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OAR Box 1778 

Prepped by Ollie Stewart 

Document Number: 

220) ll-G-1 

Docket Number: 

A-90-06 

Printed 10/28/2008 9:51:02 AM Sheet 220 of 276 
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II-G-1 

ui T < \ 

TESTIMONY OF RICHARD SCHMALENSEE 

MEMBER, COUNCIL OP ECONOMIC ADVISERS 

ON 

v 8. 1868 

u«% 

NATURAL GAS CO-FIRING PROMOTION ACT OF 1989 

V\V \-

\VV- BEFORE THE 

SUBCOMMITTEE ON ENERGY RESEARCH AND DEVELOPMENT 

.COMMITTEE ON ENERGY AND NATURAL RESOURCES 

1 UNITED 8TATES 8ENATE 

May 8, 1990 

I am very pleased to be given this opportunity to discuss 

with you the complex set of issues that have come to be referred 

to as WEPCO. I will limit the scope of my remarks in two ways. 

First, as I am not a lawyer and claim no expertise whatever in 

environmental law, I will not pretend to offer my own legal 

opinions or to predict future judicial decisions. Second, as the 

electric utility industry is the focus of most discussions 

regarding WEPCO — and of virtually all discussions regarding 

WEPCO's interaction with the various Clean Air bills — I will 

limit my remarks to that industry. 

Mr. Chairman, you posed two specific questions in your 

letter. First, you requested testimony on regulatory impediments 

to market penetration of repowering and retrofit technologies 

stemming from EPA's so-called "WEPCO" policy. Second you asked 

for a discussion of whether or not the WEPCO issue was addressed 

adequately in the Clean Air Act amendments as recently passed in 

the Senate and as currently pending in the House. 

In regard to the first question, it is extremely difficult 

to separate the incremental effect of "EPA's so-called 'WEPCO1 

policy" from other influences on the market penetration of 

repowering and retrofit technologies. Anecdotal evidence and 

common sense both suggest that the modification rule as currently 

applied by EPA, has by itself probably had some discouraging 

effect on the market penetration of repowering and retrofit 

technologies. It is important to recognize that pollution 

control retrofits or other modifications which cause emissions of 

all, pollutants to decrease at the source being retrofitted will 

not trigger a new source review. The main controversy in WEPCO 

revolves around the way in which the before and after emissions 

being compared in applying the increase test are calculated. 

As to the second question, adequacy is inevitably in the eye 

of the beholder, and the proposed Clean Air Act amendments (and 

certain administrative developments that I s-hall discuss) do move 

in the right direction especially with respect to clean coal 

technology. After a careful look at the matter, the 
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Administration has formulated a set of principles that it 

believes provide the foundation for a legislative approach to 

WEPCO that will protect local air quality values and also 

significantly reduce uncertainty affecting investment decisions 

in the utility industry. These principles are outlined at the 

end of my testimony. 

Basic Issues and Problems 

Environmental policy has historically imposed more 

stringent obligations on new facilities than on old facilities. 

The main substantive rationale for this distinction is that it is 

often more expensive to retrofit existing plants to reduce 

emissions to some level than to incorporate controls into the 

design of new plants to attain that same level. The distinction 

between new and existing facilities may also be attractive 

because the interests of existing facilities are more vigorously 

defended than the interests of those that do not yet exist when a 

regulatory program is established. 

For whatever reason it is introduced, the distinction 

between new and old plants may create strong incentives to 

prolong the lives of old plants in order to avoid tougher newplant standards. The WEPCO issue, in its present form, basically 

reflects the difficulty of using further regulation to counteract 

this incentive. 

specifically, in a regime where existing facilities receive 

more favorable treatment than new ones, it becomes necessary to 

decide when changes to an existing source make it into a new 

source for regulatory purposes. It is easy to agree that 

replacement of everything but a plant's outer shell should 

trigger new source requirements. It is also easy to agree that 

routine maintenance, of the sort that is regularly done on 

specific plants, is not capitalized, and has no effect on 

emissions, ought pot to do this, it is, however, extraordinarily 

difficult to get even reasonable, well-informed people to agree 

on where the line should be drawn between these extremes. In 

recent years, industry plans to rehabilitate existing units 

rather than to build new ones has focused increased attention on 

this issue, and EPA enforcement policies and court decisions in 

WEPCO and related cases have not resolved important uncertainties 

regarding both the present location of the line and where it 

should be drawn in the future. 

