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AUTHORIZING SUPPLEMENTAL ENVIRONMENTAL

PROJECTS TO INCENT REDUCTIONS OF DIESEL

EMISSIONS

HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY AND AIR QUALITY

OF THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

ON

H.R. 3754

FEBRUARY 13, 2008

Serial No. 110–89

(

Printed for the use of the Committee on Energy and Commerce

energycommerce.house.gov

COMMITTEE ON ENERGY AND COMMERCE

JOHN D. DINGELL, Michigan, Chairman

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, JR., New Jersey

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

DIANA DEGETTE, Colorado

Vice Chairman

LOIS CAPPS, California

MIKE DOYLE, Pennsylvania

JANE HARMAN, California

TOM ALLEN, Maine

JAN SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

CHARLES A. GONZALEZ, Texas

JAY INSLEE, Washington

TAMMY BALDWIN, Wisconsin

MIKE ROSS, Arkansas

DARLENE HOOLEY, Oregon

ANTHONY D. WEINER, New York

JIM MATHESON, Utah

G.K. BUTTERFIELD, North Carolina

CHARLIE MELANCON, Louisiana

JOHN BARROW, Georgia

BARON P. HILL, Indiana

JOE BARTON, Texas

Ranking Member

RALPH M. HALL, Texas

FRED UPTON, Michigan

CLIFF STEARNS, Florida

NATHAN DEAL, Georgia

ED WHITFIELD, Kentucky

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

ROY BLUNT, Missouri

VITO FOSSELLA, New York

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

JOSEPH R. PITTS, Pennsylvania

MARY BONO MACK, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

SUE WILKINS MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

PROFESSIONAL STAFF

DENNIS B. FITZGIBBONS, Chief of Staff

GREGG A. ROTHSCHILD, Chief Counsel

SHARON E. DAVIS, Chief Clerk

DAVID L. CAVICKE, Minority Staff Director

(II)

(III)

SUBCOMMITTEE ON ENERGY AND AIR QUALITY

RICK BOUCHER, Virginia, Chairman

G.K. BUTTERFIELD, North Carolina,

Vice Chairman

CHARLIE MELANCON, Louisiana

JOHN BARROW, Georgia

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

ALBERT R. WYNN, Maryland

MIKE DOYLE, Pennsylvania

JANE HARMAN, California

TOM ALLEN, Maine

CHARLES A. GONZALEZ, Texas

JAY INSLEE, Washington

TAMMY BALDWIN, Wisconsin

MIKE ROSS, Arkansas

DARLENE HOOLEY, Oregon

ANTHONY D. WEINER, New York

JIM MATHESON, Utah

JOHN D. DINGELL, Michigan (ex officio)

FRED UPTON, Michigan

Ranking Member

RALPH M. HALL, Texas

ED WHITFIELD, Kentucky

JOHN SHIMKUS, Illinois

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

ROY BLUNT, Missouri

STEVE BUYER, Indiana

MARY BONO MACK, California

GREG WALDEN, Oregon

MIKE ROGERS, Michigan

SUE WILKINS MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

MICHAEL C. BURGESS, Texas

JOE BARTON, Texas (ex officio)

(V)

C O N T E N T S

Page

H.R. 3754, to authorize the Administrator of the Environmental Protection

Agency to accept, as part of a settlement, diesel emission reduction Supplemental Environmental Projects, and for other purposes. ................................. 4

Hon. Rick Boucher, a Representative in Congress from the Commonwealth

of Virginia, opening statement ............................................................................ 1

Fred Upton, a Representative in Congress from the State of Michigan, opening statement ........................................................................................................ 8

WITNESSES

Hon. Jim Costa, a Representative in Congress from the State of California ..... 6

Prepared statement .......................................................................................... 8

Tim Regan, senior vice president, Corning Incorporated, Washington, DC ....... 11

Prepared statement .......................................................................................... 13

Conrad Schneider, advocacy director, Clean Air Task Force, Brunswick, ME ... 30

Prepared statement .......................................................................................... 32

(1)

H.R. 3754: AUTHORIZING SUPPLEMENTAL ENVIRONMENTAL PROJECTS TO INCENT REDUCTIONS OF DIESEL EMISSIONS

WEDNESDAY, FEBRUARY 13, 2008

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON ENERGY AND AIR QUALITY,

COMMITTEE ON ENERGY AND COMMERCE,

Washington, DC.

The subcommittee met, pursuant to call, at 1:27 p.m., in room

2322 of the Rayburn House Office Building, Hon. Rick Boucher

(chairman) presiding.

Members present: Representatives Barrow, Matheson, Upton and

Shimkus.

Staff present: Lorie Schmidt, Laura Vaught, Chris Treanor, Rachel Bleshman, Alex Haurek, Erin Bzymek, David McCarthy, Tom

Hassenboehler, and Garrett Golding.

