clean 
    Air Act, relies on reductions associated with the region-wide 
    budget set forth in the NOx SIP Call to meet the 1-hour ozone 
    NAAQS. Using an emissions budget greater than the level that serves 
    as the basis of the NOx SIP Call, Connecticut is unlikely to 
    demonstrate attainment of the 1-hour ozone standard. On a regional 
    basis, the NOx SIP Call only reduces total NOx emissions by 25 
    percent from projected 2007 levels. Connecticut must still 
    compensate for 75 percent of the remaining transport problem even 
    with the full NOx SIP Call. Any control program less stringent than 
    the full NOx SIP Call will require additional regional control on 
    other source sectors, or it will be virtually impossible to achieve 
    the public health standard for ozone.

    Question 2. Some suggest that the NOx SIP call does not reflect the 
collaborative approach to rulemaking. Can you describe what role the 
States had in reviewing and commenting on proposals made through the 
Ozone Transport Assessment Group?
    Response. The NOx SIP Call was EPA's response to recommendations 
from the multi-year program known as the Ozone Transport Assessment 
Group (OTAG). The OTAG process set a national precedent for active 
involvement of stakeholders in developing technical data and 
environmental policy. Within OTAG, the Policy Group consisting of the 
environmental commissioners from all OTAG States and the District of 
Columbia along with several high-ranking EPA of finials (non-voting 
members) served as a policy steering committee for the OTAG process and 
the various sub-groups. Participation in the OTAG process provided the 
States with ample opportunity to review and comment on the overall 
direction of the OTAG process as well as specific recommendations 
arising from that process. Given the large number of participants from 
a diverse group of States, potentially regulated sources, environmental 
groups and academia, it is understandable that not every participant 
was completely pleased with the results. The OTAG process, nor any 
other democratic process, can use 100 percent consensus as a benchmark 
for success. The most important aspect of the OTAG experience is that 
every participant was heard and each position considered.
    OTAG'sfinal recommendations are a reflection of the multiple and 
divergent interests among the participants. As a natural result, OTAG 
recommended a range of NOx reductions, rather than a specific amount. 
EPA 's NOx SIP Call is within that range and supported by OTAG 's 
technical finding that greater NOx reductions resulted in greater ozone 
reductions across the region.

    Question 3. In order to control NOx emissions, there are several 
stages of controls that can be utilized. One can change the fuel input; 
one can change when and where air is brought into the combustion 
process, and back end controls as catalytic and non-catalytic 
converters, or ambient enhanced injection technologies. The effect of 
failing to look at the air pollution in the regional, and I would say 
real world, context, is to force States who are downwind to move 
quickly through the series of technological fixes and to force the most 
costly, and draconian controls. Would you agree?
    Response. Yes. States in the Northeast have been implementing 
progressively more stringent and costly emission reduction strategies 
aimed at attaining the ozone standard since implementation of the Clean 
Air Act in 1970. It has become apparent that the transport of ozone and 
its precursors into the Northeast are hindering our efforts. In fact, 
draconian controls in the Northeast alone will not guarantee attainment 
of the ozone standard.