In the abstract at least, the best way to deal with the 

incentive problem posed by the distinction between new and old 

sources is to shift from source-specific control requirements to 

area-wide emissions ceilings — but only where-this can be 

without compromising local, air quality values. EPA's bubbles and 

offsets programs are moves in this direction. The President 
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proposed a significant further move in this direction: 

amendments to the Clean Air Act to deal with sulfur dioxide 

emissions, which cause acid rain, by a system of tradable 

allowances coupled with a nationwide cap on those emissions. We 

are gratified that this approach has been retained in the Senate 

bill and, we understand, in the bill ordered to be reported by 

the House Energy and Commerce Committee. An important reason for 

the attractiveness of this approach is its ability to deal with 

the environmental problems posed by very old plants with high 

emissions in a fair and cost-effective manner. However, it must 

be recognized that the adoption of this flexible, cost-minimizing 

approach to acid rain control adds a new dimension to the WEPCO 

issue. 

That is, there is a tension between the longstanding sourceby-source approach to local air guality problems under the 

existing clean Air Act and the flexible approach to sulfur 

dioxide control at the regional and national level in the Senate 

and House committee bills. Under the latter approach, electric 

utilities are free to reduce emissions any way they can — by 

fuel-switching, scrubbing, changing dispatch orderings, 

encouraging conservation, or doing other things nobody has yet 

thought of. They are even free to increase emissions from some 

plants, as long as they remain within the limits of any 

applicable State Implementation Plan (SIP) and purchase 

allowances from others who have decreased emissions below levels 

they would otherwise be required to reach. 

The tension arises in part because cost minimization 

requires that utilities be free to reallocate their generation 

loads as part of their compliance strategies, but those 

reallocations may also reallocate emissions among generating 

units. But actions aimed at reducing sulfur dioxide emissions, 

such as a change in fuels or the installation of pollution 

control equipment, that require modifications to generating units 

may trigger new source review depending on the way in which 

"before" and "after" emissions used in applying the net increase 

test are calculated. The modification rule may be triggered even 

if the "after" emission level does not violate any air quality 

standards at the local level. 

WEPCO-Related Uncertainties 

The Clean Air Act specifies that modifications to an 

existing source that increase source-specific emissions of any 

regulated pollutants that affect local air quality must go 

through new source review — even if the modification decreases 

one or more other pollutants. New source review has two 

components. The Prevention of Significant Deterioration (PSD) 

program limits air quality deterioration from new or modified 

sources siting in already clean areas; and the non-attainment 
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provisions expedite attainment in areas that violate one or more 

of the National Ambient Air Quality Standards (NAAQS). 

"Modification" is defined in the Act as "any physical change 

in, or change in the method of operation of a stationary source 

which increases the amount of any air pollutant emitted by such 

source or which results in the emission of any air pollutant not 

previously emitted." By regulation, EPA has defined "routine 

maintenance, repair, and replacement" as not constituting a 

"modification." For NSPS purposes, changes that do not increase 

hourly emissions rates are not "modifications," while for PSD and 

NA purposes, changes that do not increase total annual emissions 

are not "modifications." 

The WEPCO case and related developments have focused 

attention on at least three sets of concerns regarding future EPA 

actions. First, there is concern that the "increase" test for 

PSD/NA review would trigger reviews for any physical or 

operational changes that would provide a direct economic 

incentive to increase capacity utilization, even if hourly 

emissions rates were reduced at the affected unit and total 

emissions of all pollutants were reduced once utilization changes 

at other electric utility units were taken into account. Second, 

there is uncertainty regarding when actual emissions will be 

used, when potential emissions will be used, and when differences 

between past actual emissions and future potential emissions will 

be used for triggering new source reviews. This is compounded by 

uncertainty regarding the importance of the WEPCO court's 

distinction between "like-kind replacements" and other changes. 

Third, considerable uncertainty attaches to EPA's future 

definitions of "routine maintenance" and of "actual" and 

"potential" emissions. 

