[Senate Hearing 106-471]
[From the U.S. Government Publishing Office]
S. Hrg. 106-471
NOx STATE IMPLEMENTATION PLANS
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HEARING
BEFORE THE
SUBCOMMITTEE ON
CLEAN AIR, WETLANDS, PRIVATE PROPERTY AND NUCLEAR SAFETY
OF THE
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
JUNE 24, 1999
__________
Printed for the use of the Committee on Environment and Public Works
U.S. GOVERNMENT PRINTING OFFICE
59-374 cc WASHINGTON : 2000
_______________________________________________________________________
For sale by the U.S. Government Printing Office
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20402
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
one hundred sixth congress
JOHN H. CHAFEE, Rhode Island, Chairman
JOHN W. WARNER, Virginia MAX BAUCUS, Montana
ROBERT SMITH, New Hampshire DANIEL PATRICK MOYNIHAN, New York
JAMES M. INHOFE, Oklahoma FRANK R. LAUTENBERG, New Jersey
CRAIG THOMAS, Wyoming HARRY REID, Nevada
CHRISTOPHER S. BOND, Missouri BOB GRAHAM, Florida
GEORGE V. VOINOVICH, Ohio JOSEPH I. LIEBERMAN, Connecticut
MICHAEL D. CRAPO, Idaho BARBARA BOXER, California
ROBERT F. BENNETT, Utah RON WYDEN, Oregon
KAY BAILEY HUTCHISON, Texas
Jimmie Powell, Staff Director
J. Thomas Sliter, Minority Staff Director
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Subcommittee on Clean Air, Wetlands, Private Property, and Nuclear
Safety
JAMES M. INHOFE, North Carolina, Chairman
GEORGE V. VOINOVICH, Ohio BOB GRAHAM, Florida
ROBERT E. BENNETT, Utah JOSEPH I. LIEBERMAN, Connecticut
KAY BAILEY HUTCHISON, Texas BARBARA BOXER, California
(ii)
C O N T E N T S
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Page
JUNE 24, 1999
OPENING STATEMENTS
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma... 1
Lieberman, Hon. Joseph I., U.S. Senator from the State of
Connecticut.................................................... 4
Letters, Northeast Utilities System.......................... 13-21
Voinovich, Hon. George V., U.S. Senator from the State of Ohio... 2
WITNESSES
Harding, Russell J., Director, Michigan Department of
Environmental Quality.......................................... 29
Prepared statement........................................... 86
Hill, Hon. F. Wayne, Gwinnett County Commissioner, Lawrenceville,
Georgia........................................................ 10
Prepared statement........................................... 68
Report, Gwinnett, GA, Air Quality Data....................... 72-79
Responses to additional question from Senator Inhofe......... 70
Nye, Hon. Thomas, Mayor, Hamilton, Ohio.......................... 9
Letters:
Hamilton Boiler No. 9.................................... 46
Hamilton Electric Plant.................................. 51
Prepared statement........................................... 41
Responses to additional questions from:
Senator Chafee........................................... 49
Senator Inhofe........................................... 46
Senator Voinovich........................................ 50
Stahl, Jane, Deputy Commissioner for Air, Water and Waste
Programs, Connecticut Department of Environmental Protection,
Hartford, Connecticut.......................................... 28
Letter, NOx transport issues................................. 82
Prepared statement........................................... 79
Responses to additional questions from:
Senator Baucus........................................... 83
Senator Inhofe........................................... 83
Senator Lieberman........................................ 84
Treat, Hon. Sharon, Maine State Senate, Gardiner, Maine.......... 7
Prepared statement........................................... 37
Responses to additional questions from:
Senator Baucus........................................... 40
Senator Inhofe........................................... 40
Senator Lieberman........................................ 40
ADDITIONAL MATERIAL
Article, Lifting the Veil of Smog, EM magazine................... 104
Memoranda, Hamilton, OH, Public Utility Data..................... 51-68
Reports:
Gwinnett, GA, Air Quality Data............................... 72-79
Role of Ozone Transport in Reaching Attainment in the
Northeast, NESCAUM.........................................88-104
Statement, Ohio Environmental Protection Agency.................. 34
NOx STATE IMPLEMENTATION PLANS
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THURSDAY, JUNE 24, 1999
U.S. Senate,
Committee on Environment and Public Works,
Subcommittee on Clean Air, Wetlands, Private Property,
and Nuclear Safety,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:07 a.m. in
room 406, Senate Dirksen Building, Hon. James M. Inhofe
(chairman of the subcommittee) presiding.
Present: Senators Inhofe, Voinovich, and Lieberman.
OPENING STATEMENT OF HON. JAMES M. INHOFE,
U.S. SENATOR FROM THE STATE OF OKLAHOMA
Senator Inhofe. The meeting will come to order.
Today's hearing is to discuss EPA's NOx SIP Call and how it
affects States. While we originally decided to have this
hearing before the court issued the stay on the SIP Calls on
May 25, the hearing is now even more timely in order to hear
how the States are responding.
There are a number of different issues concerning the SIP
Call which are coming together and which will cause impacts on
all the States involved.
First, a SIP Call which originally required the States to
submit their plans to the EPA by this September has been put on
hold by the court while they consider whether or not to
overturn the rulemaking. This has created confusion within the
States. I know that some States are going to continue to go
forward with the SIP; others are submitting SIPs which would
not have been approved by the EPA, and other States have
decided not to submit SIPs until the court case has been
decided.
A question I have for all the States is, if you go forward
with something now, and either the courts or the EPA changes
the rules during the process, what would be the effect?
Second, absent the NOx SIP Call, the EPA is going forward
with Section 126 petitions which will require reductions
starting in December, based on the 1-hour ozone standard. Is
this the best use of resources? Once again, if the SIP Call or
a modified version is reinstated next year, will the States and
industry have made irreversible decisions regarding control
measures, which they will be forced to change in mid-course?
And finally, overshadowing all of this is the NAAQS court
case decision invalidating the new ozone standards. Much of the
EPA's justification for both the SIP Call and the Section 126
petitions was based on the 8-hour ozone standard, which has
been held unconstitutional by the court--in spite of the fact
that Carol Browner doesn't believe it. I think it is important
to note that while the Constitutional decision was a split
decision, all three judges agreed that the standard could not
be enforced.
I believe most of these problems could have been avoided if
the EPA had bothered to work collectively with all of the
regions affected by these decisions. Last year, a group of
midwestern and southeastern Governors offered a compromise
solution which would have addressed over 75 percent of what the
EPA regulation would have accomplished, and this would have
avoided the lawsuit and allowed the program to continue.
Interestingly enough, the Senator to my right, Senator
Voinovich, was the Governor who was the chairman of the
committee of these regions, I believe, and was very much
involved--was more involved, probably, than any other Governor
of any State.
Senator Voinovich?
OPENING STATEMENT OF HON. GEORGE V. VOINOVICH,
U.S. SENATOR FROM THE STATE OF OHIO
Senator Voinovich. Thank you, Mr. Chairman. I would like to
thank you for conducting this hearing today on EPA's NOx SIP
Call.
I always like to preface my remarks--and I think the
members of this committee are getting tired of this--but I
consider myself to be an environmentalist. I am the father of
the Ohio Environmental Protection Agency. When I was in the
legislature, I was responsible for creating the House
Environment Committee, and I have tried to be very responsible
throughout my career in government to be an environmentalist
and to try to protect the health and welfare of our citizens.
I would like to give a warm welcome to Mayor Tom Nye of
Hamilton, Ohio. Hamilton is a great city and is the seat of
Butler County in southwestern Ohio.
Mr. Mayor, I would like to congratulate you and your
citizens. They had a choice of either building a coal
generating facility, and decided to spend more money to build a
hydroelectric facility on the Ohio River to provide energy for
your community, and I think that's the best evidence. You can
always tell where people's principles are when you see what
they do with their pocketbooks.
While I was Governor of Ohio I became concerned that the
EPA was not taking into consideration cost benefits and sound
science during their rulemaking process. I was particularly
concerned about their ozone and particulate standards and the
NOx SIP Call. In fact, Mr. Chairman, I spent over 100 hours in
trying to convince EPA, the Clinton Administration, Members of
Congress, and members of this committee that the cost of the
new standards to this country far outweigh the benefits to
public health and the environment. In fact, I think I spent
some time with you a couple of years ago on this. In fact,
according to EPA's own estimates, the cost for implementing the
NAAQS standard for ozone exceeded the benefits. The President's
own Council on Economic Advisors predicted that the benefits
would be small, while the cost of reaching full attainment
could total some $60 billion.
I also do not believe the Administration knew enough about
the science behind these rules to finalize them. In the case of
PM2.5, after the rule was finalized, the
Administration has consistently returned to Congress to ask for
funding to research the effects of PM2.5, and it
seems to me they should have done that scientific research
before issuing the rule.
I would like to note that at the time, Senator Inhofe
provided significant help to the States by amending TEA-21 to
help provide more reasonable timelines to implement ozone and
particulate matter requirements.
Just last month, a U.S. Appeals Court remanded EPA's ozone
and PM2.5 standards, ruling that EPA did not justify
its decision with sound scientific evidence. Ohio was a party
to this lawsuit, which began when I was Governor. The court
didn't say that EPA couldn't regulate at these levels, but that
EPA didn't give justification for doing so.
That's been my point all along. I have argued that the
NAAQS standards and NOx SIP Call were going to be costly to
implement, and that the investments to achieve them could not
be supported by sound science.
Shortly after the NAAQS decision, the same Appeals Court
granted a State petition to stay the NOx SIP Call until it
decided on the lawsuit by Ohio and other States.
I believe one of the most obvious examples of EPA's lack of
regard for reasonable approaches was witnessed by midwest
States during the Ozone Transport Assessment Group process, and
announcements of the final rules for the NOx SIP Call by the
EPA. OTAG is a partnership among 37 States, including Ohio,
environmental groups, and industry. It recommended NOx
reductions in amounts up to 85 percent, along with completion
of sub-regional models. Ohio concurred with this
recommendation. I recall that at the time there were some
people who argued that we shouldn't; we concurred with that,
but we did say that we ought to look at sub-regional modeling
to see what could be done to achieve the standard.
However, USEPA chose to impose an across-the-board uniform
85 percent reduction, despite data demonstrating little or no
impact from the many States in OTAG. In essence, USEPA simply
chose the level of pollution control it wanted utilities to
achieve, and implemented it without regard to air quality
impact.
The midwest and southern Governors proposed an alternative
NOx strategy that made much more sense for meeting the new 8-
hour ozone standard--by the way, that's the standard that the
court has overruled. It required a good faith downpayment of 65
percent reductions. In 2001, States would analyze whether
additional controls were necessary to meet the 8-hour ozone
standard by 2009. By the way, that's a full year earlier than
permitted under the USEPA approach. Then if additional controls
were necessary, they would have been implemented; however, if
the 65 percent reductions met the standard, then additional and
very expensive controls wouldn't be necessary. That's logical.
The Governors thought it was a good and fair proposal that
would have achieved attainment of the 8-hour standard, but EPA
ignored this reasonable approach and finalized the most
stringent controls possible for NOx in 2003. The final rule
also sets up a system to wait until 2007 to determine whether
it works. Ironically, USEPA's final NOx rule sets up the
possibility that attainment of the 8-hour ozone standard would
actually be achieved a year later than the one the Governors
proposed as an alternative.
How could EPA justify going against experts in the States?
How are human health and the environment protected under a
model that would achieve the standards a year later than the
Governors' proposal? I think this is another example of EPA
being arbitrary and capricious. Instead of trying to work with
reasonable people who care about the environment, they went
ahead and said that it had to be done their way. I strongly
believe that if EPA had worked with the States--worked with
us--the lawsuits, like the one invalidating the NOx SIP Call,
wouldn't have taken place. We could have averted that. Now it's
in the court's hand to determine the validity of the NOx SIP
Call, but I think the underlying question is what's going to
happen with the Section 126 petitions. We will hear some
testimony about that today.
Despite pending litigation, it seems to me that utilities
and States are planning to move forward with reasonable NOx
reductions. I think the message that EPA should get is that the
States involved in this issue want to work and go forward. The
question is whether they will be able to do that.
I thank you, Mr. Chairman, and I look forward to today's
testimony.
Senator Inhofe. Thank you.
Senator Lieberman?
OPENING STATEMENT OF HON. JOSEPH I. LIEBERMAN,
U.S. SENATOR FROM THE STATE OF CONNECTICUT
Senator Lieberman. Thanks, Mr. Chairman.
This is one of those mornings on which we are reminded that
America is a big country, different regions, different points
of view, but I thank you very much for holding this hearing. I
am personally pleased to welcome Jane Stahl from Connecticut's
Department of Environmental Protection as one of the witnesses
today. I look forward to hearing her testimony on this
important issue.
Ms. Stahl is here today, I suppose, for the same reason
that I was very anxious to be here myself, which is to express
our dismay that Connecticut is literally choking on the exhaust
of others, that the health of our residents is at risk, and
that our government has been rendered all but powerless to do
anything about it.
If that sounds strong, it is meant to. Although the subject
and the vocabulary of our discussion this morning may seem
arcane, sometimes theoretical, the consequences involved are
real and they are threatening.
The problems that I have just described are not new to
Connecticut or its neighbors. We have been plagued by the
transport of ozone air pollution, which is, as you know, the
main harmful ingredient in smog, from midwestern States since
the passage of the Clean Air Act Amendments of 1970. From our
perspective, ``plagued'' is no exaggeration. Transported
pollution into our region has been measured at levels that
exceed the public health standard by 80 percent. Ground level
ozone damages lung tissue, reduces lung function, and
sensitizes the lungs to other irritants. Children are
particularly vulnerable to these ailments.
There is, in fact, a tremendous body of scientific research
that has been developed and reviewed by the Ozone Transport
Commission, a commission created by the Clean Air Act
Amendments of 1990, which helps us understand both the sources
and the consequences of transported pollution. Building on that
research, a partnership effort by EPA, the States, industry,
and environmental groups was instituted in 1995 to develop air
quality modeling and recommendations for solving what we all
acknowledged, including all of us here today, to be a
complicated problem. In October of last year, EPA issued a
final rule that reflected the input of these diverse
stakeholders. The NOx SIP Call Rule, as it is known,
established a regional cap-and-trade program for large sources
of NOx emissions in 22 eastern States and the District of
Columbia.
In my view the rule is not only sensible, it is really
essential as a tool to protect public health and retain
flexibility in implementing pollution reductions.
Unfortunately, as has been indicated just last month, the D.C.
Circuit Court issued a partial stay on that proposed rule. The
stay, as I read it, was not issued because there is a finding
that the rule is not needed--the air is just as dirty today as
it was before the ruling--it was issued because the rule is
caught up in a separate dispute regarding delegation of
authority in establishing new standards for measuring ozone
pollution.
Personally, I am hopeful that this challenge will be
rejected; but in the meantime, I do think it's important to
emphasize what is not being challenged, which is the need to
establish standards to protect the public from the dangerous
health effects caused by smog and soot. It is precisely this
public health concern that means that we can't turn our backs
on instituting a regional and responsible plan to curb
dangerous levels of pollution. The NOx SIP Call Rule would, I
think, achieve significant air quality benefits in an equitable
manner.
Approximately 67 million people east of the Mississippi
River live in areas that have unhealthy levels of smog. EPA
estimates that every year implementation of the controls
proposed in the regional plan are delayed, there are between
200 and 800 premature deaths, thousands of additional instances
of moderate to severe respiratory symptoms in children, and
hundreds of thousands of children suffering from breathing
difficulties. This threat was localized over the Memorial Day
weekend recently when the citizens of Connecticut suffered
through several days of smoggy air that prompted State
officials to ask people to drive less, avoid drive-up windows,
and put off mowing the lawn. Health officials advised people to
stay indoors and to avoid outdoor work and exercise. Just
yesterday in our State's largest newspaper, the Hartford
Current, there was a story about an epidemic of asthma among
children living in Hartford, which I would guess has something
to do, of course, with the quality of the air they're
breathing.
Court actions in this case are not just tying the hands of
EPA. They also mean it is effectively impossible for the State
of Connecticut to protect our own citizens, because Connecticut
cannot achieve pollution standards required by law without
regional action and regional help. In fact, there is one
study--one modeling exercise--done that concludes that even if
Connecticut removed every car from our roads, we would still be
in violation of the 1-hour standard. Some say that required
regional controls are extreme, burdensome, even draconian, some
say, and will lead to a disruption of power service delivery;
yet Northeast Utilities, which of course is a Connecticut
company, has demonstrated that the reductions are achievable
and that technology is available to meet the requirements
without disruption to customers. The Tennessee Valley Authority
has also announced plans to implement state-of-the-art controls
to address ozone pollution.
What may well be burdensome--and perhaps even draconian, at
least in the contemplation of those who live in my State and
neighboring States--are the costs that the northeast States
will incur if we fail to adopt regional controls. Right now,
utilities in the southern and midwestern States emit over 4.5
times more NOx emissions than northeastern utilities. A study
done by the Northeast States for Coordinated Air Use Management
found that we will have to pay between $1.4 billion and $3.9
billion for additional local controls to reduce ozone pollution
if six upwind States fail to implement the NOx rule
requirements.
So, Mr. Chairman, ozone transport is a problem that is
real, and from the point of view of our State of Connecticut,
it is harmful. It can only be solved with a regional remedy.
The NOx SIP Call Rule, in my opinion, is a reasonable and
balanced remedy, allowing States flexibility in achieving
reductions needed to protect public health.
I look forward to hearing from our witnesses this morning
about how we can work together to achieve the overriding public
interest here, which is safeguarding public health.
Thank you, Mr. Chairman.
Senator Inhofe. Thank you, Senator Lieberman.
I now ask our first panel to be seated at the table. The
way we have divided the panels today is to start with the
Honorable Sharon Treat, Maine State Senate, and you are the
Senate Chair of the Joint Standing Committee on Natural
Resources, I understand.
Mr. Wayne Hill of Gwinnett County, in Georgia, the County
Commissioner.
And the Honorable Tom Nye, Mayor of Hamilton, Ohio. I have
to say this to my friend, the Mayor, I was the mayor of a major
city for three terms, and I know what a hard job it is. There's
no hiding place.
We will hear from each one of the witnesses. I would tell
you that while we don't have many members here, all the members
are represented here. You will receive questions for the
record; we will keep the record open so that you will have an
opportunity to respond to these. As you give your opening
remarks, your entire statement will be made a part of the
record, but I would ask you to try to confine your opening
statement to 5 minutes, and that's why we have these cute
little lights up here. After you all three have had your
opening statements, we will have rounds of questioning from
this table here, and I suspect other members will be coming in
during the course of this.
So we will start with you, Senator Treat.
STATEMENT OF HON. SHARON TREAT, MAINE STATE SENATE, SENATE
CHAIR OF THE JOINT STANDING COMMITTEE ON NATURAL RESOURCES,
GARDINER, MAINE
Senator Treat. Thank you, Senator Inhofe and members of the
subcommittee. Good morning. My name is Sharon Treat, and I am a
State Senator in Maine, where I chair the Natural Resources
Committee. I also serve as one of Maine's two representatives
on the Ozone Transport Commission.
As the only representative on this panel of more than 20
States which are supporting EPA's efforts to control NOx
pollution under Section 110 of the Clean Air Act, I will try
today to present a regional perspective.
At the outset, let me stress that the northeast States are
not asking our upwind neighbors to take any regulatory actions
that we are not willing to impose upon ourselves, nor are we
asking upwind States to take actions that only benefit distant
downwind States. The reality is that, upwind or downwind, ozone
pollution is a problem that needs to be addressed. It affects
our most vulnerable citizens, children and the elderly, and it
knows no political boundaries.
Already this year the smog has been really bad, as has been
mentioned already, and summer just started on Monday. This is
not just a northeast phenomenon. Between March 12 and June 12
of this year, Ohio experienced 181 exceedances of the health-
based 8-hour ozone standard. Michigan had 76 exceedances; North
Carolina had 43, and Georgia, 39. Also, North Carolina and Ohio
on several occasions over the past weeks have exceeded the old
1-hour standard. So clearly, any reductions in NOx emissions
from upwind States will benefit the citizens of their States
and their States' environment, regardless of EPA's standard.
Over the past 25 years a significant amount of research has
documented the long-distance movement of smog. Levels of ozone
transported are clearly beyond the control of local reduction
efforts within the northeast corridor. Maine is uniquely
situated at the receiving end of much of this smog. Locations
along the Maine coastline far removed from urban centers, such
as Acadia National Park, typically exceed the 1-hour Federal
ozone standard during the late evening and overnight hours,
times during which ozone production is not possible due to the
lack of sunshine, so it is not a local problem.
How can we justify the continued operation of old
grandfathered power plants without modern pollution control
equipment in any of our States? Maine and many rural areas of
the northeast will be unable to achieve clean air as long as
these old power plants operate to 1950's standards.
Let me be clear. Regional upwind control efforts are needed
to augment--not to replace--additional local measures in
downwind States. We are not asking somebody else to clean up
our problem. We only ask that local measures go toward
achieving clean air, and not for offsetting somebody else's
pollution.
I would like to put something in perspective here. Consider
that NOx emissions from all source categories, including
automobiles, trucks, and power plants, in Maine's largest city,
Portland, totaled almost 28,000 tons in 1996. By comparison, a
single power plant in southern Ohio emitted over four times as
much NOx during the same year.
While the State of Maine is itself not subject to the NOx
SIP Call, Maine's Governor, along with other northeastern
States, has committed to achieve the same NOx reductions from
major stationary pollution sources within our State. In fact,
in 1994 we joined with 11 other States and agreed to reduce NOx
emissions from electric utilities and large stationary sources
by up to 75 percent, roughly twice the mandatory reductions
required under the Clean Air Act. Mainers and other
northeasterners have been willing, time and again, to impose
restrictions on themselves and their industries to control
pollution, but without reductions in upwind States we will
continue to have a smog problem.
Speaking as an elected official--and I would say, a long-
time supporter of stringent in-State controls, both on
stationary and mobile sources, not a politically unrisky
position to take, I might add--I can report that this really
creates a policy problem in our State. When scientific modeling
and data demonstrate that implementing an IM program will not
alter our attainment status, it is understandable that the
inconvenience and cost of additional controls, such as IM
programs, can be a tough sell, and it has been.
This is not an abstract issue of meeting or not meeting
Federal standards. It is a question of public health, as
Senator Lieberman has pointed out.
There is also a matter of our environment and our economy.
Maine's economy is dependent on her natural resources:
forestry, fishing, agriculture, and tourism. All are harmed by
the effects of ozone and acid rain caused by NOx pollution.
Loss of fall foliage damages a multi-million dollar fall
foliage tourism season. Reduced sugarbush--maple syrup-
producing trees--comes from acid rain. Algal blooms in our
marine ecosystems result in damage to our fisheries. Need I
mention Maine lobster, to make my point more clearly?