OPENING STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH

OF VIRGINIA

Mr. BOUCHER. The subcommittee will come to order.

I want to begin this afternoon by welcoming to our subcommittee

the gentleman from Michigan, Mr. Upton, who is the new ranking

member of our subcommittee. It has been a privilege to work with

him over the years on a whole range of matters, telecommunications, energy issues, other things, and I am delighted that he is

now going to be ranking member of this subcommittee for the balance of this Congress, and I just want to welcome him here today.

Today the subcommittee will examine H.R. 3754, legislation introduced by our colleague, Jim Costa from California, which would

allow the continued use of Supplemental Environmental Project

funds for diesel retrofit projects. Identical legislation has been introduced by Senator Carper. That legislation last week was unanimously approved by the Senate Committee on the Environment

and Public Works.

Following this afternoon’s hearing, the legislation will be considered for markup in this subcommittee and I will announce at this

time that pursuant to a unanimous-consent request which will be

made shortly, we will be proceeding directly to markup of this bill

as soon as our hearing is concluded, and so Members who had

planned to come here at some other time, 2:30, perhaps, should

make their way to the subcommittee if they desire to take part in

the markup process.

2

Diesel emissions from on- and off-road vehicles and engines account for more than one-half of the nitrogen oxide and particulate

matter emissions from mobile sources across our country. The Environmental Protection Agency has issued regulations to limit

emissions from new diesel engines and vehicles, but the rules only

apply to the new vehicles and not to the heavy-duty diesel fleet

that is currently on America’s highways. Given the long life of

many diesel vehicles and engines, it is estimated that the existing

fleet of vehicles will not be entirely cycled out of operation until

about the year 2030.

In order to achieve emission reductions from the existing diesel

fleet, a number of actions have been taken to encourage the retrofit

of these vehicles with emission reduction technologies. For example, the EPA has administered the Clean School Bus Program for

a number of years, providing grants to school districts for the purpose of retrofitting diesel-powered school buses. As another example, as part of SAFETEA-LU, the Highway Transportation Reauthorization, Congress provided funding for diesel retrofits under

the Congestion Mitigation and Air Quality Program. Under the

Diesel Emissions Reduction Act, which was enacted as a part of the

Energy Policy Act of 2005, the expenditure of $200 million annually

over a 5-year period for grants and loans funding diesel retrofit

projects was authorized. And most recently, in December, the Congress passed, and the President signed into law, an appropriation

of $49.2 million for fiscal year 2008 in that year’s appropriations

legislation.

In addition to these initiatives administered by the EPA, private

entities have also often funded clean diesel programs as part of settlement agreements reached with the EPA in cases in which the

Agency had alleged that the private entity had violated the Clean

Air Act. These Supplemental Environmental Projects devoted to

diesel emission reductions have totaled approximately $45.4 million

from fiscal year 2001 through fiscal year 2006. Unfortunately, as

a result of the funding which was appropriated for the diesel emissions reduction program, the EPA has concluded that as a matter

of law, it is required to cease allowing Supplemental Environmental Projects for diesel retrofits as a part of settlement cases for

violations of the Clean Air Act. That decision was made based on

the conclusion by EPA that continuation of the Supplemental Environmental Projects for diesel retrofits violates the Miscellaneous

Receipts Act, which prohibits the augmentation of Agency budgets

that are appropriated by the Congress from other means. Given the

estimated 10 million heavy-duty diesel vehicles and engines in use

today, there is an extraordinary need to continue to fund diesel retrofit programs. The reduction of diesel emissions through retrofit

technologies is cost-effective, and it clearly will produce a needed

environmental benefit.

The legislation Mr. Costa has brought to us, H.R. 3754, would

ensure that all available means of funding for these valuable programs are allowed to continue. It would grant EPA specific authority to accept diesel emission reduction Supplemental Environment

Projects as part of the settlement of alleged violations of environmental laws, provided that these projects protect human health

and the environment, are related to the underlying violation and

3

do not constitute activities that the defendant otherwise would be

required legally to perform, and do not provide funds for the staff

of the Agency or contractors to carry out EPA’s internal operations.

I would note that this legislation has the support of more than

40 groups consisting of a broad range of health, environment, industry and non-governmental organizations. It reflects a commonsense approach to ensuring that we utilize all available and appropriate means to reduce diesel emissions, and I very much look forward to hearing from today’s witnesses regarding this consensus

measure.

The bill before us, as I indicated, was authored by our colleague,

Jim Costa from California, and I want to thank him for bringing

this matter before the subcommittee. In just a moment we will welcome his comments. Following Mr. Costa’s testimony and that of

our second panel of witnesses, I will announce again that the subcommittee will proceed directly to markup on this measure.

At this time I will include in the record a copy of the bill, H.R.

3754.

