Four thoughts come immediately to mind: The first is "Thank God, at last." The Act is certainly showing its age. With the benefit of a decade of hindsight, several fundamental flaws are evident in its structure, approaches, and scientific presumptions including, for example, that it generally ignores the existence of wind. I think EPA has done a reasonably good job of implementing the Act; though I do wish the Agency had come back to you sooner to fix some of its problems.
Second, great good has nevertheless resulted from the Act, so we must undertake a "mend it, don't end it" reauthorization. Many new ideas were tried out in the 1990 Amendments, and some like cap and trade programs have proven extraordinarily successful. Others, however, have proven counterproductive and must be revised.
Third, this reauthorization is far too important to public health, functioning ecosystems, and our nation's global competitiveness for it to devolve into partisan political or regional bickering. I am a witness to the power of collaboration; I have seen first-hand the progress that can be made when dedicated leaders like your Chairman, Republican Senator Bob Smith, and New Hampshire's Democratic Governor, Jeanne Shaheen, work together. There is broad agreement among states that the Act should employ much less prescriptive approaches, provide greater opportunity to innovate responsibly and accountably, and incorporate new scientific developments much more readily. There is also broad agreement that progress in reducing air pollutant emissions, particularly from our transportation and electric power sectors, and the technology development that rises to meet this challenge, must continue.
Finally, thorough, independent analysis of state air programs has determined that the federal government provides only enough resources to fund about half of what it asks states to do. And contrary to popular belief, Title V's "polluter-pays" provisions do not fill this gap; Title V added more work than it funded. Furthermore, the responsible, accountable regulatory flexibility that states should have and which our companies deserve is much more costly than traditional one-size-fits-all, command-and-control regulation. Simply put, Congress has to get serious about funding clean air, or something has to give.
Air issues are among the most complex and difficult of all environmental matters, so much so that it is impossible to go into any real detail in a single hearing, let alone five minutes. Nevertheless, having lived and breathed these issues for the last six years, I can and do confidently represent to you that there are better ways to conduct air policy; better for the environment, better for the regulated community, and less costly to administer. I only have time for a few examples here today:
· New Source Review (NSR) and Prevention of Significant Deterioration (PSD) While states generally support requirements that new facilities install state-of-the-art pollution controls, the Act "lets the excellent get in the way of the good" by encouraging sources to keep their old equipment running instead of installing new cleaner units. We can fix this.
· Integrated, Multi-Pollutant Approaches Traditional pollutant-by-pollutant approaches maximize control costs, public policy battles (statutory and regulatory), and associated litigation to the detriment of public health, environmental quality, and economic well-being. Substantial opportunities exist for effective control measures that address multiple pollutants simultaneously with declining caps over time. We can fix this, and indeed, your committee has already begun constructive deliberation regarding an integrated, four-pollutant approach for the electric power sector.
· Encouraging Innovation and Superior Environmental Performance By its very prescriptiveness, the Act makes it difficult if not impossible for EPA to approve innovative new approaches to pollution reduction. We can fix this by providing EPA with the authority and responsibility to approve non-standard solutions that provide equal or better environmental benefits.
· Better Ways to Control Pollution Requiring like categories of sources to pay for emissions, and then distributing the revenues back to those sources based on production, would encourage both lower emissions and higher productivity, with many attendant economic and regulatory benefits (e.g., continuous improvement, more flexibility, lower overhead, faster technology development, greater use of market forces, etc.). Similarly, if we internalized environmental costs (e.g., "externalities") into the price of goods and services in the first place, then market forces rather than regulation would drive environmental improvement. We can fix this by adopting better approaches to regulating sources.
· Transported Pollution Too much time and money has been wasted both at the federal and state levels arguing about the nature and extent of transported pollution. We should adopt a new definition of states' responsibility concerning transported pollution, perhaps by requiring that the air leaving a state be as clean or cleaner than the air entering the state. We can fix this.
· "Zero-Threshold" Pollutants Science is increasingly showing that several pollutants, including ground level ozone and fine particulate matter, are "zero-threshold pollutants." Unlike the traditional "dose-response" approach, there is no level of exposure that is "safe." As a result, traditional approaches to setting and meeting National Ambient Air Quality Standards need revision, and costs should probably factor more greatly into this process. We can fix this.
· "Fairest" or "Least Cost?" The application of consistent emission standards across the nation is widely regarded as a fair approach. However, due to widely varying emission densities across the country, this approach does not represent a least cost solution. Since both approaches have merit, there is a public policy quandary here. This is a decision that is appropriately resolved by Congress, however, so it's one we can fix too.