    Question 4. Under the NOx SIP Call Rule what provisions are 
included to ensure that States have flexibility in determining a 
strategy for achieving the required reductions? Are there options for 
achieving reductions using different technical means, and would a 
situation that was described by Mayor Nye from Ohio, where a municipal 
utility provides the bulk of the power supply have limiting constraints 
that could similarly affect Connecticut under the Rule?
    Response. The NOx SIP Call has been designed to reduce the 
transport component in the most cost-effective manner by allowing 
market forces to be considered in the business planning process 
concerning the decision on whether add-on emission controls are 
appropriate in a given circumstance. Sources contributing to the ozone 
precursor burden in the Eastern United States will be provided the 
flexibility to reduce emissions through implementation of add-on 
controls, by acquiring allowances from other sources who have reduced 
emissions at lower cost, or through a combination of less costly (and 
less effective controls) and the purchase of allowances.
    The real-world cost of a 65 percent NOx reduction at Northeast 
Utility's Merrimack coal-fired power plant in New Hampshire was $404/
ton using selective catalytic reduction (SCR). [Source: NH Dept. Env. 
Services] The projected cost for an additional level of SCR control to 
achieve an 85/0 NOx reduction is less than $800/ton of NOx reduced on 
an annual basis. Clearly, this real-world example of actual costs and 
reductions demonstrates how many large coal-fired power plants can 
comply at low cost with the NOx SIP Call and generate allowances for 
smaller sources to purchase in lieu of installing expensive controls 
that are of concern to Mayor Nye.
    Furthermore, the situation described by Mayor Nye is not 
necessarily a direct result of the NOx SIP Call. States have the 
flexibility to choose where and how NOx reductions are made, and can 
implement a NOx ``cap and trade `` program to encourage greater 
reductions from the cheapest sources to control. The excess allowances 
can then be made available to smaller sources, such as the Hamilton, OH 
municipal power plant, for complying with the NOx SIP Call. The high 
cost cited by Mayor Nye for his particular situation would only apply 
(assuming the estimated cost is realistic) if the State of Ohio, not 
the U.S. EPA, specifically required the source to install specific 
controls under a ``command and control'' approach. The choice is 
Ohio's, and is not mandated by the NOx SIP Call. In fact, the State of 
Ohio need not require any reductions at all from the Hamilton, OH 
powerplant. The NOx SIP Call provides each State the flexibility to 
meet its State NOx budget through greater reductions at less cost from 
other sources in the State if it chooses to do so. Nothing in the NOx 
SIP Call requires a specific level of reductions from the Hamilton, OH 
municipal power plant or any other power plant.
    The success of the market-based approach to compliance has 
previously been demonstrated by sources subject to the Clean Air Act's 
Title IV acid rain program, as well as by sources in Connecticut (and 
elsewhere in the Northeast) covered by Phase I NOx RACT rules and OTC's 
current Phase II NOx control requirements. For example, several sources 
in Connecticut, which would have faced comparatively high control costs 
under a command and control scenario, were able to comply with the 
State 's 1995 Phase I NOx RACT requirements by purchasing emission 
reduction credits on the open market at a much lower cost.
                               __________
 Statement of of Russell J. Harding, Director, Michigan Department of 
                         Environmental Quality
    Good morning. My name is Russell Harding and I am the Director of 
the Michigan Department of Environmental Quality. I would like to thank 
you for giving me the opportunity to testify on the very important 
issue of achieving improvements in the air quality of our States.
    I want to share with you Michigan's disappointment with the 
Environmental Protection Agency's inflexible, unworkable, and 
scientifically flawed approach toward reducing ozone transport in a 
rule that is known as the ``NOx SIP Call.'' Under this approach, EPA is 
demanding that Michigan (as well as 21 other States and the District of 
Columbia) adopt regulations to drastically reduce the emissions of 
oxides of nitrogen from utilities and other major industries in our 
State. According to EPA, these reductions are necessary in the Midwest 
and Southeast, in order to reduce concentrations of ground level ozone 
in the Northeast.
    Until recently, these regulations were to be in place by September 
of this year. Fortunately, this requirement has been temporarily 
``stayed'' by the U.S. Court of Appeals, pending further review by the 
Court. We are hopeful that the Court will ultimately agree that the EPA 
demand is not justified.
    It has long been our contention, indeed it was Michigan that filed 
suit against the EPA challenging the NOx controls, that administrative 
convenience and not sound policy served as the justification for the 
EPA NOx control plan. We believe, along with adopting a rule which has 
no scientific justification, the Agency has greatly exceeded its 
authority under the Clean Air Act to impose such requirements on 
States.
    In addition to requiring States to adopt unnecessary NOx 
regulations, EPA has taken the unprecedented step of also developing a 
Federal implementation plan (or ``FIP'') that would impose these same 
extreme controls in our States. EPA has also worked in concert with 
States in the Northeast in attempting to use section 126 of the Clean 
Air Act to impose these controls at the Federal level. These actions 
include petitions by several States in the Northeast seeking these 
Federal regulations. In what we consider to be a breach of regulatory 
ethics, EPA has stepped outside its assigned role of objective 
decision-making, and instead has facilitated setting State against 
State in an unnecessary finger pointing battle. Unfortunately, this has 
resulted in costly lawsuits and a serious loss of credibility to the 
Agency.
    Michigan, concerned with the lack of justification for the drastic 
program being proposed by EPA, has analyzed our State's contribution to 
the ozone problems in the Northeast States. The results of our analysis 
showed unequivocally that the EPA's methodology for determining the 
culpability of States for significant ozone transport was 
scientifically flawed. The analysis showed conclusively that imposition 
of extensive controls in Michigan would have very little benefit on 
northeastern nonattainment areas.
    Our analysis is also consistent with the extensive study that was 
completed by the Ozone Transport Assessment Group (OTAG), and which EPA 
falsely claims as justification for their rulemaking. In fact, the OTAG 
analysis shows that by far the largest contributors to ozone 
nonattainment in the northeast are the Northeast States themselves. 
Some Northeastern States would actually contribute more to their 
neighbors' ozone levels after imposing EPA's controls than some 
Midwestern and Southern States contributed before imposing controls.
    OTAG also recognized that additional analysis was necessary and 
called for the States to be given time to conduct additional 
``subregional'' modeling. OTAG further recommended that a range of 
controls for the utility industry be considered, depending upon the 
results of the additional modeling, and the needs of the particular 
State and region. The EPA has effectively disregarded these 
recommendations by not allowing time for the additional modeling to be 
completed and by demanding an across the board level of control at the 
most stringent level possible with no variation between the States.
    The extreme level of control demanded by EPA would impose billions 
of dollars of costs on sources, which are primarily power producing 
facilities, in a very short time period. This would threaten the 
reliability of the electric power supply system in the entire Midwest. 
In Michigan, this extreme level of control is simply not necessary to 
achieve air quality objectives.
    I would also like to share with you the Michigan plan for improving 
air quality and the sound scientific basis upon which our proposal was 
developed. Michigan, along with several other States in the Midwest and 
Southeast, developed an alternative proposal for significant reduction 
of NOx emissions in our States. This plan would provide for a 65% 
reduction in NOx emissions from utilities (instead of the 85% sought by 
EPA), and similar reductions from other major industrial sources of 
NOx. The reductions at utilities will be accomplished in two phases, 
with substantial reductions by 2002, and final reductions by 2004.
    Michigan is also providing flexibility to the affected sources in 
Michigan, by allowing one facility to trade emission reduction credits 
with another. We are doing so in accordance with an innovative and 
comprehensive emission-trading program that Michigan developed several 
years ago. The Michigan trading program is an open and voluntary 
system, as opposed to the closed and restrictive trading program 
developed by EPA. In addition, our system avoids the unnecessary 
restrictions on growth and economic development that are hallmarks of 
the EPA trading program.
    In developing our proposal, Michigan also evaluated whether air 
emissions from sources in Michigan are having a ``significant'' impact 
on air quality in States that are downwind of us. We also analyzed the 
air quality improvement in downwind States that might result from 
controls in Michigan. This technical analysis reveals that Michigan is 
having a very slight impact on downwind States, and supports the 
control levels we are adopting.
    The Michigan analysis is precisely the kind of analysis that EPA 
has refused to conduct. Instead of basing the emission reductions on 
real air quality impact, EPA has attempted to define ``significant 
contribution'' in terms of the cost of controls, and erroneously 
concludes that virtually all ozone transport is significant.
    Michigan also was a party to the lawsuit that challenged the new 
national ambient air quality standard for ground level ozone, claiming 
that the EPA failed to provide a sound scientific basis for the 
standard it chose. This position has also been vindicated by another 
recent U.S. Court of Appeals ruling. The court, in its opinion, stated 
that the EPA had failed to provide an ``intelligible principle'' for 
the ozone standard and ruled that EPA cannot enforce the new standard.
    It was clear from a panel of scientists that reviewed the standard 
that there was no clear benefit to human health or the environment in 
setting a new standard for ozone at the levels under consideration, and 
that setting a new standard was a ``policy call'' by the EPA. 
Nonetheless, EPA adopted a new ozone standard that would have 
immediately thrown Michigan and most other States into noncompliance, 
despite the fact that immense improvement has been made in air quality.
    Michigan is proud of the clean air accomplishments in our State, 
and is committed to being a good neighbor. Michigan's two largest 
metropolitan areas have been redesignated as attainment of the old 1-
hour standard for ozone, including the Detroit area, which became the 
largest metropolitan area in the country to achieve this goal several 
years ago. More recently, on the basis of air quality data, EPA has 
taken action recognizing that the 1-hour standard for ozone has been 
met in all other areas of the State.
    Despite the recent court rulings that have placed the EPA 
requirements on hold, Michigan is moving forward with a NOx control 
program consistent with the alternative we proposed to EPA last year in 
conjunction with several Midwestern and Southern States. We are 
convinced that this level of NOx control is appropriate to address any 
contribution we may make to ozone problems in States that are downwind 
of us and will not threaten the reliability of the power supply in our 
State. In addition, it is a program that ensures the continued economic 
growth of our State. We are continuing to work with our neighboring 
States to encourage them to also proceed with NOx emission reduction 
strategies that are appropriate for their respective States and the 
region.
    We are also committed to continuing our legal challenge as EPA has 
steadfastly refused to consider our proposal, or to honestly consider 
the many technical and legal flaws we have identified in the EPA rule. 
It is unfortunate that States such as Michigan have had to resort to 
litigation because of EPA's refusal to really listen to our concerns. 
Fortunately, the courts have now begun to hear our concerns, and are 
agreeing with the compelling arguments we are making. The courts will 
hopefully recognize the primary role that Congress has given the States 
in developing air pollution control programs, rather than having these 
programs dictated by EPA.
                               __________
[Prepared for Northeast States for Coordinated Air Use Management, July 
                                 1998]
 The Role of Ozone Transport In Reaching Attainment in the Northeast: 
                  Opportunities, Equity and Economics
(By Tim Woolf, David White, Bruce Biewald Synapse Energy Economics, and 
    William Moomaw The Global Development and Environment Institute)
1. Introduction and Summary
    Under the Clean Air Act, the Environmental Protection Agency (EPA) 
has established National Ambient Air Quality Standards for ozone that 
must be met in order to prevent significant damage to public health and 
the environment. Yet a large number of States, particularly those in 
the eastern US, do not meet these standards, and are expected to face 
great difficulty in meeting them for the foreseeable future.
    In November 1997 the EPA acknowledged that the transport of ozone 
and its precursors from upwind sources significantly contributes to the 
level of ozone in certain downwind States. Consequently, the EPA 
proposed a ``SIP call'' requiring certain upwind States to reduce NOx 
emissions to prescribed budget levels by 2003.
    The transport of ozone and its precursors imposes economic costs 
upon downwind States, as those States must implement increasingly 
expensive options to reduce local emissions of NOx and VOCs in order to 
achieve attainment with the Federal ozone standards. The objective of 
this study is to estimate the extent of the economic impact experienced 
by downwind States as a consequence of transported ozone. We estimate 
the costs to the Northeast States of reducing local NOx emissions in 
order to offset the transported ozone.
    Much of this study focuses on the opportunities and costs of 
controlling NOx emissions from the electric utility sector. This sector 
is a large source of NOx emissions--contributing 37 percent of the 
total NOx emissions in the Northeast, and 51 percent in the East-
central region.\1\ Electric power plants also offer the lowest-cost 
options for controlling NOx emissions, in general.
---------------------------------------------------------------------------
    \1\ We define the Northeast to include New England, NY, NJ, PA, and 
MD; and the East-central region to include KY, IN, MI, OH, VA, and WV 
(see Section 3).
---------------------------------------------------------------------------
    As of 1990, power plants in the East-central region produced 
roughly twice as much NOx emissions as power plants in the Northeast. 
This disparity is increasing over time as the Northeast States take 
greater measures than the East-central States to reduce NOx emissions. 
In 1996, power plants in the East-central region produced nearly four 
times as much NOx as those in the Northeast. If the East-central region 
does not meet the budget requirements of the EPA SIP call, then by 2003 
the East-central power plants will be producing over seven times as 
much NOx as those in the Northeast.
    Because of the relatively large volume of NOx emissions from the 
East-central region, the transport of ozone into the Northeast could be 
quite large relative to the amount of ozone that would be created by 
local NOx emissions in the Northeast. We estimate, using a range of 
ozone transport scenarios provided by Northeast States for Coordinated 
Air Use Management (NESCAUM), that the amount of transported ozone 
generated by NOx produced by East-central power plants, could be 
roughly one to three times as much as the local ozone generated by all 
of the NOx emitted from Northeast power plants.
    We estimate that even after the East-central sources install 
additional NOx controls in accordance with Title IV of the Clean Air 
Act, the transport of NOx and ozone from the East-central electricity 
industry alone would require the Northeast States to incur roughly $1.4 
to $3.9 billion in additional local NOx control costs each year. These 
costs would be incurred by controlling emissions from industrial point 
sources, motor vehicles, area sources, and the electric utility sector.
    In addition, we have found that in some scenarios the Northeast 
sources are not able to offset all of the ozone transported from upwind 
sources--even after utilizing all currently known NOx reduction 
options. This result suggests that the Northeast will be unable to 
reach attainment of the ozone standard unless the East-central sources 
meet the EPA's proposed NOx budgets. This result also suggests that our 
estimates of costs imposed on the Northeast sources due to ozone 
transport might be significantly understated.
    The rationale for requiring the East-central sources to meet the 
EPA's proposed budgets is supported by the fact that there are 
significantly more low-cost opportunities for reducing NOx emissions in 
the East-central region than in the Northeast. We estimate that the 
East-central power plants can meet the NOx emission budgets required in 
the EPA SIP call at an average cost of $662/ton. The Northeast power 
plants, on the other hand, will spend an average of roughly $1,031/ton 
to meet the EPA budgets--roughly 50 percent higher than the average 
cost to the East-central region.\2\
---------------------------------------------------------------------------
    \2\ While these Northeast control options are expensive relative to 
those available in the East-central region, they are less expensive 
than control options available from other sectors ire the Northeast.
---------------------------------------------------------------------------
    It is important to recognize that even if all States were to meet 
the EPA SIP call NOx budgets, the East-central sources will continue to 
emit relatively large volumes of NOx that will contribute to ozone in 
the Northeast. We estimate that if the East-central sources were to 
reduce NOx emissions from the electricity sector down to the levels 
implied by the EPA's SIP call budgets, the economic impact on the 
Northeast would be as high as roughly $0.2 to $1.1 billion each year.
    Our study suggests that the overall costs of controlling NOx 
emissions could be reduced if the EPA were to adopt some form of NOx 
credit trading system--to allow the Northeast sources to purchase some 
of the relatively low-cost NOx reductions that are available from the 
East-central sources. A NOx credit trading system will help mitigate 
the burden on the Northeast sources in reaching attainment of the ozone 
standard, and will also mitigate the net costs to the East-central 
sources of meeting the EPA SIP call budgets.
    The public health impacts of the ozone transported into the 
Northeast are not considered in this report. Hence, the total health 
and economic costs of transported ozone are greater than the costs 
presented above.
    The large ozone reservoir in the Ohio River Valley returns each 
summer with little abatement. Researchers have found no significant 
trends in regional ozone levels from 1980 to 1995 (Five, et al., 1998). 
While urban levels have decreased somewhat due to pollution controls on 
automobiles regional ozone and NOx levels have not significantly 
changed. This is due in large part to the lack of significant NOx 
reductions from fossil fuel power plants which, in places such as the 
Ohio River Valley, contribute 40-50 percent of the total NOx emissions 
in a given region. Between 1987 and 1996, NOx emissions from power 
plants rose 3 percent nationally (EPA, 1998). Because regional ozone is 
more sensitive to NOx controls than VOC controls, the lack of 
significant NOx reductions from power plants is impeding progress 
toward reducing ozone levels.
    The movement of ozone from the Ohio River Valley into the Northeast 
was seen as early as 1979. During early August in 1979, scientists 
tracked a mass of ozone leaving Ohio, crossing Pennsylvania and 
southern New York, and entering into the Northeast Corridor (Clarke and 
Ching, 1983). When this mass of air from the Ohio River Valley entered 
into the Northeast . Corridor, it contained about 99 parts per billion 
(ppb) of ozone.\3\ The 1-hour Federal ozone standard is equivalent to 
120 ppb (0.12 parts per million). Therefore, the amount of ozone 
observed entering the Northeast was more than 80 percent of the 1-hour 
ozone standard and represented a significant contribution to the 
overall ozone burden experienced in the Northeast during that time.
---------------------------------------------------------------------------
    \3\ The researchers also indicated that as the air mass entered the 
Northeast corridor, it contained enough transported precursor.emissions 
(NOx and VOCs) to generate an additional 35 ppb of ozone on top of the 
99 ppb already formed. Consequently, the amount of background ozone and 
precursors entering the Northeast could have resulted in an exceedance 
of the l-hour ozone standard in the Northeast even if no additional 
precursor emissions occurred locally.
---------------------------------------------------------------------------
    As the persistent ozone reservoir establishes itself every summer 
in the Ohio River Valley, large amounts of ozone continue to be 
transported into the.Northeast from the west. During the summer of 
1995, the North American Research Strategy for Tropospheric Ozone-
Northeast (NARSTO-NE) conducted aircraft measurements of ozone in air 
masses along the western edge of the Northeast Corridor. During pre-
dawn hours, scientists measured ozone levels up to and in excess of 100 
ppb above Shenandoah, VA, Gettysburg, PA, Poughkeepsie, NY, and other 
locations in the Northeast (Lurmann, et al., 1997). During this time of 
morning, the ozone could not have been formed locally (no sunlight is 
present to initiate the formation of ozone), so it must have been 
transported during the overnight hours. Wind direction on some of the 
highest ozone days (e.g., July 14, 1995) was out of the west 
(Blumenthal, et al., 1997). Therefore, it is reasonable to conclude 
that the ozone traveled into the Northeast from points to the west, 
i.e., the Ohio River Valley.
    At transported ozone levels of over 100 pub during the pre-dawn 
hours, the Northeast is already over 80 percent on the way to an 
exceedance of the 1-hour standard before the sun rises. The Northeast 
is in the predicament of achieving the 1-hour 120 ppb Federal ozone 
standard in situations where 100 ppb or more of the ozone is beyond its 
control. Only an additional 20 ppb of ozone generated within the 
Northeast will cause an exceedance of the 1-hour standard, and the 
situation is even worse for the 80 ppb 8-hour standard. The high levels 
of transported ozone virtually guarantee that the Northeast will not 
achieve air quality goals without NOx reductions from upwind sources.
3. Estimating Ozone Transport Into the Northeast
    A range of ozone transport into the Northeast can be estimated from 
the field measurements mentioned in the preceding section, and from 
computer modeling of ozone formation and transport. Based on results 
from a model called CALGRID\4\ we estimate a plausible contribution of 
transported ozone from outside the Northeast to ozone exposure above 
the 1-hour 120 ppb and the 8-hour 80 ppb standards inside the Northeast 
in the range of 20-45 percent. This was estimated as described in the 
following text.
---------------------------------------------------------------------------
    \4\ USEPA has approved the CALGRID model for ozone attainment 
planning purposes in the New England Domain.
---------------------------------------------------------------------------
    Two modeled scenarios were generated for a severe ozone episode 
occurring on 11-15 July 1995 in the eastern United States.\5\ In the 
first modeled scenario, the reductions proposed in the EPA NOx SIP call 
were applied only within the Northeast Ozone Transport Region (OTR), 
and current Clean Air Act measures were put in place outside the OTR 
using emissions projected for 2007 (Run 1). In the second scenario, the 
EPA NOx SIP call reductions were applied throughout 22 eastern States 
(Run 2).
---------------------------------------------------------------------------
    \5\ Communication from Mark Fernau, Earth Tech, Inc., Concord, MA.
---------------------------------------------------------------------------
    In each scenario, the total ozone exposure above the 1-hour 120 ppb 
standard and the 8-hour 80 ppb standard was determined. The total 
exposure to ozone above the 1-hour standard was calculated from the 
model by multiplying all calculated ozone concentrations above 125 ppb 
by the total hours above 125 ppb and the area of each modeled grid cell 
(144 km\2\) in which an ozone concentration above 125 ppb occurred. For 
the 8-hour standard, a surrogate 1-hour value of 110 ppb was used as 
the threshold exposure level in the model, and the total exposure was 
calculated in the same manner as for the 125 ppb threshold. The 1-hour 
threshold of 110 ppb is used because ozone monitoring data suggest that 
when a 1-hour concentration of 110 ppb is reached or exceeded, it 
typically coincides with an 8-hour average above 85 ppb at the same 
monitor.\6\
---------------------------------------------------------------------------
    \6\ The values of 125 ppb (1-hour) and 85 ppb (8-hour) are used to 
be consistent with USEPA's monitoring test for an ozone exceedance. 
According to USEPA's data truncation guidance, an exceedance of the l-
hour ozone standard does not occur until monitored 1-hour 
concentrations reach or exceed 125 ppb, and an 8-hour exceedance does 
not occur until the 8-hour average reaches or exceeds 85 ppb. For the 
modeling test, this may be a conservative threshold to use because 
models often underestimate observed peak ozone concentrations.
---------------------------------------------------------------------------
    The reduction in ozone exposure within the Northeast Ozone 
Transport Region (OTR) due to NOx controls outside the Northeast is 
shown in Table 1. The reduction is given as the percentage decrease in 
ozone exposure between Run 1 (EPA NOx SIP call in the OTR only) and Run 
2 (EPA NOx SIP call in 22 eastern States).
Table 1. Percent reduction in ozone exposure (ppb hr/km2) greater than 
 125 ppb (1-hour standard) and 110 ppb (surrogate for 8-hour standard) 
within the Northeast Ozone Transport Region due to applying the EPA NOx 
                SIP call beyond the borders of the QTR.