[The bill follows:]

4

5

6

Mr. BOUCHER. Jim, we are pleased to have you with us this

afternoon, and we thank you for bringing this matter before us. We

will be happy to hear your comments.

STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF CALIFORNIA

Mr. COSTA. Thank you very much, Mr. Chairman, for allowing

me to testify before the subcommittee on H.R. 3754.

This bill is an important measure, not just for my district but I

think it has national implications as it relates to air quality issues

throughout the country, and with the subcommittee’s efforts this

afternoon, I think we will continue to provide greater opportunities

to clean our air throughout the country. My cosponsors of this

measure, Representatives Cardoza, McNerney, Nunes, Matsui,

Kind, Bono Mack, Shimkus, Butterfield, Matheson and Hill, are

also to be thanked for their support for this important measure.

This measure would allow the Environmental Protection Agency,

if it becomes law, to continue its prior practice of accepting diesel

emission reduction projects as part of the environmental enforcement settlement agreements, as the chairman outlined in his opening statement.

For many years the Environmental Protection Agency has funded

diesel retrofit projects through Supplemental Environmental

Projects, otherwise known as SEPs, with corporations as part of

overall settlement agreements. From the fiscal year 2001 to the fiscal year 2006, the Environmental Protection Agency entered in diesel emission reduction SEPs that were valued at over $45 million.

This bill would maintain that separate private source of funding for

these projects and would continue these private-public partnerships

to improve air quality throughout the country. This is particularly

important to my district, which suffers from some of the worst air

quality issues in the country as a nonattainment area.

The map there that you have, of course you are familiar with

California. I know the chairman has been in the valley in the past.

This is the area we are talking about. It is over 250 miles in length

and 60 to 80 miles in width, and it is ringed by the Sierra Mountain range, the wonderful mountains of the Sierras that go up to

14,000 feet, and the Coast Range Mountains go to 4,000 to 6,000

feet, and the air quality therefore that comes in from the Bay area

across the Pacheco Pass and the emissions, both stationary and

mobile sources of emissions that we create, creates a very difficult

problem, as we continue to grow in managing our mobile and stationary sources of emission.

With me today, I have a group of folks who are very familiar

with all of that area. They are a group of both elected and private

citizens that are involved in commerce on the valley’s one voice

who come to Washington every year to advocate on behalf of the

valley on a host of issues. I would like them all to stand briefly.

I don’t go anywhere without my group.

Mr. UPTON. You are just lucky we didn’t impose the line-sitter

fee today.

Mr. COSTA. But we are happy that they are here this week working with their valley representatives, and I thought that since all

7

of them are involved in this issue in one fashion or another, they

would like to listen and be a part of the hearing today.

Anyway, as a result of the challenges that we face in the valley,

coupled with the fact that two major transportation corridors cut

through the valley, both Interstate 5 as well as Highway 99, that

not only provide important corridors for the valley but commerce

for the entire Nation as well, both north and south, contributes to

a large portion of our pollution issues. Over 60 percent of our emissions are mobile sources of emissions. Less than 40 percent are stationary. The reason this is important is because State and local

government have control to regulate and to provide solutions to the

stationary sources of emissions, and I think we have done an effective job through an air pollution control authority that I helped create when I was in the State legislature back in the late 1980’s.

However, over 60 percent of the emissions come from mobile

sources and that is the jurisdiction of the Federal Government and

therefore this legislation becomes more important, not just to the

rest of the country but to the valley as well that suffers from PM

emissions, as well as smog, that provide health hazards for heart

disease, lung cancer and asthma. The problem is considerable

throughout the State, but particularly in the valley as a nonattainment area. We experience 35 to 40 days in which we exceed the

Federal health standards for ground-level ozone and more than 100

days that we exceed the levels for State ozone standards.

Today more than 90 percent of the commercial trucks are powered, as the chairman noted, by diesel engines. Two-third of all the

farms and construction equipment run from diesel engines, and

this valley that I outlined to you earlier is among the richest agricultural regions in the entire country and therefore the world. We

produce half the Nation’s fruits and vegetables, and we lead in a

host of other specialty crops as well. So therefore when you look at

the combination of the challenges, this legislation becomes more

important. California has done a lot. We lead the Nation in clean

diesel technology and diesel retrofit projects that can make important contributions to improve air quality, not only in California but

throughout the country. In addition to retrofitting clean diesel technologies for diesel vehicles and equipment, we think this is one of

the more cost-effective strategies for teaching tangible and immediate results when we look at our long-term strategies to cleaning

up the air in this nonattainment area.

The Environmental Protection Agency estimates that these retrofit projects have a 13 to 1 benefit-to-cost ratio. Let me repeat that.

This project, these projects like this have a 13 to 1 benefit-to-cost

ratio, meaning that the $45 million invested during that 5-year period from fiscal year 2001 to 2006 translated into almost $600 million in health benefits. That results obviously in fewer asthma

cases, fewer cardiovascular cases and other health-related issues

that we have to deal with.

