Dover, Ohio has a population of about 13,000 with more than 900 commercial and industrial entities calling Dover home. As you would expect, our goal is to provide reliable, affordable power to our consumers including helping our local businesses remain viable and attracting new development. One of the primary attractions that Dover holds is our status as a municipal electric community. The City of Dover also owns and operates a 14-megawatt coal-fired power plant (which is co-fired with natural gas), a 16-megawatt gas turbine, a 2.5-megawatt diesel generator and we recently installed six 1.8-megawatt diesel generators in a joint effort with AMP-Ohio and other municipal electric communities. Over the last nine years as mayor, and as a prior member of city council, I have had considerable experience (and frustration) in working with the EPA on the regulatory treatment of our small electric utility.
In addition to our local generation, we purchase power through and are a member of American Municipal Power-Ohio (AMP-Ohio), the nonprofit wholesale power supplier and services provider for 78 municipal electric systems in Ohio, three in Pennsylvania and two in West Virginia. AMP-Ohio's largest generating resource is the Gorsuch Station, a 213-megawatt coal-fired facility located in Marietta, Ohio.
As a small-town mayor, local municipal utility operator of a small coal-fired power plant, participant in AMP-Ohio and president of the Ohio Municipal Electric Association (OMEA) Board of Directors, I want to share with you my observations on the Clean Air Act its successes and failures as well as my views on how to fix the problems that communities like mine are experiencing.
I shared many of these thoughts in testimony before your Subcommittee on April 29, 1997, when I testified about concerns regarding EPA's then-proposed ozone and particulate matter standards.
Overview of the Clean Air Act
As the members of this Subcommittee are aware, the Clean Air Act was passed in 1970 with the goal of achieving and maintaining healthy air quality in the United States. The Act established a process for the U.S. Environmental Protection Agency (EPA) to develop ambient standards for various "criteria" pollutants, with the standards set to protect human health and welfare. Once these standards were developed, an evaluation process was employed by EPA and the States to determine which areas where not in compliance. The States were to develop enforceable State Implementation Plans (SIPs) for achieving and maintaining these National Ambient Air Quality Standards (NAAQS), including the establishment of emissions limits for those existing major and minor air pollution sources thought to be contributing to a non-attainment problem. EPA then set emissions limits or New Source Performance Standards (NSPS) for new major air pollution sources (and major rebuilds).
A key feature of the Clean Air Act deserves to be spotlighted Congress did not direct EPA to regulate existing sources (e.g., pre-1970). Rather, EPA set the ambient air standards and left to the States the responsibility for meeting those standards. This division of responsibility between EPA and the States was carefully crafted (and maintained through subsequent amendments to the Act), and has been repeatedly threatened by recent EPA actions.
The 1977 amendments to the Clean Air Act created an advanced set of regulation for new major sources of pollution and established a three-part test for new sources first, it cannot cause an exceedance of the ambient air standards; second, it must meet the applicable Prevention of Significant Deterioration (PSD) standard; and, third, it must utilize the Best Available Control Technology (BACT).
As you know, among other provisions, the 1990 Clean Air Act Amendments created the innovative "cap and trade" acid rain program.
The Successes
Under the Clean Air Act, significant improvement has been made in air quality. The benefits to public health, agriculture, building and "enjoyment of life" are considerable. As a local official, I must emphasize that these accomplishments were realized largely through the efforts of state and local governments through innovative development and implementation of the SIP program. These improvements must continue. There are still areas of non-attainment in our country. Furthermore, we need to provide for continued economic expansion without degrading our air quality and associated public health and welfare. However, these further improvements must continue to be driven at the state and local level not dictated by a central bureaucracy and must feature a balanced cost/benefit approach.
The second crowning success of the Clean Air Act is the innovative sulfur dioxide (SO2) trading program. This "market approach" has been highly successful overall, with the cost of compliance being far less than what would have resulted from the traditional "command and control" approach. The successful SO2 approach to emission reductions should be extended to other pollutants.
The Failures
Regrettably, my list of Clean Air Act failures is much longer than my list of successes. Following is a list of key areas in which I believe Congress and the EPA must seek improvement:
1. Minimizing impacts on small business and local government
Under the Unfunded Mandates Act, the Small Business Regulatory Enforcement Fairness Act (SBREFA) and similar provisions, EPA and other federal agencies are to consider and respond to the specific and differing needs of small business and local government. Regrettably, all too often the needs of these interests are ignored, with EPA imposing a "cookie cutter" approach where the costs of compliance are as high for a small facility or operator as they are for facilities many times larger. EPA's selection of particulate matter (PM2.5) and 8-hour ozone standards are prime examples of actions taken without regard to the impacts on small business and local government.
Moreover, the laws intended to provide special recognition for the unique needs of small business and local government often have little impact, because EPA circumvents their responsibility under these provisions by delegating final action to the States who do not operate under the same provisions and procedural requirements.