  Percent daily reduction in modeled ozone exposure within the Northeast Ozone Transport Region due to 22 State
                                                  NOx SIP call
----------------------------------------------------------------------------------------------------------------
                                                                     July 11  July 12  July 13  July 14  July 15
----------------------------------------------------------------------------------------------------------------
Reduction in ozone exposure >125 ppb...............................    -31%     -16%     -35%     -33%     -42%
Reduction in ozone exposure >110 ppb...............................    -37%     -27%     -32%     -34%     -47%
----------------------------------------------------------------------------------------------------------------
Modeled reductions are based on 11-15 July 1995 ozone episode.

    Based on the modeled reductions in Table 1 and the high levels of 
ozone observed entering the Northeast during the field studies 
mentioned above, we estimate a plausible contribution range of 20-45 
percent to ozone exposure above the 1-hour and 8-hour standards in the 
Northeast Ozone Transport Region due to transported ozone from outside 
the region.
    The estimated range is consistent with modeling results from the 
Ozone Transport Assessment Group (OTAG). OTAG estimated ozone transport 
impacts by ``turning off'' all human-related sources of NOx and VOC 
emissions in various parts of the eastern United States. When human-
related emission sources were set to zero in the OTAG model (OTAG used 
a model called UAM-V), changes in ozone levels in downwind receptor 
regions could be estimated. These modeling runs indicated that human-
related emissions in various upwind regions significantly contributed 
to ozone levels in downwind receptor regions. For example, OTAG results 
for the July 1995 episode indicated that turning off NOx and VOC 
emissions in parts of the Ohio River Valley reduced ozone exposure 
above 120 ppb in the Philadelphia area by 41 percent, and in the 
Baltimore/Washington, DC area by 43 percent.\7\
---------------------------------------------------------------------------
    \7\ Tables of ozone exposure data calculated from the OTAG July 
1995 modeled episode can be found at the OTAG Northeast Modeling and 
Analysis Center web address: http://sage.mcnc.org/OTAGDC/agm/uamv/
jul95.
---------------------------------------------------------------------------
4. The Economic Impact of Ozone Transport Into the Northeast
    The estimated contribution of 20-45 percent from out-of-region 
ozone transport to ozone levels above Federal standards within the 
Northeast Ozone Transport Region raises the possibility of additional 
economic costs within the Northeast due to more stringent local control 
levels as well as Federal penalties for failure to achieve the ozone 
standards. With this in mind, NESCAUM asked Synapse Energy Economics 
and The Global Development and Environment Institute to analyze the 
potential economic costs to the Northeast should the EPA NOx SIP call 
not be fully implemented.\8\
---------------------------------------------------------------------------
    \8\ While certainly not insignificant, the additional health and 
ecological costs for the Northeast were not included in the analysis.
---------------------------------------------------------------------------
    The attached analysis finds that if no additional NOx measures 
beyond Clean Air Act acid rain controls are applied on sources upwind, 
the additional control costs in the Northeast to compensate for ozone 
transport could be from $1.4 to $3.9 billion each year. If upwind 
sources met the reductions in EPA's NOx SIP call, the economic costs to 
the Northeast will be reduced to about $0.2 to $1.1 billion each year.
    In addition, there are significantly more low-cost opportunities 
for reducing NOx emissions at upwind sources than in the Northeast. 
Upwind power plants are estimated to be able to meet the EPA NOx SIP 
call budgets at an average cost of $662/ton. Northeast power plants 
will spend about 50 percent more to achieve the same budget 
requirements--about $1,013/ton. While the cost to Northeast power 
plants is still reasonable, there are not enough reductions remaining 
available from these emission sources to fully offset the impact of 
transported ozone. The remaining reductions must come from other 
emission sectors at higher costs. A full description of the cost 
analysis is presented in the following attachment.
5. Additional Economic Costs of Ozone Nonattainment to the Northeast
    The Clean Air Act imposes penalties upon States that do not meet 
the ozone standard by prescribed timelines. Transported ozone from 
outside the region will increase the likelihood that Northeast States 
will not reach attainment by the deadlines and will be subject to at 
least some of the Federal penalties. These nonattainment penalties 
represent an additional cost that out-of-region sources can impose upon 
the Northeast due to unmitigated ozone transport.
    The penalties imposed by the Clean Air Act will depend upon the 
circumstances in each State, the degree to which the State has not 
reached attainment, and the actions that the EPA decides are necessary 
in order for the State to reach attainment. There are three main types 
of penalties imposed for not meeting attainment deadlines. The first is 
the loss of Federal funding for highway projects. A nonattainment State 
can lose Federal funding for the majority of highway projects, such as 
highway capacity increases, transportation enhancements, transportation 
control measures, transit projects, traffic flow improvements, and 
more. A few projects such as safety-related measures will be exempted, 
and will be available for Federal funding.
    The second penalty for not meeting attainment deadlines is an 
increase in the offset ratio applied to new sources of NOx and VOC 
emissions. Currently, if a business or industry in the Northeast wishes 
to create a new source of NOx or VOC emissions, it must obtain emission 
``offsets'' that are greater than the amount of new emissions. The 
emission offset ratio ranges between 1.15-to-1 and 1.3-to-1, depending 
upon how far the region is from reaching attainment. If attainment 
deadlines are not met, this offset ratio could be increased to a ratio 
as high as 2-to-1. Such a change could pose significant barriers to new 
industries locating in the State, thus hindering the State's 
opportunities for economic growth.
    The third penalty for not meeting attainment deadlines is the 
imposition of a Federal implementation plan (FIP), which would 
supersede the State implementation plan in order to assist the State in 
reaching attainment. The emission control measures required by a 
Federal implementation plan would depend upon the types of emissions in 
the State, as well as the degree to which the State was in 
nonattainment. The FIP would potentially add new Federal oversight, 
reporting and permitting processes to the State's existing processes.
References
    Blumenthal, D.L., et al. 1997. Transport and Mixing Phenomena 
Related to Ozone Exceedances in the Northeast United States, Sonoma 
Technology Report STI-996133-1710-WD1.1, February.
    Clarke, J.F. & J.K.S. Ching 1983. Aircraft Observations of Regional 
Transport of Ozone in the Northeastern United States, Atmos. Envt., 
Vol. 17, pp. 1703-12.
    EPA 1998. National Air Quality and Emissions Trends Report, 1996, 
EPA 454/R-97-013, p. 17, January.
    Fiore, A.M., D.J. Jacob, J.A. Logan, & J.H. Yin 1998. Long-Term 
Trends in Ground Level Ozone over the Contiguous United States, 1980-
1995. J. Geophys. Res., Vol. 103, pp. 1471-80. Gillani, N.V. & W.E. 
Wilson 1980. Formation and Transport of Ozone and Aerosols in Power 
Plant Plumes, Ann. N.Y. Acad. Sci., Vol. 338, pp. 276-96.
    Husar, R.B. 1996. Spatial pattern of daily maximum ozone over the 
OTAG region, Web address: http://capita.wustl.edu/OTAG/Reports/
otagspat/otagspat.html.
    Lippmann, M. 1993. Health effects of tropospheric ozone: Review of 
recent research findings and their implications to ambient air quality 
standards. J. Exposure Analysis and Envtl. Epidemiology 3: 103-127
    Lurmann, F.W., et al. 1997. Evaluation of the UAM-VModel 
Performance in the Northeast Region for OTAG Episodes, Sonoma 
Technology Report STI-996133-1716-WD2.1, March.
    Miller, D.F., A.J. Alkezweeny, J.M. Hales, & R.N. Lee 1978. Ozone 
Formation Related to Power Plant Emissions, Science, Vol. 202, pp. 
1186-88.
    Ozkaynak, H., J.D. Spengler, M. O'Neill, J. Xue, H. Zhou, K. 
Gilbert and S. Ramstrom-Harvard School of Public Health. 1996. 
Breathless: Ambient ozone exposure and emergency hospital admissions/
Emergency room visits in 13 cities. American Lung Association Report. 
Washington, D.C.
    White, W.H., D.E. Patterson & W.E. Wilson, Jr. 1983. Urban Exports 
to the Nonurban Troposphere: Results from Project MISTT, J. Geophys. 
Res., Vol. 88, pp. 10,745-52.
2. Background and Context
    In general, the Clean Air Act provides each State with the 
responsibility for achieving compliance with the National Ambient Air 
Quality Standards. However, pollutant emissions and impacts within one 
State often affect the environment and compliance plane of downwind 
States. In 1990, the Clean Air Act Amendments established the Ozone 
Transport Region (OTR) in order to address the problem created by the 
transport of ozone across State boundaries in the Northeast.\3\ In 
1995, the Ozone Transport Assessment Group (OTAG) was established to 
investigate the significance of ozone transport among the 37 eastern-
most States in the United States.
---------------------------------------------------------------------------
    \3\ The OTR includes CT, DE, MA, ME, MD, NJ, NY, NH, PA, RI, VT, 
the District of Columbia (DC), and the DC metropolitan area that is 
within northern VA.
---------------------------------------------------------------------------
    After reviewing OTAG's findings and recommendations, the EPA found 
in October 1997 that the transport of ozone and its precursors from 
certain States within OTAG contributes to the nonattainment problems in 
other downwind States. Consequently, the EPA issued a ``SIP call'' 
under Section 110 of the Clean Air Act, requiring certain upwind States 
to revise their State implementation plans (SIPs) and to achieve NOx 
emission limits in order to mitigate the problem of transported ozone 
(EPA 11/1997).
    The SIP call proposes a specific summer NOx emission budget for 
each of the 22 States (and the District of Columbia) that contribute to 
the ozone transport problem.\4\ The summer NOx emission budgets for the 
electricity sector are determined by assuming that fossil-fueled plants 
in each State install currently available, cost-effective control 
technologies, to achieve an average emission rate of 0.15 lb/MMBtu. 
Summer NOx emission budgets are also derived for other industry sectors 
and mobile sources. While EPA derived NOx budgets for each NOx emission 
sector, the States have flexibility in determining how to achieve their 
overall NOx budget. The EPA proposes that States be required to meet 
these summer NOx emission budgets by 2003 or shortly thereafter.
---------------------------------------------------------------------------
    \4\ The EPA assigned a NOx budget to DC and the following States: 
AL, CT, DE, GA, IL, IN, KY, MD, MA, MI, MO, NJ, NY, NC, OH, PA, RI, SC, 
TN, VA, WV, WI (EPA 11/1997).
---------------------------------------------------------------------------
    Many electric utilities are already taking steps to reduce their 
NOx emissions. Under Title IV of the Clean Air Act, all US utility coal 
plants larger than 25 MW are required to meet NOx emission standards. 
Phase I of these standards began in 1996, and Phase II will begin in 
the year 2000. These NOx standards range from 0.40 to 0.86 lb/MMBtu, 
depending upon the type of power plant boiler. Thus, they are 
significantly less stringent than the average emission rate used by the 
EPA to set the SIP call budgets.
    In addition, the Northeast States have agreed to reduce NOx 
emissions from the electricity sector by May 2003, as a consequence of 
their efforts in the Ozone Transport Commission (OTC). They have agreed 
to reduce NOx emissions to 75 percent of 1990 levels, or to emit NOx at 
a rate no greater than 0.15 lb/MMBtu, whichever is less stringent.\5\ 
Hence, the Northeast States have already agreed to reduce their NOx 
emissions to levels that are close to those required by the EPA NOx SIP 
budgets. Even with these NOx reductions, some Northeast States are 
expected to remain in nonattainment for the 1-hour ozone standard, and 
more are expected to be in nonattainment for the 8-hour ozone standard.
---------------------------------------------------------------------------
    \5\ In fact, the OTR is divided into three zones: Inner, Outer and 
Northern. The Northern Zone, which includes Maine, New Hampshire, 
Vermont, and northeastern New York, will be required to reduce NOx 
emissions by 55 percent from 1990 levels, or to emit NOx at a rate no 
greater than 0.2 lb/MMBtu, whichever is less stringent.
---------------------------------------------------------------------------
3. Methodology
    Our analysis focuses primarily on NOx emissions and controls in the 
electricity industry, because of large volume of emissions and the 
opportunities for relatively low-cost NOx reductions from fossil-fueled 
power plants. We utilize a data base consisting of nearly all coal, oil 
and natural gas plants larger than 25 MW in the Northeast and East-
central regions.\6\ The database includes information on the operating 
costs, electricity generation, NOx emissions and existing NOx controls 
for these plants in 1996. The data base was assembled using (a) unit 
characteristic data from the Energy Information Administration of the 
Department of Energy, (b) NOx emissions data from the Environmental 
Protection Agency, and (c) power plant cost and operation data from the 
Utility Data Institute.
---------------------------------------------------------------------------
    \6\ The data base does not contain information on gas turbines. The 
power plants in the data base represent 98 percent of the generation in 
the Northeast and 99 percent in the East-central region.
---------------------------------------------------------------------------
    We also compiled information on the performance and costs of 
various NOx control technologies for coal, oil and natural gas plants. 
All of our assumptions for NOx control technologies in the electricity 
sector were the same assumptions used by the EPA in its analysis of the 
ozone transport proposed rulemaking (EPA 1996; EPA 9/1997). For coal-
fired power plants, we considered low-NOx burner (LNB) options, low-NOx 
coal-and-air nozzles, gas reburn, selective noncatalytic reduction 
(SNCR), and selective catalytic reduction (SCR) technologies. For oil- 
and gas-fired power plants we considered gas reburn, SNCR and SCR. 
Combustion technologies were applied in combination with post-
combustion technologies, where cost-effective.
    NOx control technologies often require significant up-front capital 
costs, as well as on-going annual operation and maintenance costs. We 
have levelized the capital costs in order to present total control 
costs in annual terms. All costs presented in this study are in 1995 
dollars. We do not account for increases or decreases in NOx control 
costs beyond inflation. A more detailed discussion of our assumptions 
regarding NOx control cost in the electricity sector is provided in 
Appendix A.
    Our general approach is to identify the NOx control technologies 
that would likely be adopted on a plant-by-plant basis to meet various 
levels of NOx standards in the Northeast and East-central regions. We 
begin with a snapshot of control technologies that are in place today. 
We then develop reference scenarios that account for all of the NOx 
controls that utilities are expected to install by 2003 to comply with 
provisions of the Clean Air Act. We then look at increasingly stringent 
levels of NOx standards, and identify the least-cost control 
technologies that would be installed and the costs that would be 
incurred in meeting them. This allows us to develop curves indicating 
the average and marginal costs of NOx controls in the two regions.
    We define the Northeast States as all of the New England States, 
New York, New Jersey, Pennsylvania and Maryland. We define the East-
central States as Kentucky, Indiana, Michigan, Ohio, Virginia and West 
Virginia. These regions are presented in the map in Figure 3.1. These 
regions were defined this way because they correspond to regions that 
were modeled by OTAG.
    In discussing the transport of ozone, we generally refer to the 
Northeast region as ``downwind,'' and the East-central region as 
``upwind.'' In fact, the transport of ozone is much more complicated 
than this. Some States within the Northeast (e.g. Pennsylvania) are 
upwind of other States in the Northeast. A number of States outside the 
Northeast are upwind from the East-central sources. In addition, other 
States contribute to ozone transport within and outside the East-
central and Northeast regions. We have defined these two regions as 
upwind versus downwind in order to simplify our analysis. We do not 
mean to imply that States falling outside either of these regions do 
not contribute to (or suffer from) the ozone transport problem.
    Given that the EPA has proposed NOx budgets for the year 2003, we 
have modified our data base to reflect the operation of existing power 
plants in that year. We use the same assumptions for the growth in 
power plant utilization that were used by the EPA in its analysis of 
NOx budgets in the proposed rulemaking. The existing fossil-fired power 
plants can meet all of the EPA's assumed growth in utilization by 
increasing their capacity factors. Therefore, we have assumed that no 
new power plants will be operating in 2003.
    Our assumptions regarding NOx control options for the electricity 
sector are limited to ``bolt-on'' control technologies. We do not 
consider other options such as fuel-switching, repowering, plant 
retirement, alternative dispatching approaches or power plant 
efficiency improvements. In addition, we do not account for 
technological improvements and cost reductions for NOx control measures 
as the market demand for them increases over time. Consequently, our 
estimates of NOx control costs for the electricity sectors in both the 
Northeast and East-central region represent high-side estimates.
4. The Sources of NOx Emissions in the Northeast and East-Central 
        Regions
    Table 4.1 presents an overview of the anthropogenic NOx emissions 
in both the Northeast and East-central regions in 1990. The same 
information is presented in Figure 4.1 below. Two points are relevant 
for our analysis. First, electric utilities are responsible for a large 
portion of NOx emissions--accounting for roughly 37 percent of 
emissions in the Northeast and 51 percent of emissions in the East-
central region. Consequently, the potential for NOx reductions is 
greater in the electricity sector, simply on the basis of the volume of 
emissions.
    Second, power plants in the East-central States are responsible for 
roughly twice as many NOx emissions as power plants in the Northeast 
States. As a result, the power plants in the East-central region 
provide the greatest opportunity for reducing NOx emissions.