So in closing, Mr. Chairman, I want to thank you and the subcommittee members for inviting me to testify today. This bill is not

just cost-effective in allowing us to try to provide meaningful air

quality improvements in the valley but in the Nation as well, and

for all of those reasons I ask the subcommittee to support this effort.

8

[The prepared statement of Mr. Costa follows:]

PREPARED STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF CALIFORNIA

First, I want to thank Chairman Boucher for inviting me to testify today. This

is an important issue for my district, and for improving air quality throughout the

country, and I appreciate the opportunity to discuss this bill.

H.R. 3754 will allow the Environmental Protection Agency (EPA) to continue its

prior practice of accepting diesel emission reduction projects as part of environmental enforcement settlement agreements.

For many years, the EPA has funded diesel retrofit projects through Supplemental Environmental Projects (SEP’s) with corporations as part of settlement

agreements. From fiscal year 2001 to fiscal year 2006, EPA entered into diesel emission reduction SEP’s valued at $45.5 million. This bill will help maintain this separate, private source of funding for these projects.

In recent years, there has been a new era in clean diesel technology, which includes three critical parts. First, a cleaner burning, lower sulfur diesel; second,

lower-emitting diesel engines; and third, new emissions control technology.

Retrofitting clean diesel technologies for diesel vehicles and equipment is one of

the most cost-effective strategies for achieving tangible and immediate air quality

benefits. Areas of the country struggling to meet clean air standards can greatly

benefit from diesel retrofits to help improve air quality.

Retrofits can be done on older vehicles or equipment. The EPA estimates these

retrofit projects have a 13-to-1 benefit-to-cost ratio, meaning that the $45.5 million

invested from fiscal year 2001 to 2006 translates into almost $600 million in health

benefits—from fewer asthma cases to fewer cardiopulmonary deaths.

Right now, more than 90 percent of commercial trucks are powered by diesel engines, and two-thirds of all farm and construction equipment run from diesel engines.

Diesel retrofitting for these engines can make a significant contribution to improving air quality—in particular, by reducing particulate matter emissions, which are

linked to health hazards such as heart disease and lung cancer.

In closing, I want thank you, Chairman Boucher, and the members of the subcommittee, for inviting me to testify. This bill will allow cost-effective, meaningful

air quality improvement to continue, and I hope that the subcommittee will give its

support.

Mr. BOUCHER. Thank you very much, Mr. Costa. It is a pleasure

to have you with us today, and you are quite right, I have on a

number of occasions visited your part of California. It is indeed a

gorgeous place, and I am impressed with the number of your constituents who have journeyed here to show their support for this

measure. The only time I get that many of my constituents coming

here is when they are angry about something. You are to be congratulated for having them here for a positive purpose.

Mr. COSTA. I promised them I would take them out this evening.

Mr. BOUCHER. And they are to be congratulated for being here

to show support for your efforts.

I want to recognize Mr. Upton. I intended to recognize him for

a statement earlier and neglected to do that, so at this time let me

call on him for whatever statement he decides to make.

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. UPTON. I thank the chairman, and I appreciate Mr. Costa’s

work on this issue and the way that he has really begun on this

from a bipartisan way from the get-go, and I know Mr. Shimkus

and others are cosponsors and certainly I want to be part of the

process to make sure that we have smooth sailing today and I suggested to my chairman that we move right away to the markup.

9

We have had lots of extra votes today and we don’t need to have

this put off because of action on the House floor, so I would like

to see this happen very quickly.

This is an issue that we can all rally around, reducing diesel

emissions in an immediate cost-effective manner that eliminates

the need for new infrastructure requirements. This legislation will

address EPA’s legal interpretation that SEP money may not be

used for diesel retrofits. Today we will take a legislative step forward to authorize the EPA to use these funds under the Diesel

Emissions Reduction Act for reducing diesel emissions through retrofits. This is an issue that is supported by a broad coalition of environmental, science-based, public health, industry, State and local

government groups.

One of the groups that is in fact going to testify on the second

panel is Corning, and at the invitation of our former colleague,

Amo Houghton, I visited Corning’s headquarters in Corning, NY,

back in 2006. I was particularly impressed by the commitment that

Corning has made toward advancing environmental technology.

The company invests over 10 percent of its revenue in R&D. I visited the research lab that day to see the fruits of their investments.

The advances being made to reduce pollution from diesel engines

in fact are very significant and it is yet another example of how

we can effectively address our environmental problems through

technology. I know that they are in support of this legislation.

I look forward to being part of the positive process of moving this

legislation forward, and at this point I will yield back my time to

my chairman. Thank you.

Mr. BOUCHER. Thank you, Mr. Upton.

Let me ask other members if they care to make opening statements. The gentleman from Georgia, Mr. Barrow.

Mr. BARROW. No, I will waive my opening statement, Mr. Chairman.

