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Congressional Testimony
May 17, 2000, Wednesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 7640 words
HEADLINE:
TESTIMONY May 17, 2000 DAVID G. WOOD ASSOCIATE DIRECTOR ENVIRONMENT PROTECTION
ISSUES SENATE environment & public works clean air,
wetlands, private property, and nuclear safety CLEAN AIR ACT REAUTHORIZATION
BODY:
May 17, 2000 Testimony GAO/GAO-T-RCED-00-183
Statement of David G. Wood, Associate Director Environmental Protection Issues
Resources, Community, and Economic Development Division Before the Subcommittee
on Clean Air, Wetlands, Private Property, and Nuclear Safety, Mr. Chairman and
Members of the Subcommittee: I am pleased to be here today to discuss issues
concerning the implementation of the Clean Air Act, a comprehensive federal law
that regulates air emissions from stationary and mobile sources. The act was
last reauthorized and amended by the Congress in 1990. Those
amendments-particularly the first six titles of the law-require the
Environmental Protection Agency (EPA) to take a number of actions such as
issuing new regulations and guidance documents, undertaking research studies,
and preparing reports for the Congress. The amendments established statutory
deadlines for many of these actions. As you requested, my testimony today will
focus on EPA's implementation of the Clean Air Act Amendments and on sources
regulated by multiple provisions of the act. Specifically, I will discuss (1)
the status of EPA!s implementation of requirements established by the 1990
amendments; (2) the views from stakeholders-state governments, local programs,
industries that are regulated under the act, and environmental advocacy
groups-on the issues that have either helped or hindered the implementation of
the 1990 amendments; (3) examples of emission sources subject to regulation
under more than one Clean Air Act program; and (4) the status of EPA's efforts
to facilitate compliance for such sources. This testimony is based on our April
report' and ongoing work for this Subcommittee that relates to emission sources
affected by multiple provisions of the act. We will issue a report on the latter
work this month. In summary, we found the following: As of February 2000, EPA
had completed the majority of the 538 required actions it identified under the
1990 amendments' first six titles. However, not all the requirements were met
within the statutory deadlines: EPA missed. the statutory deadlines for 198 of
the 247 requirements with deadlines by February 2000, and will likely miss 62 of
the 108 future statutory requirements with deadlines (primarily requirements to
establish new standards for certain hazardous air pollutants). EPA officials
attributed the agency's inability to meet its statutory deadlines to (1) its
increased emphasis on obtaining stakeholders' review and involvement during the
development of regulations, which added to the time needed to issue regulations,
and (2)technical, policy, or legal issues that were not fully -anticipated in
1990. Stakeholders provided a variety of views on the issues that have helped or
hindered the implementation of the six titles. A number of stakeholders
expressed the view that flexibility in the amendments has helped their
implementation; for example, the trading system for sulfur
dioxide emissions, under which utilities that reduce their emissions below
required levels may sell their allowances to other utilities to help them meet
their requirements. This allows electric utilities to achieve required
sulfur dioxide emissions reductions at a lower cost. Also,
stakeholders cited the specificity of goals and requirements as helpful; for
example, the title dealing with stratospheric ozone depletion listed the
affected chemicals and the dates for their eventual phase- out. Stakeholders
cited inadequate resources at the state and local levels to effectively
implement and enforce the amendments as a factor that has hindered
implementation. The large industrial complexes operated by the petrochemical and
refinery, chemical manufacturing, and electric power industries are prime
examples of sources regulated under multiple Clean Air Act programs. For
example, the emissions of nitrogen oxides from electric power plants are
controlled under six programs, including those for controlling acid rain,
ground4evel ozone, and fine particles and programs for improving visibility. In
addition, petrochemical refineries are regulated under five different titles of
the 1990 amendments, and individual chemical plants may be regulated by as many
as seven different statutorily authorized programs. Additional state and local
requirements may also apply to the same industrial emissions sources. EPA has
embarked on a number of initiatives to reduce the regulatory workload and
facilitate compliance for such facilities. These include two industry-specific
efforts and other generic approaches, such as establishing total plant-wide
emissions limits, to introduce more flexibility in the overall regulatory rule
making and permitting processes. EPA's two industry-specific efforts are the
Consolidated Air Regulation and the Clean Air Power Initiative. The Consolidated
Air Regulation is intended to incorporate all federal air regulations that
affect the synthetic organic chemical manufacturing industry into a single set
of regulations. This proposed regulation, currently pending approval by the
Office of Management and Budget, would reduce the regulatory burden and enhance
enforceability by having one set of emissions controls and monitoring, record
keeping, and reporting requirements. The Clean Air Power Initiative is an effort
to develop new regulatory approaches for controlling nitrogen oxide and
sulfur dioxide from electric power plants. According to EPA and
industry officials, efforts on this initiative have been suspended because of
disagreement within the industry as well as within EPA over the appropriate
level for proposed sulfur dioxide and nitrogen oxide
reductions. Background The Clean Air Act, enacted in 1963 and substantially
overhauled in 1970, is a comprehensive federal law that regulates air emissions
from stationary and mobile sources. This law authorizes EPA to, among other
things, establish National Ambient Air Quality Standards to protect public
health and welfare. In large part, the 1990 amendments to the Clean Air Act were
intended to meet unaddressed or insufficiently addressed problems. The major
provisions of the amendments are contained in the first six titles. -Title I of
the 1990 amendments establishes a more comprehensive approach for states to
implement, maintain, and enforce the National Ambient Air Quality Standards.