Impediments to Market Penetration 

Senator Ford's letter of invitation requested testimony 

regarding "regulatory impediments to market penetration of 

repowering technologies and retrofit technologies, such as 

natural gas co-firing, stemming from EPA's so-called 'WEPCO' 

policy." The January 1989 report of the Innovative Control 

Technology Advisory Board to the Secretary of Energy identifies 

three categories of impediments: economic problems, referring to 

capital cost risk, and performance and operating cost risk; 

problems in PUC regulation, referring to electricity rate 

regulatory risk and the siting and approval process; and problems 

with environmental regulation, referring to environmental 

compliance risk, environmental permitting and regulatory delays, 

and regulatory inflexibility. The ICTAD study does not provide a 

basis for quantifying these different effects^ and I am even 

uncertain how any such study might be structured so as to 
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disentangle the multiple forces influencing the market 

penetration of these technologies. 

DOE* is, of course, in contact with utilities selected as 

host sites for CCT demonstrations. They have indicated that 

approximately one-half of these utilities have expressed moderate 

or strong concerns regarding the WEPCO policy. Only one project 

has cited WEPCO as a major factor in withdrawing from the 

demonstration program. One other project was significantly 

delayed by WEPCO concerns. To this purely anecdotal evidence, I 

can add a few qualitative observations. 

It must be recognized that because the regulatory 

distinction between new and old plants provides incentives to 

prolong the life of old plants, it tends to some extent to 

promote the adoption of these technologies. Because this 

distinction makes it necessary to decide that some changes in old 

plants make them into new plants, however, it makes some 

countervailing impediments to the penetration of these 

technologies necessary. My impression is that even before the 

WEPCO decision, the net effect was to slow the penetration of 

these technologies somewhat, but, as noted above, conclusive 

evidence is lacking. 

It is correspondingly more difficult to determine the 

incremental effect of "EPA's so-called 'WEPCO* policy" on the 

market penetration of these technologies. Certainly the 

installation of either repowering or retrofit technologies is 

likely to be considered "nonroutine" under that policy. And it 

is my impression that the uncertainties discussed above have led 

to fears that use of these technologies would lead to failure of 

the "increase" test for PSD/NA review, particularly if repowering 

or retrofitting would lead to increases in capacity utilization. 

It is important to note that such increases are likely to be 

common in this context: modifications that increase the 

efficiency of an old unit generally make it efficient and 

economical to increase utilization. The acid rain program will 

increase the frequency of this pattern, since changes to a unit 

that reduce its sulfur dioxide emissions rate or that are 

naturally accompanied by other changes that have this effect 

generally provide additional incentives to use that unit more 

intensively and to reduce generation elsewhere. 

It is thus hard to escape the conclusion that current law, 

as recently interpreted, has by itself had some discouraging 

effect on the market penetration of repowering and retrofit 

technologies. The available evidence does not allow us to 

determine whether that effect is large or small. And it is 

important to consider legislative proposals to reverse or 

eliminate that effect in light of recent administrative 

developments. 
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Recent Developments 

Senator Ford's letter of invitation requests a discussion ot 

"whether or not the WEPCO issue was addressed adequately in the i 

Clean Air Act Amendments as recently passed by the Senate, and as | 

currently pending in the House of Representatives." I would like | 

to begin my response with a broader discussion of EPA's 

application of the modification rule to the electric utility 

sector. 

The application of the modification rule to refurbishments 

clearly has very significant cost implications for the electric 

utility sector. For some facilities, exposure to the 

modification rule will significantly alter decisions regarding 

the timing of refurbishment or maintenance. In some cases, a 

decision may be made to opt for early retirement instead of a 

refurbishment plan. Many of the costs associated with the 

application of new source review to modifications at existing 

units are largely independent of the enactment of the new acid 

rain program -- a fact which does not make them any less 

important from the perspective of the utilities that are 

significantly affected by both programs. 

EPA believes that projects as extensive and nonroutine as 

the WEPCO Port Washington project will be the exception rather 

than the rule. To date, WEPCO is one of the only utility plants 

to trigger the modification provisions at existing units under 

new source review provisions. However, given the forecasted 

reliance on refurbishment in the electric utility sector it would 

be difficult to argue that no more WEPCOs are in store. 

It must be noted that compliance actions taken in response 

to the acid rain program could increase the number of existing 

facilities facing new source review as compared to a "business as 

usual" scenario. Consideration of this effect would probably 

dissuade utilities from engaging in some projects identified as 

part of the low cost compliance strategy that, for purposes of 

Administration cost estimates was based on an assumption that 

concerns over new source review had no role in compliance 

decisions. Conversely, compliance with the acid deposition 

control program could raise the costs of the new source review 

program if it increases the number of facilities subject to the 

modification rule. The interaction between these programs 

suggests the need to revisit the former while enacting the 

latter. 