Mr. BOUCHER. That is fine.

The gentleman from Illinois, Mr. Shimkus.

Mr. SHIMKUS. Thank you, Mr. Chairman. I would just like to

thank Jim for bringing the legislation, and I am proud to be a cosponsor.

We are moving into an era where diesel is not a dirty word anymore. We all remember, especially in communities, diesel buses

and the big fumes but with new technology, research and development, clean diesel, the fact that diesel is a primary fuel for automobiles in Europe is bringing a new venue, and we focus in this

committee on energy security. Diesel is going to have a big role in

that, and the fact that we can also tie this to this Supplemental

Environmental Projects, it is a win-win all around, and I am just

pleased to be a cosponsor.

Thank you for your work, and I yield back my time.

Mr. BOUCHER. Thank you, Mr. Shimkus.

The gentleman from Utah, Mr. Matheson.

Mr. MATHESON. I waive.

Mr. BOUCHER. Thank you, Mr. Matheson.

Mr. Costa, I just have one question of you. I note that the legislation requires that for a project to be accepted under its terms, the

project itself must be related to the underlying violation, and I am

10

wondering if you can give us a sense of how that will apply, and

I realize that was also a part of Senator Carper’s legislation in the

Senate, but do you have any examples for us of what would be in

bounds and out of bounds, given that requirement?

Mr. COSTA. The committee has noted that in fact we need to ensure that we are flexible and it is my intent to ensure that we

bring that about so as it relates to this legislation, I want to make

sure that the conditions in which the EPA is working with private

parties on settlement agreements that the enabling legislation will

allow for that flexibility under those circumstances when we think

it is deemed appropriate. But I think the sense of Congress clearly

needs to be determined prior to us moving. So on the markup I

would like to get a sense of the subcommittee’s own experiences in

terms of how we can best ensure that the individual examples that

we have in our districts that we know of in which parties have had

to negotiate with the Environmental Protection Agency on these

matters that we include what is fitting and appropriate to address

the air quality issues because whether it is in the San Joaquin Valley, in the area that I represent, or whether it is in other parts of

the country where you have nonattainment issues, I think it is critical that we are able to leverage these dollars and to put them to

the use of trying to provide for these Supplemental Environmental

Projects that will do the most good.

Mr. BOUCHER. OK. Thank you. And you don’t see this requirement as unduly restricting the acceptance of projects by EPA?

Mr. COSTA. It has not come to my attention that it is. If you have

some examples or other members do, I would clearly want to look

at them to ensure that we address that issue.

Mr. BOUCHER. OK. That is great. Thank you.

Mr. Upton, any questions?

Mr. UPTON. I really don’t have any questions. I just want to say

thanks again for introducing the legislation and working in a bipartisan manner. Thank you.

Mr. BOUCHER. Mr. Barrow.

Mr. BARROW. Mr. Chairman, you don’t know how long I have

waited to get this witness on the stand where I could submit him

to a thorough and sifting cross-examination. But unfortunately,

there is nothing I can add by way of either eloquence or comprehension to his statement, so I just want to thank him for sponsoring this legislation and I will yield the balance of my time.

Mr. COSTA. And I want to thank my classmate for that wonderful

response.

Mr. BOUCHER. Thank you, Mr. Barrow.

Mr. Shimkus?

Mr. SHIMKUS. No questions.

Mr. BOUCHER. Mr. Matheson.

Mr. MATHESON. No questions.

Mr. BOUCHER. Mr. Costa, with the subcommittee’s thanks, we excuse you and we will treat your legislation very tenderly.

Mr. COSTA. Thank you very much.

Mr. BOUCHER. Thank you very much.

Let me welcome now our second panel of witnesses, the senior

vice president of Corning Incorporated, Mr. Tim Regan, speaking

from an industrial perspective, and also Mr. Conrad Schneider,

11

who is advocacy director of the Clean Air Task Force, an organization comprised of numerous environmental and health associations.

We welcome both of you here today, and thank you for taking time

to share your views with the subcommittee. Without objection, your

prepared written statements will be made a part of the record. We

would welcome your oral summaries and hope that you would keep

those summaries to approximately 5 minutes.

Mr. Regan, since I mentioned your name first, we will begin with

you.

STATEMENT OF TIM REGAN, SENIOR VICE PRESIDENT,

CORNING INCORPORATED, WASHINGTON, DC

Mr. REGAN. Thank you, Mr. Chairman, Mr. Upton, members of

the committee. It is a pleasure to be here today. We are here to

endorse the bill because we think it really is necessary to clear up

a conflict that we have been the many acts of Congress that many

of you have been involved with, as a matter of fact, and this interpretation of the Miscellaneous Receipts Act by EPA.