· NOx vs. VOCs There are two precursors to ground level ozone, nitrogen oxides (NOx) and volatile organic compounds (VOCs). The Clean Air Act focuses overwhelmingly and very prescriptively on VOCs. Yet science has shown that NOx is by far the greater cause of ozone, in part because most VOCs are emitted from trees. We can fix this too.
· Best Available Control Technologies (BACT) and Lowest Achievable Emission Rate (LAER) New sources are required to install these controls, but nobody can tell them promptly and reliably what the "best technologies" are. We can fix this; indeed, your committee has already begun to do so by proposing adequate funding for a BACT/LAER information clearinghouse.
· Section 126 Section 126 of the Act appropriately allows downwind jurisdictions impacted by emissions from upwind jurisdictions to petition EPA for relief. Unfortunately, however, this relief can now only be sought from stationary sources, even if mobile sources (vehicles) are the predominant source of emissions upwind. We can easily fix this.
· Designation of Nonattainment Areas EPA has typically designated nonattainment areas based on "Metropolitan Statistical Areas" derived from the census. Notably absent is any consideration of the science regarding what emissions from what areas triggered what monitors into nonattainment. EPA has begun to take steps to revise this practice, but how it does so remains to be seen. We can fix this.
· Combined Heat and Power Our current regulatory structure often makes it easier to construct two units (boilers, turbines, etc.) one each for heat and power than it does to construct just one capable of meeting both needs. We can fix this.
· Plantwide Applicability Limits (PALs) PALs regulate sources under a facility-wide emission cap instead of on a device-by-device basis. They can allow sources much greater operational flexibility and reduce regulatory overhead, but PALs can be tricky to enforce. We can fix this.
· "Once In, Always In" EPA currently regulates some sources even if the devices that led them to be regulated in the first place no longer exist. We can fix this.
· Energy Efficiency Finally and most importantly, there is widespread recognition that the production and use of energy in all sectors is the primary cause of most significant air pollution problems: ozone, mercury deposition, ongoing acid rain, toxic air pollution, and climate change. Further, small sources and even individuals account for more and more of this pollution. We need to do everything we can to encourage and assist states in making more efficient use of energy. In doing so, we will also reap the benefits of faster technological development and greater international economic competitiveness. I think we can address this too.
I want you to know that you have New Hampshire's commitment, as well as my personal commitment, to assist you in any way we can in the daunting but doable task of defining, describing, developing, and drafting the ways to fix these problems.
Thank you again for the opportunity to share these views. I look forward to responding to any questions you may have.
Kenneth A. Colburn Director, Air Resources Division NH Department of Environmental Services 6 Hazen Drive Concord, NH 03302-0095 (603) 271-1380 (603) 271-1381 Fax
Regarding Reauthorization of the Clean Air Act before the
Senate Committee on Environment and Public Works Subcommittee on Clean Air, Wetlands, Private Property, & Nuclear Safety
September 27, 2000
ISSUES RELATING TO UTILITIES
New Source Review (NSR) and Prevention of Significant Deterioration (PSD)
- States strongly support installation of good controls when new construction or major modifications are undertaken. - Thus, states conceptually support aggressive requirements for "Best Available Control Technology (BACT)" under PSD and "Lowest Achievable Emission Rate (LAER)" under NSR. However,
- PROBLEM: "Letting excellent get in the way of the good." - Substantial environmental benefits (e.g., 90-95% emission reductions) can often be secured economically, but diminishing returns requirements for "excellence" (e.g., 95-99% emission reductions) often render projects uneconomic.
Trigen example. - SOLUTION: EPA must develop yardsticks or thresholds that provide sources greater timeliness and certainty (e.g., project cost as a percent of book value). Alternatively, develop yardsticks for exemptible environmental improvements (e.g., a project will be exempt from NSR if facility emissions per MWH will drop by 50%). Even relatively arbitrary yardsticks would be better than the current gridlock. - CAUTION: Capacity expansions with marginal environmental benefits cannot be exempted from NSR because they: Delay or prevent the much greater multi-pollutant environmental benefits that result from capital stock turnover. Discourage adoption and thus development of new, more competitive technologies. Better alternative: an Integrated Approach to Utility Emissions (see below).
- PROBLEM: "What is BACT/LAER anyway?"
- EPA has never adequately funded the federal BACT/LAER clearinghouse. - Precisely when is a technology commercially "available"?