As I understand it, the court decision in WEPCO gave EPA the 

authority to continue its recent enforcement policies (with the 

exception that the so-called "actual-to-potential" standard for 

PSD purposes was ruled invalid for at least some changes) , but 

did not compel it to do so. Thus EPA is free to return to the 
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enforcement policy (or, more precisely, the operational 

definition of "modification") that prevailed until the last few 

years. Moreover, much of the concern in this area stems from 

uncertainty regarding EPA's future policies, uncertainty that has 

led some to express fears that implausibly strict policies could 

be adopted. Without new legislation, administrative action by 

EPA can help to resolve this uncertainty. Such action is of 

course subject to the vagaries of judicial review and future 

administrative decisions. 

In the limited time that has elapsed since the WEPCO 

decision was handed down on January 19, EPA has moved to clarify 

its policies. EPA has sought to reduce uncertainties surrounding 

its position with respect to clean coal technology and other 

utility projects that could be affected by its NSPS and New 

Source Review policies. To date, EPA has issued several 

research-related "nonaction" assurances to temporary CCT projects 

to prevent new source reviews from being triggered when CCT 

equipment is removed at the end of the project. Such assurances 

are not, however, a panacea: they can leave recipients in 

technical violation of the Clean Air Act and subject to citizen 

suits. DOE reports that some projects have rejected the offer of 

a formal no-action assurance in order to maintain a lower profile 

regarding such technical violations. 

Most recently, EPA sent a letter to the Indiana Department 

of Environmental Management stating that EPA's interpretation of 

current rules would exempt the NIPSCO-Bailey CCT project from new 

source reguirements. This letter is intended to clarify EPA's 

position that if a source solely adds or enhances systems or 

devices whose primary functions are the reduction of air 

pollution, and that are determined (by the Administrator) to be 

not less environmentally beneficial than any emission control 

system or device it replaces, if any, such activities would not 

constitute a physical or operational change triggering new source 

review. The letter states that a forthcoming interpretative 

Ruling now under review at EPA would apply this policy to both 

temporary and permanent projects under the CCT program. While 

EPA will continue to move administratively, legislative action is 

also under consideration. 

Let me now, as you requested, turn to the Senate and House 

Committee bills. As passed, the Senate bill contains no broad or 

generic "WEPCO provision," but it does deal explicitly with 

commercial repowerina, with clean coal technology (CCT) 

demonstration projects, and with certain other projects. 

Section 409(d) exempts repowcred units qualifying for a 

compliance date extension from NSPS if there is no increase in 

hourly emissions of any pollutant regulated uuder the Clean Air 

Act; it does not deal with PSD or NA reviews. Section 415(e)(2) 

exempts temporary CCT demonstration projects from NSPS, PSD and 
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NA provisions. Section 415(e)(3) provides exemptions for 

permanent CCT demonstration projects and certain other projects 

from PSD and NA review under certain conditions but does not 

address.-NSPS review. Repowering projects are exempt from PSD and 

NA review if potential emissions do not increase. Retrofit 

projects (e.g., scrubbers), other pollution control projects, and 

gas conversion projects are exempt if there is no significant 

increase in actual emissions of any pollutant regulated under the 

Act^with a rebuttable presumption"that the project will not 

increase the unit's capacity factor. Some have suggested that 

this presumption may be easily rebutted by either the utility's 

own announced plans for compliance with the acid rain program or 

by consideration of the likely impact of a project on utility 

dispatch plans. (Fuel switching is characterized as a retrofit if 

physical changes are necessary to accommodate the new fuel.) 

Finally, let me comment briefly on the House Committee bill. 

I must note at the outset that definitive copies of the House 

bill were not available as this testimony was prepared so that 

there is some chance that I will mis-characterize its provisions 

and their likely effects. As 1 understand it, the House 

Committee bill now contains two broad, generic "WEPCO 

provisions": Sections 512(b) and 707. There is some tension 

between them, and I am told that their net impact is difficult to 

determine. 

Section 508(c) of the House bill exempts repowered units 

qualifying for a compliance date extension from NSPS review. 