In conclusion, for over 20 years our country has
perpetuated an illogical system in which pollution is free from
the law as soon as it crosses State lines. After 20 years of
collecting and reviewing the scientific data, EPA has finally
responded with what we consider to be a measured first step to
diminish the magnitude of NOx transport across State lines. All
States will benefit from this cost-effective pollution
reduction proposed by EPA.
It is unfortunate that the inaction on the part of our
neighbors has forced us in Maine and the northeast to turn to
the Federal Government for relief. As a State legislator, I
would have preferred solving this problem with my fellow
legislators at the State level; sadly, that option has not--and
apparently will not--present itself. It is precisely when
States cannot solve problems on their own that Federal action
is required. EPA should be commended for its recent efforts to
bring science and fairness back to our air pollution control
efforts.
Thank you.
Senator Inhofe. Thank you, Senator Treat.
Mayor Nye?
STATEMENT OF HON. THOMAS NYE, MAYOR, HAMILTON, OHIO
Mayor Nye. Good morning, Mr. Chairman, Senator Lieberman,
my own Senator Voinovich. My name is Tom Nye, and I am the
Mayor of Hamilton, Ohio, a city of 65,000 people located in
southwestern Ohio.
Hamilton is a public power community that has owned and
operated our nonprofit municipal electric system for our
citizens since 1893. I testify on behalf of the Ohio Municipal
Electric Association and its 80 public power communities on the
need for USEPA to pursue cost-effective strategies for the
control of NOx emissions.
EPA's current NOx strategy has not adequately recognized
the potential impacts on small public power communities. Public
power communities urge EPA to adopt meaningful, yet reasonable,
NOx reduction policies that mitigate the impact on small
entities and localities.
Like all communities, Hamilton seeks to provide a high
quality of life for our citizens and to attract and maintain
businesses and jobs; however, this depends on providing cost-
effective public services to residents and private sector
employers. That is why Hamilton operates a municipal electric
utility, and that is why we are very concerned that EPA's
current policies may unduly raise costs to our customers and
threaten the very viability and competitiveness of our public
power system.
Hamilton owns electric generation facilities totaling 206
megawatts in capacity. This generation includes Hamilton Boiler
No. 9, one 50-megawatt coal-fired boiler that will be subject
to EPA's NOx SIP Call, FIP, and Section 126 control strategy.
Hamilton also owns a 70-megawatt hydroelectric plant, located
in the Greenup Locks and Dam Facility on the Ohio River. This
is our primary source of power, backed up by Boiler No. 9 when
river flow conditions do not permit generation.
Hamilton's Boiler No. 9 is facing significant challenges
under EPA's proposed NOx strategy, which I have detailed in my
written testimony. I explain that Hamilton's plant could be
seriously underallocated NOx allowances due to our voluntary
pollution control activities and our reliance on the clean
hydroelectric generation. Under EPA's proposed plan, we would
be limited to operating for only 66 days out of 153 days in the
summer ozone season, and face control costs of more than $7,000
per ton of NOx removed.
Hamilton's concerns mirror the overall concerns of Ohio
public power about EPA's NOx control strategy. EPA's strategy
goes beyond what is necessary to protect the health and the
environment from ozone pollution and requires NOx controls that
are not cost-effective. Indeed, EPA has recognized the
potential for disproportionate impacts on small entities from
these rules, and it has even issued guidance to the States
calling for the mitigation of these impacts. However, EPA has
not made sufficient efforts to implement such policies itself
under its own NOx control strategy.
Hamilton encourages Congress to continue playing a role to
ensure that air pollution programs are effective and
reasonable. Congress should consider the following four
proposals.
First, Congress should establish a NOx cap-and-trade system
for the eastern United States. Localities, industry, and EPA
agree that market trading of NOx emissions is the only cost-
effective manner to achieve NOx reductions. EPA is attempting
to implement such a system; however, any system implemented by
EPA under the current regulatory climate could be confusing,
expensive, and ineffective, because it will be applied through
a hodgepodge of voluntary State programs and Federal mandates.
This situation deserves your Congressional attention.
Second, Congress should examine whether the SBREFA act, the
Small Business Regulatory Enforcement Fairness Act, is working
at EPA.
Third, Congress should consider phasing in NOx controls for
small sources, such as Hamilton's. Small entities and sources
need compliance flexibilities and extended deadlines to cost-
effectively comply with Clean Air Act regulations. Hamilton
suggests that any regional NOx control strategy be phased in,
similar to the successful SO2 acid rain program. In
this way, larger sources of pollution are the focus of the
initial reductions, which will ensure maximum environmental
benefit, stimulate the development of control technologies and
efficient pollution trading programs, and provide small
entities with adequate time to meet their compliance
obligations.
Finally, Congress should establish a ``clean air
partnership fund.'' EPA has proposed a new program that would
provide grants directly to local governments for innovative,
voluntary approaches to air quality improvement. This clean air
partnership fund is exactly the type of assistance that
localities like Hamilton need to make progress. We urge
Congress to give serious consideration to this proposed
program.
In conclusion, Hamilton and the Ohio Municipal Electric
Association support effective Clean Air Act requirements to
reduce NOx and ozone pollution, but EPA needs to be more
vigilant in identifying how these regulations might impact
small businesses and local governments who need compliance
flexibility in order to remain viable.
Thank you.
Senator Inhofe. Commissioner Hill?
STATEMENT OF HON. F. WAYNE HILL, GWINNETT COUNTY COMMISSIONER,
LAWRENCEVILLE, GEORGIA
Mr. Hill. Thank you, Mr. Chairman, and thank you, Senators,
for giving me an opportunity to come today and share a little
bit about my region.
I am the chairman of a Board of Commissioners in a county
that had 42,000 people in 1960; today, we have over 500,000----
Senator Inhofe. Would you tell us where your county is?
Mr. Hill. I am in the northeast section of Atlanta. I am
part of the 10-county Metro Atlanta Region.
I also serve as chairman of the Atlanta Regional
Commission, and I am sure that with the air quality problems
that you've heard about in Atlanta, you are very familiar with
what we are dealing with there.
While I am very sympathetic with others who are affected by
reason of air quality, I realize there are some prices to pay
for this. My very own granddaughter has respiratory problems,
so I'm very aware of what ozone does. I think that because
someone took a look at the air quality in the Atlanta area, we
can truthfully say that the air quality is better in Atlanta
than it was 25 or 30 years ago.
As I mentioned earlier, I've been very involved with the
State and the Atlanta region in trying to solve our problems,
and ARC and our State EPD are working very hard to bring our
region into compliance.
I want to talk about a couple or three things here today:
coordination and consistency at the Federal level; complexity
of the clean air issues, and consequences of regulations--or
change in budget, is the way I would phrase that.
Let me talk about consistency. We appreciate what you folks
do up here, but a lot of times we find out that different
agencies interpret things very differently, and it throws us at
the local level into a very hard position. Some of the
decisions that have been made at the local level have thrown
our county into very serious problems. Right now we have
Federal projects that have been withdrawn because of some of
the ozone problems that we have. We have four-lane roads going
to two lanes; we will have a four-lane on each end. We have
bridges that are two lanes, where we can't get our people
across. I urge you to look at that as you move forward to
change budgets and realize what effect it has already had on
some regions.
One of the other things that I want to talk about a little
bit is that we've heard that Atlanta is the ``poster child for
sprawl.'' I think some of the issues that we're dealing with
here are creating more and more sprawl. As we push people
farther out, then you're going to see our areas spread; and
instead of combining the problems of 13 county areas, we're
going to have problems statewide. To give you an example, I own
a small cabinet company. I am three miles from the county line,
or the attainment area. If I were three miles up the road, I
wouldn't worry about clean air regulations in the Atlanta
region. If we change these budgets, we're going to spread that
even farther. People will move out even farther.
Third, I want to touch on the consequences of regulations.
As I mentioned earlier, we have roads that are being affected
in our county. We in Gwinnett County have voted a sales tax,
and it's very hard for me sometimes to explain to the public in
general why we can't do things. The Atlanta area has never been
in conformity. If we drop these budgets, we don't know if we
ever will get into conformity. We have been working very hard
for a long time to get our area to where we can meet the
standards that we have today. If we're not able to meet those
standards, we fear--and my own Senator Coverdale and I have
discussed this--we fear we are going to shut our region down. I
hope this group and the Congress will take into account what it
is going to do to our economy.
I am reminded of something that one of my close friends
says: ``When we are hungry, we have one problem. When we are
prosperous, we have many problems.'' I think that's where we
are with some of these issues that we are dealing with here. If
we were not a prosperous Nation, I'm not sure we would be
paying as much attention to the clean air issues, or cleaning
it up even further than we are today.
So I would like to say about the 214-ton emissions budget
we have in the Atlanta area, that we think that we can meet it.
If it drops lower, we don't think we're going to make it; so we
have to be very careful of what we do. Atlanta and our region
pretty well drive the southeast. We do not need to be where we
are hunting jobs or hunting places for people to travel to.
We've got to find a way to do this other than just cars,
but any time we move into the power plants, as the Mayor said
here, the cost goes up. That affects our citizens. Everybody
will tell you, ``Yes, we want cleaner air.'' I don't think
you'll find anybody who won't. But when we put a cost on it, I
think you're going to see people begin to think that we went
too far.
My theory is that if we are not careful--it's kind of like
a pendulum--we'll swing over this way; if we go completely over
here, people are going to want to throw out a lot of our
standards completely. We have to get it back to the center. We
have to be sensible and do the things we need to do.
Thank you for letting me be here today and I look forward
to any questions you might have. It's an honor, and I
appreciate what you folks are trying to do.
Senator Inhofe. Well, thank you, Commissioner. I think it's
a good way to have this hearing, to have a State represented,
and a city, and a county, because you have slightly different
perspectives.
I will start, Mayor Nye, with you. I understand that the
EPA has an estimate that they have been using on cost per ton
for removal of $1,468, and you had an independent engineering
group that has come up with a figure of $7,554 per ton.
I have been very critical of the EPA for using inaccurate
figures. Back during the NAAQS fight, they originally were
saying that it was going to cost $9 billion a year--that was
the EPA's estimate--but the President's Economic Council came
up with a figure of $60 billion a year, then the Reagan
Foundation out in California came up with a range between $90
billion and $150 billion.
So I would like to ask you the obvious question here. What
do you think accounts for this disparity in the cost? Then I
would like to ask each of the others whether you have done some
estimates, either on a statewide basis or a countywide basis,
in your areas.
Mayor Nye?
Mayor Nye. I think there's a fairly easy answer to that. As
I mentioned, we have the one boiler that will be affected by
this NOx SIP Call. It is a 50-megawatt unit. The technology
that we will have to purchase will be the same, whether for 50
megawatts or whether it's 500 or 1,0000 megawatts, which is
pretty typical for some of the IOUs, the Investor-Owned
Utilities. We're going to have to spread those costs over our
base, our citizens. We serve as a public power community; we
serve our citizens. We are not serving our stockholders; we are
serving our citizens, and we will have to spread that cost over
a much smaller base than some of the bigger companies will. I
think that's really the issue at hand here.
Senator Inhofe. Well, how about you, Senator Treat?
Senator Treat. Maine has been part of the OTAG process,
which is a regional group put together to do the cost estimates
for 37 States, including many of those represented here today.
OTAG found that controlling pollution from power plants was in
fact a most effective cost-effective way of addressing this
issue. Obviously, there are a lot of other controls out there.
I think we have to ask the question, what are the costs of
not taking action? That's what I tried to point out in my
testimony. We have a natural resource-based economy, and
although we have some manufacturing, our environment is our
economy, and there will be significant economic costs to the
people in our State if we don't take action.
Senator Inhofe. Mr. Hill?
Mr. Hill. In the county we don't have anything that I can
tie it to. I have to look at the overall region whenever I talk
about costs. I do know that our power companies have come up
with some numbers, and it's going to be pretty astronomical,
what will be passed on to our citizens. But I don't have
anything like the Mayor does that I deal directly with.
Senator Inhofe. Well, Mayor, I'm going to ask you to submit
to this committee your engineering report and any supporting
documentation, and then I will use it for this committee, but I
will also submit it to EPA to get their response, because I
think that is significant when we come up with a disparity like
that.
Mayor Nye. Mr. Chairman, if I could just followup also, one
of our concerns, as I mentioned earlier, is whether SBREFA is
being taken into account here. We feel it is not, and we feel
that EPA should be held responsible, relative to the SBREFA
concept. Our unit--our municipal production--is really a small
business, so we feel that that entire SBREFA issue should be
looked at very carefully; and if you just look at that, I think
that this issue would be deemed quite different.
Senator Inhofe. All right.
Senator Lieberman, go ahead an take any time you want, 7 or
8 minutes; don't necessarily comply with the 5-minute rule.
Senator Lieberman. Thanks, Mr. Chairman. I'll try to stay
within 5 minutes.
On the question of costs--Mr. Chairman, I would like to ask
that I be able to submit for the record letters and study done
by Northeast Utilities System on the costs of complying with
some of these things.
Senator Inhofe. Without objection.
[The referenced material follows:]
Northeast Utilities System,
Berlin, CT, July 31, 1998.
vp-98-51
Ms. Carol Browner Administrator,
U.S. EPA,
401 M Street SW,
Washington, PC 20460
Dear Ms. Browner: I understand that you met last Friday with several
utilities in the Northeast to discuss the companies' experience with
nitrogen oxide controls. We were unable to attend the meeting, but I
wanted to relate to you our experience with Selective Catalytic
Reduction (SCR) technology, which we installed at PSNH's Merrimack
Station In 1995. Mr. Helms of your staff visited our Installation in
October 1997.
Three issues being debated are the technical feasibility of SCR,
the feasibility of retrofitting many units by 2003, and potential
impacts on electric system reliability. In our experience the Merrimack
Station SCR system is effective in removing NOx, can be installed
fairly quickly, and the installation has minimal impact on the
availability of the generating unit.
We decided to install an SCR system at Merrimack Unit 2 in response
to New Hampshire's NOx RACT regulation. That regulation provided us
with the flexibility to install and operate the least cost system to
meet our emissions requirements. Despite no U.S. utility coal-fired
boiler experience at that time, its international success made SCR our
choice. The retrofit project took less than a year from inception to
operation. While that was an accelerated time schedule, it is a
testament to the capabilities of constructors and suppliers in today's
marketplace. The Merrimack Installation was a fairly complex retrofit
requiring considerable engineering effort, yet, despite the
complexities of the site and the winter construction schedule, actual
construction was completed in 5 months. The construction was timed to
coincide with a scheduled maintenance outage; the SCR was built
alongside the powerhouse while the generating unit was on line, and the
final connections were made during the maintenance outage. Installation
of the SCR only added 1 week to the pre-scheduled outage duration.
Performance of the SCR has met all of our initial expectations. The
unit met the design reduction levels, and did so at a total annual cost
of about $400 per ton of NOx reduced. The cost per ton increases to
about $600 if we only consider ozone season reductions. The SCR was
designed to achieve greater reductions through the addition of more
catalyst, which live did earlier in 1998. Preliminary results indicate
a reduction of 85 percent from our original baseline emission rate.
We expect that other companies' experiences will be similar to
ours, once they commence the installation and operation of SCR's. There
appears to be adequate vendor capability and interest to meet the 4-
year schedule envisioned in the SIP call. We don't think our 1-year
project length will be unique; in fact, we are considering a second SCR
at another coal-fired unit on our system. Should we decide to go
forward, we would expect this second unit to be operational by June
1999.
The SCR system at Merrimack has had minimal impact on the
reliability of the generating unit. During our 3 years of SCR
operation, the generating unit has achieved some of the highest levels
of availability in its 30-year history, and established new ``longest
continuous operation'' benchmarks.
In our opinion, installation of NOx controls to meet the proposed
budgets across the 22-State region is entirely feasible, can be
achieved before the 2003 ozone season, and can be achieved with little
(if any) impact on system reliability. We hope to meet with you in
September to discuss this and other Issues. Please call me (and/or
another contact?) If you have questions or would like to discuss this
prior to September.
Very truly yours,
William J. Nadeau,
Vice President for Fossil/Hydro Engineering and Operations,
Northeast Utilities System.
______
Northeast Utilities System,
June 25, 1998.
d12678
Air and Radiation Docket and Information Centre,
Attention Docket A-96-56
Environmental Protection Agency,
401 M Street SW
Washington DC 20460
Re: SPA Supplemental Proposal To Reduce regional Transport of Ozone
Dear Sir or Madam: The following comments on EPA's proposed rule to
reduce regional transport of ozone through a NOx cap and trade program
in the Eastern States are offered on behalf of the Northeast Utilities
System (NU) companies, which include The Connecticut Light and Power
Company, Holyoke Water Power Company, North Atlantic Energy Service
Corporation, Northeast Nuclear Energy Company, Public Service Company
of New Hampshire, and Western Massachusetts Electric Company.
NU companies constitute the largest electric system in New England,
serving 1.7 million customers. We currently participate in a variety of
Clean Air initiatives, including EPA's Green Lights programs, and
actively participated in the Ozone Transport Assessment Group (OTAG).
NU has spent almost $40 million in the last 7 years to reduce
fossil plant NOx emissions and comply with the Clean Air Act Amendment
(CAAA). With those substantial efforts, NU has system-wide NOx emission
rate which ranked tenth best among the 50 largest Eastern utilities,
according to a 1996 NRDC Benchmarking Report ``Air Emissions of Utility
Electric Generators in the Eastern U.S.''
EPA's proposed rule represents an effective approach to addressing
regional ozone transport by achieving the necessary NOx emissions
reduction from all sources across the 22 eastern States. Our comments
address the following areas:
Allocation Method
EPA's Corrected Allocation Figures
Trading Program
Voluntary Inclusion of Other States
Phase II NOx Exemption
Timing of Reductions
In addition NU wishes to reiterate comments made in its March 9
letter (attached) commenting on EPA's original proposal.
Allocation Method
The recommended allocation method should be based on actual heat
input (in mmBtu) of the unit as proposed. However, NU is concerned that
EPA is apparently suggesting that the SIP approval process will be more
difficult and time consuming for States that depart from the
recommended approach. (63 FR 25931) EPA should not question a State's
allocation method as long as the State's total allocations for a
particular year do not exceed the appropriate aggregate tons of
emissions.
Over time, the allocation should shift from a fossil-based system
to one which includes all energy sources, whether or not fossil-fuel
generated. Such a system will provide an additional economic incentive
for generation which does not emit NOx, such as nuclear, hydroelectric,
and renewable sources.
Emission Allocation Numbers
EPA's corrected emission allocation numbers are more acute then
those projected for the 2007 baseline under the original proposal.
These numbers include sources inadvertently omitted from the original
inventory, including NU sources. Further, these numbers reflect a
growth in the amount of generation in New England, especially in
Connecticut. This is consistent with NU's projections for this area.
Trading Program
EPA has done a good job minimizing the difference between its
proposed trading program and that already approve by the Ozone
Transport Commission (OTC). In this light, NU supports EPA's proposal
to include sources over 250 mm/BTU/hr or over 25 megawatts with States
reserving the right to also include as ``core'' sources, up over 15
megawatts.
EPA has requested comment on the inclusion of addition types of
sources. States should have the right to add additional sources
including municipal waste combusters, internal combustion engines,
kilns, calciners, and process heaters. Included such additional sources
world give these States incentives to reduce emissions below regulatory
limits. If such sources are included, the State allocation should be
revised as necessary.
EPA has also requested comment on banking. The program should
include a banking option to provide an incentive for covered sources to
reduce emissions. Without it, reduction credits would be lost if not
used in the year made.
Any concern banking would lead to a large number of allowances
flooding the market and causing ozone exceedances in a particular year,
can be addressed through flow control. To prevent allowances from being
bankable under one program but worthless under the other, EPA's flow
control should be identical to the one contained in the OTC NOx budget.
Under such a system EPA would set a ratio of two to one for banked
allowances whenever the percentage of banked allowances exceeded 10
percent of the trading program budget for that control period.
Finally, generators should be allowed to bank early reduction
credits in order to encourage air quality improvements as soon as
possible. By September 30, 2002, the beginning of actual
implementation, States would determine how many early reduction credits
had been created, and would be required to reduce their allocations by
this amount. This would prevent use of early reduction credits from
casual ozone exceedances.
Voluntary Inclusion of Other States
Utilities and large sources in States not covered by the rule
should be allowed to opt into EPA's 110 trading program, provided they
agree to adopt either the allocation formulae contained in the SIP call
or the OTC's Phase III limits. These limits are comparable to those
proposed for power generators and large industrial sources in the SIP
call, so the reductions required would be similar. Additionally,
allowing these sources to opt into the 110 trading program would allow
for the seamless trading program discussed above. This issue is
particularly relevant to Maine, New Hampshire and Vermont--the three
northernmost States in the Ozone Transport Region. Excluding sources in
these States from the trading provisions in the SIP call would lead to
difficulties in maintaining a regional program.
Phase II NOx Exemption
EPA should retain the authority to relieve boilers subject to the
cap-and-trade rule from the Phase II NOx limits, as proposed. This
approach is consistent with the purposes of the CAAA and would allow
utilities to take advantage of the cost savings that result from
flexibility, within a cap, to trade allowances among utilities, as well
as among boilers owned by a single utility.
However, the authority should only be exercised if compliance with
the cap-and-trade program would achieve the same or greater overall NOx
reductions in the same timeframe. This timing condition may be
significant, in that NOx Phase II limits are effective in 2000, 3 years
before implementation of the SIP call.
Timing of the Reductions
The Agency should hold to, or accelerate, its proposed
implementation schedule of September 2002 for requiring actual
reductions. In any event delaying implementation beyond September 2002
would be inconsistent with the CAAA as well as highly inequitable.
First, the CAAA requires NAAQS be achieved ``as expeditiously as
possible''. The timeframe proposed is both economically and
technologically feasible (States Report on Electric Utility Nitrogen
Oxides Reduction Technology Options for Application by The Ozone
Transport Assessment Group: April 11, 1996). Second, under EPA's
current Rate of Progress requirements and the proposed SIP call, many
downwind nonattainment States, like Connecticut, will have achieved
from 36 percent to 42 percent reductions from 1990 baseline emissions,
after accounting for all growth, before the upwind, significantly
contributing States would begin to implement control measures in
September 2002. Third, the September 2002 date aligns with the OTC MOU
Phase 3 schedule, requiring compliance with the uniform emissions rate
by the 2003 ozone season.
Although the rule requires that SIPs contain implementation of
control measures no later than September 30, 2002 (40 CFR
51.121(e)(3)), other sections in the rule, and EPA's ``Timeline for the
Proposed Regional Ozone Transport Rulemaking'' suggest a later date is
possible. In particular, the rule requires that that SIPs provide for
compliance with the NOx budget during each ozone season beginning in
2007. See 40 CFR 51.121(e)(2). Similarly, the rule and timeline state
that each SIP revision must demonstrate that the State's measures,
rules and regulations are adequate to provide for compliance during the
2007 ozone season. (40 CFR 51.121(g)(1)).