Example: NH and CT appeals. - BACT sometimes conflicts with LAER in areas to which both apply. - Shunting the BACT/LAER discovery and substantiation burden onto sources threatens projects through unnecessary delay and increased regulatory risk, retarding capital stock turnover. - SOLUTION: Provide sufficient support for the federal BACT/LAER Clearinghouse. Also, require EPA to define default BACT/LAER technologies to streamline project approvals. - CAUTION: Beware of the "technology vs. results cycle," wherein sources vacillate between "EPA should just specify the technology necessary to comply" and "EPA should just specify the result and let sources pick the technologies." Best of both worlds: EPA should specify default compliant technologies, but sources can choose to "do as good or better." (See "Encouraging Innovation and Superior Environmental Performance" below.)
Multi-Pollutant Strategies (Co-Benefits)
- Pollutant-by-pollutant approaches maximize control costs, public policy battles (statutory and regulatory), and associated litigation to the detriment of public health, environmental quality, and economic well-being. - Substantial opportunities exist for effective control measures that address several pollutants simultaneously.
See modeling results from STAPPA/ALAPCO's "Reducing Greenhouse Gases and Air Pollution: A Menu of Harmonized Options" (attached).
NOTE: The proposed federal "Clean Air Partnership Fund (CAPF)" originated out this state-based effort. Not surprisingly, then, the states strongly support implementation of a CAPF. - Nobody plans future coal capacity, so don't wed national policy to the past.
Exit strategy: A reasonably gentle but firm glide path for coal interests.
An Integrated Approach to Utility Emissions
- A current opportunity for compromise on NSR/PSD through the use of multi-pollutant strategies. - Sources would commit to substantial reductions in at least NOx, SO2, CO2 (to Rio levels), and Hg (mercury) in a specified timeframe. - Reduction commitments would inoculate sources against NSR/PSD. - Emissions budgets, if used, should be output-based (i.e., emissions per MWH); our interest is in the societal goods produced, not in rewarding production inefficiencies. - Approach should include requirements for disclosure of the environmental characteristics of the power generated (i.e., "Environmental Disclosure"). - Would eliminate current expensive, time-consuming litigation and attendant uncertainty. - Would avoid the patchwork quilt of state-specific regulations that will otherwise result. - Would enable a competitive power marketplace sooner and with greater certainty. - Would provide lower overall societal cost through multi-pollutant reduction strategies.
Control Cost Concerns
- Doomsday scenarios typically cite aggregate costs. - Must ask: How much per KWH? How will ratepayer bills be impacted? - If adding 2-5 mills to 5› electric rates (i.e., 5.2 5.5› per KWH) for NOx controls will be economically disastrous, why isn't the Northeast economy with rates 2-3 times as high as this (i.e., 10-18› per KWH) a basket case? Instead, it is leading the nation economically.
System Reliability Concerns
- Doomsday scenarios premised on multiple, simultaneous, low-probability worst-case scenarios occurring. - Still only produces a manageable "cause for concern" in summer 2002. - Applicable maxim: "Ask an engineer about doing something and you'll get nothing but problems; tell an engineer to do something and you'll get nothing but solutions."
ADDITIONAL CLEAN AIR ACT (CAA) PROBLEMS
Oxides of Nitrogen (NOx) vs. Volatile Organic Compounds (VOCs)
- Both are "precursors" (i.e., essential ingredients) in forming ozone smog. - However, most VOCs are biogenic (i.e., are emitted naturally; oaks emit isoprene, pines emit terpene, etc.). - And NOx reductions have been clearly demonstrated to be more effective at lowering ozone concentrations (e.g., OTAG modeling). - Based presumably on mid-1980s science, the CAA imposes far more specific and onerous requirements for VOCs, the pollutant that is least effective, much more expensive to control, and whose primary source is natural emissions. - Why does EPA persist in implementing these ineffective statutory requirements (e.g., VOC RACT, I/M) when cheaper and more effective results can be had through NOx reductions? NH I/M example. "It's the law" is no excuse. EPA has a moral responsibility to seek revision to the law when science shows the need to do so.
Setting Health-Based Standards (NAAQS) for Zero-Threshold Pollutants
- Old health premise regarding air pollution was "Dose-Response" i.e., once below a certain level pollutant concentrations did not impact public health. - New understanding is "Zero-Threshold" i.e., pollutant reduction improves public health all the way down to zero. - Impact on the form of the NAAQS: With a zero-threshold pollutant, overall exposure is the best measure of health impact, so NAAQS should reflect the longest feasible averaging time (ideally, a seasonal or annual average). The 8-hour form is better than 1-hour, but still a weak reflection of public health impact. - Impact on setting the level of NAAQS: Must consider costs; what other yardstick is there? (Must include public health and environmental costs as well, however!)