  Table 4.1 Volume of 1990 NOx Emissions, by Sector (tons/summer day).
------------------------------------------------------------------------
                                                                East-
                                                 Northeast     Central
------------------------------------------------------------------------
Electric Utility..............................        3,740        7,205
Point Sources: Non-Utility....................        1,229        1,363
Motor Vehicles................................        3,439        3,318
Area Sources: Non-Road........................        1,324        1,380
Area Sources: Other...........................          460          794
    Total.....................................       10,192       14,060
                                               -------------------------
------------------------------------------------------------------------
Source: The Ozone Transport Assessment Group.

    The high emissions of NOx from the East-central electric utilities 
are due in part to the fact that the East-central region relies upon 
coal-fired power plants for the majority of its electricity generation. 
In 1996 the East-central region obtained nearly 87 percent of its 
generation from coal-fired plants, whereas the Northwest relied upon 
coal plants for only 46 percent of its generation.
    In addition, the Northeast States have already taken more steps 
than those in the East-central region to reduce their NOx emissions. In 
the Northeast, electric utilities have installed low-NOx burners on 
roughly 75 percent of coal plants, 41 percent of oil plants, and 54 
percent of gas plants. Electric utilities in the East-central region, 
on the other hand, have to date installed low-NOx burners on only 43 
percent of their coal plants and none on their oil and gas plants.
    As a result of these NOx control efforts, the average NOx emission 
rate from all fossil-fired power plants in the East-central region is 
currently significantly higher than that in the Northeast. In 1996 the 
average NOx emission rate from fossil plants in the Northeast was 0.42 
lb/MMBtu, whereas the average rate in the East-central region was 0.69 
lb/MMBtu--roughly 67 percent higher than in the Northeast.
    In addition, the Northeast relies less heavily on fossil-fired 
plants for generating electricity than the East-central region. 
Consequently, the difference in the average NOx emission rate across 
all electric generation is even greater than for the emission rate that 
only includes fossil units. In 1996 the average NOx emission rate from 
all power plants in the Northeast was 2.6 lb/MWh, whereas the average 
NOx emission rate from all power plants in the Midwest was 6.6 lb/MWh--
roughly 2.5 times higher than in the Northeast.
5. Opportunities for NOx Reductions in the Electric Utility Sector
    We investigate the likely cost of NOx controls in the East-central 
and Northeast regions under different future scenarios. For the East-
central region, our reference scenario assumes that utilities meet the 
NOx standards required by Phase II of Title IV of the Clean Air Act. In 
other words, this scenario accounts for all of the NOx controls that 
East-central utilities are expected to install by 2003 in the absence 
of any requirements of the EPA SIP call. Under this scenario we 
estimate that East-central utilities would reduce their NOx emissions 
to an average rate of 0.5 lb/MMBtu.\7\ We refer to this scenario as the 
``Title IV Only Scenario.''
---------------------------------------------------------------------------
    \7\ The NOx emission standards required by Title IV range from 0.40 
to 0.86 lb/MMBtu, depending upon boiler design. The majority of boilers 
are required to meet standards of 0.4 and 0.46 lb/MMBtu.
---------------------------------------------------------------------------
    For the Northeast region, our reference scenario assumes that 
utilities meet the much more stringent standard of 0.15 lb/MMBtu, as 
required by the EPA SIP call. We therefore refer to this scenario as 
the ``EPA Budget Scenario.''\8\
---------------------------------------------------------------------------
    \8\ We choose the EPA Budget Scenario as our reference scenario 
because it is similar to the standards already agreed to by the OTR 
States in the OTC Memorandum of Understanding, where States have a 
choice of meeting a 0.15 lb/MMBtu average emission rate or achieving a 
75 percent reduction from 1990 emissions. (OTC 1994).
---------------------------------------------------------------------------
    We then analyze scenarios where greater NOx controls are applied in 
Me East-central and the Northeast electricity sectors. For each 
scenario we estimate Me types of NOx control technologies likely to be 
applied on a plant-by-plant basis, as well as the associated costs. For 
the East-central region, we analyze an ``EPA Budget Scenario'' in order 
to estimate the impact of meeting Me NOx budgets in the EPA SIP call. 
For the Northeast region we also analyze a ``Beyond EPA Budget 
Scenario,'' which goes beyond the requirements of the EPA SIP call and 
utilizes all of the reasonably available bolt-on control technologies. 
Our results are presented in Table 5.1 and Figure 5.1.

        Table 5.1 Costs of Controlling NOx in the East-Central and Northeast Electricity Sectors in 2003.
----------------------------------------------------------------------------------------------------------------
                                                                               NOx        Control
                                                                            Reduction    cost from     Average
                                                              Average NOx      from       current      control
                                                               Emissions     current        year       cost ($/
                                                               (lb/MMBtu)   year (1000  (million $/      ton)
                                                                            tons/year)     year)
----------------------------------------------------------------------------------------------------------------
Northeast:
    1996 Control Level......................................         0.40         n.a.         n.a.         n.a.
    EPA Budget..............................................         0.15          344          354        1,031
    Beyond EPA Budget.......................................         0.10          412          472        1,145

East-Central:
    1996 Control Level......................................         0.68         n.a.         n.a.         n.a.
    Title IV Only...........................................         0.50          571           59          103
    EPA Budget..............................................         0.15        1,641        1,087          662
----------------------------------------------------------------------------------------------------------------
Notes: All costs are in 1995 dollars. See Appendix A for control cost assumptions. The Average Nt)X emission
  rates for the 1996 Control Level Scenario are slightly lower than the actual rates in 1996 because they are
  based on generation that has been adjusted to 2003 levels.