I am here as president of the Emissions Control Technology Association. We are the guys that invented the material that sits inside a catalytic converter and creates a passive chemical reaction

which breaks up the various pollutants in the exhaust. This technology has had a phenomenal impact to remove 1.5 billion tons of

pollution from the air we breathe over the last 35 years, and this

is the successor technology. This is what we call a diesel particulate filter. This is a device that will filter out very, very fine particulate matter about 1 to 2 percent of the width of your human hair

and it will withstand thermal shocks and will last about 435,000

miles in a diesel truck.

This here is an example of what we take out of the air. This is

the amount of fine particulate matter that is generated out of a

school bus over its operation for 500 miles. So I think you can see

that this is very significant. This one device here which looks like

simply a piece of ceramic, a rather large piece, cost Corning $850

million to invest and to invest to manufacture, so it is a rather significant achievement.

The challenge, as has been said already before, is to see that this

technology is now crafted onto the 11 million vehicles and engines

that are out there today. It is on all new vehicles that have been

on the road since January 1, 2007, as required equipment, but

there are 22 times more vehicles and engines in the fleet today

than are put on every year. So we have a rather significant source

of pollution on these existing vehicles, and the goal here has been

and Congress’s goal has been to help get those vehicles retrofitted

by providing the equipment owners with the financial resources to

make those kinds of investments.

Mr. Boucher reviewed with you all the things that have been

done by Congress over the last 5 years and they are indeed very

significant. Mr. Shimkus has been very much involved in moving

ahead with the appropriation that the chairman mentioned, $49.2

million last year, to retrofit the vehicles under the Diesel Emissions Reduction Act.

The problem we have is—and of course, EPA has supplemented

all that with these Supplemental Environmental Projects which

12

have provided another source of funding for this kind of activity.

In fact, 37 percent of the diesel retrofits that were diesel particulate filters that were deployed from 2003 to 2006 were funded with

SEPs, so it is a significant source. The problem we have is just not

enough funds, and that is sort of exemplified by the EPA’s school

bus program. Seventy-five percent of the grants don’t get funded.

The applications don’t get funded. And in the case of Virginia, for

example, the chairman’s State, there have been 11 grants requested and only one was funded. And so it demonstrates vividly

the need for more resources. The problem we have now is that EPA

is about to make a determination, in fact, has already made a determination or about to implement it that they can no longer fund

diesel retrofits with these SEPs because of a potential violation relative to the Miscellaneous Receipts Act.

Now, this is a real conflict, and we would argue in this particular

instance a statutory exclusion would be appropriate. Statutory exclusions to the Miscellaneous Receipts Act have been adopted before and it has been ruled that where there is such an exclusion,

SEPs can continue. This bill will effectively provide such an exclusion.

We would say there are four compelling reasons to do this. One,

the existing vehicles are a major source of pollution on the road

today. Number 2, there are very sensitive populations that are

being affected by this pollution, for example, the 25 million students that are riding school buses every year that are affected by

it. Third, Congress has obviously acted over and over again to provide such funding and the demand far exceeds the supply. And finally, this is not going to have any direct impact on the budget. So

taken together, because of these factors, we were able to generate

for you a letter from 43 different groups from business, NGOs,

trade associations in support of the bill. It passed unanimously out

of the Environment and Public Works Committee last week on the

Senate side, and we can really see no compelling public policy reason not to proceed with this.

Thank you very much.

[The prepared statement of Mr. Regan follows:]

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Mr. BOUCHER. Thank you, Mr. Regan.

Mr. Schneider, we would be happy to hear from you.

STATEMENT OF CONRAD SCHNEIDER, ADVOCACY DIRECTOR,

CLEAN AIR TASK FORCE, BRUNSWICK, ME

Mr. SCHNEIDER. Thank you, Mr. Chairman, Representative

Upton and other members of the committee. My name is Conrad

Schneider and I am the advocacy director of the Clean Air Task

Force, an environmental advocacy group based in Boston but working nationwide, and we work with a national partnership to reduce

diesel emissions, a coalition of hundreds of public health, environmental and other organizations and we support H.R. 3754 to allow

the continued use of diesel retrofits in SEPs.

As part of the recent budget bill, Congress for the first time appropriated money under the Diesel Emission Reduction Act, approximately $50 million, it has been said. That will help to pay for

the retrofits that we so desperately need for public health reasons.

That is the good news. The bad news is that EPA now has decided

that these no longer qualify to be used as part of settlements under

these Supplemental Environmental Projects, and that is because

they say that it would violate the Miscellaneous Receipts Act. We

ask for your support for this to create a clarification that EPA may

continue to use that money.

Why do we care about this as an environmental organization?

We care about it because we are engaged in a comprehensive campaign to try to clean up diesel pollution, which is a brew of toxins

and pollution particles that can be considered the number one environmental health problem that threats the United States today.