-TitleII contains provisions for controlling air pollution from motor vehicles,
engines, and their fuel. -Title HI establishes new requirements to reduce the
emissions of hazardous air pollutants (often called 'air toxics") that are known
or suspected of causing cancer or other serious health effects. Title IV
establishes the acid deposition control program to reduce the adverse effects of
acid rain by reducing annual emissions of pollutants, which are precursors of
acid rain.2 2Acid deposition is caused mainly by coal that is burned in large
electrical utility plants in the Midwest. When the coal is burned, large amounts
of sulfur dioxide are released, It is then carried by winds
toward the East Coast of the United States and Canada, where the acids become
part of rain, snow, or fog in the area or remain in gas or particle form and
settle onto land as dry deposition. Failing to earth, acid rain can damage plant
and animal life as well as lakes and streams. - Title V establishes a national
permit program to ensure compliance with all applicable requirements of the act
and to enhance EPA's and the states' ability to enforce the act. Title V
requires the states to establish permit programs- - Title VI establishes
provisions to protect the stratospheric ozone layer. Each of these titles
requires EPA to, among other things, promulgate regulations, publish final
guidance for state air pollution control programs, and issue various research
reports to the Congress. Most of the requirements involve promulgating
regulations to implement the act. Once the regulations are promulgated, it is
generally up to state and local air pollution control agencies to enforce their
provisions, with oversight from EPA. Status of EPA's Implementation of the Clean
Air Act Amendments of 1990 While EPA has completed the majority of the actions
required by the 1990 amendments, it has not done so in accordance with all
statutory deadlines! EPA missed the statutory deadlines for 198 of the 247
requirements with deadlines by February 2000. Furthermore, according to EPA
officials, it is unlikely that the agency will meet the deadline for 62 of the
108 remaining statutory requirements (primarily requirements to establish new
standards for certain hazardous air pollutants). Specifically, the officials do
not believe they will meet the November 15, 2000, deadline for establishing
standards for hazardous air pollutants. EPA officials cited several factors
explaining why the agency has missed deadlines including: (1) its increased
emphasis on obtaining stakeholders' review and involvement during regulatory
development, which added to the time needed to issue regulations; (2) the
setting of priorities to manage the work load resulting from the 1990
amendments, which created a tremendous number of new responsibilities for EPA;
(3) complications associated with the startup and effective implementation of
new programs (e.g., operating permits and air toxics), which posed technical,
policy, or legal issues that were not fully anticipated in 1990; (4) competing
demands caused by the work load associated with EPA's response to lawsuits
challenging some of its rules; and (5) the emergence of new scientific
information and other factors that led to major Clean Air Act activities that
did not arise from the 1990 amendments, such as the effort to reduce the
regional transport of ozone pollution throughout the East. It is important to
recognize that in terms of their ultimate impact on the environment, all
requirements are not equal. For example, a requirement that EPA issue a rule on
monitoring a limited number of stationary sources in a single industry has
neither the complexity nor the impact of a provision that requires dozens of
states to submit implementation plans to attain a major national ambient air
quality standard. The latter is inherently more difficult to accomplish and
often requires states and local agencies to pass legislation and issue, adopt,
and implement rules. Certain programs are implemented largely by states and
require extensive, continuing interaction between EPA and the nation's
governors, state legislators, county officials, state and local regulators, and
others on numerous complex requirements while others are implemented solely by
EPA. Views of Key Stakeholders on Major Issues Affecting Implementation of the
Clean Air Act Amendments of 1990 The stakeholders we interviewed from
environmental groups, industrial groups, and state and local governments stated
that the Clean Air Act Amendments of 1990 have had positive effects on the
environment by reducing pollutant emissions. However, the stakeholders had
differing views on the issues that either helped or hindered the effective