    Our results in Table 5.1 indicate that the costs of controlling NOx 
in the Northeast is significantly higher than in the East-central 
region. If the Northeast States meet the EPA Budget Scenario, while the 
East-central power plants meet the Title IV Only Scenario, then their 
average control costs (in $/ton) will be ten times higher than for the 
East-central region. Even in the scenarios where the two regions meet 
the same average NOx emission rate of 0.15 lb/MMBtu, the Northeast will 
incur average NOx control costs of $1,031/ton--roughly 56 percent 
higher than the $662/ton incurred by the East-central region. This 
difference in control costs is partly because the Northeast has already 
taken many measures to control NOx emissions under the OTC Memorandum 
of Understanding.
    Marginal costs provide another indication of the extent to which 
NOx control costs in the Northeast are higher than in the East-central 
region.\9\ Figure 5.1 presents a graphical representation of the 
marginal NOx control costs for both the Northeast and East-central 
regions, at various levels of NOx controls. The X-axis indicates the 
cumulative amount of NOx reductions relative to the 1996 control 
levels, while the Y-axis indicates the marginal NOx control costs (in 
$/ton) for each level of NOx reduction. The Northeast control cost 
curve intersects the Y-axis at the 1996 Control Level Scenario emission 
rate of 0.40 lb/MMBtu, and climbs up to the Beyond EPA Budget Scenario 
emission rate of 0.10 lb/MMBtu. The East-central.control cost curve 
intersects the Y-axis at the 1996 Control Level Scenario emission rate 
of 0.68 lb/MMBtu, and climbs up to the EPA Budget Scenario emission 
rate of 0.15 lb/MMBtu.
---------------------------------------------------------------------------
    \9\ Marginal control costs represent the cost of controlling a 
small increment of NOx at a particular level of control (e.g., at the 
0.15 lb/MMBtu point). Average control costs, on the other hand, 
represent the cost of controlling all of the NOx emissions from a 
baseline level (e.g., 1996 control levels) to a higher level of 
control.
---------------------------------------------------------------------------
    The two control cost curves in Figure 5.1 indicate the extent to 
which there are significantly greater low-cost opportunities to control 
NOx emissions in the East-central region relative to the Northeast. In 
the Northeast the low-cost options have already been adopted, and there 
are fewer plants on which to apply the higher-cost options. The 
Northeast curve becomes quite steep after the average emission rate of 
0.15 lb/MMBtu is achieved. Our analysis indicates that it is difficult 
to achieve further NOx reductions in the Northeast after the 0.10 lb/
MMBtu average emission rate is achieved.\10\
---------------------------------------------------------------------------
    \10\ A few plants remain without SCR control technologies in this 
scenario, but their capacity factors are so low that installing SCR 
does not significantly reduce NOx emissions. Power plant owners could 
begin reflowering with natural gas or retiring coal-fired plants to 
achieve additional reductions beyond the 0.10 lb/MMBtu average level, 
but we have not evaluated the economics of these options.
---------------------------------------------------------------------------
    In the East-central region the marginal control cost curve is much 
less steep than the Northeast, and there are many more opportunities 
for low-cost emission reductions. For example, in the Title IV Only 
Scenario the East-central power plants would be able to achieve 571,000 
tons of NOx reductions--more than the amount available in the Northeast 
under the Beyond EPA Budget Scenario--at a marginal cost of less than 
$500/ton and an average cost of roughly $103/ton.
    Figures 5.2 and 5.3 present the extent to which the Northeast and 
East-central utilities are expected to install NOx controls in the 
various scenarios that we investigate. For simplicity we group NOx 
control technologies into two categories. The combustion control 
category includes the relatively low-cost options, such as low-NOx 
burners, low-NOx coal-and-air models, coal reburning, and others. The 
SCR category includes the more expensive SNCR and SCR post-combustion 
controls. In some cases, plants are assumed to install both combustion 
controls and SCR post-combustion controls to achieve the maximum amount 
of NOx reductions.
    As indicated in Figures 5.2 and 5.3, the Northeast has currently 
installed significantly more low-cost combustion controls than the 
East-central region. In order to meet the requirements of the EPA 
Budget Scenario, the Northeast will have to install combustion controls 
on almost all of its fossil-fired generation units, as well as SCR 
controls on 82 percent of the fossil-fired units. If the East-central 
utilities simply meet the Title IV Ohly Scenario, they could install 
only combustion controls on roughly 80 percent of their fossil-fired 
generation units. In order to achieve the average emission rate of 0.15 
lb/MMBtu, the two regions will both have to install combustion controls 
on nearly all fossil-fired generation units, as well as SCR controls on 
over 70 percent of the units. If the Northeast utilities wish to 
achieve the lower average emission rate of 0.10 lb/MMBtu, they will 
have to also install combustion controls and SCR controls on nearly all 
fossil-fired units.) \11\
---------------------------------------------------------------------------
    \11\ As described in Section 3, we do not consider all of the power 
plant control options available, such as fuel-switching, repowering or 
coal unit retirement. In practice, therefore, it may not be necessary 
to implement all of the control options presented in Figures 5.2 and 
5.3.
---------------------------------------------------------------------------
6. The Economic Impact of the Transport of Ozone
            6.1 The Extent Ozone Transport from the East-Central Power 
                    Plants
    The transport of ozone and its precursors from the East-central 
region to the Northeast will require the Northeast States to adopt more 
local NOx and VOC controls than they otherwise would adopt to meet 
ozone attainment standards. These local NOx and VOC controls will be 
relatively expensive because most of the low-cost NOx and VOC controls 
would have already been implemented by the Northeast States.
    In order to estimate the extent of the additional costs to the 
Northeast, we begin by estimating the approximate amount of NOx and 
ozone that is transported from the East-Central region to the 
Northeast. While OTAG has addressed this question In its air quality 
modeling analyses, there still remains considerable debate about the 
extent to which ozone is transported between the two regions.
    In order to provide an illustration of the plausible extent of 
ozone transport, we assume a range of amounts of ozone transported from 
the East-central region. This range was developed by NESCAUM, and is 
described in a companion document prepared by them. In our Low 
Transport Case, we assume that 20 percent of the NOx emissions from the 
East-central power plants are transported to the Northeast States, as 
either NOx or an equivalent level of ozone. In our Medium and High 
Transport Cases, we assume that 30 and 45 percent of the NOx emissions 
from the East-central plants are transported to the Northeast, as 
either NOx or an equivalent level of ozone.\12\
---------------------------------------------------------------------------
    \12\ In fact, a significantly larger portion of NOx emissions from 
the East-central region will be transported to nearby regions in the 
Northeast (e.g., Pittsburgh) than to regions farther away (e.g., 
Maine). Our assumptions here about the percent of NOx that is 
transported to the Northeast represent an average impact across the 
entire Northeast region.
---------------------------------------------------------------------------
    We estimate that the NOx emissions from East-central power plants 
in the Title IV Only Scenario will be roughly 1,525 thousand tons per 
year. Consequently, our Low, Medium and High Transport Cases imply that 
the ozone transported from the East-central region to the Northeast is 
equivalent to roughly 305, 457 or 686 thousand tons of NOx emissions. 
For comparison purposes, in the EPA Budget Scenario the Northeast 
States are expected to produce roughly 232 thousand tons of NOx 
emissions. Therefore, the amount of ozone transported from the East-
central power plants could be roughly one to three times as much as 
that generated by the NOx emissions from the power plants located in 
the Northeast.
            6.2 The Costs of Controlling NOx Emissions in the Northeast
    We then identify the options available for reducing NOx emissions 
in the Northeast. Under most scenarios the potential NOx emission 
reductions from Northeast power plants are not sufficient to offset all 
of the ozone that is transported from the East-central power plants, so 
we investigate options for reducing NOx from other sectors of the 
economy. The details of our control cost assumptions for the non-
utility sectors are provided in Appendix B.
    A summary of our Northeast NOx control cost assumptions is provided 
in Table 6.1.\13\ These costs represent the control options available 
after the various sectors have already reduced NOx emissions down to 
the level required by the EPA budgets in the SIP Call. As indicated in 
Table 5.1 above, the Northeast could reduce NOx emissions in the 
electricity sector by roughly 68 thousand tons/year, by lowering the 
average emission rate from 0.15 to 0.10 lb/MMBtu. These reductions 
would cost an average of $1,717 per ton.
---------------------------------------------------------------------------
    \13\ We do not consider opportunities for reducing VOC emissions in 
the Northeast. Regional scale modeling indicates that reductions of VOC 
emissions are likely to affect only local ozone formation, with 
relatively little impact on transported ozone.
---------------------------------------------------------------------------
    The other sectors that create NOx emissions are characterized as 
point sources, area sources, and motor vehicles. We rely upon OTAG 
information as the primary source for estimates of NOx control costs in 
these sectors (Pechan). As indicated in Table 6.1, the average cost of 
controlling NOx from these sectors is significantly greater than from 
the electric utility sector.

Table 6.1 NOx Reductions Available in the Northeast From Utility and Non-
     Utility Sectors, After the EPA SIP Call Budgets Have Been Met.
------------------------------------------------------------------------
                                     Potential
                                     reduction    Average      Average
                                       (1000      Cost Low    Cost High
                                       tons/      Case ($/     Case ($/
                                       year)        ton)         ton)
------------------------------------------------------------------------
Electric Utilities.................        68         1,717        1,717
Point Sources: Industrial..........        56         5,000        7,000
Point Sources: Incinerators........         7         5,000        7,000
Point Sources: Other Industrial....        24         5,000        7,000
Area Sources: Industrial...........        67         5,000        7,000
Motor Vehicles.....................       235         6,800       11,500
Area Sources: Off-Road Diesel Fuel.         6         8,000       23,000
Area Sources: Off-Road Gasoline....         5        10,000       10,000
    Total Potential Reductions.....       468            --           --
------------------------------------------------------------------------
Source. See Appendix B. These reductions and costs represent those
  available after the Northeast States achieve the NOx budgets proposed
  in the EPA SIP call. Note that this table only lists options
  identified by OTAG. There are, however, additional cost-effective
  measures which may have not been considered by OTAG, such as heavy-
  duty diesel controls, that win be feasible options for additional NOx
  reductions.

    Figure 6.1 provides a graphical representation of the costs of 
controlling NOx in the Northeast from the various sectors of the 
economy. The control options are presented in order of the lowest to 
highest cost, beginning at the left and moving to the right. The X-axis 
indicates the cumulative volume of NOx reductions available from each 
sector. The Y-axis indicates the average costs (in $/ton) required to 
achieve the associated volume of reductions. \14\
---------------------------------------------------------------------------
    \14\ In practice, each sector offers a number of NOx control 
options, each with costs that may be above or below the averages 
presented here.
---------------------------------------------------------------------------
    Figure 6.1 indicates that the majority of NOx emission reductions 
in the Northeast is available from point sources (at $5,000 to $7,000/
ton), and motor vehicles (at $6,800 to $11,500/ton). The extent to 
which these NOx reductions would be used to offset ozone transported 
from the East-central region depends upon the transport assumptions:
    In our Low Transport Case, the Northeast will have to offset the 
equivalent of roughly 305 thousand tons of NOx per year from the East-
central region, which can be done by utilizing additional NOx controls 
from the electric utility sector, the point source sectors, and part of 
the motor vehicle sector.
    In the Medium`Transport Case, the Northeast will have to offset the 
equivalent of roughly 457 thousand tons of NOx emissions from the East-
central region, which requires essentially all of the control cost 
options presented in Table 6.1.
    In the High Transport Case, the Northeast will have to offset the 
equivalent of roughly 686 thousand tons of NOx emissions from the East-
central region, which would require roughly 218 thousand tons of 
reductions beyond those presented in Table 6.1.
            6.3 The Economic Impact of NOx Transported From East-
                    Central Power Plants
    We use the data in Table 6.1 and Figure 6.1 to-estimate the 
economic impact upon the Northeast as a consequence of transported 
ozone. Our analysis is summarized in Table 6.2. The public health 
impacts of not attaining the ozone standard in the Northeast are not 
considered in this report.
    In the Title IV Only Scenario, the Northeast States would have to 
reduce local NOx emissions by 305 thousand tons per year under our Low 
Transport Case. Roughly 68 thousand tons of NOx reduction could be 
achieved by installing additional controls on Northeast power plants 
(our Beyond EPA Budget Scenario). At an average cost of roughly $1,717 
per ton, these NOx reductions from the electricity sector cost a total 
of approximately $117 million.
    The remaining 237 thousand tons of NOx would have to be obtained 
from sources in other sectors. This amount of reduction could be 
achieved from point sources and motor vehicles, at an average cost of 
$5,600 to 8,500 per ton, requiring a total cost of $1.3 to $2.0 
billion. The total economic impact imposed upon the Northeast States 
under the Title IV Only Scenario and the Low Transport Case would 
therefore be roughly $1.4 to $2.1 billion.