Eleven million diesel engines and buses and trucks, construction

equipment and so forth produce 1,000 tons of toxic particulate matter every year, and according to a study that was performed by

EPA’s benefits consultant using EPA-approved methodology, that

pollution results in approximately 21,000 premature deaths each

year plus tens of thousands of asthma attacks and heart attacks.

Nationally, diesel exhaust poses a cancer risk that is more than

eight times higher than all of the air toxics that EPA tracks combined. While EPA’s new engine rules set the standards for emissions from new diesel engines, EPA estimates there are about 11

million engines currently in operation that will take decades to

fully replace them with new, cleaner engines.

This retrofit technology, as Mr. Regan mentioned, is proven and

cost-effective and I would direct your attention both to the screen

and toward I believe a piece of paper in front of you. We did some

emissions testing of a vehicle, a box truck, before it had a diesel

particulate filter on it, and you can see the emissions there on the

left, and on the right-hand side of that chart, you can see that once

it had a diesel particulate filter, those emissions were reduced by

up to 90 percent. That is the effective part of the cost-effective that

we are talking about here.

These SEP monies have been a very important funding stream

for diesel projects, providing tens of millions of dollars. In fact, just

this past December, EPA entered into a settlement with American

Electric Power containing a Federal SEP, designating as much as

$21 million for diesel retrofits. More of concern, there are settleVerDate 11-SEP-98 10:57 Apr 04, 2008 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 Q:\DOCS\110-89 SCOM1 PsN: SCOM1
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ments that are currently under consideration by the Agency that

may exclude these very cost-effective measures because of EPA’s

current opinion on this. We feel that this position unnecessarily

hampers the progress we could be making and we applaud Representative Costa and his cosponsors for addressing this problem

by introducing this legislation to correct it.

The Miscellaneous Receipts Act was really passed in order to ensure that government agencies didn’t bypass your appropriations

authority and keep monies that otherwise would inure to their

agency budgets rather than turning them back over to the Federal

Treasury. There is no legislative history in that act to suggest that

it was meant to disturb private settlement agreements, particularly

where the money as in here in SEPs is really not directed toward

the Agency or to the Treasury. It is directed to really third parties

who administer these Supplemental Environmental Projects. So

there is no loss to either the Agency budget or to the Federal

Treasury by creating this exclusion as we described it.

We feel that rather than engage in a protracted argument with

the Agency about their interpretation, a statutory clarification is in

order if it can be enacted quickly, primarily because EPA is in the

midst of negotiating many of these settlements and they won’t be

able to have these type of cost-effective projects if Congress fails to

act, and it won’t mean that additional dollars won’t flow to the

treasury. It will mean that probably the Supplemental Environmental Projects that are included won’t be as effective as the ones

that use diesel.

So in conclusion, I just would also echo that this wouldn’t be the

first time that Congress created an exclusion to the Miscellaneous

Receipts Act. It has happened many times before and I detailed

those in my written testimony. And unlike the current bill, even

those exemptions would have allowed the executive agencies to

hold onto the money. That is not what we are asking here. We are

asking that they continue to go to cost-effective pollution control.

So thank you very much. I will be happy to answer any questions, and we just urge passage of the bill as soon as practicable.

Thank you.

[The prepared statement of Mr. Schneider follows:]

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Mr. BOUCHER. Thank you very much, Mr. Schneider and Mr.

Regan. I think with your testimony and the clear understanding

that we have of this matter, there are few questions that we need

to propound.

I want to ask Mr. Regan though what the cost of installing one

of those devices on an existing vehicle is.

Mr. REGAN. Somewhere within a range of $5,500 to $8,500. It is

a major undertaking.

Mr. BOUCHER. It is a considerable expense.

Mr. REGAN. Yes, it is. It involves basically a systems change. It

has to be engineered to the particular vehicle that it is on, and

there has to be some systematic connection between this device and

the engine.

Mr. BOUCHER. And apart from these supplemental projects, how

much retrofitting is taking place at the present time just because

owners of these vehicles would like to emit less particulate matter,

NOx, et cetera?

Mr. REGAN. Without funding, virtually none.

Mr. BOUCHER. Virtually none. So this measure is essential in

order to make sure that that happens on a broad basis?

Mr. REGAN. Absolutely.

Mr. BOUCHER. OK. Let me ask Mr. Upton if he has any questions

of these witnesses.

Mr. UPTON. Just briefly.

Mr. Regan, did the Clean School Bus Fund, did that appropriate

any money to help with school buses with retrofits, or not?

Mr. REGAN. Yes. The Clean School Bus USA Program was developed by EPA and has been funded by the Congress since fiscal year

2003.

Mr. UPTON. Since 2003?

Mr. REGAN. Since 2003. But the amount of funding for that

whole period of time is only something on the range of $25 million.

So the Agency has not been able to even keep up with the grants.

In the period from fiscal year 2003 to 2005, they had 292 requests

for grants and they were only able to fund 72. So 75 percent of the

grant applications went unfunded.