NU wishes to confirm that all control measures necessary to comply
with NOx budgets will be fully applicable by September 30, 2002, and
that the timeline would not in fact allow 5 more years for the States
to comply. Additionally, if this is true, NU questions why States
should have an additional 5 years to demonstrate compliance.
In conclusion, NU believes EPA's proposed rule represents an
effective approach to addressing regional ozone transport and urges the
agency to go forward with rule implementation as soon as possible.
Thank you for the opportunity to comment. If you have any questions,
please contact Mr. Charles F. Carlin, Principal Engineer (860-665-5344)
or Mr. Richard A. Miller, Manager Environmental Regulatory Affairs
(860-665-5480).
Very truly yours,
Dennis E. Welch, Vice President for Environmental, Safety
and Ethics,
Northeast Utilities System.
______
Northeast Utilities System,
March 9, 1998.
d12150
Air and Radiation Docket and Information Center,
Attention Docket No. A-96-56
U.S. Environmental Protection Agency,
Washington DC 20460.
References: EPA Proposal To Reduce Regional Transport of Ozone
Dear Sir or Madam: The following comments on EPA's proposed rule are
offered on behalf of the Northeast Utilities System (NU) companies,
which include The Connecticut Light and Power Company, Holyoke Water
Power Company, North Atlantic Energy Service Corporation, Northeast
Nuclear Energy Company, Public Service Company of New Hampshire, and
Western Massachusetts Electric Company.
NU companies constitute the largest electric system in New England
serving 1.7 million customers. We currently participate in a variety of
Clean Air initiatives including EPA's Green Lights programs, and
actively participated in the Ozone Transport Smear Group (OTAG). In
1996 NU won an EPA Environmental Merit Award for installing Selective
Catalytic Reduction at Merrimack Station in New Hampshire. NU has spent
almost $40 million in the last 7 years to reduce fossil plant emissions
and comply with the Clean Air Act Amendments (CAAA). With these
substantial efforts, NU has a system-wide NOx emission rate which
ranked tenth best among the 50 largest Eastern utilities, according to
a 1996 NRDC Benchmarking ``Air Emissions of Utility Electric Generators
in the Eastern U.S.''
NU believes that the proposal represents an effective approach to
addressing regional ozone transport by achieving the necessary NOx
emissions reductions from all source sectors across the 22 eastern
States. Our comments address several areas, including NU efforts to
reduce NOx, the severity of the transport problem, specific comments on
EPA's proposal, and NU experiences in installing NOx controls on
multiple units.
1. NU Background
Over the past decade NU power plants have implemented a variety of
pollution controls, including water injection, overfire air, modified
burners, low NOx burners, modified operation., and selective catalytic
and non catalytic reduction outruns.
Further, since passage of the Clean Air Act, NU has improved air
quality by adding the capability to burn additional natural gas and
using low-sulfur fuels.
In addition to these direct efforts, NU has indirectly reduced
pollution through substantial investments in customer conservation and
energy-efficiency improvements. Specifically, NU companies have
invested over $555 million since 1982 in a variety of programs, thereby
avoiding air emissions from our power plants of approximately 20,800
tons of NOx. Further, nuclear operations on the NU system, from 1968 to
the present, have enabled us to avoid emitting over 400.000 tons of
NOx.
As part of the Ozone Transport Commission (OTC), NU's service
territory States, Connecticut, Massachusetts, and New Hampshire, have
committed to:
by 1999, reducing ozone season major source NOx emissions by
65 percent (from 1990 levels) or emitting at a rate no greater than
.20 ls. per million BTU (whichever is less stringent), and
by 2003, reducing ozone season major source NOx emissions by
75 percent (from 1990 levels) or emitting NOx at a rate no greater
than 0.15 lbs. per million BTU (whichever is less stringent).
NU will comply with these OTC requirements and any requirements
imposed by the current EPA rulemaking.
2. Severity of the Transport Problem
On certain days, ambient ozone levels in each of the three States
served by NU have exceeded the 1-hour ozone standard and would have
exceeded the new 8-hour standard. These exceedannces occur despite very
substantial and expensive reductions made by NU and other businesses
over the past 25 years. Significant further local reductions are
planned and will occur. However, stopping all anthropogenic emissions
within these States will not attain the ozone air quality standards.
Clearly, the influx of transported ozone and its precursors must be
reduced to give all of the States a chance to provide healthy air for
their citizens.
In addition to the negative health impacts of ozone, States in non-
attainment suffer economic consequences. The cost of the added
pollution controls and offsets made necessary by a States's non-
attainment status are disproportionately borne by the industries and
residents within that State. Many existing sources in our region,
including NU customers, have installed RACT for NOx or VOC, and new or
modified sources are subject to BACT/LAER and offsets. Some sources
recently have had to spend over $13,000 per ton to control ozone
precursor emissions. In considering additional requirements for States
such as Connecticut and Massachusetts, EPA must recognize that these
States have already made considerable expenditures. In contrast,
sources in upwind States, which significantly contribute to non-
attainment in NU's service territory, but which are themselves located
in attainment areas, have avoided such costs to date. This inequity
exists because the costs of downwind pollution are not captured in the
costs of operating upwind sources. Imposing equal control requirements
across the SIP call region will internalize these environmental costs
and level the playing field among regions.
The contribution of Midwest and Southern emissions is substantial
and is likely to grow with electric utility restructuring and open
competition. According to OTAG modeling, on high ozone days, 40 percent
of the ozone in Eastern States is transported from Midwestern and
Southern States. In 1996, the Federal Energy Regulatory Commission
predicted that increased production of low-cost power in the Midwest
and South might lead to NOx emission increases of over 500,000 tons per
year. This prediction seems now to be coming true. According to a
recently issued NESCAUM report, between 1995 and 1996 (when the Federal
government opened up access to interstate transmission lines for
wholesale competition), one Midwestern company alone, American Electric
Power, increased emissions of NOx from coal-fired plants by over 51,000
tons (See ``Air Pollution Impacts of Increased Deregulation in the
Electric Power Industry: An Initial Analysis,'' January 15, 1998). This
figure is significantly greater that the total 1996 NOx emissions from
all NU sources, 31,964 tons.
3. Specific Comments
The NOx reductions proposed by EPA are necessary for environmental
protection, justified by modeling, and fully supported by law. The
reductions will also have the ancillary benefits of reducing, regional
haze, acid deposition, and eutrophication of water bodies such as Long
Island Sound and Chesapeake Bay. Based on our experience with similar
controls, the reductions are also technically and economically
feasible. Specific comments below address the following: cap and trade,
OTAG's recommendations, growth in utility production, timing of
reductions, sanctions, transitional SIP issues, and mobile sector
emissions.
A. Cap And Trade
The importance of capping regional NOx emissions cannot be
overstated. The NO caps EPA proposes, however sweeping, are necessary
to produce the ozone transport reductions needed to come into
compliance with the CAAA. NU endorses the use of this system, rather
than a ``command and control'' method to obtain reductions.
Use of a cap and trade system is especially important in our
industry. As we restructure, the utility industry is entering a period
of uncertainty, particularly with respect to future use of generating
units. It is critical that this operating uncertainty does not create
uncertainty in the environmental benefits of EPA's rulemaking.
The availability of an emission trading mechanism will provide
flexibility to ensure cost-effective and timely compliance with EPA's
proposal. Emission trading is proven means of reducing the total
societal cost of a reduction program. One look no further than the Acid
Rain Program to find an effective and workable system.
B. OTAG Recommendations
EPA's proposed rulemaking accurately and fairly reflects OTAG's
recommendations.
The results of OTAG modeling, air quality analysis and State
attainment modeling have proven:
The existence of widespread transport of ozone precursors
over the Eastern United States.
The persistence of a summertime reservoir of elevated
ozone levels throughout upwind areas such the Ohio River Valley
which are carried by prevailing winds to the OTR;
The existence of elevated ozone levels at the boundaries
of the OTR often as high as 80 percent of the 1-hour NAAQS and
sometimes actually exceeding the standard,
The achievability of NOx controls on utilities of up to 85
percent reductions from the proposed 2007 baseline.
C. Growth in Utility Production
The Agency has accounted for expected growth to 2007 in setting the
State-level caps. This is an appropriate approach and should allay
State concerns that EPA's NOx budget might restrict future economic
growth. However, the actual growth factors that EPA projects for some
of the smaller States are questionable.
Growth in utility production was projected using the IPM model.
This model does a good job on a large scale, but, as indicated by EPA's
State-to-State breakdown, can give some questionable results. For
example, the IPM model forecasts a growth of 22 percent for
Connecticut, compared to 71 percent for Connecticut's neighbor,
Massachusetts. NU expects generation to be built in New England, but
cannot predict where exactly within the region, it will be sited. To
account for this uncertainty, NU suggests that EPA use region-wide IPM
numbers--perhaps based on the regional categories used by North
American Electrical Reliability Council.
D. Timing of the Reductions
The Agency should hold to its proposed date of September 2002 for
utility reductions. This would align the implementation with Phase III
of the OTCs NOx agreement, and simplify the process for these affected
OTC States. Implementation any later than this date will only allow
pollution levels in affected States to continue to be unhealthy and
cause these States to remain in non-attainment.
Delaying implementation beyond 2002 would be inconsistent with the
CAA as well as highly inequitable. First, the CAA requires NAAQS be
achieved ``as expeditiously as possible''--not whenever implementation
is politically feasible. Second, under EPA's current Rate of Progress
requirements and the proposed SIP call, many downwind nonattainment
States, like Massachusetts and Connecticut, will have achieved from 36
percent to 42 percent reductions from 1990 baseline emissions
accounting for all growth), before the upwind, significantly
contributing States first begin to implement control measures in 2002.
E. Sanctions
Because implementation of the reductions proposed will not occur
until after the next (1999) milestone, EPA should not sanction Eastern
States that cannot attain the standards because of significant
contributions from upwind States. Specifically, EPA should not ``bump
up'' such States, including Connecticut, Massachusetts, and New
Hampshire, for failure to demonstrate attainment in ``serious''
nonattainment areas. Similarly, for these States, EPA should not
require that offset ratios be increased for new construction and should
not cutoff Federal highway funds or grants to State air programs.
Finally, EPA should not require States affected by significant
contribution from upwind States to make demonstrations of attainment
and reasonable further progress (RFP) until after implementation of
this proposal. Demonstration of attainment is impossible until upwind
reductions are made, and imposing RFP reductions is inequitable until
upwind States make comparable reductions.
F. Transitional SIP Issues
Although not part of the ozone transport proposal, EPA has recently
issued a ``Concept Paper'' on implementing the New Source Review
program in transitional and other areas, that relates in important ways
to EPA's Section 110 proposal.
Unfortunately, this Concept Paper would undermine many of the
benefits of this Section 110 proposal. For instance, the paper proposes
to allow States to designate reductions from the implementation of
regional ozone control measures to be placed in an ``offset pool''
which could then be used by new sources. Reductions should not be
displaced by the construction of new sources, except to the extent that
the reductions are surplus and go beyond the regional control
obligations.
Further, the Concept Paper would allow sources in transitional
areas to satisfy BACT rather than LAER. This is inequitable, as sources
in other non-attainment States must meet LAER. Further, the Concept
Paper suggests that the NOx threshold for BACT would be 100 tons in
transitional areas, significantly higher than the 40/25 ton threshold
in non-attainment areas.
It questionable whether EPA has authority to make such concessions
to any State, and unfair to give such concessions to only certain
States. If indeed, EPA has authority to make such concessions, it
should grant them to all States in non-attainment. OTC States, such
Connecticut, Massachusetts and New Hampshire, which have expended
millions of dollars in improving air quality, and warrant such
concessions more than do new non-attainment States which have not made
any progress to date.
G. Mobile Sector Emissions
EPA must require reductions from all source sectors commensurate
with their contribution. Nationally, in 1995, the mobile sector
contributed 48.7 percent to NOx emissions (National Air Quality
Emissions Trends Report, 1995). However, the proposal would not mandate
any State controls on mobile sources (though it assumes large
reductions will be obtained through existing SIP measures and federally
required programs). Even assuming the Federal reductions hoped for from
the mobile sector, this sector will grow and will constitute a larger
piece of the NOx pie totally. For example, if the reductions proposed
in this rule are implemented, in Connecticut in 2007, mobile emissions
would be eight times utility sector emissions. Accordingly, EPA must
compel further reductions from the mobile sector.
4. NU Experience with NOx Controls
Proposed requirements are reasonable, based on similar NOx controls
installed at NU-installed various types of NOx controls on its fossil
fuel units in 1993-95. These controls were required by RACT regulations
in the three States in which we operate. The units, controls,
effectiveness, and costs are listed in the attached table.
At the start of our effort, we were concerned that NOx controls
would be technically difficult and extremely expensive. We began with
an exhaustive program to identify feasible control options for each of
our units, and found that reductions were not only achievable but also
less expensive than first thought. As the table shows, we installed a
wide range of NOx controls from simple combustion modifications to
selective catalytic reduction. We have operated with these controls for
approximately 3 years, and have seen little if my impact on unit
availability.
It is important to note that all of our controls were installed
concurrently, and at a time when many other units in the Ozone
Transport Region were also installing controls. We were able to manage
this program without exhausting the vendor supply, and without an
impact on system reliability. Most of the work was done during
previously scheduled maintenance outages, which in some cases had to be
extended slightly.
Thank you for the opportunity to comment. If you have any
questions, please contact Mr. Charles F. Carlin, Principal Engineer
(865-665-5433), Mr. Richard H. Pershan, Environmental Analyst, (860-
665-5296), or me.
Very truly yours,
Richard A. Miller, Manager, Environmental Affairs,
Northeast Utilities System.
______
Northeast Utilities System,
March 19, 1996.
D09723
Mr. Peter Tsirigotis
Air Docket Section (A-131)
Attention Docket No. A-95-28
U.S. Environmental Protection Agency,
Washington, DC 20460.
Dear Mr. Tsirigotis: Northeast Utilities Service Company (NUSCO), as
agent for Public Service Company of New Hampshire (PSNH), Holyoke Water
Power Company (HWP). Western Massachusetts Electric Company (WMECO) and
The Connecticut Light and Power Company (CL&C), is pleased to offer the
following comments on EPA's proposed NOx emission limits under Title IV
of the Clean Air Act Amendments (CAAA). We are encouraged that this
proposal from the EPA is requiring further controls on major emitters,
and very much agree with the Agency's approach of setting emission rate
targets rather than specifying a particular technology such as low-NOx
burners. This allows companies to determine the most economic controls
for their specific units. On balance, the proposed rule is a reasonable
one and should be adopted.
Our comments comprise three major points:
A. Based on our experience with installing NOx controls, the
omission limits you have proposed are reasonable and attainable.
B. Since this rule is not aimed at attaining the ozone standard
under Title I of the CAAA, it should not be used a substitute for NOx
control recommendations currently emanating from the Ozone Transport
Assessment Group (OTAG) process.
C. There are significant secondary benefits to be gained from
controlling NOx emissions beyond reductions in acid rain, ozone and
ozone transported to upwind States.
Additionally, we suggest some potential improvements that may make
the rule easier to implement.
A. NUSCO operates six coal units that will be covered by the
proposed rule. Each is already attaining State limits similar to the
limits EPA has proposed, utilizing NOx controls that were installed
under State rules for NOx RACT required by Title I of the CAAA. In 1990
and 1991, we were concerned about the expense and difficulty of
installing these controls. However, we found that the installations
were substantially less costly than we had thought. We currently are
operating a Selective Catalytic Reduction (SCR) unit on Merrimack 2, a
Selective Non-Catalytic Reduction (SNCR) unit on Merrimack 1, a Low NOx
Burner/Over Fire Air (LNB/OFA) system on Mt. Tom, and combustion
modifications with OFA on three units at Schiller Station. Cost
information on each installation is shown on the attached table, as
explained in the table ``Notes'' these numbers are estimated. Our
estimated control cost ranged from $141 per ton at Schiller (Combustion
Modifications/OFA) to $603 per ton at Merrimack 1 (SNCR). All of our
control costs are well within the range that EPA cites in the preamble
of its proposal, and are generally at the low end of the range.
B. It is important to keep in mind that NOx emissions limits
proposed here for coal fired power plants do not address attainment of
the ozone standard. While the resulting reductions will move in the
direction of attainment, they do not go far enough to reach these
goals. The Title IV reductions should not be the only regional NOx
reduction program, it is realized by those of us living and working in
the Northeast that a more comprehensive NOx/ozone program is required.
C. There are secondary benefits (beyond reducing acid deposition)
to lowering NOx emissions from coal fired power plants. Concern over
ambient concentrations of the particulate is heightening, and airborne
nitrate is a large potion of the total concentration. Airborne nitrate
also contributes to degradation in visibility. Additionally, there is
mounting evidence that NOx emissions contribute to nutrient loading in
water bodies such as Chesapeake Bay and Long Island Sound.
We are grateful to have this opportunity to comment on this issue
and trust these thoughts are considered in making the final ruling.
Please call Mr. Charles F. Carlin, Principal Engineer, at (860) 665-
5344 to discuss this further or if you would like additional
information.
Very truly yours,
R.G. Chevalier.
Senator Lieberman. Thank you.
I am going to read just briefly from it. I want to make
clear that this was March 19, 1996, but I believe the data is
still relevant. It was a submission to EPA.
But interestingly, Northeast points out that it operates
six coal units that will be covered by the proposed rule. It
says that ``each is already attaining State limits similar to
the limits EPA has proposed, using NOx controls that were
installed under State rules.'' Then the writer of the letter
says, ``We were concerned about the expense and difficulty of
installing these controls; however, we found that the
installations were substantially less costly than we had
thought.'' I'm jumping ahead here--they do include cost
information and the tables, that will now be a part of the
record.
The concluding sentence reads, ``Our estimated control
costs range from $141 per ton at Shiller,'' which is the
location of one of the coal-fired plants, ``to $603 per ton at
Merrimac.''
The final sentence, ``All of our control costs are well
within the range that EPA cites in the preamble of its
proposal, and are generally at the low end of the range.''
So that's just the experience of one utility company, to
add to the mix of data that we've received.
Senator Treat, let me begin with you and ask you this. I
understand that emissions of NOx have actually increased 1
percent nationally between 1990 and 1997, but that in Maine you
have actually cut NOx emissions by nearly 14 percent. Presuming
that it's true, how have you done it?
Senator Treat. Well, we've done it by putting additional
controls on our power plants and facilities. We have done it by
moving to cleaner fuels. We have done it by adopting the
California Low Emission Vehicle standards, way in advance of
what the Federal Government is going to do. We are going to
have cars on the road that are going to meet the Federal
standards 10 years earlier than that.
So I think that it's a multifaceted strategy. It has been
difficult politically to get it through, but we know we have to
do it. We also know we have to do it if we're going to be
asking folks in the midwest and other parts of the country to
help out, as well.
Senator Lieberman. Do I understand correctly that even with
all that you have done, as you described--and done with some
success, especially with the 14 percent reduction--it is still
hard for Maine to achieve the national standards without a
regional control strategy?
Senator Treat. Yes, it is. I believe we're currently in
attainment right now, but we could move out of it with a single
exceedance in the area at issue. So we're right on the edge
right now. We've already had some of the earliest exceedances
that I've ever known; on that same Memorial Day I was kayaking
and having a hell of a time with my own breathing, and was not
surprised to find out that that was a day when we had very high
levels of ozone in our State.
Senator Lieberman. Right. Thanks.
Commissioner Hill, you have talked about some of the air
quality problems in the greater Atlanta region, and I looked at
some of the EPA tracking of data from your area. An ozone
monitor in Gwinnett County revealed 27 days during 1998 in
which ozone levels significantly exceeded the ozone health
standards, and a monitoring site in neighboring Rockdale County
actually saw more than a month of bad air days.
No court as yet has challenged the legitimacy of the 8-hour
standard as a measure of public health protection. The
disputes, as you know, are over the level to set, the
threshold.
I presume from your opening statement that those
exceedances concern you as a public health issue for your
region, and I just wanted to invite you to talk a little bit,
not only from the regional point of view but your local point
of view, how you think you can clean up the air.
Mr. Hill. The exceedances that you were talking about on
the 8-hour standards were high. We are controlled so much by
temperature and humidity in the Atlanta area. Let me give you
an example. I was in Harold Reheis' office, who is head of EPD.
One day we were standing there talking, and he said, ``Wayne,
right there is the problem.'' I said, ``What?'' He said, ``The
trees. All the pine trees we have put off certain things that
cause ozone.'' I said, ``Certainly you're not telling me we
need to cut all the trees.'' He said, ``No, but if we lived in
an area with no trees, we wouldn't have the problem we have
today.''
So we are hampered not only by the things that are being
done. When you look at the station in Gwinnett County, I think
we are one of the stations that don't exceed it as much as some
of the other areas. Now, the 8-hour standards, I don't believe
there's any way that we are ever going to meet those, simply
because of the natural hindrances that we have that deal with
those.
Now, we do have a plan that we're bringing forward that
will bring us into conformity with the standards that we have
today, but it's going to be 2003 before we get there. It deals
with power companies and it deals with vehicles, and if you'll
look at the vehicles, they are not as big a part as they have
been. With the growth that we've had in our area, I think we've
done great.
I fly a small plane. I don't see the dirty air like I did
in the 1970's. We have actually done a good job in the Atlanta
region. Now, at the county level we have a lot of people who
say, ``Quit building roads, and you won't have any more cars.''
That will not solve our problems. We're actually creating more,
and that's part of what I was touching on. When we have road
projects that are stopped and we cause more congestion, we're
actually hurting matters. So we're fighting a losing battle
sometimes.
Senator Lieberman. You know, I wanted to talk to you about
your call for consistent guidelines in order to plan for
activities like roadbuilding.
My understanding was that the State Implementation Plans
were really intended for the exact purpose of preserving State
flexibility, and that they assume a multi-year budget of
allowable emissions and give the States the opportunity, while
they are trying to reach attainment of the Clean Air Act goals,
to make some choices about what they want to do at what times.
That's what I wanted to ask you, what you think about the NOx
SIP Call Rules in the sense that they preserve flexibility, I
believe, for some of the transportation sector decisions that
you've talked about. Of course, we face that in Connecticut all
the time ourselves.
Mr. Hill. We have an air quality group that meets, and we
were sitting in a meeting the other day. One group was
interpreting the rule one way and one another way. We've got to
find a way to get these groups together if we're ever going to
solve problems. That's what I was referring to there. This
particular issue dealt with how they model something. One group
was modeling one way and one another, and we couldn't bring the
two points together. So that's one of the issues when I say
``consistency.'' If it was interpreted the same way, or
somebody had the power to do that, it would make it easier.
Flexibility is great, but if you can't meet the 1-hour
standards, I'm not sure you're ever going to meet the 8-hour
standards.