implementation of specific provisions. Extent of Flexibility in Meeting
Reguirements One of the overarching issues affecting implementation cited by
stakeholders is the tension between allowing states and sources of pollution the
flexibility to develop their own approaches for achieving air quality
improvements and using a more prescriptive "command and control" approach. For
example, the title IV acid rain program, as designed by the Congress and
implemented by EPA, attempted to strike a balance between traditional command
and control principles-which specify where and how emissions reductions must be
achieved-and the flexibility of market-based measures for reducing air
pollution. Specifically, this program uses a market-based approach to allow
electric utilities to trade sulfur dioxide allowances with
other utilities. Utilities that reduce their emissions below the required level
can sell their extra allowances to other utilities to help them meet their
requirements. Stakeholders from environmental and industrial groups and state
and local governments told us that the flexibility provided by the acid rain
program's sulfur dioxide emissions allowance-trading system
enabled the required emissions reductions to be achieved at a lower cost than
that estimated at the time the amendments were passed. Other stakeholders
pointed out that because the legislation specified the reduction goals and
identified the power plants that were required to achieve these reductions, the
program was administratively more efficient to implement. According to some
stakeholders, adopting more market-based approaches like the acid rain program
is a particularly effective way of achieving greater flexibility. In their view,
this program has shown that an aggregate "cap" on emissions, which permits
individual sources to trade allowances, can lead to lower-cost emissions
reductions than those under the traditional command and control approach used in
other programs. EPA officials agreed that the "cap and trade' approach can
reduce emissions at a lower cost (and, in some cases, reduced pollution levels
as well than those under a traditional command and control approach. However,
they pointed out that to work effectively, cap and trade programs traditionally
require a well-known population of sources with extremely well-characterized
emissions and control costs. According to EPA, in some circumstances, other
forms of economic incentive programs and approaches (e.g., open market trading
and emission fee programs) can be added to the existing regulatory structure and
can provide incentives for reductions from other source categories when
accountability is adequate. For this reason, EPA has issued rules and guidance
that allow states and other stakeholders to consider a variety of economic
incentive approaches to both reduce costs and gain improved environmental
quality. Specificity of Reguirements Several stakeholders identified the
specificity in the amendments or in implementing regulations as an important
factor affecting implementation. For example, according to a state and local
government organization, specifying the amount of sulfur
dioxide emissions reductions to be achieved and the specific power plants where
the reductions were to come from made it easier to achieve the required
reductions in sulfur dioxide emissions. The stratospheric ozone
provisions of title VI-which specify the affected chemicals and the time frames
for their eventual phase out-were also cited by stakeholders as an example of
successful implementation. Adequacy of Funding The states, state organizations,
and environmental groups that we interviewed all commented that state and local
governments need additional funding to more effectively implement the
requirements of the amendments. According to a director of an organization that
represents all state and local governments, there is currently a $140 million
annual shortfall in funds for implementation of the Clean Air Act at the state
and local government levels. EPA awards grants to the states and local
government agencies to help them implement the amendments. However, the agency
has reduced this: funding over the last several years by 25 percent, to $120
million annually. According to a state and local government organization, EPA
justified the decrease by considering the funding available to states and local
air pollution control agencies through permit fees (which are assessed on
regulated sources for permits required by the Clean Air Act). However, according
to a stakeholder representing an environmental group, there is a scarcity of
funds from permits because states have been under pressure to keep the fees low.