Such units are also exempt from PSD and NA provisions if 

potential emissions after the change, assuming a 70 percent 

capacity factor, do not exceed actual emissions before the 

change. Since repowering often follows a period of low capacity 

utilization, we expect this exemption to apply only when 

significant investments in pollution control are made along with . 

repowering. Section 515(b) of the House bill exempts temporary 

CCT demonstration projects from NSPS, PSD, and NA provisions. 

Permanent CCT demonstration projects a^re exempted by Section 

515(c) from these same provisions only if those projects pass the 

same "current actual to potential emissions at 70 percent 

utilization" test that would be applied to commercial repowering 

projects. Since most power plants operate at less than 70 

percent utilization, this provision would only partly meet WEPCOrelated concerns at most permanent demonstration projects. 

Next steps 

All of this discussion points to two key questions. The 

first is whether the foregoing developments constitute an 

"adequate" response to the WEPCO issue. Adequacy is inevitably 

in the eye of the beholder, and the administrative and 

legislative developments outlined above do move in the right 
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direction, particularly as regards temporary CCT demonstration 

projects. Moreover, a good case can be made for reliance on 

Administrator Reilly's good sense to maintain a sound approach to 

administration of the new source review provisions of the 

nonattainment and Prevention of significant Deterioration 

programs in the future. 

Nonetheless, the Administration's position is that, 

particularly in light of the special burdens placed on the 

electric utility industry's coal fired boilers to control acid 

rain and the importance of flexibility to that program, a broad, 

clear, generic provision to deal with this issue should be 

included in the final Clean Air bill. Differences in 

interpretation among a number of court decisions, uncertainties 

as to how different decisions will be reconciled, the recent 

controversy surrounding the application of new source review to 

modifications of existing utility plants, the vagaries of 

judicial review of EPA actions, and the long term implications of 

this policy all point to the conclusion that a clear statement in 

law would constitute the most effective approach to resolving the 

new source review issue as it applies to electric utilities. 

The second question follows immediately: what sort of broad, 

generic legislation would the Administration recommend? Let me 

begin to address this question by making it clear that the 

Administration views the acid rain program is a supplement to, 

and not a substitute for, existing Clean Air protections. In 

particular, local air quality values, measured by attainment of 

the national ambient air quality standards or, in clean areas, by 

the prevention of any significant deterioration in air quality, 

should not be compromised. 

we do, however, recognize that the acid rain program will 

interact with previously existing programs in several important 

ways. Utilities will be reconfiguring their facilities and 

dispatch plans to achieve the ambitious sulfur dioxide reductions 

specified in the acid rain program. The steps taken to meet our 

ambitious sulfur dioxide reduction goals may greatly increase the 

number of existing facilities facing NSPS and/or PSD issues over 

the next 10 years, as compared to a "business as usual scenario". 

In addition, the acid rain control program imposes a national 

ceiling on sulfur dioxide emissions, and a national standard for 

technology on existing utility burners to reduce nitrogen oxide 

emissions. 

Taking account of the need to protect local air quality 

while at the same time facilitating the ambitious emissions 

reductions required under the acid rain programs, the 

Administration supports a broad, generic legislative resolution 

that has seven basic elements. — 
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(1) The distinction between routine and nonroutine physical 

and operational changes to electric utility steam electric 

generating units should be retained. As under current law, 

routine^repair and replacement as well as increased utilization 

of existing sources that is not accompanied by physical or 

operational changes would not be considered a "modification" and 

would thus not trigger new source review. For example, periodic 

replacement of coal-handling equipment, boiler tubes, and turbine 

blades is typically considered routine, while replacement of 

steam and generating turbines is not. To reduce uncertainty, EPA 

should be instructed to issue, within 18 months of the date of 

enactment, guidance for use by permitting authorities in 

determining criteria under which refurbishment projects would be 

considered routine or nonroutine. 

(2) Local air quality values should continue to be 

protected. Thus, in non-attainment areas, all nonroutine 

physical or operational changes, including pollution control 

projects, that result in a net increase in the maximum hourly 

emission rate of any pollutant would be subject to the review and 

permitting requirements of part D of Title I. In addition, part 

D review and permitting requirements would also be triggered by 

any nonroutine physical or operational change, including 

pollution control projects, that resulted in a net increase of 

pollutants in a non-attainment area that would exacerbate the 

exceedence of air quality standards. The net increase 

determination would be based on a comparison of before and after 

emissions across representative periods. 