Senator Lieberman. Thanks, Commissioner.
May I take advantage of the Chairman's generosity and just
ask a quick question of Mayor Nye?
I find in Connecticut--and I bet that you find in Georgia,
Commissioner, and you do in Ohio, and my friend and colleague
from Ohio said it; he's an environmentalist--that these things
matter to people, our constituents, particularly when they
connect it to their health. Looking over some of those same EPA
monitoring and tracking numbers, 26 counties in Ohio don't meet
the 8-hour standard. Under the SIP Plan, all but one of them
would be brought into attainment.
Doesn't that make it in the interest of your area to be
supportive of this NOx SIP Call?
Mayor Nye. I think that's a very good question and a very
fair question. Certainly, as Mayor, I hear the complaints of
the citizens. I go to the barber shop and people pick my brain.
I can't go out to dinner without people coming up to me saying,
``I hate to interrupt your dinner, but''--so I hear all those
kinds of comments.
That is one of the reasons that in Hamilton, we have taken
very proactive steps. Senator Voinovich mentioned our
hydroelectric plant on the Ohio River. We did that in 1981,
voluntarily. We spent almost $30 million more by building a
hydroelectric plant than we would have for a coal-fired plant.
We chose that; we chose to do that. We are also doing various
other environmentally friendly things now, and I think that's
one of our concerns. We feel that we are being penalized by
this because we did so many of these things in advance, and now
we are going to be asked to reduce our NOx emissions by 85
percent. Simply by going to the green power that we did, we
reduced our NOx by 50 percent right out of the gates. We don't
feel that we should voluntarily reduce it by 50 percent, and
then be asked to reduce it by 85 percent more. That's very
onerous.
The other issue in that regard is, during the baseline
years of 1995 through 1997, we were upgrading Boiler No. 9,
which I referenced, to be more environmentally friendly--again,
voluntarily. Those were the baseline years that were used, and
we weren't using our Boiler No. 9. Again, we feel that we are
being penalized because those were abnormal years.
Certainly, to the credit of the EPA--I have been to EPA and
they have listened to our concerns. They are reviewing them
right now, and we certainly hope that they will take those
unusual circumstances into account.
Senator Lieberman. OK. In some ways we all have common
interests here. I wish we could work out a system where we
weren't in apparent conflict, in spite of our common interests.
I would say finally that on the question of constituents
coming up to you while you are out, last year I was out for
dinner with some friends and people kept coming up and asking
questions. Finally one of the people that was there with me
said, ``Boy, this is a real nuisance. People keep bothering you
while you are out here for dinner.'' I said, ``One thing that
would be worse would be if nobody came up to say hello.''
[Laughter.]
Mayor Nye. Amen.
Senator Lieberman. Thank you.
Mayor Nye. Senator, if I could follow up on that--being
Mayor, I would like to pipe up here. You talked about common
ground, and I think Senator Treat talked about why the States
can't do this themselves. I think then-Governor Voinovich's
National Governors' Association alternative is the exact type
of program that we need to look at. I think it was a very
reasonable approach. It addressed the concerns of the
environment, but it also did it in a cost-effective manner. The
Governors got together, with Governor Voinovich's admirable
leadership. I think we need to look at that long and hard. I
think that could mitigate much of the trouble that we're having
right now.
Senator Inhofe. I think that probably answered Senator
Voinovich's first question.
[Laughter.]
Senator Voinovich. Well, it's interesting, depending on
where you're at and your perspective on this.
First of all, Senator Treat, I would like to congratulate
you for the steps that your State has taken to try to solve
your own problem. I would like to pint out that while I was
Governor of Ohio, we doubled the budget of the EPA. When I came
in as Governor, 26 regions of the State weren't attaining the
1-hour ozone standard, and when I left, all of them but one had
been approved, and we are waiting for a rule from EPA for that
one area right now. In 1997, I vetoed legislation to remove
Ohio's emission testing program, which we put in in 1996. So I
know a little bit about the heat that one takes in moving
forward with environmental policy.
I would also like to point out that up through 1995, our
utilities spent $3.7 billion, which at that time was more than
all of the northeastern States put together had spent on
investing in their power plants.
Last but not least, we have, Senator Lieberman, come up
with a plan to deal with the new 8-hour standard that the court
just said wasn't reasonable. As Mayor Nye has mentioned, we
think it's a reasonable approach to deal with the problem.
I think the issue now, with this court business going on,
is whether there is a possibility in terms of the 126 petitions
that were filed to work something out so that we can move
forward with this, or is this going to be hung up in court for
the next 2 or 3 years, which in my opinion doesn't do anything
for the environment?
So that's the real issue here: can we work together,
through the EPA, to come up with something that is reasonable?
I would also like to point out one other thing, because I
spent a lot of time on this issue. Back in 1997--I don't know
whether you're familiar with this or not--there was a memo from
the Commissioner of Maine's Department of Environmental
Protection to Governor King, and it stated that ``the auto and
utility emissions from Massachusetts and New Hampshire have the
greatest impact on Maine air quality.'' In addition, the memo
acknowledges that the New England States--well, I'm not going
to get into the issue of the 126 petition.
But the fact of the matter is that--you know, we could shut
down all our power plants; and, Senator Lieberman, I don't
think that your State would be reaching the 1-hour ozone
standard. I think that we all ought to get together and try to
work at coming up with a solution that is reasonable, and move
forward. I think that, to me, would be the most important
thing, Mr. Chairman, that could come out of this hearing. This
other thing is going to be hung up and we don't know what we're
going to do about the 8-hour and the particulate and so on.
But there is a sense of cooperation here, of moving
forward, by the midwest States and the Governors, and I think
that it would behoove all of us to maybe get the OTAG group
together again and talk about moving forward while all of this
court thing is going on.
Senator Treat. Did you want a response or a comment on
that?
Senator Voinovich. Yes.
Senator Treat. Thank you.
I have a real concern that I'm not sure that we have any
standard right now. In my testimony it was ``this standard,
that standard'' being violated. They are; it's not clear that
we have a Federal standard. So certainly we need to be thinking
about what's going on right now.
But as to the question of ozone coming from Ohio, and
whether it is reaching Maine or not, obviously it is not flying
over all those other States and landing in Maine, causing all
of our problems. But it is reaching States to the south of
Maine, and those States are going over the standard, and a slug
of air is coming up from them. How much of that is attributable
to Ohio or some other State? Most of it certainly is coming
from the States directly south of us, but we would not be
getting that pollution from them but for the fact that they're
getting a great deal of the ozone from outside their own
borders.
So it is a complicated scientific thing, but certainly it
has been recognized that at least 500 miles worth of ozone
transport is justifiable, and that goes a long way outside of
our own borders, if you're starting from the south of the
State.
Senator Voinovich. Well, it's interesting that the SIP Call
in your own region--you agreed to 75 percent, and yet the EPA
is setting 85 percent for the midwest, and you just wonder
about that.
I think OTAG has also shown that most transport impacts
occur within 150 miles of the source. The 126 petition seeks
controls over 600 miles away.
So I just thing that we get into a lot of this
technicality. The main thing is, how do we work together to
have a cleaner environment and do more for public health than
we're now doing? There's no question that we've had exceedances
in Ohio; we had them all over the country when the hot weather
came in. We had the same thing--don't use your lawnmower, stay
inside, and the rest of it. But that happens around the
country. How do we all, as a country, work together to see if
we can't do something about that, and at the same time
understand that it has to be reasonable and meet good science
and good cost-benefit analysis?
Senator Inhofe. Well, let's just briefly have another short
round here. Something that Senator Voinovich said sparked an
interest in me, having been a Mayor and having also been in the
State legislature, so I understand how these things work.
How is all this affecting your planning? You have a
situation where the EPA has issued a stay, but they're going
forward with Section 126; of course, that would just be on the
1-hour. If they should win their appeal, then it's going to be
on the 8-hour? How do you anticipate this? Because you can't
just wake up one morning and say, ``All right, now we're going
to implement this.'' Are you having problems? Isn't it a little
bit confused right now, Senator Treat?
Senator Treat. Well, it is confused. I think one thing of
interest here is that for some States, the old 1-hour standard
was actually harder to meet than the new 8-hour standard. So
it's not so clear that going back to the old standard is going
to help everybody out in terms of meeting those standards. It
really depends on the State and where they are and the weather
patterns and all of these things.
So it is an unclear thing. I think we need to, at least
initially, make sure that there is some kind of standard out
there, because this is a matter of public health. We just can't
wait around for 2 or 3 years with nothing in place.
So certainly it would be good to have some sort of rules
out there for the time being. I don't have any problem with
additional discussions amongst the States and with EPA. I think
generally it is a benefit. We do think, though, that what EPA
did overall made sense for us. You can talk about the timeframe
for compliance, and I understand how hard that can be,
especially on smaller businesses, but the fact is that many of
the northeastern States have been asking for action to be taken
for 10 or 20 years.
So for us, we see it as coming long after it perhaps should
have. The upwind States, I can understand their perspective.
It's a lot to swallow all at once. It is tough.
Senator Inhofe. Any comments on that? Commissioner Hill?
Mr. Hill. I'd like to change hats and get my ARC hat on.
That's one of the things that we deal with when we're talking
about planning. We are talking about planning; most of our
plans for the region are laid out over a 20-year period. When
we have these things continually changing, it's very hard to
deal with them. The thing that we've been dealing with lately
is, we have a standard; we have a 1-hour standard. The minute
we make the 1-hour standard, it drops to the 8-hour standard,
and it is very hard to plan. It's a very tedious thing. We're
working very hard, but some of those things don't have answers
yet.
Mayor Nye. I would agree with that. Right now Ohio is going
through electric deregulation, which is also making our job
very challenging. But to plan for something that may or may not
occur is quite challenging.
If the EPA regulations go through as presented now, it
could literally put us out of business. After being in the
public power business for 110 years, we might have to close our
doors. To try to plan for that eventuality, and then try to do
the appropriate things, we can't plan ahead. We can't buy a
project that would be paid for over 20 years if, in 2 or 3
years, we are going to be out of business.
Senator Inhofe. Senator Lieberman, do you have some further
questions?
Senator Lieberman. I have no further questions for this
panel, thanks.
Senator Inhofe. All right.
Senator Voinovich?
Senator Voinovich. I have no more. Thanks very much.
Senator Inhofe. All right. Well, thank you very much.
Senator Inhofe. We will ask the second panel to come up to
the witness table.
Panel II includes Mr. Russell Harding, Director, Michigan
Department of Environmental Quality, and Ms. Jane Stahl, Deputy
Commissioner of the Connecticut Department of Environmental
Protection.
We will start with Ms. Stahl. You heard our instructions to
the first panel; if you would try to keep your opening comments
to 5 minutes, your entire statement will be submitted for the
record.
STATEMENT OF JANE STAHL, DEPUTY COMMISSIONER FOR AIR, WATER AND
WASTE PROGRAMS, CONNECTICUT DEPARTMENT OF ENVIRONMENTAL
PROTECTION, HARTFORD, CONNECTICUT
Ms. Stahl. Thank you Mr. Chairman, members of the
committee. I will use up a little bit of my time to thank
Senator Lieberman not only for his support of many of our
efforts in the Department of Environmental Protection----
Senator Inhofe. Your time in thanking Senator Lieberman
will not be counted against you.
[Laughter.]
Ms. Stahl. Thank you so much.
Senator Lieberman. Thank you, Mr. Chairman.
Ms. Stahl. I also suggest that he does such a good job that
many of my comments can in fact be cut back, so thank you, sir.
Senator Lieberman. I want to state for the record, Mr.
Chairman, that this is a Republican State administration that
Ms. Stahl is speaking on behalf of.
[Laughter.]
Ms. Stahl. Well, let me state that I believe I am speaking
on behalf of all of the citizens of Connecticut.
I would like to start by highlighting the two points that I
really do want to make here this morning, the first being that
Connecticut and the other northeastern States cannot achieve
our health-based air quality standards without actions by our
sister States. The regional transport of air pollutants is real
and harms all of our citizens.
The second point is that reduced air emissions are
technologically achievable and economically feasible without
compromising electric reliability. Those are lessons that,
unfortunately, we learned the hard way in Connecticut, but they
are in fact lessons well learned.
The State of Connecticut has been deeply involved in the
search for a regional consensus-based solution to the problem
of interstate transport of ozone. As a member of the Ozone
Transport Commission, we have participated on the Ozone
Transport Assessment Group from its inception, and fully
support the development of market-based approaches to air
quality management. We are disappointed by recent events that
threaten the promise of cleaner air for all.
To inject a sense of immediacy into this discussion, I
would like to point out--and I deviate from my comments here
because in the past day we've had another exceedance, bring us
to a total of nine exceedances of the 8-hour standard, and
additional exceedances of the 1-hour standard. This is very
early in the season for us to have had those impacts, and it
looks to be a long, hot, dry haul for us based on weather
patterns. So it's not getting better.
We in Connecticut have been engaged in a prolonged struggle
to protect the public health of our citizens by bringing
ground-level ozone concentrations down to levels which comply
with the 1-hour ozone standard. We have taken great strides to
control the primary pollutants that produce ozone by meeting,
and often exceeding, the numerous requirements imposed by the
Clean Air Act Amendments.
Despite our vast improvements in our air quality, we
continue to remain noncompliant with 1-hour standards. The
chief source of the continued noncompliance is the overwhelming
transport of ozone and its precursors.
There are two maps attached to my testimony. Without going
into great detail, and perhaps we can do that later, they do
demonstrate the regional transport of ozone based on some
significant monitoring and modeling throughout the years.
So we are at a distinct geographic disadvantage in
achieving our reduced levels of ozone all on our own. We are
also geographically blessed, but we will save that for another
time.
Air quality monitoring data collected since the 1970's
shows a significant contribution in the northeast originating
from pollution sources outside the region. Transported ozone
entering the northeast corridor has been measured aloft by
aircraft at levels exceeding 80 percent of the 1-hour ozone
standard, and over 100 percent of the unenforceable 8-hour
standard.
The issue of interstate transport of ozone and its
precursors has not gone unnoticed by Congress who, in
structuring Sections 110 and 176(a) of the Clean Air Act,
recognized that Constitutional limitations prevent individual
States from addressing problems associated with interstate
transport of air pollution.
In the absence of Federal leadership, Connecticut has
reinstituted its 126 petition. We were hopeful of being able to
do this kind of work in a more consensus-building atmosphere.
We believed that the NOx SIP Call would allow us that regional
approach and atmosphere, but still need to address the issue
through whatever vehicles are available to us.
Regardless of the future of the NOx SIP Call, Connecticut
suffers from some of the worst air quality in the Nation. We
have sensitive subpopulations who are affected by environmental
pollutants such as ozone. Compliance with the 1-hour standard
will only minimize, not eliminate, adverse health effects
because many sensitive subpopulations are being stressed by
other environmental constraints.
Air quality modeling indicates that peak ozone levels will
barely comply with the 1-hour standard in the year 2007, only
if the NOx SIP Call as set forth in the NOx rule is fully
implemented.
I see that the red light is on. I am hoping that during
questions and answers we will be able to address some of the
economic information and technological feasibility that has in
fact been demonstrated.
I will stop here. Thank you.
Senator Inhofe. Mr. Harding?
STATEMENT OF RUSSELL J. HARDING, DIRECTOR, MICHIGAN DEPARTMENT
OF ENVIRONMENTAL QUALITY
Mr. Harding. Thank you, Mr. Chairman and members of the
committee. It is a distinct pleasure to be here this morning.
My name is Russ Harding, Director of Michigan's Department of
Environmental Quality.
I would like to start out by thanking Senator Voinovich for
his leadership as Governor, and now Senator, in these clean air
issues, particularly in the challenge of the 8-hour standard,
on which we have prevailed in court.
Michigan has always been a leader in environmental
protection. In fact, our air rules and regulations are much
stricter than the Federal Government's. We have reduced
emissions in our State by 75 percent in the last decade.
Southeast Michigan is in attainment with the 1-hour standard,
the largest industrialized area in the Nation to get that
attainment status.
However, EPA has continuously placed roadblocks in the way
of States and played fast and loose with Congressional
mandates. We have been forced to seek relief through the
courts. Our position has been vindicated; the 8-hour standard
for low-level ozone, as you know, was declared unscientific.
The NOx SIP Call, which required midwest and southeast States
to impose expensive and unneeded controls to prevent transport
of ozone, has been stayed indefinitely.
EPA's methodology for determining the culpability of States
is significantly and scientifically flawed. EPA is defining
``significant'' by cost. We have repeatedly asked them, what is
``significant''? We are more than willing to meet whatever our
culpability is. They come back and define ``significant'' as
what it costs for controls. That's ludicrous.
I convened a meeting last week of 11 State Environmental
and Air Directors. I am not aware of a single State in the
entire group that is unwilling to meet whatever our scientific
culpability is in the northeast. This has not been a question
of cost for us; it has been a question of doing the right
thing, but doing the right thing that the science and
technology require, not on a ``one size fits all'' mandate from
Carol Browner. That mandate puts Alabama, Ohio, Michigan,
everyone into the exact same prescriptive approach, which is
not technically justified.
We have conducted extensive modeling in our State to find
out exactly what our contribution was. We were very
instrumental and worked hard in OTAG. I personally attended
many of those meetings over several years. We learned a lot
about the transport of ozone. Using those models, we know
exactly what our culpability is and are willing to meet that,
and so are other States.
Let me explain a little bit what our plan would do. Senator
Voinovich, you touched on that earlier, and I appreciate that.
We took a very aggressive position. Six Governors signed on
to a plan; many other States had a very similar plan. We
brought that forward. It is an environmentally superior plan to
the EPA NOx SIP Call. We agreed to an early down-payment to do
65 percent reductions. We further agreed to do all the fine-
grid modeling necessary to meet any culpability we had, to even
meet the new 8-hour standard, which the courts have set aside
now. It was a very, very responsible position on the part of
the States. We worked long and hard for a long time to get to
that. We committed to that. We were not even given the
opportunity to discuss that in any meaningful way with the
agency; it was summarily rejected. They said, instead, ``You're
going to do it the way we want it done, and it's going to be
done in a prescriptive manner and with the controls prescribed
by us.''
It was interesting, as I visited with States on this issue
last week, every State has plans in the works to take care of
their problems. Some are doing it different than others. For
instance, North Carolina mentioned that they're going heavily
at mobile sources. They want enhanced I&M throughout their
State. In the case of Michigan, we are going ahead with a rule,
which we will have promulgated this fall, which does a 65
percent reduction in NOx. That will more than take care of
culpability in the northeast, according to all the technical
modeling. It will allow us to continue to meet clean air goals
in our State. We have stepped forward to do that in the past
and have achieved that. We are committed to that. We believe
the citizens want that. It will also give us the opportunity
for economic growth. We have worked closely with Dennis Archer,
Mayor of Detroit, who has very much opposed these EPA rules and
mandates without the kind of flexibility--and one thing that
people often forget, on the NOx SIP Call, is that it imposed a
budget cap and restriction on NOx on all of the States. Given
that, it would be impossible to redevelop Detroit, impossible
to continue to make progress on our brownfield sites that we
have made to turn those back into a world-class city.
What can Congress do? Quickly, there are several things
that I would like to ask you to do. Again, I believe that Carol
Browner has built a house of cards of unreasonable politics and
bad science. That house of cards is falling, thanks to the
courts.
We do need some adult supervision at EPA. I believe that
Congress needs to rein in the agency. It is clearly exceeding
its Congressional authority. We need to heal the breach in
regulatory ethics. Carol Browner has been in an advocacy role
to the northeast States; she should be in an adjudicatory role.
These petitions, for instance the 126 petition, should be
looked at independently and not in an advocacy role.
I think that a good faith effort--and I heard what can be
done--a good faith effort right now would be for USEPA not to
promulgate a rule on the 126 petitions, but instead meet with
both the northeastern, midwestern, and southern States involved
in this issue so that we can come up with a plan to address
clean air in this Nation. We are more than ready and willing to
work on that, as we have been for several years.
In summary--I see my time is up--we appreciate your
interest on this and look forward to working with you in the
future.
Thank you.
Senator Inhofe. Thank you, Mr. Harding.
We have an interesting panel up here in that we have an
eastern State and a midwestern State, and then a southwestern
State. While it might be said that I don't have a dog in this
fight, I think we all want the same thing, and that's clean
air. We look at the whole Nation, not just our individual
areas.
There is a meeting that is going to be called where we will
have to leave at 20 minutes before the hour, so I am going to
go ahead and defer to my two colleagues.
Senator Lieberman?
Senator Lieberman. Thanks, Mr. Chairman. I will be brief.
Ms. Stahl, thanks for your testimony and your kind words.
Just to make the point quickly, am I right that
Connecticut's ozone levels would exceed the National Ambient
Air Quality Standards even if all manmade emissions were
eliminated by Connecticut?
Ms. Stahl. That is in fact what our monitoring and modeling
have shown us. Of course, if Senator Voinovich would like,
perhaps we can model what would happen if those midwestern
plants that he referred to earlier did in fact shut down, but
that wasn't on our plate at the time. I hope he takes that in
the humor in which it was offered.
Senator Voinovich. I do.
[Laughter.]
Senator Lieberman. That's New England humor, you know.
Senator Inhofe. You mean like adult supervision?
[Laughter.]
Ms. Stahl. But in fact, our monitoring has indicated and
identified for us the fact that transport is a major cause--I'm
not going to use the term ``significant'' here--but is a major,
major cause of the ozone situation in Connecticut. We have
monitors that have no sources anywhere in the vicinity, and yet
they are tripped during certain wind patterns, clearly
identifying both the direction of the transport and the extent
of the transport's impetus. It is information like that on
which we rely when we make statements like ``shutting down all
of the manmade sources in Connecticut,'' but still not allowing
us to achieve our goals.
Senator Lieberman. Yes. I know from the statistics that
while the national numbers on emissions of volatile organic
compounds have dropped 8 percent between 1990 and 1997, in
Connecticut we have reduced them by 19 percent. The NOx
emissions have increased, as I mentioned to the last panel, by
1 percent over that period, but we in Connecticut have cut them
by 8 percent--not quite to Maine's standards, but a pretty good
result. So that's part of the conflict.
Let me just finally try to engage you and Mr. Harding in
the discussion we have been having this morning.
I hear what you have said. The State of Michigan has been
taking steps to try to reduce NOx. Part of the problem is that
it is such a large problem. The numbers that I have seen say
that utilities in the south and midwest emit four and a half
times more NOx than the northeastern utilities. One utility
source in Michigan, Belle River in St. Claire County, emits
almost six times more NOx than all of the electric utilities in
Connecticut.
The question is how to reconcile the numbers with the
effort and come to a reasonable point. From our point of view,
as you can imagine, Mr. Harding, we just think that what is
happening is unfair. While I acknowledge, certainly, that
you're making an effort, we feel we need more of an effort in
light of all that we're doing--Maine, Connecticut, the other
northeastern States, New York, New Jersey--to try to clean up,
and still we're frustrated in that.