2. Fostering participation and market-based solutions
The Title IV acid rain program exempts units under 25 MW. The Act encourages their participation in the market-based SO2 reductions by allowing these units to "opt in" to the program with the assumption that the units would be shut down and the operator could use the "allowances" to secure an alternative power supply. Regrettably, despite the diligent efforts of AMP-Ohio, OMEA and others, EPA has not constructed the "opt in" program in a workable manner. They have failed to foster participation in the market-based program by small generators and have consequently penalized us and failed to pursue a cost-effective means of bringing numerous small emitters under the Act's acid rain program.
3. Exceeding agency authority
In adopting and amending the Clean Air Act, Congress did not give EPA the authority to set emissions limits for "grandfathered" plants. Yet EPA has taken numerous approaches to target these plants and attempt to force their retirement. It is worth noting that EPA has frequently overstepped its congressionally-granted authority, earning the dubious distinction of losing the majority of appeals of its rules to the D.C. Circuit.
However, even if eventually overturned by the Court, EPA's actions have a serious chilling effect on our industry and economy. For instance, as a result of EPA's unilateral reinterpretation of the NSPS and NSR rules, utility routine maintenance and plant improvements have virtually come to a halt, thereby threatening the reliability of the nation's electric system. EPA also appears to be attempting to exceed its authority through back-door imposition of carbon dioxide (CO2) limits even though EPA lacks authority to regulate CO2 and Congress has expressly taken action to preclude back-door implementation of the Kyoto Treaty. Under a 1996 proposed rule to revise the NSR program, EPA is attempting to get coal-burning utilities to "voluntarily" agree to a suite of emissions reductions including CO2 to obtain relief from what undoubtedly will be a stringent new NSR rule.
4. Usurping State authority
The Act creates a careful partnership between EPA and the States. In general, EPA sets the broad standard, and the States have the flexibility to implement various means of achieving that standard. However, EPA has increasingly undermined the authority of the States by seeking to impose plant-specific limits on "grandfathered" plants, overturning State BACT determinations, and indiscriminate use of its veto power over State Title V permitting decisions.
5. Departing from "technological feasibility" and "cost effectiveness"
Since its inception, Congress expected that technological feasibility and cost effectiveness would be taken into account in establishing NSPS and the determination of BACT. Historically, EPA and the States have generally balanced pollution control technology and cost, and the required BACT removal efficiency standards have improved impressively. However, in 1998, EPA issued revised nitrogen oxide (NOx) standards for utility and industrial boilers, basing the standard on a single, very expensive control system regardless of boiler or fuel type. In addition, several southeastern states have recently had their BACT determinations overturned by EPA.
6. Failure to employ a multimedia approach
As the recent experience with methyl butyl tertiary ether (MTBE) standards demonstrates, EPA's failure to take a "holistic" approach to pollution prevention and regulation leads to deployment of technologies to reduce one form of pollutant that merely causes or contributes to another source problem. By taking a multimedia (e.g., air, water, waste) approach, the agency will maximize the environmental benefits of its actions and facility managers will avoid conflicting requirements and have the flexibility needed to meet permit limitations in a manner best suited to a given facility.
7. Disregard for the energy needs of the country.
I understand that EPA's mission is not to provide for the energy sufficiency of the country. However, recent regulatory and enforcement actions by the agency suggest an agenda to prevent future development of coal-fired generation and reduction or elimination of existing coal-fired generation. The economy is growing at a rapid clip, and the past few summers have demonstrated the strains that occur from inadequate supply. The majority of new facilities that are being built are gas-fired and built to serve "peak" demand. The lack of base-load plants and the over-dependence on a single fuel source should be of concern to all of us.
Recommendations
Mr. Chairman, members of the Subcommittee, I have shared with you numerous concerns. I want to also share with you my views on how to help fix these deficiencies. In some cases, statutory revisions are necessary; in other cases, I believe that the EPA needs simply to be told it has "crossed the line".
I offer the following suggestions:
Ø Revise SBREFA by creating an independent advisory commission to develop binding regulations for SBREFA implementation and to prevent EPA efforts to circumvent SBREFA by delegating actions to the States. In addition, the "direct/indirect" standards for review should be revised so that the EPA can not unfairly determine that the impacted community is too small to warrant SBREFA treatment.
Ø Expand the use of market-based mechanisms to achieve pollution reduction objectives and adopt language to fix the acid rain "opt in" program.
Ø Continue rigorous oversight such as this hearing to prevent EPA from over-reaching its statutory authority and take action (such as the Byrd-Hagel resolution and Knollenberg funding limitation) when necessary to curb agency efforts to create new regulations and programs without congressional authorization.
Ø Reaffirm the role of the States in implementing key elements of the Act.
Ø Explicitly amend the Act to require the use of scientifically supported standards and technologies and impose cost-effectiveness tests on agency actions.
Ø Adopt multimedia pollution management in order to encourage innovation, flexibility and cost-effectiveness.
Ø Ensure that the country maintains a diverse fuel supply.
Conclusion
The Clean Air Act has worked well in many of the areas envisioned by Congress, including developing a mechanism for setting and attaining ambient air standards. When standards are based on scientific consensus and designed to address human health and welfare, the system works. Most criticisms of the Clean Air Act are actually criticisms of EPA's efforts to use the Act to achieve objectives and impose restrictions beyond congressional intent.