Mr. UPTON. And Mr. Schneider, do you have any record of what

kind of reductions have occurred so far with the settlement payments?

Mr. SCHNEIDER. In terms of tonnage reduced as a result of the

money? I don’t have that number but we could calculate that number. Because the settlement agreements—the information we have

about them that the Agency keeps on that is really in dollars as

opposed to tons of pollution reduced, but there is a calculation that

we could do to get you that number.

Mr. UPTON. And are there any other ways to look at retrofits,

any other funding sources that are out there, or not?

Mr. REGAN. This is a nationwide movement. States are moving

ahead doing this as well as the Federal Government so we have got

the DERA program underway. We have got the money coming out

of the SAFETEA-LU. The SAFETEA-LU made funding diesel retrofits a priority under the CMAQ Program. There is potentially a lot

of money. And then you have got States that are doing their own

thing. California has had a program in placed called the Carl

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Moyer Program funding hundreds of millions of dollars for many

years. Texas has a program, a TEFRA program to reduce emissions

in Texas. And then New York and North Carolina recently put a

law in place, and we have one in Massachusetts, in Connecticut,

in Rhode Island, in Ohio, in Oregon. So States are stepping up because they know that this is a very cost-effective way to reduce

emissions and meet their nonattainment goal.

Mr. SCHNEIDER. Most of the States have nonattainment areas,

and because they know this is one of the most effective things they

can do, it is money well spent, and that also means that with respect to these environmental settlements, it is money well spent.

Mr. UPTON. It does make a lot of sense.

Mr. Chairman, I have no further questions.

Mr. BOUCHER. Thank you, Mr. Upton.

Mr. Barrow.

Mr. BARROW. Thank you, Mr. Chairman.

Mr. Regan, I want to commend you and your outfit for what you

all are doing for this huge research and development bullet that

you all bit down on in order to be able to make this technology as

available as you have. For the benefit of those who are here and

don’t realize, I represent Washington and surrounding counties in

Georgia, the kaolin capital of the world, and you folks employ 700

families in order to try and bring this technology to the marketplace, trying to harvest the kaolin in that part of the world, and

I commend you for what you are doing. One question I have, I represent the kaolin capital of the world but I also represent the

birddog capital of the world. Over in Burke County, they are working with a sorry boy that doesn’t want to try. It is a little bit like

going bird hunting and having to tote the dog. Well, working with

an Agency that doesn’t want to do right can sometimes be like

going bird hunting and having to tote the dog. And the question

I have is, I respect an agency that has been doing something for

a long period of time and all of a sudden they decide they haven’t

got the authority to do what they have been doing, and all of a sudden they adopt a principled stance. Well, we can fix that principled

objection with a simple change in the law. We are going to do that.

My question is, is there any reluctance or resistance on the part

of the EPA to take the authority this bill would give them that is

the next roadblock we have to encounter, or will we really get some

response from them? Because giving them the authority that they

ought to have, that they have had or exercised in the past is good

but now they don’t want to use it.

So my question to you is, is this really the main hang-up or is

there more to it than that?

Mr. REGAN. That is a question that EPA will have to answer

itself but I think that EPA’s lawyers have made a very cautious interpretation because the Miscellaneous Receipts Act basically says

that you can’t take funds for activities and use them to fund activities which have been mandated by Congress. Congress has the constitutional authority to appropriate funds and tell you what to do.

So when you get funds, you got to put it back into the treasury.

Well, they never really touched these funds, and so——

Mr. BARROW. They did in the past, didn’t they?

Mr. REGAN. No, they never really touched any of this money.

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Mr. BARROW. What I mean to say is, they funded SEPs in the

past.

Mr. REGAN. Right. So what they did is, they said now you have

done the DERA, you have appropriated money to do a task.

Mr. BARROW. I think that is unintended consequences that actually strips their implied authority to use SEPs in this way. Well,

we are going to fix that.

Mr. REGAN. Exactly. So our expectation is, based on our informal

conversations with the Agency, is they really would like to continue

to do this.

Mr. BARROW. Excellent. That is what I wanted to hear. Thank

you very much.

Mr. BOUCHER. Thank you very much, Mr. Barrow.

Mr. Matheson?

Mr. MATHESON. No questions.

Mr. BOUCHER. Thank you, Mr. Matheson.

At this time I am pleased to recognize Mr. Upton for a unanimous-consent request.

Mr. UPTON. Thank you, Mr. Chairman. I would ask unanimous

consent that the bill H.R. 3754 be considered immediately by this

subcommittee for markup and reporting to the full committee.

Mr. BOUCHER. Without objection, the subcommittee will now considered H.R. 3754, and before we do that, I will excuse this panel

of witnesses and thank both of you very much for your outstanding

testimony here. We appreciate your joining us this afternoon.

[Whereupon, at 2:05 p.m., the subcommittee proceeded to other

business.]

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