Maybe I will start, Ms. Stahl, by asking you if you are
able at this point to answer the question about--not only about
what Michigan is doing not being enough, but more directly, if
you had a chance to review some of the southeast and midwest
proposals, the alternate proposals at this point, and proposals
from the upwind States, why Connecticut feels those are not
enough.
Ms. Stahl. Again, I have to rely largely on the monitoring
and modeling that we've done. We do recognize, and Mr. Harding
and I have agreed on as many points as we have disagreed on
over time in our roles in the States.
This is one where our modeling shows us that regardless of
what or how many more controls we institute in Connecticut or
in the northeast, that unless the full reductions called for in
the SIP Call as it is currently configured are effectuated, we
will still not reach our health-based standards.
So it is very cut and dried in terms of the modeling. So
that's one answer.
The other answer is that this is in fact a national
problem, and because there are some--forgive me, and take it in
the manner in which it is given--there are cost-effective
solutions available to the midwestern States that are no longer
available in the northeastern States. We have already grabbed
that ``low-hanging fruit,'' if you will. Again, not to say that
Michigan and other States have not done anything, but there is
still available to them significant reductions at lower costs
than there are available at similar costs in the northeast. So
there is some amount of just contribution. There is a
contribution to our problem; we are hopeful that there will be
a contribution to our solution.
The final point that I would make is that we will continue
to institute new requirements in the State of Connecticut, but
what we are hoping is that with some support from the midwest
region, our efforts will not be used to offset the transport of
additional pollutants, but in fact to further improve air
quality.
Senator Lieberman. Thanks. In light of the time, maybe you
want to wait and respond to Senator Voinovich's questions.
Senator Voinovich. Well, I think I would have asked Mr.
Harding to respond to that as well.
Senator Lieberman. The question is, we are acknowledging
that you are taking steps which are clearly constructive and in
the right direction--I would ask it real personally--why should
they be enough for us, who are still feeling that we are in a
dangerous health situation?
Mr. Harding. Well, a couple of things. First of all, one of
the basic tenets of the Clean Air Act has always been that the
Federal Government sets the standards, and the States are left
with trying to figure our how to meet that. This NOx SIP Call
absolutely turns that upside down, and that's one of the things
that is so objectionable to the States.
I have visited extensively with the States on this issue.
There are a lot of different strategies being employed for a
lot of different good reasons. Atlanta, Georgia is not the same
as Lansing, Michigan.
To give you an example of our problem with this, in saying
that the 85 percent level requirements are necessary to fix
this problem with utilities--and by the way, we don't think
that's going to fix the problem, we're convinced of that--EPA
actually did zero out all emissions from the midwest and the
south to use that. Now, that is not even realistic.
Again I would say to you, Senator, the way to fix this
problem in my opinion would be to develop the scientific and
technical principles that we all would agree that we would
apply across the board, and then the States agree to make the
necessary reductions to the extent that we are culpable in each
State. That's going to vary; it's not going to be the same in
Alabama as it is in Ohio and Michigan. I think if we could
agree to those kind of principles--and I can't speak for all
the States, but I haven't heard any State in the midwest or the
south step forward and say they would not be willing to put in
whatever controls are necessary in our States to help out the
northeast. We've always agreed to that.
In the case of Michigan, we might use a different strategy
than Ohio would use or Alabama or North Carolina. We would be
willing to meet that, but we need to do it based on what the
science and technology say, not on the whim of EPA that one
size fits all. In fact, my technical staff tells me that they
are convinced that this 85 percent across-the-board reduction
on utilities is not the right strategy, and Michigan is not
going to achieve the desired results.
So again, I don't think this debate is about how much it
costs. Cost is not the point. We need to be worried about that;
we always want to do things cost-effectively, but the point is
we need to do them with some common sense and we need to do
them based on sound technical principles. I believe the States
are willing to step up and do those. I know we are in Michigan,
and I think that's the way to resolve this.
Any help that Congress can give us to ask the agency to do
that in good faith, we would certainly appreciate that.
Senator Inhofe. Senator Voinovich?
Senator Voinovich. Mr. Chairman, first of all, I would like
to ask that the statement from the Director of the Ohio
Environmental Protection Agency, who couldn't be here this
morning, be inserted in the record.
Senator Inhofe. Without objection.
[The referenced statement follows:]
Statement of Christopher Jones, Ohio Environmental Protection Agency
I am Christopher Jones, director of the Ohio Environmental
Protection Agency. I want to thank Senator Inhofe and the committee for
holding this hearing, and for inviting Ohio's testimony.
As you may know, Ohio is one of eight States which appealed the NOx
SIP call. One of our primary reasons for doing so is that we believe
the 85 percent reduction in utility emissions required in the rule is
neither within U.S. EPA's authority to mandate nor justified by
scientific data.
The Clean Air Act gives U.S. EPA the authority to establish
national ambient air quality standards, but it reserves for the States
the authority to develop their own control strategies that will achieve
the standards. For U.S. EPA to effectively mandate in the SIP call the
specific sources that must be controlled and the degree to which they
must be controlled is a clear infringement on the States' rights. This
is particularly egregious because the NOx SIP call is not based on
sound science. In fact, it largely ignores the work of the Ozone
Transport Assessment Group--OTAG.
In 1996, 37 States in the eastern United States formed OTAG to
analyze persistent ozone problems east of the Mississippi River. After
2 years of study, including extensive modeling, OTAG presented a series
of findings and recommendations to U.S. EPA. Some of the more pertinent
findings include:
1. Regional NOx controls are effective in producing ozone benefits.
2. Ozone benefits diminish with distance, particularly at distances
over 150 miles.
3. The following NOx controls would be effective in reducing ozone:
A. Utility emissions controls between those required under Title IV
of the Clean Air Act controls and 85 percent;
B. Large non-utility controls between 55 percent and 70 percent;
C. Reasonably available control technology for mid-sized sources;
D. States should have a choice of regulatory systems whether it be
using emission rates or a statewide emissions budget; and
E. States should have the ability to conduct regional modeling to
determine the level of control needed to meet air quality
standards. After these recommendations were presented to U.S. EPA,
the Federal agency proposed the NOx SIP Call, requiring that 22
States develop State Implementation Plans to reduce utility
emissions by 85 percent in the year 2002. The one-size-fits-all 85
percent requirement ignores OTAG's finding that ozone reduction
benefits diminish with distance, as well as the recommendation for
regional modeling to determine effective control levels. Rather,
the SIP Call mandates the most stringent level of control for every
State, instead of considering other options that might prove
equally effective.
Ohio, West Virginia, Michigan, Virginia, South Carolina, Indiana,
Illinois, Kentucky, Tennessee, and Alabama initiated a series of
meetings to develop an alternative plan to reduce NOx emissions. In
June 1998, six States known as the Midwest/Southeast Governors' Ozone
Coalition submitted a plan that contained these main elements:
1. A Phase I early reduction program, with utilities achieving a 55
percent reduction by 2002 and a 65 percent reduction by 2004.
2. A Phase II plan to aggressively pursue attainment of the 8-hour
ozone standard, which includes:
A. Complete ``first look'' modeling completed by July 2001;
B. Submission of a final plan by July 2003;
C. Additional controls installed by April 2007; and
D. Attainment of the 8-hour standard by October 2009.
In submitting the plan, we put forward a rational approach to more
than adequately address long-range transport, provide a substantial
down payment on the 8-hour standard, and determine whether additional
reductions of nitrogen oxides or volatile organic compounds are needed
to meet the new air quality standards.
U.S. EPA rejected this commonsense approach and, in the fall of
1998, U.S. EPA adopted its final rules virtually unchanged except for
providing an additional 6 months for utilities to comply, until Spring
of 2003. The rule required State Implementation Plans to be submitted
to U.S. EPA by September 30, 1999.
Ohio had no choice but to appeal. The deadline itself precluded
virtually any response but rote agreement with U.S. EPA's approach, and
the rule is more burdensome than the Governors' plan without being more
protective. On May 25, 1999, the Court issued a stay of the requirement
to submit a SIP and will hear oral arguments on our appeal on November
9, 1999.
Because the implementation of the NOx SIP call has been stayed by
the U.S. District Court of Appeals, Administrator Browner has announced
her intent to require essentially the same NOx reductions in 12 States
through rulemaking under Section 126 of the Clean Air Act. Ohio does
not believe that U.S. EPA in fact has the authority to take this
action. U.S. EPA's interpretation of Section 126 is that there is a
``typographical error,'' and that the what the law says is not what
Congress intended it to mean. Ultimately, only Congress can clarify
whether the law reflects its intentions, but in the meantime, Ohio will
argue that it must be administered as it stands.
I want to assure the members of the committee that Ohio wishes to
be a partner with U.S. EPA and the States in establishing protective
air quality standards and devising cost-effective strategies to meet
them. Regrettably, Ohio has been characterized as more interested in
litigation than in clean air. This is not at all the case. The plan we
presented would have achieved the 8-hour ozone standard a full year
sooner than the Clean Air Act allowed. I remain open to discussion with
U.S. EPA and other affected States about the best way to reduce ozone
levels both in the northeast and in the Midwest.
Thank you for this opportunity to present this testimony to the
committee.
Senator Voinovich. I think we need to put this all in
perspective. No. 1, the court has ruled that the 8-hour
standard and the 2.5 particulate standard exceeded their
authority, for whatever reasons, and that will be hung up in
court for who knows how long.
We have a separate matter, and that's the 126 petition that
has been filed by the northeastern States. The agency has taken
a position that they're going to back off from the SIP Call
based on the 8-hour standard and the PM2.5 because
it's in court, but they're going to go forward anyhow with the
SIP Call at the 85 percent requirement. By the way, that's
based on the 8-hour standard and the 2.5.
The reality of it is that that will be contested in court,
and I don't know how the court will rule, one way or the other.
We have a situation, I think, where overall southern States and
the midwest have said, ``We want to go forward, and we're
moving forward on the basis of an 8-hour standard,'' and I'm
not sure if your State will ever meet the 8-hour standard,
regardless of what you do in your State----
Ms. Stahl. We'll keep trying.
Senator Voinovich. I know, but the point is that you have
this situation where things are in limbo and we do have a
chance to move forward reasonably with a reasonable SIP Call,
and I think most of the southern and midwestern States would be
willing to do that if we could work something out with the
agency. But the agency says, basically, ``85 percent, take it
or leave it, goodbye.''
Now, we can let that hang out there for who knows how long,
and we don't do anything for Ohio's environment or your
environment or the country's environment, or we can sit down
and say, ``Here are these people who are taking a reasonable
approach. It may not be exactly what the agency dictates, the
one-size-fits-all, but it's a reasonable approach that we can
get started with.'' I think that's the real issue that needs to
be addressed today. I don't know whether you do that through
legislation, or maybe the members of this committee on a
bipartisan basis, people from your part of the country and our
part, write a letter to her and say, ``Look, here's the deal;
could you sit down and work something out? These people seem to
be willing to go forward and start dealing with this problem.''
Or we can just let it hang out there and nothing is going to
get done, although I know you are moving forward in Michigan
and I know Ohio is moving forward. Our utilities, many of the
are going to do it anyhow, but it would be nice if it could be
worked out with the Environmental Protection Agency.
Do either one of you want to comment on that? Mr. Harding?
Mr. Harding. Well, Senator, I absolutely agree with that. I
think, again, there could be some common ground, and it is
certainly worth the effort. I think the result of not doing
that is the result that we have had, and that is litigation
which is preventing further clean air in this country. In fact,
we don't have a standard now; many of us were of the opinion
when the 8-hour standard was promulgated, that this was going
to cause a problem.
So we do need to move forward and I very much agree with
your statement.
Senator Inhofe. I would like to comment also that there are
a lot of us who would like to propose and work and craft
legislation that would replace the SIP Call and the 126
petitions, and we would certainly call on everyone who has been
testifying here today from all of the regions to help us work
on this. I would make that as an official request.
If it's all right, Senator Lieberman, we've had the
Majority Leader call a meeting and we're going to have to go to
that. Normally we like to visit personally after things are
over since the witnesses have gone to so much trouble and
inconvenience in being here, but there won't be time for us to
do that. So I just want to thank you for being here today and
for the testimony you have offered.
You will receive questions for the record from members of
this committee. That will become a part of the record of this
hearing.
Thank you very much.
[Whereupon, at 10:37 a.m., the subcommittee was adjourned,
to reconvene at the call of the Chair.]
[Additional statements submitted for the record follow:]
Statement of Maine State Senator Sharon Treat
introduction
Good morning. My name is Sharon Treat, and I am a State Senator in
Maine, where I am the Senate Chair of the Legislature's Joint Standing
Committee on Natural Resources. I also chair the National Conference of
State Legislatures' Science, Energy, and Environmental Resources
Committee, although I am not here today to speak on that committee's
behalf. I serve as one of Maine's two representatives on the Ozone
Transport Commission, and am a regular participant in regional forums
through the Northeast States for Coordinated Air Use Management
(NESCAUM), an organization representing the air pollution control
programs in the eight northeast States.
Thank you for the opportunity to speak to you from the perspective
of a Northeast State about ozone transport and its regulation. There
are three ideas which I think must shape any response to this issue.
First, the regional transport of ozone is a very real and significant
problem. Second, the amount of ozone flowing into the northeastern
States from the west prevents them from effectively limiting their
ozone levels. Third, without effective federal regulation of ozone
transport levels the northeastern States will never be able to attain
compliance with existing or proposed EPA standards.
It is unfortunate that testimony on each panel is limited to only
one representative of the more than dozen States that support the
Environmental Protection Agency's efforts to control NOx pollution
under Section 110 of the Clean Air Act. Our perspectives and experience
do differ, and it would have been helpful for the committee to hear
from additional supporting States. My comments, therefore, are from the
regional perspective of the Northeast States and reflect the regional
approach Maine is taking in collaboration with our neighbors. I am
honored to be here to present both Maine and the Northeast States'
support for sound and equitable solutions to our Nation's shared air
quality concerns.
At the outset, it is important to stress that the Northeast States
are not asking our upwind neighbors to take any regulatory actions
under Section 110 that we are not willing to impose upon ourselves. Nor
are we asking upwind States to take actions that only benefit distant
downwind States. The reality is, whether downwind or upwind, ozone
pollution is a problem that needs to be addressed. It affects our most
vulnerable citizens, children and the elderly, and it knows no
political boundaries.
Already this year, the smog has been really bad--and summer just
started Monday. Between May 1 and June 12 of this year, Ohio
experienced 181 exceedances of the health-based 8-hour ozone standard,
with 12 days over 0.085 parts per million (ppm); Michigan had 76
exceedances, with 15 days over 0.085 ppm; North Carolina had 43
exceedances, with 7 days over 0.085 ppm; and Georgia had 39 exceedances
with 15 days over 0.085 ppm. North Carolina and Ohio also have multiple
exceedances of the one-hour standard during this time frame. Clearly,
any reductions in NOx emissions by upwind States will directly benefit
the health of their citizens and the quality of their environment.
regional ozone transport
The scientific community has long recognized the regional nature of
the smog problem. Over the past 25 years, a significant amount of
research has appeared in the peer-reviewed scientific literature
documenting that the long-distance movement of smog affects not only
the Northeast, but areas in the Midwest and Southeast as well.
Scientific observations have documented ozone transport across the
eastern United States. In 1980, George Wolff, now with the General
Motors Research Laboratories, coined the term ``ozone river'' to
describe three July 1978 ozone episodes in which ``a distinct area of
high ozone concentrations was observed flowing northeastward in a
'river', extending from the southwest Gulf Coast to New England.'' In
1979, scientists using aircraft measurements followed a mass of high
ozone from central Ohio into the Northeast Corridor where incoming
ozone levels reached 90 parts per billion. Most recently, scientists
with the North American Research Strategy for Tropospheric Ozone
(NARSTO) observed ozone levels above 80 parts per billion entering the
western (upwind) boundary of the Northeast Corridor on the morning of
high ozone days during the summer of 1995.
These levels of transported ozone have been observed for a number
of years, are a significant fraction of the 120 parts per billion one-
hour federal ozone standard, and are clearly beyond the control of
local reduction efforts within the Northeast Corridor. Of course, the
Northeast is not alone in suffering the ill effects of transported smog
and its precursors. The Oklahoma Department of Environmental Quality's
May 1999 issue of its Air Quality Update recognized that long range
ozone transport also affects Oklahoma. The Department discovered during
a review of its ozone data from 1998 that pollution from wildfires in
southern Mexico likely contributed to high ozone levels in the Oklahoma
City area (attached). It isn't a big leap in logic to recognize that
forest fires and the burning of fossilized trees (coal) have similar
transport impacts when the wind blows.
Recently, the chief of the air pollution control division in Ohio,
Robert Hodanbosi, explained during a June 1999 high ozone event in the
city of Columbus that ozone levels built up because ``the sun is very
bright today, there are no clouds, and the wind isn't blowing.'' (The
Columbus Dispatch, June 10, 1999) That is correct. When the wind blows,
the Northeast receives this pollution.
Just as the flow of ozone from points west overwhelms the pollution
control efforts of Pennsylvania, Maryland, New York and others,
emissions from those States take their toll on New England. Ultimately,
each State's air quality is inexorably linked to that of its neighbors
as emissions and ozone cascade from west to east.
transport to maine
Maine is uniquely situated at the receiving end of much of this
smog. Locations along the Maine coastline far removed from urban
centers, such as Acadia National Park, typically exceed the one-hour
federal ozone standard during the late evening and overnight hours.
Indeed, some of the highest levels of ozone in the State and in the
country have been measured in Acadia Park. These are times when the
ozone could not possibly be formed locally because there is no
significant sunshine available to drive the ozone-forming chemical
reactions. Maine and many rural areas of the country will be unable to
achieve clean air unless all major smokestacks in the Eastern United
States are required to implement cost-effective modern pollution
control equipment. In fact, it was the 37 State OTAG (Ozone Transport
Assessment Group) process that identified large fossil fuel fired
utility and non-utility boilers as the most cost-effective method to
reduce the transport of ozone in the eastern United States
Let me be perfectly clear that regional upwind control efforts are
needed to augment and not replace additional local measures. Our demand
is simply that the bulk of our local measures go toward achieving clean
air and not offsetting someone else's pollution. To put things in
perspective, the NOx emissions from all source categories (e.g.,
automobiles, trucks, power plants) in Portland, Maine's largest city,
totaled almost 28,000 tons in 1996. By comparison, a single power plant
in southern Ohio emitted over four times as much NOx during the same
year.
maine's response to air quality problems
While the State of Maine is itself not subject to the NOx SIP Call,
Maine's Governor Angus King has made a commitment to achieve the same
level of NOx reductions from major stationary pollution sources within
the State. Maine has also signed an Ozone Transport Commission
Memorandum of Understanding (MOU) committing the State to achieve
similar NOx reductions from our major stationary sources. The State
joined with 11 other States in 1994 and agreed in an MOU to reduce NOx
emissions from electric utilities and large stationary sources by up to
75 percent, roughly twice the mandatory reductions required under the
Clean Air Act for sources located in nonattainment areas.
It is my understanding that all the NESCAUM States are seeking to
implement NOx controls in the timeframes envisioned in EPA's final
rule. While the recent injunction imposed by the D.C. Circuit Court has
temporarily delayed the federal requirement for action, it has not
diminished the activity of those Northeast States committed to
achieving clean air in the most cost-effective manner possible.
Maine has received some criticism of its other air quality control
measures, particularly after the failure of the aborted Car Test
program. However, the fact is Maine has implemented a motor vehicle
emission inspection and maintenance program and has adopted the
California Low Emission Vehicle Program. Maine ceased the use of
reformulated gas (RFG), but only after an extensive drinking water
testing program showed clear evidence of widespread MTBE contamination.
The low RVP fuels now required in Maine will meet EPA requirements
without the use of MTBE. Additional mobile source reductions are
achieved through a Stage II Vapor Control System.
Maine can and will impose tough restrictions on both NOx and VOC
emissions, but without reductions in upwind States will still have a
smog problem. Speaking as an elected official, who has herself long
supported stringent in-state controls on stationary and mobile sources,
I can report that this creates a major public policy problem in our
State. Mainers and other northeasterners have been willing, time and
again, to impose restrictions on themselves and their industries to
control pollution. But when scientific modeling and data demonstrate
that implementing an I/M program will not alter attainment status, and
that the emissions from a single uncontrolled Midwestern power plant
can emit twice as much NOx per day as all sources in Vermont combined,
it is understandable that the inconvenience and cost of such a program
can be a tough sell for the downwind State.
negative impacts of low air quality
Exposure to chronic ozone levels below the one-hour standard harm
the public's health in a number of ways. These include:
Increased airway responsiveness in the general population.
Increased severity and incidence of asthma attacks.
Increased severity and incidence of respiratory infections.
Increased prevalence of chronic respiratory symptoms.
Development of chronic respiratory bronchiolitis.,
For example, in Maine ozone causes breathing difficulty for 395,000
people--approximately one-third of our population--who have respiratory
ailments, are elderly or are children. The American Lung Association of
Maine recently stated that ``one out of every 12 kids in Maine has
asthma''--a frightening statistic for our next generation.
In addition to ozone health effects, Maine as well as the entire
Northeast is affected by other environmental and public health impacts
caused by NOx pollution. Maine's economy is dependent on our natural
resources--forestry, fishing, agriculture and tourism. Chronic exposure
to elevated smog levels may be accelerating the death rates of some
tree species in our eastern forests, which could alter the forests'
value as timber and recreational resources. A study by the National
Academy of sciences recently reported that leaves of ozone-damaged
plants often die and fall off in late summer, reducing the beauty of a
forest's fall foliage. Fall foliage tourism in Maine is a multi-million
dollar industry.
Nitric acid formed from NOx is a constituent of acid rain that
contributes to long-term damage in many eastern lakes and forest soils.
Indeed, acid rain has been pointed to as the culprit in the diminished
productivity and value of northern Maine and Vermont sugarbush (maple
syrup producing trees). Nitrogen deposited from the air into bays and
estuaries leads to oxygen-depleting algal blooms, harming aquatic life
in some of our most economically productive marine ecosystems.
conclusion
In conclusion, for over 20 years our country has perpetuated an
illogical system in which pollution is free from the law as soon as it
crosses State lines. The illogic and inequity of punishing downwind
States for forces beyond our control has led to a host of tortured
policies, like EPA's decision in 1982 to designate the State of Rhode
Island to be in ``attainment but for transport.'' In human speak this
means the air was clean but for the pollution. After 20 years of
collecting and reviewing the scientific data, EPA has finally responded
with a measured first step to diminish the magnitude of NOx transport
across State lines. All States will benefit from the cost-effective
pollution reductions required under the EPA approach.