          Table 6.2 Control Costs in the Northeast Due to NOx Emissions from East-Central Power Plants
----------------------------------------------------------------------------------------------------------------
                                            Low Transport           Medium Transport          High Transport
----------------------------------------------------------------------------------------------------------------
Title IV Only Scenario: (East-Central
         NOx = 0.50 lb/MMBtu)
Total Emissions from East-Central      1,525..................  1,525..................  1,525
 Power Plants (1000 ton/year).
Emission transport from East-Central   305....................  457....................  686
 to NE (1000 ton/year).
NOx Reductions from NE Power Plants    68.....................  68.....................  68
 (1000 ton/year).
NOx Reductions from Other NE Sectors   237....................  389....................  618
 (1000 ton/year).
Average Cost of NOx Reductions from    1,717..................  1,717..................  1,717
 NE Power Plants ($/ton).
Average Cost of NOx Reductions from    5,600-8,500............  6,100-9,700............  >7,500
 Other NE Sectors ($/ton).
Total Cost of NOx reductions (billion  1.4-2.1................  2.5-3.9................  >3.9
 $/year).

  EPA Budget Scenario: (East-Central   454....................  454....................  454
       NOx rate=0.15 lb/MMBtu)
Total Emissions from East-Central      91.....................  91.....................  91
 Power Plants (1000 ton/year)
Emission transport from East-Central   91.....................  136....................  205
 to NE (1000 ton/year)
NOx Reductions from NE Power Plants    68.....................  68.....................  68
 (1000 ton/year)
NOx Reductions from Other NE Sectors   23.....................  68.....................  136
 (1000 ton/year)
Total Cost of NOx reductions (billion  0.2-0.3................  0.5-0.6................  0.8-1.1
 $/year)
----------------------------------------------------------------------------------------------------------------

    In the Medium Transport Case the Northeast would have to achieve 
reductions in local NOx emissions of 457 thousand tons. This requires 
utilizing almost all of the control options listed in Table 6.1 and 
Figure 6.1, and therefore causes a much higher total cost ranging from 
$2.5 to $3.9 billion.
    In the High Transport Case the Northeast would have to achieve 
reductions in local NOx emissions of 868 thousand tons. This requires 
utilizing all of the control options listed in Table 6.1 and Figure 
6.1, as well as 281 thousand tons of additional NOx reductions. 
However, it is not clear whether there will be many additional sources 
of NOx reductions beyond those identified in Table 6.1 Consequently, it 
may not be possible for the Northeast States to offset the full amount 
of ozone transported in from the East-central sources. If such 
reductions are available, they will most likely cost more than those 
reductions assumed in the Medium Transport Case. We therefore simply 
note in Table 6.2 that the total cost of NOx reductions in the High 
Transport Case will be greater than $3.9 billion per year.
    In sum, the economic impact on the Northeast could range from $1.4 
to over $3.9 billion per year, if the East-central sources do not meet 
the EPA SIP call budgets. To put these costs in perspective, the 
Northeast States will have to incur roughly $354 million to reduce 
their average emission rates from today's level to the 0.15 lb/MMBtu 
level. Thus, the transport of NOx and ozone from the East-central 
region creates an economic impact on the Northeast that could be 
anywhere from roughly four to over ten times as much as its own costs 
required to achieve the budget levels proposed by the EPA.
    Our EPA Budget Scenario assumes that the East-central sources 
reduce their NOx emissions to the levels required in the EPA SIP call. 
In this scenario the economic impact on the Northeast would be 
considerably smaller. In the Low Transport Case, all of the transported 
ozone could be offset through reductions in the electric utility 
sector, for a total cost of $0.2 to 0.3 billion. In the Medium 
Transport Case, the transported ozone would be offset by equal amounts 
of emissions from the utility and point sources, resulting in a total 
cost of $0.5 to $0.6 billion. In the High Transport case, the costs 
could be as high as $0.8 to $1.1 billion.
    The difference between the costs of the Title IV Scenario and the 
EPA Budget Scenario indicates the economic impact that the East-central 
utilities are likely to place on the Northeast as a consequence of not 
meeting the budgets in the EPA SIP call. In our Low Transport Case this 
difference is roughly $1.2 to 1.9 billion, and in the Medium Transport 
Case it is roughly $2.0 to $3.3 billion. In the High Transport Case, it 
will be significantly higher.
            6.4 Limitations, Uncertainties and Approximations
    Our results should be seen as approximate illustrations of the 
costs of offsetting ozone transported from the East-central region. The 
complexity of the issue makes accurate calculations challenging. The 
two greatest uncertainties in our analysis are the amount of ozone 
transported from the East-central region, and the costs of controlling 
NOx from utility and non-utility sectors. The more important 
uncertainties in our analysis are addressed in turn below.
    The transport of ozone. We believe that our assumption of 20 to 45 
percent represents a reasonable range of likely ozone transport 
scenarios. (Please refer to the companion document prepared by 
NESCAUM.) Evidence indicates that in some regions of the Northeast the 
transport will be significantly greater. In some regions it will be 
lower. On average, our assumptions cover the plausible range of ozone 
transport.
    Non-utility NOx control costs. We have used conservative 
assumptions for the cost of controlling NOx emissions from non-utility 
sectors. Many of the reductions will be available from point sources, 
which OTAG has estimated to cost greater than $5,000 per ton. In some 
cases, they may cost significantly more than this. We have assumed that 
these reductions will cost only $5,000 to $7,000 per ton.
    Utility NOx control costs. We have not accounted for some important 
electricity sector NOx reduction opportunities, such as fuel-switching, 
coal-to-gas repowering. or coal unit retirement. These opportunities 
might be more cost-effective than some of the utility control costs 
assumed here--particularly if the benefits of reducing other pollutants 
(e.g., CO2) are accounted for.
    Improved efficiencies and economies of scale. Our assumptions for 
NOx control costs in both the electric sector and the non-utility 
sectors might overstate the actual control costs, as a consequence of 
efficiencies that might be achieved over time. As industries come under 
increasing pressure to reduce NOx emissions, they can be expected to 
identify new control options and to achieve reductions more efficiently 
than in the past. In addition, increased demand for NOx control 
technologies may allow for them to be produced with increased 
economies-of-scale.
    Annual versus seasonal control costs. Our analysis estimates the 
costs of achieving annual NOx reductions from the electric utility 
sector, as opposed to the seasonal reductions required in the EPA SIP 
call. Annual NOx reductions are likely to be more expensive than 
seasonal reductions, because some of the power plant NOx controls might 
not have to be operated during the off-season periods. However, we 
believe that using annual control costs does not overstate our control 
cost results significantly, and does not affect our overall 
conclusions; The control costs we assume for reducing NOx from non-
utility sources are based on seasonal control costs; it is only the 
utility sources that are based on annual costs. The non-utility sources 
represent the greatest contribution to the total control costs in our 
analysis, both in terms of dollars per ton and number of tons. For 
example, in our Medium Transport Case the non-utility control costs 
represent 95 to 97 percent of the total cost of NOx reductions reported 
in Table 6.2.
    Transported ozone from non-utility sources in the East-central 
region. Our estimates of the costs imposed upon the Northeast only 
present a portion of the economic impact of NOx transport, because they 
only account for the NOx emissions from East-central electric power 
plants. As indicated in Table 4.1 above, power plants are responsible 
for only about one-half of the total NOx emissions from the East-
central region. Consequently, we have accounted for only a portion of 
the transported ozone problem. The NOx emissions from other sectors in 
the East-central region will impose additional costs on the Northeast 
States.
    Insufficient NOx control measures in the Northeast. As indicated in 
Figure 6.1, the Northeast States may have to apply nearly all currently 
known NOx controls to offset the volume of the ozone transported from 
the East-central region. In the High Transport Case, there is unlikely 
to be enough NOx control options available to offset the transport of 
ozone generated from all East-central sources. \15\ Consequently, the 
economic and residual environmental costs could be much higher than we 
have identified here.
---------------------------------------------------------------------------
    \15\ While there is likely to be some NOx reduction measures 
available in the Northeast beyond those presented in Table 6.1 and 
Figure 6.1, they are likely to be increasingly expensive and difficult 
to find.
---------------------------------------------------------------------------
    Low-cost NOx control measures are needed to address local NOx 
emissions first. OTAG modeling has indicated that the Northeast States 
might not be able to reach attainment of the 1-hour ozone standard--
even after they meet the NOx budgets proposed in the EPA SIP call. 
Therefore, they may need to implement some of the control options 
presented in Table 6.1, regardless of whether there is any ozone 
transported from the East-central region. A more appropriate estimate 
of the economic impact caused by transport would therefore assume that 
such options are not available for offsetting transported ozone. 
Consequently, the control options that are used to offset the 
transported ozone will be more expensive--if they are available at all.
    In sum, our analysis generally indicates that the transport of 
ozone and its precursors from the electricity sector in the East-
central region is likely to require the Northeast States to implement a 
large portion of the available local NOx control options, including 
control options from all NOx-emitting sectors. This will require the 
Northeast States to incur costs on the order of billions of dollars per 
year, and might still leave some regions in the Northeast in 
nonattainment of the ozone standard.
    If the East-central sources achieve the NOx reductions proposed in 
the EPA SIP call, then this economic impact will be significantly 
reduced. Even then, however, the impact imposed upon the Northeast will 
still be on the order of hundreds of millions of dollars, if not more. 
Even in this scenario, the transport of ozone will make it more 
difficult for the Northeast States to reach attainment of the ozone 
standard.
7. Conclusions
    Our analysis finds that there is a clear need to reduce the inter-
regional transport of ozone and its precursors. Simply put, ozone is a 
regional problem with regional implications, and upwind States cannot 
act without regard for the NOx and ozone that is transported out of 
their borders.
    NOx emissions from East-central power plants significantly 
contribute to the nonattainment of ozone standards in the Northeast--in 
addition to contributing to the local ozone problem in the East-central 
region. Not only does this East-central contribution threaten public 
health by preventing the Northeast States from reaching attainment, it 
also requires the Northeast States to incur significantly higher NOx 
control costs than they would in the absence of transported ozone.
    Based on OTAG modeling to date, the Northeast States will likely 
have to take additional aggressive measures to reach attainment of the 
ozone standard even after the EPA NOx SIP call is fully in place 
throughout the eastern United States. As this study shows, the most 
effective approach is to implement low-cost upwind NOx controls so that 
a greater portion of the additional local measures can be applied 
toward reaching attainment, rather than compensating for outside 
transport. Therefore, the East-central sources should be required to 
meet the State NOx emission budgets in the EPA's proposed rulemaking.
    The EPA NOx SIP call is a good first step in addressing the 
regional ozone problem in the eastern United States. Even at the EPA 
NOx budget levels, however, upwind sources will continue to impose 
significant costs on downwind States, and will continue to impede the 
ability of downwind States to reach attainment. The U.S. EPA and the 
States should monitor the ozone transport problem over time to 
determine what additional measures might be necessary to reduce ozone 
transport further beyond the EPA NOx SIP call budgets.
                               references
    Andover Technology Partners 1998. Status Report on NOx: Control 
Technologies and Cost Effectiveness, Submitted to Northeast States for 
Coordinated Air Use Management, Draft Report, January.
    Energy Information Administration 1997. Annual Electric Generator 
Data: 1996, Form EIA-860.
    Environmental Protection Agency (EPA) 5/1998. Staff Paper on 
Gasoline Sulfur Issues, Office of Mobile Sources, EPA420-R-98-004 May 
1.
    EPA 1997. Summary Emission Reports: 1996, Acid Rain Division, Year-
to-Date and Quarterly.
    EPA 11/1997. Finding of Significant Contribution and Rulemaking for 
Certain States in the Ozone Transport Assessment Group Region for 
Purposes of Reducing Regional Transport of Ozone; Proposed Rule, 40 CFR 
Part 52, Federal Register, November 7.
    EPA 9/1997. Proposed Ozone Transport Rulemaking Regulatory 
Analysis, Office of Air and Radiation, September.
    EPA 7/1996. Analysis of Electric Power Generation Under the Clean 
Air Act Amendments, July.
    Northeast States for Coordinated Air Use Management (NESCAUM) 1997. 
The Long-Range Transport of Ozone and Its Precursors in the Eastern 
United States, March.
    Pechan & Associates 1997. OTAG Cost Parameters Applied To Non-
Utility Strategies To Reduce Ozone Transport, Prepared for U.S. EPA, 
Contract No. 68-D4-0107, Pechan Report No. 97.05.001/1150.020, May 29.
    Synapse Energy Economics 1998. Grandfathering and Environmental 
Comparability: Air Emission Regulations and Electricity Market 
Distortions, prepared for the National Association of Regulatory 
Utility Commissioners, with the Global Development and Environment 
Institute, Forthcoming.
    Utility Data Institute 1997. 1996 Production Costs Operating Steam-
Electric Plants, UDI-2011 -97, September.
                                 ______
                                 