EPA officials stated that they work jointly with states and local agencies to
establish priorities on the basis of available funding and, through work plan
negotiations for grants, have been successful in directing grant funds toward
agreed-upon priorities. Examples of Sources Subject to Multiple Clean Air Act
Regulatory Programs Because the act is structured to address different aspects
of the nation's air pollution problems, some sources are regulated by more than
one statutory program. For example, industrial emissions sources such as
petroleum refineries, chemical manufacturing facilities, and electric power
plants are sometimes regulated under multiple provisions of the act and numerous
associated federal air regulations. Petrochemical and Refinery In Petrochemical
and refinery facilities are regulated under all of the first five titles of the
1990 amendments and a multitude of EPA regulations designed to implement the
legislative provisions. In addition to the large number of existing air
regulations, the industry is faced with planning and implementing measures to
comply with a host of new requirements beginning in 2000. According to industry
officials, efforts to comply with one program by controlling emissions of a
pollutant from a single facility may have the unintended effect of increasing
emissions of other pollutants from elsewhere in the same facility. For example,
title II requires the petroleum industry to reduce sulfur
levels in gasoline to help produce cleaner fuels for motor
vehicles. Producing these cleaner fuels, however, requires changes in the
refining process that may increase the emissions of other pollutants including
such hazardous air pollutants as benzene, formaldehyde, and mercury from
emission points within the refineries. EPA officials told us that while they do
not expect this to occur at all refineries, it could occur at some. According to
the officials, this case illustrates how separate requirements can serve
different, but equally important purposes. The low-sulfur
gasoline requirements will work nationwide to help ensure that air
quality improves significantly in areas where mobile sources are a primary
source of pollution. On the other hand, permitting requirements for statutory
sources ensure that an individual facility's emission increases do not
contribute to a local air quality problem. Chemical Manufacturing Industry
Within chemical manufacturing facilities, individual emission sources such as
storage tanks may be subject to four or five different regulatory programs. At
any given facility, all or part of the following-in addition to obtaining title
V operating permits-may apply: (1) meeting standards for new source construction
permitting, (2) reducing the emissions of hazardous air pollutants, (3) meeting
new source performance standards, and (4) complying with visibility protection
requirements. According to industry officials, the act's regulatory process is
an especially complex system and it is not always clear which emission reduction
requirements are applicable to a specific source. For example, the emissions of
pollutants known as volatile organic compounds (VOC's) are subject to regulation
under title I of the 1990 amendments, but some are also considered to be
hazardous air pollutants, which are regulated under title III.4 Thus, the same
facility may be subject to meeting regulatory requirements associated with each
title. According to industry officials, in some cases, EPA has recognized the
title HI requirement (under which the source must meet emissions levels
associated with maximum achievable control technology standards) as the most
stringent, and so the VOC emissions control requirements are considered to be
satisfied through demonstrated compliance with the technology standards.
According to an industry official, however, EPA has, in some situations,
required that facilities report or demonstrate compliance with both emissions
reduction requirements. Electric Power Indus Electric-power-generating
facilities may be subject to more than a dozen federal air regulations and
initiatives that have different objectives, time frames, and compliance
requirements. For example, the emissions of nitrogen oxides from power plants
are subject to regulation under several title I programs, including (1) the
national ambient air quality standards program, (2) the new source review
program for minimizing air pollution from large new stationary sources; and (3)
the visibility improvement program. Nitrogen oxides emissions are also
controlled under the title IV acid deposition program, which is targeted at
specific electric utility plants. According to industry officials, some of the
regulations affecting the same air pollutants and emissions sources can make it
difficult for the industry to accurately determine the applicability of each of
the requirements and to develop effective emissions control strategies. EPA
Efforts to Address Sources Affected by Multiple Clean Air Act Requirements
Recognizing that individual facilities are regulated under multiple programs,
EPA has undertaken initiatives to reduce the regulatory workload and facilitate
compliance for such facilities. These include two industry-specific efforts-the
Consolidated Air Regulations and the Clean Air Power Initiative- and several
generic approaches to introduce more flexibility and stakeholder involvement in
the rulemaking and permitting processes. Consolidated Air Regulations One of the
administration's initiatives aimed at reinventing environmental regulations was
to consolidate federal air regulations, so that all federal air requirements for
an industry would be incorporated into a single set of regulations. EPA used the
regulations applicable to the synthetic organic chemicals manufacturing industry
for its pilot study of the feasibility of consolidating and streamlining
existing federal air quality regulations. The synthetic organic chemical
manufacturing industry was selected for the pilot because of the large number of
air regulations that apply to the industry's facilities and the similarity in
many of the requirements in the existing regulations. The resulting single set
of regulations, which incorporates all of the applicable requirements for 16
different air regulations that affect the industry, is referred to as the
Consolidated Air Regulations. Participation in the consolidated regulations by
facilities will be voluntary; facilities may choose to continue being regulated
under the 16 separate regulations or the consolidated regulations. EPA's
objectives are to (1) reduce the regulatory burden, (2) facilitate