It is unfortunate that the inaction on the part of our neighbors
has forced us to turn to the federal government for relief. As a State
legislator, I would have preferred standing shoulder to shoulder with
my upwind counterparts to announce that States had joined together in a
necessary effort to protect public health. Sadly, that option has not
and apparently will not present itself. It is precisely in the cases
when States can not reach rational outcomes alone that federal action
is required. EPA should be commended for its recent efforts to bring
science and fairness back to our air pollution control efforts. Thank
you.
______
Response by Senator Sharen Treat to Additional Question from Senator
Inhofe
Question: Senator Treat, Mr. Harding, from Michigan testified on
the second panel that OTAG recommended that the States be given
additional time to conduct ``subregional'' modeling. Were the States
given the additional time to conduct this modeling?
Response. In it final report, OTAG recommended that States be given
additional time to conduct local and subregional modeling and air
quality analysis. It seems evident that the OTAG membership understood
that even after transported emissions were controlled, there would
continue to be some areas with ozone air quality problems. These areas
would obviously need to undertake additional efforts to evaluate the
nature and extent of their air quality problems through local or
subregional planning efforts. In fact, EPA's timeline for implementing
the 8-hour ozone standard provides for additional modeling time that is
very consistent with OTAG's recommendations.
______
Response by Sharon Treat to Additional Questions from Senator Lieberman
Question 1. How difficult will it be for Maine to achieve the
standards without a regional control strategy?
Response. Attainment of the 8-hour ozone standards in Maine is
almost wholly dependent upon the implementation of a regional control
strategy. While local emissions certainly have an impact on ozone air
quality in Maine, regional air quality modeling conducted by the U.S.
Environmental Protection Agency (EPA), the Ozone Transport Assessment
Group (OTAG), and others has shown conclusively that pollution
transport is responsible for most of our air quality problems. Air
quality modeling conducted by EPA predicts that regional controls will
allow most or all of Maine to meet the 8-hour ozone standard; at least
four counties will violate this standard without regional controls.
Although the 1-hour ozone standard has been revoked throughout
Maine, the long-term maintenance of this standard is also largely
dependent upon upwind emission reductions. Regional controls of the
magnitude required by the NOx SIP Call and Section 126 rulemakings will
play a key role in ensuring that Maine continues to meet this standard,
and will become even more important should the standard be reinstated.
Question 2. Could you please describe how the proposal from the
Southeast/Midwest Governors would affect Maine's efforts to control
acid rain and air pollution? How does the proposal compare to the
current NOx reduction requirements scheduled to begin in 2000 under the
existing Acid Rain Program?
Response. The Southeast/Midwest Governors' proposal would
significantly hamper our efforts to control acid rain, ozone and
particulates. In addition to requiring less stringent controls, the
Governors' proposal does not contain a cap on emissions. As a result,
emissions would continue to grow in future years. Even if fully
implemented, this proposal would result in emissions levels that were
21\1/2\ times higher than those under the NOx SIP Call in 2007. In
fact, by 2007 this growth would return NOx emissions back to the same
levels achieved by the Acid Rain Phase II NOx control levels in 2000.
Clearly, the acid rain benefits provided by the Govemors' proposal fall
far short of those provided by the NOx SIP Call.
______
Response by Sharon Treat to Additional Question from Senator Baucus
Question: What advantages and disadvantages do you believe that the
``Governors' proposal'' on NOx reductions, as alluded to in the
hearing, would have relative to EPA's proposed NOx SIP call?
Response. As I understand it, the Govemors' proposal promises early
``substantial reductions'' by 2002 (the lesser of a 55 percent
reduction or a 0.35 lb. per million Btu emission rate), with additional
controls by 2004 (the lesser of a 65 percent reduction or 0.25 lb. per
million Btu emission rate). Although this proposal touts its ``early
reductions,'' it offers no more than a marginal short-term advantage
over the NOx SIP call. Since the NOx SIP call amounts to the equivalent
of an 85 percent NOx reduction from power plants in the 3-year period
prior to May 2003, we could expect that two-thirds of these reductions
(or a 57 percent reduction) would already be achieved by May of 2002.
The Govemors' proposal offers no real short-term advantages.
Over the long term, the Governors' proposal will result in
significantly more transported pollution, since emissions are not
capped. By 2007, NOx emissions under the proposal will have grown to
the same level seen under the Acid Rain Program Phase 11 NOx controls.
Even worse, any future reductions are contingent upon upwind State's
modeling efforts. Maine and the other northeast States would once again
be at the mercy of upwind States that have no incentive to address
impacts beyond their own borders. Implementation of this program would
expose millions more to unhealthy air pollution, and cost the northeast
and Mid-Atlantic States millions of dollars to mitigate the effects of
transported emissions.
__________
Statement of Mayor Thomas Nye, City of Hamilton, Ohio
Good morning, Chairman Inhofe, Senator Graham, my own Senator
Voinovich, and other members of the Subcommittee. My name is Thomas
Nye, and I am the Mayor of the City of Hamilton, Ohio. Hamilton is a
city of approximately 65,000 located in Butler County in southwest
Ohio. Hamilton is a public power community that has owned and operated
a non-profit municipal electric utility for its citizens since 1893. I
appreciate the opportunity to testify on behalf the Ohio Municipal
Electric Association and its 80 public power communities, on the need
for the United States Environmental Protection Agency (EPA) to pursue
cost effective strategies for the control of NOx emissions. EPA's
current NOx strategy, calling for up to 85 percent reductions in
electric utility NOx imposed through a State Implementation Plan Call,
and backed up by the imposition of controls under a Federal
Implementation Plan or Clean Air Act Section 126 action, has not
adequately recognized the potential impacts on small public power
communities. Public power communities therefore urge EPA to adopt
meaningful, yet reasonable, NOx reduction policies that recognize and
mitigate impacts on small entities and localities. We also urge the
Congress to promote cost-effective air quality regulations that provide
maximum flexibility and assistance to local governments and small
businesses.
the city of hamilton and its municipal electric system
The City of Hamilton owns and operates a municipal electric system
for its residents, commercial businesses and industries. Hamilton's
economy is supported by industrial operations including Champion
International, International Paper, Hamilton Caster, Hamilton Die Cast,
Krupp-Hoesch, Krupp-Bilstein, Hamilton Fixture, and General Electric,
to name a few.
The City of Hamilton is pursuing economic development strategies to
recycle abandoned and underutilized industrial and commercial
properties by actively participating in the redevelopment of
``brownfields.'' Placing these environmentally challenged properties
back into productive re-use will allow Hamilton to be actively involved
in the revitalization of our industrial corridor and central city.
Benefits of the redevelopment of brownfields sites in the City of
Hamilton include the creation of family-wage jobs, increased private
investment, the retention and expansion of existing businesses, and
recruitment of new high technology companies. The reuse of existing
properties in our center city can also help reduce sprawling growth
outside the City and throughout the region, which will help slow the
increase in traffic over the long-term, in turn reducing air pollution
from vehicles.
However, Hamilton's quality of life, and our ability to attract
jobs through brownfields redevelopment and other business recruitment
efforts, depends in large part on providing cost-effective public
services to residents and private sector employers. That is why
Hamilton operates a municipal electric utility, and that is why we are
very concerned that EPA's current Clean Air Act policies may unduly
raise the costs of service to our customers, and threaten the viability
and economic competitiveness of our public power system.
Hamilton's municipal electric system consists of local electricity
transmission and distribution wires, and three electric generation
facilities totaling 206.7 megawatts in capacity. This electric
generation includes 135 megawatts at the fossil-fired Hamilton
Municipal Power Plant, 70.2 megawatts at Greenup Hydroelectric Plant on
the Ohio River and 1.5 megawatts at the Hamilton Small Hydro located on
the Ford Hydraulic Canal. Hamilton's Municipal Electric Plant
contributes significantly to the local economy, generating purchases
from local businesses of at least $2.6 million, contributing $12.8
million in household earnings, supporting 371 full and part time jobs
in the greater Cincinnati region, and contributing up to $160,000 for
the local tax base. Boiler #9, a 50 megawatt coalfired boiler subject
to EPA's NOx SIP Call, FIP and Section 126 control strategy, is the
largest and most cost-effective unit in Hamilton's fossil fuel plant.
The Greenup hydroelectric facility is our primary source of power,
backed up by Boiler #9 when river flow conditions do not permit
generation.
In addition to overall concerns about EPA's NOx strategy that we
explain below, Hamilton is very concerned that EPA's NOx strategy may
adversely impact the Hamilton electric system by improperly
overcontrolling Boiler #9 under EPA's proposed NOx cap-and-trade
program. A second concern of Hamilton is that EPA's NOx control
strategy will neither recognize the role of our hydroelectric
facilities in our electric system, nor the massive decrease in NOx and
other air pollution emissions that our generation system has made since
1981, when we purchased the Greenup hydroelectric facility and began
producing the majority of our power through clean hydroelectric
generation. See Attachment 2 (demonstrating reductions of more than
7,200 tons in NOx, SO2, particulate and VOC emissions during
EPA baseline years of 1995-97, including 2,700 tons of NOx). EPA is
currently considering Hamilton's requests, and we are hopeful that the
Agency will take into account our reasonable and justifiable concerns.
Today, I wish to emphasize that Hamilton's specific concerns are
symptomatic of the overall impact of the federal NOx control strategy
on public power communities and other small business entities: a
stringent, costly and uniform federal mandate will inevitably have
negative impacts on the smallest entities and localities. In our
belief, EPA has not done an adequate job of identifying and mitigating
these impacts.
Hamilton's first specific concern involves the potential over-
control of Hamilton's Boiler #9 under EPA's proposed method for
establishing a baseline of emissions for affected units, and allocating
NOx trading allowances to cover the emissions that would be allowed
from that baseline. Under EPA's proposed NOx trading system, Boiler #9
will be allocated allowances based on its historic usage. However, due
to exceptional circumstances during EPA's proposed baseline utilization
period, Boiler #9 could receive a serious underallocation of
allowances.
Specifically, the 1995-97 baseline years, upon which the EPA NOx
budgets established for individual States have been calculated, were
unusual years for the operation of Boiler #9. In 1995, there was a
major rehabilitation of Boiler #9 during the summer ozone season,
reducing operation by 30 percent. In 1996, the utilization of Boiler #9
was reduced nearly 50 percent, due to boiler control upgrades necessary
for a dry desulfurization pollution control project. Likewise, in 1997,
the availability of Boiler #9 was only 59 percent due to a rebuild of
the associated generator and final tie-in of the desulfurization
project. Unless these exceptional circumstances at the Hamilton plant
are taken into account in EPA's allowance allocation, Boiler #9 will be
starting at a serious disadvantage under an already stringent
regulatory program. (See also Attachment 3, explaining Hamilton's
situation under EPA NOx control strategy).
Hamilton's second specific concern is that EPA's federal NOx
allowance trading program will not take into account the role of our
Greenup hydroelectric facility at our electric system, or the
substantial reductions in NOx and other air pollutants that Hamilton
has already undertaken through this hydroelectric system, at great cost
to our community. Hamilton relies on the Greenup hydroelectric facility
as its primary source of electric generation. Hamilton has
substantially reduced the municipal utility's emissions of NOx and
other air pollutants through its large investment in the hydroelectric
facilities at the Greenup Locks and Dam on the Ohio River and at
Hamilton's Ford Hydraulic Canal. The amount of power generated from
this ``run of the river'' Greenup facility (unlike at darns with
impoundment reservoirs) depends on river flow conditions and Ohio River
navigation requirements regulated by the Army Corps of Engineers. The
facility can only generate when there is sufficient distance between
the upstream and downstream pools based on flow conditions, and when
the Army Corps permits flow into the lower pool. As such, generation of
electricity is a secondary function of the Greenup Locks and Dam, in
which we are making use of an existing facility for the
environmentally-preferable production of clean energy. However, in
those cases in which the run-of-the-river does not permit electric
generation, the Greenup facility is backed by Hamilton's coal-fired
Boiler #9.
As a result, EPA's proposed allowance allocation to Boiler #9 may
not provide sufficient to the unit if utilization is increased to
substitute for hydroelectric output in order to ensure that electric
demand and reliability are met. This situation imperils the City of
Hamilton's ability to provide cost-effective service to its citizens if
the hydroelectric plants, due to flow conditions and navigation
requirements beyond Hamilton's control, are unable to meet the
production levels accomplished during the EPA 1995-97 baseline
emissions period. Extended hydroelectric plant outages are likely to
occur during the ozone season when stream flows are low, which may
leave the City with insufficient NOx allowances to meet its needs. (See
also Attachment 3).
Hamilton's switch from sole reliance on fossil-fired electric
generation to small hydroelectric generation during the early 1980s has
made its 1995-1997 heat input baseline artificially low. Hamilton has
actually decreased its use of fossil fuels approximately 40 percent
from 1981 levels while still supporting an increase of 50 percent in
electric demand over the same period. (See also Attachment 3). This is
a significant accomplishment by a public power community and represents
an approach that is significantly different than the course of action
typically taken by investor-owned utilities during this period.
Hamilton has not accomplished this without cost to the community, as
our $ 170 million investment in hydropower has imposed an additional
$29.534 million in operating and capital costs than had a similar sized
coal-fired facility been developed during the 1980's. These voluntary
pollution prevention expenditures are in addition to Hamilton's
voluntary investments in advanced coal scrubbing technology, composting
facilities? and other environmental initiatives that have resulted in
more than $2.5 million in yearly debt service. (See Attachments 4 & 5).
Since EPA's proposed allowance allocation is based on historical
heat input, and Hamilton has already cut its heat input by 50 percent ,
the municipal electric system is expected to receive only 50 percent of
the allocations that Hamilton must have to support its required
generation. (See Attachments 3 & 6). In short, EPA's proposed NOx
control and trading strategy may significantly overcontrol Hamilton's
Boiler #9, despite the large investments we have made in clean power
hydroelectric generation.
We believe that if EPA's proposed NOx control strategy is imposed
on Hamilton, it may threaten the viability of our municipal electric
system. For example, even if Hamilton installed technology to meet
EPA's 0.15 lb/mmBtu limit--which is a cost-prohibitive option--EPA's
proposed allowance allocation to Boiler #9 (87 tons per ozone season)
will permit Hamilton to operate the unit for only 66 days during the
ozone season without purchasing significant additional allowances.
Further controls on Boiler #9 are not cost effective. An independent
engineering Bern has estimated the cost-per-ton of NOx removed for
Hamilton's Boiler #9 at $7,554. This is well in excess of EPA's
estimated cost of $1,468/ton removal for large electric generating
units.
Likewise, if Hamilton must purchase additional NOx allowances to
cover its typical generation, it will be placed at a different starting
point from other affected utilities, and at a significant competitive
disadvantage. The City may be forced to pay extraordinary allowance or
substitute electricity prices during those periods when the City cannot
rely on its hydroelectric generation to cover typical demand -if those
commodities are even available. Such a situation could wreak havoc on
municipal budgets. Such risks can, of course, be controlled by
purchasing options and through other market tools. However, small
public power communities lack the resources and expertise to play the
commodities markets. Our citizens want us to be public servants, not
Wall Street hawks.
I would also like to note with appreciation that both Senator
Inhofe and Senator Voinovich have monitored Hamilton's concerns
regarding the impact of the NOx control strategy on our municipal
system, and urged EPA to take our situation into account. EPA is
expected to issue a final rule on a federal NOx trading system in July,
which could take Hamilton's requests into account. We appreciate the
Senators' attention to this matter, and the Agency's consideration of
our situation.
Hamilton's concerns about the potential impacts of EPA's NOx
control strategy are not unique among Ohio public power communities,
and we believe that these concerns are shared by public power systems
throughout the proposed EPA NOx control region, as explained further
below.
epa's nox control strategy may adversely impact public power
communities
From an overall perspective, Ohio's public power communities are
concerned that EPA's NOx control strategy goes beyond what is necessary
to protect public health and the environment from ozone pollution, and
requires NOx controls that are not cost-effective for small businesses
and localities.
The impact of EPA's strategy could be particularly difficult for
smaller sources and entities. EPA itself has recognized the potential
for disproportionate impact on small entities, in its final Regulatory
Impact Analysis for the 8-hour ozone standard (at pp. 11-27, 11-28, 11-
29):
Small entities, all other factors being equal, generally have less
capital available for purchase of add-on pollution control technology
than large entities. In addition, the control cost per unit of
production for small entities will likely be higher than for large
entities due to economies of scale. Thus, control measures requiring
the use of add-on control technology may cause small entities affected
by State rules to experience disproportionate economic impacts compared
to large entities if no strategies to mitigate potential small entity
impacts are available for implementation by States.... Consequently,
EPA is encouraging States to exercise regulatory flexibility for small
entities when developing strategies to meet the standards adopted
today. While some States may need to turn to small businesses for
emission reductions, small businesses will likely be among the last
sources the States will choose to control. States may consider controls
on small businesses only if such businesses are a significant part of
an area's nonattainment problem and attainment cannot be reached
through application of all available cost-effective measures to major
sources.
To the extent States consider controlling small businesses, EPA
believes there are many ways States can mitigate the potential adverse
impacts those businesses might experience. For example, States could
choose to exempt or apply less stringent requirements to small
businesses.... States could also extend the effective date for control
requirements for small businesses to 2010 or later.... States could
also choose to apply control requirements to other businesses first,
before requiring them for small businesses.
Hamilton and the Ohio Municipal Electric Association strongly agree
with this EPA recognition in the ozone impact analysis, and thus calls
upon EPA to take more meaningful action to ensure that this message is
translated into the Agency's ozone and NOx implementation policies.
Although EPA has taken the proper step of exempting the smallest
utility sources (less than 25 megawatts) from NOx controls, EPA has not
assessed the impacts of its NOx strategy on small entities, like
Hamilton's municipal utility, that may own both small and larger
utility units. Given the stringent nature of EPA's NOx control
strategy, and the disproportionate impacts to small businesses and
localities that may result, Hamilton supports approaches like the so-
called ``Governors' Alternative'' NOx control strategy that was
proposed by then-Governor Voinovich, which is being pursued by Ohio and
other States. Although Ohio public power believes that all approaches,
including the Governors' Alternative, must better assess and mitigate
impacts on small entities, we believe that the Governors' Alternative
can achieve substantial reductions in utility NOx emissions of 65
percent over the next 5 years, in a fashion that is cost-effective and
feasible for affected municipal electric systems. We call on EPA to
consider working cooperatively with States like Ohio to achieve needed
NOx reductions through this reasonable alternative plan.
epa's clean air act implementation should better recognize and identify
impacts on small entities and localities
Given the potential for adverse, disproportionate impact on small
entities from EPA's NOx control strategy, Hamilton and the Ohio
Municipal Electric Association urge the Agency to consider more fully
how to mitigate such impacts. Most importantly, EPA should commit to
performing a full analysis of small entity impacts under the Small
Business Regulatory Fairness Act, or ``SBREFA.''
Indeed, EPA has encouraged States to identify and mitigate impacts
of Clean Air Act regulations on small entities. In April, 1998, EPA
issued ``Guidance on Mitigation of Impact to Small Business While
Implementing Air Quality Standards and Regulations.'' This guidance
calls for ``implementation strategies that mitigate adverse impacts on
small sources . . . wherever possible and appropriate, including the
exemption of small sources from regulations, compliance flexibility,
extended compliance deadlines, and compliance assistance for small
entities. EPA has issued this guidance to States, but has not made
sufficient efforts to ensure that States implement the guidance, and
has not made adequate efforts to implement such policies itself.
EPA's effort to identify and mitigate impacts on small entities
should begin with the performance of a full SBREFA analysis for the NOx
SIP call. Second, EPA should ensure that any SBREFA analyses for the
NOx control strategy include the proper universe of public power
communities. Specifically, the definition of ``small entity'' under
SBREFA with respect to electric utilities includes those utilities that
sell less than 4 million megawatt hours of power annually. This SBREFA
standard includes Hamilton, as well as all other municipal electric
generators in Ohio. However, EPA's SBREFA analysis conducted under its
proposed FIP and its Section 126 rules does not appear to have used
this standard, and as a result has not properly identified impacts of
the NOx control strategy on public power communities like Hamilton.
Third, once these impacts are properly identified, the Agency should
consider the use of compliance flexibility and assistance for small
public power systems, to ensure that they can comply in a cost
effective manner, and that they are not faced with a competitive
disadvantage against larger electric systems as industry deregulation
and competition looms on the horizon.
congress should promote clean air act policies that are cost-effective,
with compliance assistance targeted to small entities and localities
Hamilton greatly appreciates the efforts of this Subcommittee to
oversee the implementation of EPA's NOx control strategy, and
encourages you to continue playing an appropriate role to ensure that
air pollution regulations are effective and reasonable. In addition to
oversight, Congress should consider how it can enact legislation that
will promote air quality strategies that are clear, cost-effective and
supportive of market-based emissions control systems. Specifically,
Congress should consider:
Establishing a NOx cap-and-trade system for the eastern
United States. Localities, industry and EPA agree that market
trading of NOx emissions is the most cost-effective manner to
achieve NOx reductions. EPA is attempting to implement such a
system. However, any system implemented by EPA under the current
regulatory climate could be confusing and counter-productive,
particularly for small entities. EPA's proposed federal NOx trading
system will not be applied uniformly over the eastern United
States, but instead through a hodgepodge of voluntary State
programs and federal mandates. The implementation of EPA's proposed
system could be particularly confusing given recent federal court
rulings regarding the 8-hour ozone standard and the NOx SIP Call,
as well as the on-going litigation with respect to the SIP Call. In
these uncertain circumstances, a NOx trading program could be
ineffective, resulting in NOx credits that are too expensive and
difficult to obtain for entities like Hamilton that will need them.
This situation deserves congressional attention.
Examination of SBREFA at U.S. EPA--EPA's performance of its
obligations under the SBREFA statute has not adequately identified
impacts from Clean Air Act regulations on entities like Hamilton.
Congress should consider whether EPA is effectively administering
its obligations under SBREFA and take appropriate oversight or
legislative action to ensure that SBREFA does its job.
Phasing In NOx Controls for Small Sources--As EPA has
recognized, small entities and sources may need compliance
flexibility and extended deadlines in order to cost-effectively
comply with Clean Air Act regulations. Hamilton suggests that a
regional NOx control strategy should be phased in, with the largest
utility units controlled first, followed by smaller sources. Like
the successful SO2 Acid Rain program, a phased approach
for NOx will focus on the most significant sources of pollution
first, stimulate the development of control technologies and
efficient pollution trading markets, and provide small entities
with adequate time to meet their compliance obligations.
Clean Air Partnership Fund--EPA has proposed a new program
that would provide grants and other assistance directly to local
governments for innovative approaches to air quality improvement.