    appendix a. nox control options for the electric utility sector
    Table A.1 presents a summary of the NOx control technologies for 
achieving NOx reductions in the electricity sector. All of the data in 
Table A. 1 are taken from the same study (EPA 1996) that EPA used in 
its ozone transport rulemaking (EPA 9/1997).
    The majority of the NOx controls available are designed for coal 
plants, due to their high emission rates. Some controls are applied in 
the combustion process itself, while others are applied after the fuel 
has been burned. On any one unit it is possible to apply both 
combustion and post-combustion controls. In such case the removal rates 
are multiplicative.
    It is important to note that in practice, the cost of these control 
measures, and the amount of NOx removal, might vary considerably from 
the costs presented in Table A.1. The cost might depend upon the unique 
characteristics of a unit's design, location, and operating patterns. 
For example, the costs of the few SCR technologies installed to date 
have varied significantly (Andover Technology Partners 1998).
    Figure A.1 indicates the removal rates from some of the key NOx 
control options. It presents the NOx removal rate and control cost for 
a typical coal plant operating at 50 percent capacity factor, for six 
different combinations of combustion and post-combustion controls. The 
greatest opportunity for removing NOx emissions can be found by 
combining 10w-NOx burners with SCR controls.
    The cost of reducing NOx emissions (in $/ton) will vary depending 
upon the extent that a unit operates. Figure A.2 presents the NOx 
control costs for three control technology options, for a typical coal 
plant at various levels of plant operation. The control costs increase 
with lower levels of plant operation. The low-NOx burner represents the 
least-cost control option available, while the combination of low-NOx 
burners and SCR controls provides the greatest level of NOx removal.
    In our economic analysis we have levelized the capital costs over 
30 years using a fixed charge factor of 12 percent, in order to present 
total control costs in annual terms. All costs presented in this study 
are in 1995 dollars. We do not account for increases or decreases in 
NOx control costs beyond inflation.
    The general approach in our economic analysis is to identify the 
NOx control technologies that would likely be adopted on a plant-by-
plant basis to meet various levels of NOx standards in the Northeast 
and East-central regions. We begin with a snapshot of control 
technologies that are in place today. We then look at increasingly 
stringent levels of NOx standards, and identify the least-cost control 
technologies that would be installed and the costs that would be 
incurred in meeting them. This allows us to develop curves indicating 
the average and marginal costs of NOx controls in the two regions.
        appendix b. nox control options for non-utility sectors
    We rely upon the OTAG information for the primary source of data on 
NOx control options for non-utility sectors (Pechan 1997). This 
information includes inventories of NOx control costs by sector and by 
State. The inventories include different groupings of control options, 
to achieve different degrees of NOx reductions. These groupings are 
referred to as Level 1, Level 2 and Level 3, with Level 3 being the 
most stringent.
    We seek to identify those NOx options that can be applied in the 
Northeast in the EPA Budget Scenario--i.e., after the Northeast States 
have meet the NOx budgets proposed in the EPA SIP call. To identify the 
NOx options available in this scenario, we have relied upon Round 3, 
Run I of the OTAG modeling. \16\ This run is comparable to the NOx 
reduction requirements of the NOx SIP call.
---------------------------------------------------------------------------
    \16\ A State-level ``Tier 2'' emissions inventory description 
broken down by emission sector is found through OTAG's website html:://
www.iceis.mcnc.org/OTAGDC/index.html.
---------------------------------------------------------------------------
    The OTAG runs model the NOx control options for point sources (both 
utility and non-utility), area sources and motor vehicles. The results 
for Round 3, Run I are summarized in Table B. 1, and are described 
below.
Non-Utility Point Sources
    From the Run 2, Round 9 OTAG inventory, \17\ three general emission 
sectors are identified. \18\ These are industrial and other point 
sources, incinerators, and other industrial processes. These are 
assumed to be already controlled at OTAG Level 2 under the NOx SIP 
call. On average, Level 2 is assumed to be a 55 percent reduction from 
the initial OTAG baseline inventory. Going beyond Level 2 to Level 3 is 
assumed to be an average 75 percent reduction from the OTAG baseline 
inventory. Therefore, going beyond the NOx SIP call (Level 2 controls) 
to Level 3 will mean an average additional 44 percent reduction beyond 
Level 2. The total available reductions in the Northeast from the 
industrial, incinerators, and other industrial categories are 56, 7, 
and 24 thousand tons per year beyond the EPA SIP call levels. \19\
---------------------------------------------------------------------------
    \17\ The Round 3, Run I, NOx point source inventory was missing 
from the OTAG website. As a surrogate, the NOx point source inventory 
from Round 2, Run 9 was used. In this inventory, NOx power plant 
controls were equivalent to Run I. For non-utility point source NOx 
emissions, the inventory was equivalent to Run I for boilers >250 
MMBtu. The Round 2, Run 9, inventory was more stringent than Run I for 
boilers ton for non-utility point sources. 
Using 5,000 dollars/ton as the lower limit, the total costs of relying 
upon each of the non-utility point source sectors would require an 
annual cost of $435 million.
Area Sources
    NOx area emissions are split into three general categories--
industrial and other combustion sources, off-road diesel, and off-road 
gasoline. For industrial and other combustion area sources, the same 
approximation to estimate additional NOx reductions is used as for the 
non-utility point sources (i.e. 44 percent beyond Level 2 controls used 
in Run [). For off-road diesel, the control measure is going from 50 
octane diesel to 55 octane diesel. \20\ This will result in a 3 percent 
NOx reduction based on figures from Ethyl Corporation. For off-road 
gasoline, more uncertainty is involved. The presumed control measure is 
California reformulated gas (RFG) II. This is an average 40 ppm sulfur 
gasoline. If the impact of Cal RFG II on off-road gasoline vehicles is 
comparable to older conventional cars (Tier 0), then the impact might 
be a 10 percent reduction in NOx, based on an EPA staff report (EPA 5/
1998). The total available reductions in the Northeast from the area 
industrial, off-road diesel and off-road gasoline are 67, 6, and 5 
thousand tons per year beyond the EPA SIP call levels.
---------------------------------------------------------------------------
    \20\ Additional strategies exist to achieve NOx reductions from 
off-road diesels, but were not explicitly included in the OTAG cost 
estimates. One option is to accelerate the introduction of proposed 
non-road diesel engine emissions standards between 2000 and 2008. The 
proposed emissions standards for off-road diesels will result in large 
NOx reductions over the next two decades. Nationally, between one to 
two million tons of NOx a year (beginning in 2010) will be reduced as a 
result of introduction of the standards at a cost of less than $1,000 
per ton.
        In addition, the use of some types of electrically powered off 
road equipment can reduce NOx in a cost effective manner. Use of 
natural gas fuel can also greatly reduce off-road vehicle NOx 
emissions. Cost estimates prepared for natural gas highway vehicles 
suggest that NOx reductions can be also be achieved in a cost effective 
manner from off-road vehicles.
---------------------------------------------------------------------------
    Level 3 costs for industrial and other combustion area sources are 
listed in the OTAG cost matrix as greater than 5,000 dollars/ton. For 
off-road diesel using 55 octane fuel, the OTAG cost matrix gives a 
range of 8,000-23,000 dollars/ton. This range is used to set a low and 
high cost estimate range. For off-road gasoline, an estimate of 10,000 
dollars/ton is used. This estimate is taken from the calculation 
described below for mobile source costs. It basically is chosen as a 
cost that falls within the range described below. While this is a rough 
estimate, the potential reduction of 5 thousand tons per year from this 
sector make the overall Northeast cost estimate relatively insensitive 
to this particular emissions sector.
Motor Vehicles
    The control measure assumed for motor vehicles is going from 
Federal RFG (150 ppm sulfur) to Cal RFG II (40 ppm sulfur). Run I 
assumes national low emission vehicles (NLEV) in the Northeast. Based 
on an EPA staff report for 40 ppm sulfur gasoline, an average reduction 
in NOx of 55 percent from NLEV could be expected (EPA 5/1990). A 
reduction of 55 percent is used in this analysis, but it is an 
overestimation of available reductions in the Northeast because it does 
not take into account non-LEV vehicles in the Northeast in 2007. 
Therefore, 235 thousand tons per year represents a generous estimate of 
available NOx reductions from mobile sources in the Northeast beyond 
the NOx SIP call.
    The cost of Cal RFG II in the Northeast is estimated as follows. 
Based on EPA's staff report on sulfur in gasoline, an NLEV car will 
emit 0.50 g/mile at 100,000 miles when using fuel with 150 ppm sulfur. 
:A vehicle fleet average of 25 miles/gal in 2007 is assumed (this is 
optimistic and ignores sport utility vehicles and heavy duty trucks). 
From this, the NOx tons/gal can be calculated. From this value, a 55 
percent NOx reduction is estimated by going from 150 ppm sulfur 
gasoline to 40 ppm sulfur fuel. An EPA staff report gives costs of 40 
ppm sulfur (Cal RFG II) gasoline in a range of 5.2-8.7 cents/gal. From 
this we calculate a low cost estimate of $6,845/ton, and a high cost 
estimate of $11,452/ton.
                               __________
             [From the Magazine EM, pp. 19-23, April 1999]
 Lifting the Veil of Smog: Why a Regional Ozone Strategy is Needed in 
                       the Eastern United States
     (by Paul J. Miller, Northeast States for Coordinated Air Use 
                              Management)
    In Bertolt Brecht's play The Life of Galileo, dogma clashes with 
modern science during a scene in which two representatives of the 
Inquisition visit the workroom of Galileo. The Inquisitors are there to 
look through a telescope at the recently discovered moons of Jupiter. 
The claim that moons orbit Jupiter, or any other planet for that 
matter, is heretical because it contradicts the view that all celestial 
objects revolve around the earth. The two representatives insist on 
debating Galileo over the question Can such planets exist? Galileo 
responds that all they need do is look through his telescope tube to 
see for themselves. His plea is met with the retort, If your tube shows 
something that cannot be there, it cannot be an entirely reliable tube, 
would you say?
    So seems to be the current state of debate over the long-range 
transport of ground-level ozone (or smog) in the eastern United States. 
The U.S. Environmental Protection Agency (EPA) recently promulgated a 
regional plan to reduce the formation and transport of ozone within 22 
eastern States and the District of Columbia. \1\ EPA's regional ozone 
plan is not without controversy. A number of States along with utility 
and business groups have filed lawsuits challenging it, and Congress 
may get involved in reviewing the plan. Much of the criticism focuses 
on computer modeling to dispute the notion that upwind pollution 
sources significantly contribute to smog problems experienced far 
downwind. Within this computer-generated realm, however, reference to 
real world observation is sometimes ignored, perhaps because 
observation will contradict what one would like to believe about the 
world around us.
    Because computer modeling is inherently limited by the lack of 
perfect knowledge of the natural world, interpretation of modeling 
results needs to be grounded in real-world observations. \2\ The 
purpose of this article is to present a brief synopsis of observed 
ozone transport described in the peer-reviewed scientific literature 
over the past 25 years. Part of this article's focus is on fossil fuel 
power plants because EPA predicates its regional ozone plan largely 
upon reductions from these pollution sources. Even so, automobiles and 
other mobile sources, as well as smaller stationary sources, can also 
be major contributors to regional ozone formation. EPA's plan does not 
preclude State efforts to control pollution sources other than power.2 
plants, but EPA believes the control costs will be relatively more 
expensive.
    A reading of the peer-reviewed scientific literature finds that 
researchers have long recognized the regional nature of the ozone 
problem across the eastern United States. Researchers have observed 
regional ozone formation and transport not just from the Midwest to the 
Northeast, but in other areas throughout the eastern United States. In 
the specific context of ozone transport from the Midwest to the 
Northeast, the observed transported ozone levels are at such high 
levels as to make it impossible as a practical matter for the Northeast 
to achieve air quality standards without implementing upwind controls.
History of regional ozone research in the eastern United States
    As summarized in a report from the National Research Council, the 
major characteristics of high ozone episodes were first identified 
during the early 1970's in rural field studies sponsored by the U.S. 
Environmental Protection Agency. \3\ Researchers described periods of 
high ozone (>0.08 parts per million) lasting several days and spanning 
areas larger than 100,000 km \2\ in the eastern United States. In one 
case, researchers described a river of ozone extending from the Gulf 
Coast, throughout the Midwest, and up to New England. \4\ High ozone 
levels were also observed transported out of the U.S. Great Lakes 
region into southern Ontario. \5\
    An example of a recent large ozone episode occurring across much of 
the east-central United States is shown in the map of Figure 1. The map 
displays ozone concentrations measured on September 13, 1998 at 
monitoring stations throughout the East. Ozone levels above the Federal 
8-hour health standard of 0.08 parts per million (ppm) were observed 
across large sections of the eastern United States in places far 
removed from urban centers. This is typical of severe ozone episodes in 
the East when summertime high pressure systems move from west to east 
across the eastern United States, picking up and transporting air 
pollution along the way. \6\
Power plants are major contributors to regional smog
    EPA's regional ozone plan relies on reducing emissions of nitrogen 
oxides (NOx), an important precursor of ozone formation in the 
atmosphere. NOx is formed during the combustion of fossil fuels by 
power plants as well as motor vehicles and industrial sources.
    Studies show that emissions of NOx from fossil fuel power plants 
play a major role in the formation and transport of regional ozone. For 
example, high ozone levels formed and transported within power plant 
plumes have been observed in Maryland, \7\ from Wisconsin into 
Michigan, \8\ from Tennessee toward Indiana, \9\ from Missouri toward 
Chicago, \10\ \11\ and across southern Alabama and Mississippi. \12\ 
These studies show that NOx in power plant plumes produces ozone 
approaching or exceeding health standards, and the ozone can travel 
long distances into neighboring States. Two of the studies also found 
that individual power plant plumes can produce ozone on a regional 
scale comparable to the amount of ozone generated in an urban plume. 
\11\ \12\ These two studies demonstrate that power plant plumes and 
urban plumes both contribute to downwind ozone transport.
    Within the Ohio River Valley, there is a large and persistent area 
of high ozone during the summer months relative to air in other parts 
of the country. \13\ In this region, winds intermingle ozone pollution 
from different power plant plumes (as well as other pollution sources). 
Because of this mixing, a large reservoir of ozone is formed across 
much of the east central United States (Figure 2). Somewhat 
surprisingly, people living in the Ohio River Valley are exposed to 
higher average smog levels over a more prolonged period of time than 
people living in Chicago or Boston.
    The areas of the eastern United States experiencing chronically 
high smog levels are also the same areas where many large fossil fuel 
power plants are located (Figure 3). A single power plant can emit as 
much NOx in 1 year as all the cars and trucks in a large metropolitan 
area. For example, the General James M. Gavin power plant in rural 
southern Ohio emitted over 110,000 tons of NOx pollution in 1996. \14\ 
By comparison, all highway vehicles (cars and trucks) in the Boston-
Lawrence-Worcester, Massachusetts/New Hampshire ozone nonattainment 
area emitted about 125,000 tons of NOx in 1996. \15\ When many power 
plants are grouped together as in the Ohio River Valley, they will emit 
as much NOx pollution as a major metropolitan region extending over 
several hundred miles.
Ozone is transported out of the Ohio River Valley
    The movement of ozone out of the Ohio River Valley was seen as 
early as 1979. During early August 1979, scientists tracked a mass of 
ozone leaving central Ohio, crossing Pennsylvania and southern New 
York, and entering into the Northeast Corridor a distance of over 450 
miles. \16\ When this mass of air from the Ohio River Valley entered 
into the Northeast Corridor, it contained about 0.09 ppm of ozone. By 
comparison, the Federal 8-hour ozone standard is 0.08 ppm and the 1-
hour standard is 0.12 ppm. With transported ozone levels approaching 
0.09 ppm, it is difficult to conceive as a practical matter how an area 
such as the Northeast can achieve health standards on its own without 
additional control measures applied in upwind regions.
    As the persistent ozone reservoir re-establishes itself every 
summer in the Ohio River Valley, large amounts of ozone continue to be 
transported into the Northeast from the west. During the summer of 
1995, the North American Research Strategy for Tropospheric Ozone 
Northeast (NARSTO-NE) conducted aircraft measurements of ozone in air 
masses along the western edge of the Northeast Corridor. During 
overnight hours, scientists measured ozone levels above Shenandoah, VA, 
Gettysburg, PA, Poughkeepsie, NY and other locations in excess of 0.10 
ppm (two ozone profiles above Poughkeepsie, NY are shown in Figure 4). 
\17\ \18\ During the night, ozone can not have been formed locally (no 
sunlight is present to initiate the formation of ozone), so it must 
have been transported during the pre-dawn hours. Upper air flow 
direction during the highest ozone days (July 12-15, 1995) indicated 
that the polluted air masses were arriving from the west. \18\ Later 
during the day, the transported ozone trapped aloft mixed down to the 
earth's surface, significantly contributing to ozone concentrations 
experienced far downwind of the ozone's source region. High 
concentrations of ozone trapped aloft during overnight hours were 
observed in several studies to significantly contribute to ground-level 
ozone concentrations experienced later during the day. \17\ \19\ \20\
    The field studies are consistent with evaluations of air mass 
trajectories associated with the highest ozone levels observed in 
southern New England. In a recent study, researchers found that the 
highest ozone levels observed at a site in rural western Massachusetts 
are associated with air masses arriving from the west. \21\ Based on an 
analysis of air masses arriving in western Massachusetts, the 
researchers concluded:

    Anthropogenic pollutants (combustion-derived products) were highest 
    under [southwest] flow conditions, which were generally warm, 
    moist, and relatively cloudy. This is indicative of warm sector 
    transport. The highest O3 concentrations did not occur under these 
    conditions, which had a low O3 production efficiency. Instead, the 
    highest average summer O3 occurred under [west] flow. . . which 
    delivered well-aged air masses with high O3 production efficiency. 
    This implies an important contribution of advected pollutants from 
    Midwest source regions.

    The large ozone reservoir in the Ohio River Valley returns each 
summer with little abatement. Researchers have found no significant 
downward trend in regional ozone levels from 1980 to 1995. \22\ While 
urban NOx levels have decreased (as have urban ozone levels in a few 
large metropolitan areas) due in large part to pollution controls on 
automobiles, regional ozone and NOx levels have not significantly 
changed. In contrast to a decrease in NOx pollution emitted by cars, 
regional NOx emissions from power plants increased by 3 percent between 
1987 and 1996. \23\ The lack of regional NOx reductions is significant 
because it is well established that regional ozone formation over the 
eastern United States is limited primarily by the supply of NOx. \24\ 
\25\ \26\ \27\ \28\ \29\ \30\
Health and ecological problems caused by regional NOx pollution
    Medical researchers have observed that prolonged exposures to ozone 
at concentrations as low as 0.08 ppm for several hours or over a period 
of several days produce health effects similar to shorter exposures at 
higher ozone concentrations. \31\ \32\ The observed detrimental health 
effects include:
     increased airway responsiveness in the general population
     increased severity and incidence of asthma attacks
     Increased severity and incidence of respiratory infections
     Increased prevalence of chronic respiratory symptoms
     Development of chronic respiratory bronchiolitis.
    The recent change in the Federal ozone health standard from a 0.12 
ppm 1-hour concentration to a 0.08 ppm 8-hour concentration is intended 
to reduce the observed health impacts from prolonged exposures to lower 
ozone concentrations. As described previously, such chronic long-term 
ozone levels are often observed over large areas of the eastern United 
States.
    In addition to public health impacts, transported smog and NOx 
affect natural resources. Scientists are raising concerns that 
prolonged ozone exposure can increase the death rates of trees in 
forests of the Appalachian region. \33\ This could alter the long-term 
tree composition of eastern forests, thereby affecting the forests 
value as timber and recreational resources.
    Agricultural productivity can also be affected by regional ozone 
pollution. Eastern North America has been identified as a region where 
the correlation between agriculture and fossil fuel burning may lead to 
reductions in crop yields due to prolonged ozone exposure during the 
growing season. \34\
    Aside from their role in ozone formation, NOx emissions also 
contribute to ecologically damaging acidic precipitation on forests and 
nitrogen deposition in bays and estuaries. Nitrate deposition is 
highest in the northeastern United States directly downwind of major 
NOx pollution sources in the Ohio River Valley (Figure 5).
Conclusion
    Based on observations of high ozone levels throughout the eastern 
United States, EPA's recent plan to reduce NOx emissions in 22 eastern 
States and the District of Columbia makes sense. On a regional scale, 
ozone formation depends largely upon the presence of NOx, a byproduct 
of fossil fuel combustion. The largest individual sources of NOx are 
fossil fuel power plants, and numerous studies have observed 
significant amounts of ozone being formed and transported within power 
plant plumes.
    When a downwind area already produces harmful levels of ozone from 
its own pollution sources, transported ozone from upwind regions will 
hinder efforts to improve local air quality. Field studies have 
recorded ozone levels approaching or exceeding 0.09 ppm in air masses 
traveling long distances in the eastern United States. Whether a 
downwind area is subject to the 1-hour ozone health standard (0.12 ppm) 
or the 8-hour ozone standard (0.08 ppm), the observed levels of 
transported ozone are significant obstacles to achieving clean air.
    While the scientific justification for a regional ozone approach 
has existed for some time, EPA's NOx reduction strategy is the subject 
of continued debate. Many States, notably Tennessee and a number of 
Northeastern States, support EPA's approach, while other States, 
primarily in the Midwest and Southeast, oppose it. Interestingly, 
several States suing to stop EPA's regional smog plan would receive 
some of its largest benefits due to the persistent nature of ozone 
within their own borders (e.g., Indiana, North Carolina, Ohio, 
Virginia, West Virginia). Ultimately, all the eastern States may come 
to see that the resiliency of the regional ozone problem is a shared 
concern. After all, as Bertolt Brecht writes in The Life of Galileo, 
Once something is seen, it cannot be made to be unseen.
About the Author
    Paul J. Miller is Senior Scientist with the Northeast States for 
Coordinated Air Use Management (NESCAUM) in Boston, MA. NESCAUM is a 
regional organization providing technical and policy advice to the air 
quality agencies of eight northeastern States. Dr. Miller received a 
Ph.D. in chemical physics from Yale University and was a National 
Research Council Associate at the Joint Institute for Laboratory 
Astrophysics, University of Colorado. Prior to NESCAUM, he was a 
Visiting Fellow at the Center for Energy and Environmental Studies, 
Princeton University. 
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