implementation and compliance, and (3) ensure the continued environmental
protection and enforceability of the regulations. Proposed by EPA in October
1998, the consolidated regulations are currently being reviewed by the Office of
Management and Budget. The Consolidated Air Regulations are intended to maintain
the current levels of health and environmental protection benefits currently
afforded by the 16 existing regulations and also to ensure the same degree of
emission controls as the existing regulations do or a greater degree than they
do. However, the level of human health and environmental protection may be
greater in some instances because the regulations will require some facilities
(that choose the consolidated regulations) to meet more stringent emissions
reductions or requirements. Because of the reduced burden afforded by the
Consolidated Air Regulations, some sources are expected to elect to comply with
the consolidated regulations despite the more stringent requirements. However,
according to EPA officials, it is unclear at this time how many of the synthetic
organic chemical manufacturing facilities will elect to participate because the
consolidated regulations requirements may require some to achieve larger
emissions reductions than they are currently required to meet under the older
air regulations. EPA officials acknowledge that progress has been slower than
expected because of difficulties in getting the chemical industry to agree on
specific environmental protection requirements in the consolidated regulations
and their reluctance to accept the more stringent emission reductions. Clean Air
Power Initiative The concerns about the electric power generating industry's
costs to control multiple pollutants under several provisions of the Act added
by the 1990 amendments prompted EPA to initiate the Clean Air Power Initiative
(CAPI). In consultation with electric power industry representatives, EPA
developed an integrated regulatory strategy for sulfur dioxide
and nitrogen oxides emitted from power plants. The purpose of this collaborative
effort was to seek new approaches to pollution control that would improve public
health and the environment but simultaneously cost less and reduce the number
and complexity of current and expected requirements. EPA began the CAPI in 1995
by meeting with interested stakeholders to discuss more cost-effective
alternatives to pollution control and developing a model that could analyze the
costs and emissions implications of different reduction scenarios for
sulfur dioxide and nitrogen oxides. However, the lack of
complete support within the electric power industry ended the initial effort in
late 1996 without agreement, according to EPA officials. Some stakeholders
believed that the controls suggested under the CAPI were not desirable or cost-
effective, according to an EPA official, because they had not yet been required
through rule making. According to officials at Edison Electric Institute, 'the
initiative ended because (1) there was substantial disagreement over the science
underlying EPA!s proposed new controls for sulfur dioxide and
nitrogen oxides; (2) EPA could not provide any regulatory certainty should a
program be mutually agreed to; and (3) certainty could result only from amending
the act, which neither stakeholder wanted to pursue. In late 1998 and throughout
1999, EPA staff participated in the Edison Electric Institute Air Quality
Integration Dialogue at which EPA and industry staff explored an integrated
approach for controlling pollution from the electric power industry. The
dialogue had broad industry participation as well as EPA staff participation.
The White House Climate Change Task Force also attended these meetings. The
Dialogue was intended to promote a free exchange of ideas and analysis at a
staff level concerning new or potentially upcoming regulatory actions to address
air emissions of sulfur dioxide, nitrogen oxides, carbon
dioxide, and mercury. EPA continues to believe that over the next several years,
it will probably be necessary for the power industry to achieve large reductions
of sulfur dioxide and nitrogen oxides. According to agency
officials, there continues to be considerable interest in developing an
integrated approach to address cost-effective strategies for implementing
multiple air regulations. EPA has had a number of follow-up discussions and
expects to continue interactions with industry representatives on this topic.
Other Initiatives to Address Multiple Regulation Issues In addition to the
Consolidated Air Regulations and the Clean Air Power Initiative, EPA has
developed other regulatory approaches to provide industry with more flexibility
to achieve the necessary reductions in air pollution, while still providing
accountability for the results. For example, EPA allows facilities to average
the emissions from all emissions points and to use trading programs in order to
provide more flexibility in how and where an industrial facility chooses to
reduce its air emissions. In some cases, EPA has set plant wide limits that
control total emissions that are allowed to be released from an individual
plant. These efforts provide latitude to industries in choosing how and where to
reduce emissions. EPA has also worked with individual industries to eliminate
duplicating or overlapping regulatory requirements. For example, EPA worked with
industry organizations, such as aerospace and shipbuilding and coating
operations, to set limits for VOCs and toxic air pollutants and with the
pharmaceutical industry to give it more flexibility in complying with new source
performance standards for storage tanks. Furthermore, EPA and various
stakeholders began, in 1993, to identify opportunities for developing 'cleaner,
cheaper, smarter" environmental protection strategies that were tailored toward
environmental protection and would consider the unique circumstances of
different industries. EPA, along with states, environmental and public interest
groups, and the environmental justice community worked with six
industries-petroleum refining, printing, iron and steel, computer and
electronics, metal finishing, and auto manufacturing-to find better ways to
manage environmental responsibilities. With the completion of the Common Sense
Initiative-one of EPA's efforts to 'reinvent" environmental regulation-EPA is
applying the lessons learned to other sections of the act. Mr. Chairman, this
concludes my prepared statement. I would be pleased to respond to any questions
you may have.
LOAD-DATE: May 24, 2000, Wednesday