This ``Clean Air Partnership Fund'' is now being considered by
Congress in EPA's budget proposal. The Fund could be available to
assist local initiatives to clean the air through activities
including the use of advanced technologies, energy efficiency and
renewable energy projects, clean vehicles, and assistance to small
businesses in reducing emissions. This sort of fund for local clean
air innovation is exactly the type of assistance that localities
like Hamilton need to make progress, without having to face
increasingly stringent command and control mandates. I am certain
that Hamilton could put the Fund to use to reduce emissions of NOx
and other air pollutants, and we urge Congress to give serious
consideration to this proposed program.
conclusion
On behalf of the City of Hamilton and the Ohio Municipal Electric
Association, I once again thank the Senators for the opportunity to
testify today. Hamilton supports effective Clean Air Act requirements
to reduce NOx and ozone pollution, but EPA needs to be more vigilant in
identifying how these regulations might impact small businesses and
local governments who need compliance flexibility in order to remain
viable.
______
Letter from Mayor Nye
July 1, 1999.
Hon. James Inhofe, Chairman,
Committee on Environment and Public Works,
Subcommittee on Clean Air, Wetlands, Private Property and Nuclear
Safety,
Washington, DC 20510.
Re: NOx Removal Costs for Hamilton Boiler 9
Mr. Chairman: During the course of my testimony and the following
question and answer period, there seemed to be great interest by
co-committee members regarding the estimated cost per ton of NOx
removed for Hamilton Boiler 9. It was requested that Hamilton
provide documentation of these estimated costs for entry into the
public record.
Based on capital and O&M cost estimates prepared by the engineering
firm SET, Inc. for the City of Hamilton's Boiler 9 (attachment 1), the
total annual cost to install and operate a selective catalytic
reduction system (SCR) to comply with the 0.15 lb/mmBtu NOx limit is
$771,929 debt service and an additional $656,100 O&M (based on a 56.6
percent capacity, which is typical for Boiler 9). The debt service is
calculated on the estimated cost as provided by SET, Inc., adjusted by
3 percent per year inflation for the period from 1995 to 1998 and
amortized over 20 years at 4.5 percent interest (attachment 2). This
equals 3.2 percent of the 1998 electric revenues for the entire
Hamilton Municipal Electric System. Further, when calculated on a cost
per ton NOx removed, the cost was over $7,554/ton. The basis for this
is as follows:
1. Ozone season NOx production for Boiler #9 pre-SIP, FIP or 126 =
0.40 lb/mmBtu x 729 mmBtu/hr x 24 hr/day x 153 day/season x 0.565
(historic capacity factor of Boiler 9) x 1 ton/2000 lbs = 302 tons.
2. After installation of controls: 0.15 lb/mmBtu x 729 mmBtu/hr x
24 hr/day x 153 day/season x 0.565 (historic capacity factor of Boiler
9) x 1 ton/2000 lbs = 113 tons.
3. 302 tons--113 tons = 189 tons removed under EPA performance
standard.
4. $1,427,689 annual cost/ 189 annual tons removed = $7,554 per ton
NOx removed.
Part of the higher that expected removal cost is associated with
our capacity factor of the boiler, but that is a reality based on the
fact that Boiler 9 backs up our hydroelectric generation. However, even
without the capacity factor issue the cost/ton NOx removed would be
$4,274. Both are significantly higher than USEPA's estimated removal
cost of $1,500/ton NOx.
Should there be anything additional that I may provide concerning
this issue, do not hesitate to contact me at (513) 868-5834.
Alternatively, feel free to contact Mary Moore, Utilities Environmental
Administrator, at [email protected] or at (513) 868-
5908 ext. 1830.
Very truly yours,
Thomas E. Nye, O.D.
Mayor, City of Hamilton.
______
Responses by Thomas Nye to Additional Questions from Senator Inhofe
Question 1. Mayor Nye, in your testimony you were critical of the
EPA's efforts to implement SBREFA. You stated that the EPA ignored the
definition of a ``small entity'' with respect to electric utilities. If
they had adequately considered SBREFA how would it have improved your
situation?
Response. In its NOx SIP Call, EPA failed to undertake any of the
analyses and outreach required by the Small Business Regulatory
Enforcement Fairness Act of 1996 (``SBREFA''). Congress enacted SBREFA
in order to protect small businesses, small organizations and small
governmental jurisdictions, collectively referred to as ``small
entities,'' from disproportionate or unanticipated adverse impacts of
Federal rulemaking activity. The analyses required by SBREFA must be
undertaken prior to publication of any general notice of proposed
rulemaking and must ``contain a description of any significant
alternatives to the proposed rule which accomplish the Stated
objectives of applicable statutes and which minimize any significant
economic impact of the proposed rule on small entities.'' U.S.C.
Sec. 603(c). In addition, agencies must conduct extensive outreach and
coordination with small entity representatives during the regulatory
process for significant rules. Likewise, agencies must publish final
SBREFA analyses, including an assessment of alternative approaches to
mitigate impacts on small entities, when a final rule is promulgated.
Such analysis and outreach for the EPA NOx SIP Call would have
assured that the impacts on small entities were given due
consideration, and mitigated where reasonable. The SIP Call will
directly and undoubtedly impact small entities, like public power
communities. However, EPA shirked its SBREFA obligations by arguing
that the SIP Call will not directly ``regulate'' small entities,
because the specifics of the SIP Call will be imposed by States who are
being commanded to implement the program, rather than by EPA. EPA's
approach to SBREFA in the SIP Call is, Hamilton believes, clearly
contrary to the intent of Congress. Although this issue is currently in
litigation (including through petitions raised by small public power
communities), it may be necessary for Congress to clarify SBREFA to
ensure that agencies like EPA are not able to evade the analysis and
outreach that is necessary to mitigate the disproportionate impact of
regulations as significant as the SIP Call on small entities.
Even where EPA has performed analyses for SBREFA (such as in the
CAA Section 126 and NOx FIP rules), the analyses were limited in scope,
and they used the wrong standard. Specifically, Hamilton was not
permitted to submit comments to the Small Business Advocacy Review
Panels that met to assess the potential impacts of the Section 126 and
FIP rulemakings on small businesses. In order to submit any comments to
these panels, our comments had to be submitted through our State trade
association, American Municipal Power-Ohio (AMP-Ohio). No direct
comments were accepted. The timeline for response to these panels were
extremely short as well. The original letter from Thomas E. Kelley
inviting comment was dated July 30, 1998, and the comments were due by
August 11, 1998.
In addition, EPA used the wrong standard to define ``small entity''
in the utility industry in its SBREFA analysis. It appears that EPA
assessed the potential impact of the Section 126 rule and FIP rules on
small utilities by defining as ``small'' those utilities that own or
operate small units, of less than 25 megawatts in size. And, because
EPA proposed to exempt such small units from regulation, the Agency
assumed that there will be minimal impact of the NOx rules on small
utility entities. However, SBREFA and applicable small business
regulations define ``small entity'' in the utility industry as an
entity that sells less than 4 million megawatt/hours annually--whether
that entity owns small utility units, large utility units, or both. In
Hamilton's case, for example, our municipal utility system is a ``small
entity'' under SBREFA that owns one ``large'' unit, Boiler 9 at 50 MW,
and several small, less than 25 MW units. Many other public power
communities would likewise fall under the SBREFA standard, even though
they may own some larger utility units (which, of course, are fully
subject to EPA's Clean Air Act regulations).
However, EPA has failed in its SBREFA analyses for the Section 126
and FIP rules to identify how its NOx strategy may have
disproportionate impacts on small utility entities, and how these
impacts can be mitigated. The Agency has not properly assessed how the
typical lack of capital, lack of staff resources, lack of pollution
control expertise, and diseconomies of scale of these smaller systems
may make it more difficult for them to cost-effectively implement
Federal regulatory mandates and remain competitive in the utility
industry. EPA itself has recognized the potential for disproportionate
impacts to small entities from its Clean Air Act rulemaking, and even
issued guidance to States to urge them to mitigate such impacts.
If EPA had performed a full SBREFA analysis for its NOx rules as
Congress intended, I believe the impacts on public power communities
like Hamilton (e.g., larger cost per ton removal, less staff to track
and administer the program, less customers over which to spread the
costs of compliance, and Hamilton's significant debt load for voluntary
environmentally favorable projects, to name a few) would have been
recognized, and could have been mitigated. A more flexible pollution
control program could have been developed to ameliorate impacts on
Hamilton and other small entities. Commenters like Hamilton have
attempted to offer suggestions to EPA for compliance flexibility for
small public power communities. However, as conducted by EPA in its NOx
rulemaking process, we do not perceive that the Agency's SBREFA work
has had any meaningful effect on these rules.
In sum, EPA has either evaded its SBREFA obligations or performed
inadequate analysis and outreach that have not identified the
disproportionate impacts on small utility entities that may take place
under its NOx control strategy. The Agency has acknowledged the real
potential for such impacts. If EPA conducts a full and proper SBREFA
analysis for its NOx program, it could better identify how to avoid
small entity impacts through compliance flexibility for small public
power communities.
Question 2. Mayor Nye, now that the EPA has issued the stay for the
SIP call, how does that affect your planning? Will you go forward with
the Governors proposal or try and implement the EPA's plan?
Response. Hamilton's only realistic choice is to follow the rules
that are adopted and implemented by our State, although we are very
concerned that the confused regulatory situation will make it difficult
for us to plan for our future pollution control and utility operations.
At this point, we do not know whether we will be asked to implement the
Governors Alternative, a future SIP Call plan, a future Federal
Implementation Plan, or the newly crafted EPA Section 126 plan for
Ohio.
As I have testified, the only cost-effective way for Hamilton to
comply with either EPA's rules or the Governors Alternative is through
a NOx allowance trading program that provides easily available, and
affordable, NOx credits. Obviously, Hamilton feels that the Governors
Alternative is a more reasonable and achievable plan, with its proposal
for a 65 percent reduction in NOx emissions. However, even the
Governors Alternative is unfavorable to small entities in many
respects. For example, it might impose controls on the smallest of
utility units, and it does not identify how NOx trading can make
compliance achievable for small entities.
Therefore, from Hamilton's perspective, we must have two things to
enable us to plan for NOx control: a clear sense of the rules that will
apply, and a set of rules that provides for cost-effective NOx trading
as a means of compliance. For us, the judicial stay of the SIP Call is
merely continuing the uncertainty of our future regulatory obligations,
and potentially preventing parties from working together to craft a
workable NOx trading program. In the meantime, Hamilton is still
awaiting EPA's final Federal NOx trading rule, and the outcome of our
discussions with EPA regarding the allowance allocation process under
that rule (as I discussed in my written testimony). The final scope and
design of any trading program will determine the full impact of the SIP
(or FIP or 126) rules on Hamilton. Alternatively, if Ohio implements a
Governors Alternative approach, we need to discuss with Ohio EPA the
specifics of implementation, such as allowance allocation, trading and
compliance deadlines in order to achieve a small entity favorable (or
at least neutral) program.
Question 3. If the EPA plan is upheld by the courts, what kind of
lead time do you need in order to plan for the reduction?
Response. Since Hamilton's only cost-effective method to comply
with the NOx SIP is through the proposed NOx allowance trading program,
the lead time necessary for Hamilton compliance may not be as
significant as if Hamilton planned to comply through the installation
of pollution control equipment or substantial operational changes.
However, the uncertainty that may be associated with a
reinstatement of the EPA SIP Call (and its May 2003 compliance date) at
the end of the current litigation is a significant concern to Hamilton.
I reiterate that Hamilton feels that a phasing of the NOx control
program for small entities is justified on both environmental and small
entity fairness grounds. Phasing in NOx reduction requirements for the
largest sources of emissions first, and then later for small entities,
would ensure that the bulk of emission reductions are achieved up
front. Further, a phased program will also allow a workable NOx trading
program to be fully implemented before small entities become subject to
the program. This approach could also broaden the compliance options
for small entities: if a new, less-costly NOx reduction technology can
be developed during the phase-in period, then a small entity may be
able to choose the technology instead of being limited to the trading
program as the sole compliance option.
Hamilton would also need lead time for its NOx compliance if U.S.
EPA's forthcoming Federal NOx trading program does not grant Hamilton's
request that its allowance allocation for Boiler 9 be adjusted to
reflect Hamilton's unique circumstances, as explained in my written
testimony. If Hamilton is required to meet NOx requirements as early as
May, 2003 with a substantial underallocation of NOx allowances, the
City will need to consider other options, including the shut down or
sale of our fossil-fired electric plant, which could in turn threaten
the viability of our system, established in 1893.
Likewise, Hamilton would need lead time to plan, if the State of
Ohio implements a NOx control plan that does not provide for easily
available, cost-effective NOx allowance trading by Hamilton. Again,
without such an option, Hamilton may face a crisis.
In any of these scenarios, Hamilton is harmed by the lack of
regulatory certainty of the current situation, which is only
exacerbated by the prospect of continuing litigation over the Federal
NOx program.
Question 4. The EPA is going forward with Section 126 petitions, at
this point they will only address the 1-hour standard, because of the
recent NAAQS decision. If they win the appeal, presumably they will re-
address the 8-hour standard, plus the SIP Call at a later date, what
effect does this have on your city's short- and long-term planning?
Response. The City of Hamilton is struggling with two major issues
regarding our electric system as I respond to this question. The first
is, can we compete under electric deregulation? Governor Taft signed a
bill on June 6, 1999 deregulating the electric utility industry in Ohio
effective January 2001. Municipal electric utilities have to right to
``opt out'' from competition under this deregulation bill. Given the
significant debt load under which the Hamilton Electric System is
operating due to our decision to invest in hydroelectric power, and the
potential disproportionate costs that will be incurred to comply with
any regional NOx reduction strategy, our ability to compete is in
question. However, with our need to attract and maintain jobs for our
community though the provision of low-cost electric service, do we dare
not open our city to competition? Thus, the uncertainties associated
with the ozone NAAQS, the SIP Call, Section 126 are placing the City in
a significant planning quandary, both short and long term.
Hamilton is also concerned with a second issue, which is affected
by the uncertainly of the current regulatory situation. Hamilton has
decided to delay indefinitely the installation of low NOx burners on
Boiler 9, which are necessary for our compliance with Phase 2 NOx
reductions requirements under Clean Air Act Title IV. Phase 2 rules
applicable to Boiler 9 mandate compliance with a 0.40 lb/mmBtu limit
for NOx emissions effective January 1, 2000. The installation of low
NOx burners is a cost-effective method of complying with this new
limit. Hamilton, however, could not justify investing additional
capital dollars in our generating system should deregulation and/or
further NOx requirements cause us to go out of business. We will be
complying with the Title IV requirements by co-firing natural gas. For
the long term, this is not the most cost-effective mode of operation
but, given all the uncertainties, no other prudent decision could be
made.
______
Responses by Thomas Nye to Additional Questions from Senator Chafee
Question 1. In your testimony you reference the EPA's proposed NOx
Trading program. Could you elaborate on how you think that proposed NOx
Trading program could be improved?
Response. For Hamilton and most small public power electric
generators, compliance with any regional NOx control strategy must be
achieved through the trading and purchase of NOx allowances through a
NOx Trading program. Therefore, the trading program must be well
conceived and well implemented.
However, any system implemented by EPA under the current regulatory
climate could be confusing and counter-productive, especially for small
entities. EPA's proposed Federal NOx trading system will not be applied
uniformly over the eastern United States, but instead through a
hodgepodge of voluntary State programs and Federal mandates. For
example, the State of Michigan currently does not plan to participate
in any regional NOx trading approach. In Ohio, there is a trading
committee currently meeting to determine if Ohio is going to have
trading as an option in its rulemaking approach; thus it is unknown if
trading will be an option for Hamilton. Likewise, it is not clear at
this point whether EPA mandates may be imposed on selected States
through SIP Call responses, applications of NOx FIPs to individual
States, and/or the application of Section 126 controls to individual
sources.
In this confused context, if fewer States choose to participate in
a regional NOx trading program, or if the individual State programs are
not consistent, it will surely result in an inefficient market with
higher cost allowances. For example, Hamilton understands that NOx
allowances are currently trading in the $6,000-$7,000 range right now
under the Ozone Transport Regional system in New England, which is a
smaller market. Moreover, a poorly designed trading program could
potentially allow competitors, particularly large utilities with
multiple plants, to hoard allowances and further drive up costs for
small entities.
For these reasons, Congress should consider establishing the NOx
cap-and-trade program for the entire 22 State region involved in the
regional NOx reduction strategy to alleviate the confusion and
inefficiencies that differing voluntary State, and federally mandated,
programs will cause. Such a regional trading system can build upon
EPA's proposed Federal NOx trading plan and the successful SO2
trading program. A legislatively established system should also provide
incentives for the early retirement of fossil-fired electric plants,
including small plants. Incentives should also be put in place for
verifiable, voluntary emissions reductions activities like energy
efficiency and investments in green power, including small
hydroelectric generation projects like Hamilton's Greenup Locks and Dam
facility. The NOx trading system should also provide assistance and
incentives to small entities, like public power systems, that are
covered by the regulatory program yet burdened by diseconomies of scale
and other disadvantages. For example, allowance allocation formulas can
be developed that provide additional credits to smaller entities, or
more flexibility in the use of such credits.
Finally, I must again emphasize that even if Congress establishes a
NOx trading program as Hamilton and other small entities recommend, it
is critical that Hamilton's NOx allowance situation be resolved. Due to
our significant investment in hydroelectric generation and unusual
circumstances during EPA's chosen baseline utilization years for
affected utility sources, Hamilton may be placed at a severe
competitive disadvantage in relation to similar units. Thus, any cap-
and-trade program must provide a method for the adjustment of baselines
for individual units who demonstrate certain unusual circumstances
during baseline years, such as extended outages or atypically low
utilization.
Question 2. In your testimony you cite environmental improvements
that were made to the Hamilton Public Utility made as far back as 1981,
including investments in hydro power. What year do you propose to start
getting credit for voluntary or mandatory actions that you have already
completed?
Response. While Hamilton feels that recognition of our early
efforts is appropriate under EPA's NOx trading program, we are not
requesting that allowances be provided from day one of the operation of
our hydroelectric plant. Nor do we suggest a specific year at which EPA
should begin crediting voluntary action by utilities who reduced NOx
early, in expectation of potential future requirements. Hamilton does,
however, believe that our voluntary emissions reduction activities
should be considered with respect to our reasonable request for an
adjusted allowance allocation to Hamilton's coal-fired, 50 megawatt
Boiler 9. As I have testified, Boiler 9, which is the primary source of
back-up generation to Hamilton's hydroelectric plant, experienced
unusual and atypically low utilization during the 1995-97 baseline
period chosen by EPA for allowance allocations.
We understand that no entities, aside from Hamilton and a handful
of Michigan public power communities, have requested adjusted allowance
allocations based on unusual circumstances in the proposed EPA baseline
period. Hamilton's situation is thus fairly unique. We ask that
Hamilton's situation be considered in light of our significant
investment in clean hydroelectric power, because our hydroelectric
plant is essentially hitched to the same yoke as our affected Boiler 9.
Hamilton is not asking for a change in how the overall, regional
allocation process occurs, and thus our request should not have any
significant effect on EPA's final NOx trading rules or the public
health and environment.
______
Responses by Thomas Nye to Additional Questions from Senator Voinovich
Question 1. What will be the effect of EPA's NOx control strategy
and regional trading program on Hamilton's coal plant, as it is now
proposed?
Response. As explained in my testimony, the only way Hamilton can
cost effectively comply with EPA's proposed strategy is through the
purchase of NOx trading allowances. However, the way EPA has proposed
allocating those allowances will seriously shortchange Hamilton due to
exceptional circumstances at our plant and our decision to invest in
hydroelectric generation. We have raised these concerns with EPA, and
we are appreciative that they have listened and understood our
concerns. However, if EPA does not account for Hamilton's situation in
its final NOx trading program, which we expect them to announce on July
15, I can say that the very viability of our Hamilton electric system
will be threatened. For a community that has been in the electric
generating business since 1893, and that has been progressive in its
decisions to protect the environment, it would be truly ironic, and
unfair, for this proposed rulemaking to cause us to cease operations.
Question 2. What is Ohio Public Power's overall concern with EPA's
NOx control strategy?
Response. Ohio Public Power recognizes that there are local ozone
problems that involve short range regional NOx transport (e.g., from
Ohio to Pittsburgh). We are committed to working with State regulatory
agencies to solve these problems in a cost-effective manner for public
power facilities.
However, Ohio Public Power believes that EPA's NOx control strategy
will impose cost-prohibitive and unwarranted controls on electric
utilities, particularly small public power entities. First, Ohio Public
Power does not feel that the reductions called for by EPA's NOx control
strategy are warranted by the science. The one-size-fits-all 85 percent
reduction requirement ignores OTAG's finding that ozone reduction
benefits diminish with distance. Second, EPA's NOx control strategy has
not adequately assessed the potential disproportionate costs and
impacts on small entities, like public power communities. Nor has the
Agency adequately identified how to mitigate such impacts. Such
assessment could have taken place if the Agency had performed required
SBREFA analysis and outreach for the SIP Call, as Ohio Public Power
believes Congress intended in that 1996 law. It is clear that small
electric utilities will bear a disproportionate impact from this SIP
Call regulation, as EPA has acknowledged, and as evidenced by the
estimated $7,500+ cost per ton of NOx removed for Hamliton Boiler 9.
__________
Statement of F. Wayne Hill, Gwinnett County, Georgia
Thank you for allowing me to speak today about the Clean Air Act
and proposed regulatory changes. My name is F. Wayne Hill, Chairman of
the Gwinnett County Board of Commissioners in Lawrenceville, GA, and
Chairman of the Atlanta Regional Commission, the metropolitan planning
agency for the Atlanta area. I am currently serving my second term as
Gannett County Commission Chair. I have lived my entire life in
Gwinnett County and built my business there.
In 1960, Gwinnett County had a population of 42,000. Today, our
population has swelled to more tom 500,000. More than ever, I
understand and agree that standards are necessary to preserve air
quality to protect the public health. I'm especially sympathetic to
others who are affected by the region's air quality. While I serve as
Chairman of Gwinnett County's Board of Commissioners, my bigger role is
that of husband, father and grandfather. Sadly, my granddaughter
suffers from upper respiratory problems, and that causes my wife and I
a great deal of concern.
On behalf of the residents in Gwinnett County, including my wife,
children and other family members, I want to commend you and earlier
members of Congress who decided to tackle the problem. Because of you,
air quality is better today that it was 25 or 30 years ago.
As I mentioned earlier, I also serve as Chairman on the Atlanta
Regional Commission. In that capacity, I have been very involved with
Atlanta's efforts to comply with the requirements of the Clean Air Act.
I can assure you that both the ARC and Georgia State agencies have been
working diligently to ensure compliance in the region.
As we work to address this matter, let's remember that air quality
is a very complicated issue, involving a number of interconnected
sources. My discussion today will cover three major areas: 1)
coordination and consistency at the Federal level, 2) complexity of
Clean Air issues and 3) consequences of regulation.