A Public Policy Quandary: Broadly Applicable Regulations or Least Cost Solutions? - EPA's 22-State NOx SIP Call creates a "level playing field" by applying the same emission limit to the entire region even for sources in areas that have less impact on air quality.
"Fair," understandable, and easier to apply and enforce. - Analytical techniques and technologies exist today that can reasonably accurately quantify and apportion culpability. Result: Geographically targeted and pro-rated control measures produce least cost solutions. Emissions trading would still be workable through the use of "discounting" or "trading ratios."
Section 126 (Downwind Areas Petition EPA for Relief from Upwind Stationary Source Emissions)
- Currently Section 126 of the CAA only provides for relief from stationary sources such as power plants and large industrial facilities. - Power plants comprise only about 25-33% of NOx emissions (though controlling these sources is one of the most cost-effective options). - Section 126 should be modified to provide relief from non-stationary source pollution as well (e.g., heavy duty diesel engines, area sources, etc.).
Designation of Nonattainment Areas Under the 8-Hour Ozone NAAQS
- In determining nonattainment areas, EPA typically applies designations across census-based Consolidated Metropolitan Statistical Areas (CMSAs). - Instead, science would suggest approaching designations on the basis of an "Area of Violation (AOV)" with an accompanying "Area of Influence (AOI)." - Use of CMSAs can lead to ridiculous and ineffective regulatory outcomes.
Example: NH vis-…-vis Cape Cod.
Combined Heat and Power (CHP)
- Also known as "Cogeneration." - Current regulations, together with economies of scale, disadvantage CHP, resulting in higher emissions since two boilers (i.e., one for electric power and one for the heating load) are otherwise required. Trigen Example. CHP is often a victim of "Letting excellent get in the way of the good."
Plantwide Applicability Limits (PALs)
- Concept: Adopt a more stringent limit on overall plantwide emissions of a given pollutant in exchange for operational flexibility under this cap. - Better for sources, better for regulators (e.g., permit writers), but possibly harder to enforce. - EPA has simply stopped approving permits that incorporate PALs. - "Just Say No" is not an optimal or acceptable solution; if EPA won't implement PALs, the CAA should be modified to explicitly authorize them.
Once In, Always In
- EPA's "Reasonably Achievable Control Technology (RACT)" regulations (and perhaps others) require "Once in, always in" provisions. - Even if a source has permanently eliminated emissions sources, it is still regulated and subject to record keeping and reporting requirements. - The CAA should be modified to explicitly exempt such sources from regulation.
IDEAS FOR A "SECOND GENERATION" OF ENVIRONMENTAL REGULATION
The Industry Average Performance System (IAPS)
- Until environmental "externalities" are internalized, public policy battles (statutory and regulatory), litigation, and control costs will be maximized to the detriment of public health, environmental quality, and economic well-being. - If environmental externalities were internalized, then economics rather than regulation would drive environmental improvement (less or no litigation; fewer or no "command and control" approaches, fewer or no Congressional or regulatory battles, etc.) - Requiring like categories of sources to pay for emissions, and then distributing the revenues back to those sources based on production, would encourage both lower emissions and higher productivity, with many attendant economic and regulatory benefits. (See IAPS attachment.) - Not a tax; not a revenue source for government.
Encouraging Innovation and Superior Environmental Performance
- EPA either cites the CAA to dissuade those interested in pursuing environmental innovation, or struggles to find a legal basis for allowing them to do so. - EPA also fears litigation from third parties if it allows innovative initiatives, let alone if they fail to deliver on their anticipated promise. - Result: Minimal environmental innovation, risk-taking, and potentially productive experimentation. - SOLUTION: Provide EPA with explicit, appropriate authorization to allow and encourage non-traditional innovation and experimentation. (See the National Academy of Public Administration's report on this topic.) Further, require EPA to approve non-standard regulatory approaches that it determines are reasonably likely to equal or exceed the environmental performance of the controlling traditional regulatory approach(es).
A New Definition for States' Responsibility Concerning Transported Pollution
- Debates about causality and "significant contribution" could be easily avoided simply by requiring that each state have a reasonable opportunity to achieve attainment. - In many cases at present, the air pollution entering a state would cause nonattainment of NAAQS even if all of the state's own emissions were eliminated. - SOLUTION: Require that the air leaving a state must be as clean or cleaner than that entering the same state. Hold downwind states harmless from federal sanctions until this outcome is achieved. - NOTE: Such a requirement would eliminate the need for Section 126 provisions in the CAA.
Kenneth A. Colburn Director, Air Resources Division NH Department of Environmental Services 6 Hazen Drive Concord, NH 03302-0095 (603) 271-1380 (603) 271-1381 Fax