PSD increments or visibility protection limitations 

promulgated pursuant to Part C must also be protected. Projects 

that did not increase the hourly emission rate of any pollutant 

used in establishing the applicable PSD baseline levels for the 

source (or, for those sources permitted after the establishment 

of the PSD program, the hourly emission rate specified in the PSD 

permitting process) would be considered to fall within short-term 

PSD limits without any further showing, since the short-term PSD 

baseline and/or increment consumption would have been calculated 

using that hourly rate. For similar reasons, a project that did 

not increase annual emissions of a source above the levels used 

in establishing the baseline or in determining increment 

consumption would be considered to meet annual PSD requirements 

for that source without any further showing. 

(3) As in the Senate and House Committee bills, temporary 

CCT proiects should be exempted from NSPS, PSD, and NA review 

provisions. Failure to maintain this exemption would raise 

significant and unwarranted obstacles to the development of this 

important technology. 

(4) In considering all other nonroutine changes, we would 

distinguish between "utility pollution control projects" and 
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other nonroutine changes and apply different tests to each. Any 

nonroutine physical change in, or change in the method of 

operation of, an existing steam electric utility generating unit 

for purposes of reducing emissions at that unit in order to 

comply with the acid rain title of the Clean Air Act should 

constrcuEs-u_ ior pre^ ~ purposes, a utility oollJLtiP_nL control 

proiects This would include, among other changes, gas cofiring. 

This basic intent standard should be applied to a set of 

contemporaneous changes, rather than separately to each. 

when a plant is idled to permit physical changes aimed at 

reduction of emissions of sulfur dioxide or nitrogen oxides, it 

is often economical to make other changes as well. To reduce 

uncertainty regarding the applicability of new source review 

requirements to such undertakings, we would specify that 

contemporaneous physical or operational changes shall be deemed 

to be part of the utility pollution control project if their 

value does not exceed 20 percent of the total project value. 

However, units seeking to take advantage of this provision would 

be required to meet the NOx reduction limits required by the 

applicable final rule, if any, issued under Section 407(b) as a 

part of the total project. 

(5) Utility pollution control projects would be evaluated in 

terms of their impacts on maximum hourly emission rates, 

following current policy toward NSPS reviews. Thus a utility 

pollution control project that does not increase maximum hourly 

emissions of any criteria air pollutant compared to a 

representative period prior to the project should not be deemed 

to be a major modification subject to the review and permitting 

requirements of part C of Title I. 

(6) Nonroutine physical or operational changes at existing 

steam electric generating units other than utility pollution 

control projects should not be deemed to be major modifications 

subject to the review and permitting requirements of part C and D 

of Title I unless they result in a net increase in annual 

emissions. States would be given the option to allow utilities 

to reduce costs by employing comparisons of actual emissions 

involving multiple sources. In cases in which a utility 

operating company plans to shift generation from other owned 

units to units affected by the nonroutine physical or operational, 

change and EPA is the permitting authority, the operating company 

may, for purposes of this section, elect to calculate its actual 

emissions on a statewide basis. Any State permitting authority 

may allow actual emissions in both representative periods to be 

(i) total operating company emissions within the State, (ii) with 

the agreement of the owners of all other steam electric 

generating units within the State, total emissions within the 

state, or (iii) with the agreement of any other States in which 

the operating company owns steam electric generating units, total 

operating company entissions. 
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The calculation of the change in emissions for all projects 

other than pollution control projects should be based on annual 

emissions during representative periods before and after the 

proposed modification. Because emissions increases in 

nonattainment areas are ruled out by the need to protect local 

air guality, the same type of comparison would apply to utility 

pollution control projects in those areas to any emissions of 

pollutants that would exacerbate the exceedence of air quality 

standards. 

(7) Finally, in cases where a new source review is 

triggered, we believe the Best Available Control Technology 

(BACT) standard for nitrogen oxides (NOx) for existing coal-fired 

boilers should be the standard set forth in section 407 in the 

Senate bill. That is, for physical or operational changes at an 

existing steam electric utility unit that require permits under 

Sections 165 or 173, BACT for NOx should be set at the levels 

required under section 407 where EPA is the permitting authority. 

This provision would provide guidance to State permitting 

authorities, without in any way preempting their authority to set 

more restrictive standards. 

* * * * 

Mr, Chairman and members of the Committee, thank you once 

again for giving me the opportunity to appear before you. I 

would be please to respond to any questions you might have.