First, let's talk about coordination and consistency. I am very
comfortable with Congress's intent on the Clean Air issue. Sometimes,
though, your intent may be blurred by how Federal agencies implement
your legislation. It's not unusual for two Federal agencies to take
different approaches to an issue that can leave a local government hung
between two conflicting sets of regulations. Specifically related to
the Clean Air Act, we request that Congress emphasize a coordinated
approach that balances all the many factors that should be considered,
including public health, highway safety, mobility, economic impacts,
cost and the will of the American people.
Such coordination can help reduce certainty about future
requirements, which is one of the most difficult things for local
governments to handle. In Gwinnett and the rest of the Atlanta region,
we have been thrown into chaos by a combination of decisions at our
level and the Federal level and legal challenges to those decisions.
Federal funding for a number of previously approved projects has
been withdrawn. The State of Georgia and local governments like mine
are faced with the prospect of worsening congestion and increased
danger of travel while we attempt to meet the revised guidance from the
Federal level. You can imagine our frustration! While we are told
repeatedly that we must plan for the long-term, our plans have to be
based on Federal requirements that can change rapidly.
I understand that legislation has been proposed to address the
Court decision regarding EPA's rule dealing with ``grandfathered''
projects. I urge that Senate Bill 1053 be passed for the good of areas
all across the United States.
The second point for discussion is the complexity of the issue. All
of you know that this is a complicated, interconnected problem. It is
easy to create unintended results. For example, there is a lot of
discussion about the evils of ``sprawl'' development and its
contribution to air pollution through encouraging auto-dependent
travel. Yet dealing with the extra requirements brought on by
designation as an area with air quality problems can drive businesses
and people to move farther out.
My small business, a cabinet shop, is a point-source for certain
pollutants because we use glues and stains. We were sent 30 to 40 pages
of papers to file about the number of gallons we use. If we were three
miles to the north, we would be in a county that is outside the non-
conforming Atlanta area, and we would not have to file these documents.
Some businesses will supply choose at some point to move rather than
deal with the extra regulations. As companies move further, so will
people, resulting in more and more sprawl of development.
Third, I want to touch on the consequences of regulation. As noted
earlier, Federal funding for certain transportation projects in the
Atlanta area has been withdrawn. This leaves many local governments,
including Gwinnett, with gaps in the transportation network, for
example, two-lane road sections connecting four-lane sections.
Delaying such projects puts the public at risk. Not only is there
increased likelihood of vehicle accidents but the response time of
emergency vehicles climbs. Greater congestion also leads to exactly
what we're trying to prevent--emission of more pollutants!
We must also consider the public's will. Gwinnett County voters
approved a one-cent special purpose local option sales tax for the
purpose of improving the transportation infrastructure. It's tough to
explain why we cannot utilize tax dollars as the public wishes.
Another consequence is the potential effect on the nation's
economy. At some point, the uncertainly of future transportation
improvements, the impacts of increased congestion on the public and the
burden of additional legislation will cause the business activity of
Atlanta to shift and slow. The same will be true for any area in the
United States facing non-conformity under Clean Air standards.
Vital to economic development is the ability for industry to get
its product to market. If road projects are discontinued, that will
virtually shut down Atlanta's transportation network. Industries all
over the Southeast rely on our interstate and rail systems and the
close proximity to Hartsfield International Airport. If that network is
crippled because of delayed or canceled road projects, it could
conceivably paralyze the economy for the southeast region. Of equal
concern is the perception of businesses considering relocations or
expansions. Executives know that it is less expensive for a business to
locate in an attainment area than a non-attainment area.
I'm not suggesting that we slow efforts to improve air quality, but
that we carefully consider the economic impacts. My business background
taught me that I have to have enough money to pay the bills. My time as
an elected official has shown me that it takes money to run an
effective government, and a healthy economy lets us accomplish
important projects that we could not otherwise do. This applies at all
levels of government, as you all know better than I do.
In summary, I agree that regulations are necessary to address air
quality. I commend the committee and subcommittee members for
addressing a complex and unpopular issue. Thank you for your time today
and for allowing me to voice my thoughts and suggestions.
______
Responses by F. Wayne Hill to Additional Question from Senator Inhofe
Question. What advantages and disadvantages do you believe that the
``Governors' proposal'' on NOx reductions, as alluded to in the
hearing, would have relative to EPA's proposed NOx SIP call?
Response. The overall purpose of EPA's September 24, 1998 Final
Rule, ``Finding of Significant Contribution and Rulemaking for Certain
States in the Ozone Transport Assessment Group Region for Purposes of
Reducing Regional Transport of Ozone'' (known as the NOx SIP Call), is
to reduce regional transport of NOx that contributes to ozone
nonattainment in multiple eastern States. Ground-level ozone tends to
be a problem over broad regional areas, particularly in the eastern
United States, where it is transported by the wind. When emitted, NOx
reacts in the atmosphere to form compounds that contribute to the
formation of ozone. These compounds, as well as ozone itself, can
travel hundreds of miles across State boundaries to affect public
health in areas far from the source of the pollution. Thus, cities or
areas with ``clean'' air, those that meet or attain the national air
quality standards for ozone, may be contributing to a downwind city's
ozone problem because of transport.
EPA's rule requires 22 States (including Georgia) and the District
of Columbia to submit State Implementation Plans (SIPs) that address
how they will reduce the transport of NOx emissions across State
boundaries. These areas were identified by the EPA as ``contributing
significantly'' to ozone problems in downwind areas. The rule requires
emission reduction measures to be in place by May 1, 2003. By improving
air quality and reducing emissions of nitrogen oxides, the actions
directed by these SIPs will decrease the transport of ozone across
State boundaries in the eastern half of the United States, thus
assisting downwind States in meeting the ozone standard.
The Atlanta metro area, for example, will not meet the 1-hour
standard in 1999 (the attainment deadline for Serious areas) partly
because of the impact of pollution entering Georgia from several upwind
States, including Alabama, Kentucky, North Carolina, South Carolina,
and Tennessee. Consequently, Georgia will request an extension of
Atlanta's attainment date to 2003, when controls on those upwind States
are required by the NOx SIP Call and other local controls can be in
place. Thus, full implementation of the control measures required by
the NOx SIP Call in upwind States is very important to Atlanta's
achievement of the ozone standard.
Full implementation of the NOx SIP Call, as amended on May 6, 1999,
will reduce total NOx emissions by about 25 percent (or 1.142 million
tons). EPA projects that these regional reductions will bring the vast
majority of all new ozone nonattainment areas into attainment with the
8-hour standard without having to implement local controls.
EPA's rule established NOx budgets for each State by determining
the amount of NOx emissions that would remain after application of
highly cost-effective controls to utilities and other sources of NOx.
For utilities, EPA chose a control level (0.15 lb/mmBtu) which is
achievable using available, cost-effective technology. This equates to
an 85 percent reduction in emissions from these sources. For non-
utility sources, EPA chose a control level that represents a 60 percent
reduction from uncontrolled levels for large industrial boilers and
turbines, a 90 percent reduction from stationary combustion engines,
and a 30 percent reduction from cement kilns. States will be able to
decide the best mix of controls to meet their overall NOx budget.
However, utilities and large non-utility point sources would be one of
the most likely sources of NOx emissions reductions.
The rule also creates a pool of emission ``credits'' for each State
to use. This pool of credits encourages early compliance and also
provides flexibility by allowing these credits to be used by sources
that might not otherwise meet the deadline. In addition, States can
choose to participate in a multi-state ``cap and trade'' program that
allows facilities that reduce emissions early or in greater amounts
than required to sell their emissions reductions to other facilities
that cannot reduce emissions as quickly or cost-effectively. According
to EPA, the ``cap and trade'' program will allow States to achieve over
90 percent of the emissions reductions required by the SIP call.
During the comment period on the proposed NOx SIP Call in 1998,
several States requested that the EPA consider an alternative proposal,
called the ``Alternative Proposal by the Southeast/ Midwest Governors'
Ozone Coalition.'' This ``Governors' proposal'' suggests a two-phase
approach over a slightly longer implementation period.
As a first step, it calls for a 55 percent (or 0.35 lb/mmBtu)
reduction from utility sources by May 1, 2002. In Step Two, the
proposal calls for a 60 percent (or 0.25 lb/mmBtu) reduction by May 1,
2004. Controls on non-utility sources would not be required until Step
Two. In addition, the proposal calls for considering further reductions
that would be needed to attain the 8-hour standard in Step Two. This
proposal does not establish emission budgets (or caps), only emission
reduction rates.
Compared with EPA's final rule, this proposal would allow States
more time to implement control measures. It also calls for less
emissions reductions than the final rule. As a result, there may be
economic advantages, such as less extensive (and less costly) scrubber
systems for utility plants.
It is not clear whether the States involved are suggesting that the
Governors' proposal apply to only the States supporting the proposal or
to all 22 States and the District of Columbia. If it were applied to a
limited number of States, areas with 1-hour standard attainment
deadlines of 2003 may not be able to demonstrate attainment if less
emissions reductions are achieved in upwind States by then.
Even if the proposal were applied to all 22 States and the District
of Columbia, it achieves less total reductions than EPA's final rule
and spreads the reductions out over a longer period of time. It does,
however, propose considering further reductions to meet the 8-hour
standard in Step Two. Nonetheless, downwind States may still be
required to implement additional local controls to make up the
difference in order to attain the 1-hour standard, and attainment of
the 8-hour standard could be delayed.
Finally, the proposal does not require the establishment of State
emission budgets, only reduction rates. This makes it possible for
power facilities in Ozone Transport Commission States (in the
northeast) that already have emissions caps to shift their power
production to facilities in the midwest, thereby continuing to increase
emissions in the midwest.
__________
Statement of Jane Stahl, Connecticut Department of Environmental
Protection
Introduction
Good morning. My name is Jane Stahl. I am the Deputy Commissioner
for Air, Water and Waste Programs at the Connecticut Department of
Environmental Protection. I appreciate the opportunity to present the
perspective of the State of Connecticut on EPA's NOx SIP Call rule.
As you know, the NOx SIP Call would require 22 States and the
District of Columbia to amend their respective State Implementation
Plans to reduce emissions of oxides of nitrogen (NOx--a precursor
pollutant to the formation of ground-level ozone). These reductions
would be achieved through the implementation of a regional, market-
based, emissions allowance trading program. Such a program would yield
emission reductions more cost effectively than a program based on
traditional command and control measures.
The State of Connecticut has been deeply involved in the search for
a regional, consensus-based, solution to the problem of interstate
transport of ozone. The State of Connecticut, as a member of the Ozone
Transport Commission, participated in the Ozone Transport Assessment
Group (OTAG) from its inception and fully supports the development of
market based approaches to air quality management. We are, however,
disappointed by recent events that threaten the promise of cleaner air
for all.
To inject a sense of immediacy into this discussion, I would like
to point out that so far this ozone season (the period from May 1-
September 30 when ambient ozone levels are of greatest public health
concern) the State of Connecticut has experienced three (3) days with
exceedances of the 1-hour health-based National Ambient Air Quality
Standard for ozone (1-hour ozone NAAQS) and eight (8) days with
exceedances of the more protective (yet unenforceable) 8-hour ozone
NAAQS. The peak 1-hour ozone levels in Connecticut have reached 158
ppb; that is 27 percent higher than the minimum threshold determined by
the United States Environmental Protection Agency (EPA) as necessary to
protect public health. The peak 8-hour ozone levels in Connecticut have
reached 133 ppb, that is 58 percent above the public health threshold
set by EPA.
background
I. Connecticut fails to meet the 1-hour ozone NAAQS
The State of Connecticut has been engaged in a prolonged struggle
to protect the public health of its citizens by bringing ground level
ozone concentrations down to levels which comply with the 1-hour ozone
NAAQS. The State of Connecticut has taken great strides to control the
primary pollutants that produce ozone by meeting (and often exceeding)
the numerous requirements imposed on the State by the Clean Air Act
Amendments of 1990 (Act). For example, the Department of Environmental
Protection (CTDEP) is currently implementing and plans to implement
many aggressive ozone abatement programs, including:
Reformulated gasoline (including ozone season reid vapor
pressure limits) statewide;
Enhanced Centralized Motor Vehicle Inspection and
Maintenance statewide;
Stages I and II Gasoline Vapor Recovery statewide;
New Source Review (with Offset requirements) at reduced
major source thresholds as low as 25 tons per year (and in some
instances technology review at 5 tons per year);
Reasonably Available Control Technology on NOx Stationary
Sources;
Reasonably Available Control Technology on VOC Stationary
Sources;
California Low Emission Vehicle Program (Cal LEV) with
National LEV Compliance Option; and
OTC NOx Budget Program (1999 Phase II reductions and 2003
Phase III reductions).
Despite the vast improvement in Connecticut's air quality as a
result of the implementation of these programs, Connecticut remains in
noncompliance with the 1-hour ozone NAAQS established by the EPA. The
chief cause of such continued noncompliance with the 1-hour ozone NAAQS
is the overwhelming transport of ozone and its precursors, primarily
NOx, into our State from upwind States.
There are two maps attached to this testimony which clearly
demonstrate the geographic link between high ozone levels and NOx
emissions from electricity generating plants:
Figure 1 is a map of average maximum daily ozone (in parts per
billion, 1-hour average) measured at ozone monitoring sites in the
Eastern United States during the months June through August, 1991-1995.
You will note that the most persistently high ozone levels extend along
two axes: one is from the lower Ohio River Valley eastward across the
Appalachians to Connecticut; and the second extends northeastward from
the Piedmont of North Carolina to Connecticut. A third broad area of
high ozone exists in the vicinity of Atlanta.
Figure 2 displays two types of information. The red arrows indicate
wind flow (direction and persistence) during periods of high ozone
episodes; and the circles represent locations and magnitude of NOx
emissions from electric generating stations. Note the size of the
circles is proportional to the quantity of emissions from each power
plant; and that there are a series of power plants along the Ohio River
Valley and along the Piedmont closely paralleling the high ozone map.
It is quite obvious that Connecticut is at a distinctive geographic
disadvantage in the struggle to lower ozone levels unless we can get
upwind areas to assist with reducing ozone precursor emissions.
II. Decisive Federal Action Is Necessary to Address Interstate
Transport of Ozone
Air quality monitoring data, collected since the 1970's, shows a
significant contribution of ozone in the Northeast originating from
pollution sources outside the region. Transported ozone entering the
Northeast Corridor has been measured aloft by aircraft at levels
exceeding 80 percent of the 1-hour ozone NAAQS (and over 100 percent of
the unenforceable 8-hour ozone NAAQS). Reaching attainment in
Connecticut and throughout the Northeast is unlikely if States must
first compensate for the polluted air blowing across their boundaries.
This is not one State's attempt to lay blame for its poor air quality
on another State. Nor is it a choice between reductions from upwind
sources or additional reductions from sources in Connecticut and
throughout the Northeast. This is specific recognition of the fact that
ozone pollution is a regional problem requiring regional solutions.
Simply put, we do not live in a vacuum and our actions affect others.
The issue of interstate transport of ozone and its precursors has
not gone unnoticed by Congress, who in structuring sections 110 and
176A of the Clean Air Act recognize that constitutional limitations
prevent individual States from addressing problems associated with
interstate transport of air pollution. There are distinct economies of
scale in regional approaches to air pollution control that offer the
most flexible opportunities to meet the ozone NAAQS at the lowest
possible cost. However in the absence of federal leadership to control
interstate transport of air pollution, States such as Connecticut will
be constrained to seek relief under section 126 of the Act from
transported air pollution which contributes significantly to
nonattainment of the 1-hour ozone NAAQS in Connecticut. I would like to
be clear that Connecticut's 126 petition is not the preferred option to
address ozone transport and that the State of Connecticut would rather
participate in a program based on a regional consensus-built solution
to this problem. Although I believe that Connecticut's section 126
petition is meritorious and would yield reductions in interstate
transport of air pollution, it will do so in a manner that is
ultimately wasteful of the resources of all involved parties given the
resultant litigation.
III. What the NOx SIP Call Means to the State of Connecticut
The State of Connecticut is fully aware that there are political
and industrial interests aligned against the NOx SIP Call. There is
also a judicial review of the NOx SIP Call pending before the United
States Court of Appeals for the District of Columbia Circuit. The NOx
SIP Call faces an uncertain future.
Regardless of the future of the NOx SIP Call, this does not change
the fact that Connecticut suffers from some of the worst air quality in
the nation. When the CTDEP is forced to issue warnings for its children
and elderly citizens to stay inside on sunny summer days, when
incidences of hospital admissions for asthma and related respiratory
illnesses increase on days with poor air quality, when all of this
persists in the face of one of the nation's premier air quality
programs, it is obvious that it is beyond the power of the State,
acting alone, to correct. This situation is shared by our sister States
in the Northeast.
Against this backdrop, Connecticut emphatically endorses EPA's
attempt to effectuate Congress' recognition of the regional nature of
the ozone problem and offers the following comments in support of the
NOx SIP Call:
A. The NOx SIP Call is necessary to protect the public
health of Connecticut's Citizens
There are indications of the existence of sensitive subpopulations
which are affected by environmental pollutants such as ozone. Ozone-
related health effects can include: moderate to large decreases in lung
function (e.g. resulting in difficulty breathing and shortness of
breathe); respiratory symptoms such as those associated with chronic
bronchitis (e.g. aggravated/prolonged coughing and chest pain);
increased respiratory problems (e.g. aggravation of asthma and
susceptibility to respiratory infection--resulting in increased
hospital admissions and emergency room visits); and chronic
inflammation and irreversible structural changes in the lungs upon
repeated exposures.
Connecticut's Ozone Attainment Plan relies on the NOx SIP Call, in
conjunction with the control measures identified in Part I of this
testimony and elsewhere in the Connecticut State Implementation Plan,
to meet the 1-hour ozone NAAQS. Compliance with the 1-hour ozone NAAQS
will only minimize, not eliminate, the adverse health effects described
above because many sensitive subpopulations may be adversely effected
by ozone levels below the 1-hour ozone NAAQS. Air quality modeling
indicates that peak ozone levels will barely comply with the 1-hour
NAAQS in the year 2007 ONLY IF the NOx SIP Call, as set forth in EPA's
final rule, is fully implemented.
B. The NOx SIP Call is a technically feasible and cost-
effective program
One of the arguments put forth by detractors of the NOx SIP Call is
that control technologies are not feasible to meet the level of
emission reductions needed to reduce ozone transport to acceptable
levels. However, the fairly extensive experience in the United States
with advanced post-combustion controls (such as Selective Catalytic
Reduction or SCR, and Selective Non-Catalytic Reduction or SNCR)
demonstrates that these technologies can provide significant NOx
reduction capability for virtually every coal-fired boiler in the NOx
SIP Call region at a very attractive cost effectiveness. There are a
number of studies, including one sponsored last year by the States of
the Northeast States for Coordinated Air Use Management (NESCAUM--a
regional association of the eight States of Connecticut, Massachusetts,
Maine, New Hampshire, New Jersey, New York, Rhode Island, and Vermont)
which indicate that control technologies are both technically feasible
and cost effective. The NESCAUM study showed that there are
significantly more low-cost opportunities for reducing NOx emissions
from upwind regions than in the Northeast. The cost analysis found that
power plants in the Midwest can meet the emission targets at an average
cost of $662 per ton of NOx reduced versus more expensive options in
the Northeast that would amount to $1,031/ton. Furthermore, the market-
based system of allowance trading which EPA has developed is intended
to provide source owners the flexibility to decide for themselves if
technology or trading is more cost-effective.
Conclusion
Thank you for providing the opportunity to present the perspective
of the State of Connecticut on the NOx SIP Call. As public officials we
have a duty to do everything in our power to limit exposures to
environmental pollutants and the resultant risks to public health
associated with such exposures. It is simply sound public health
practice to limit exposures to any environmental pollutant that is
within our means to control. When an opportunity to protect public
health on this scale presents itself and contains the added benefits
associated with a technically feasible and cost-effective program such
as the NOx SIP Call, that opportunity must be seized. Therefore, I urge
the members of this subcommittee to fully support EPA's efforts to
protect public health and address this regional problem. I would also
urge the members of this subcommittee and Congress to avoid any
initiatives to weaken the NOx SIP Call.
______
letter from jane stahl
July 22, 1999.
Committee on Environment and Public Works
Washington, DC 20510.
Mr. Chairman: Thank you for the opportunity to present the views of the
State of Connecticut on the EPA NOx SIP Call to the Subcommittee on
Clean Air, Wetlands, Private Property, and Nuclear Safety, Committee on
the Environment and Public Works.
In response to your correspondence of July 7, 1999, please find
enclosed the responses of the State of Connecticut Department of
Environmental Protection to the questions raised by several Members of
the Committee. I would like to take this opportunity to reiterate the
need for a regional solution to the problem of interstate transport of
nitrogen oxides (NOx--a precursor to the formation of surface level
ozone). Through July 21 of this year, the State of Connecticut has
experienced eight (8) days where air quality exceeded the 1-hour
health-based National Ambient Air Quality Standard for ozone (1-hour
ozone NAAQS). The peak 1-hour ozone levels detected in Connecticut have
reached 178 ppb; that is 44 percent higher than the 1-hour ozone NAAQS,
which is designed to protect public health. Given that much of this
pollution is transported into Connecticut on prevailing winds, reaching
attainment of the 1-hour ozone NAAQS is unlikely if our State must
first compensate for transported air pollution.
As you may know, following the committee's hearing EPA convened a
meeting of the environmental commissioners and secretaries of all the
States implicated in or by the NOx SIP Call. I believe this was an
unanticipated yet positive outcome of the hearing. It is in the spirit
of ongoing discussions between the States, and in the hope for an
agreed upon regional resolution to air quality issues that I provide
these additional comments.
Again, thank you for the opportunity to present the views of the
State of Connecticut on the EPA NOx SIP Call. If you or any other
member of the Subcommittee on Clean Air, Wetlands, Private Property,
and Nuclear Safety, Committee on the Environment and Public Works
should have any additional questions or require any additional
information, please do not hesitate to contact me at (860) 424-3009.
Sincerely,
Jane K. Stahl, Deputy Commissioner,
______
Responses by Jane Stahl to Additional Questions from Senator Inhofe
Question 1. Ms. Stahl, in your testimony you cite a study
commissioned by the Northeast States which claims that the average cost
of reductions in the Midwest would be $662 dollars per ton. This is in
direct conflict with Mayor Nye's real-world example that it would cost
them $7,554 dollars per ton. You also state that the Northeast can do
it for $1,031 dollars per ton. If Mayor Nye's estimate is correct do
you still believe that they should go forward at that cost, or would it
be more cost-effective for the Northeast to make the reductions?
Response. As I stated in my testimony, the regional, market-based,
emission trading program included with EPA's NOx SIP Call will enable
emission reductions across the region to be achieved in a more cost-
effective manner than a program mandating a specific emission limit at
each and every Affected facility (i.e., as would be the case under
traditional command and control requirements). Under command and
control, sources such as the one cited by Mayor Nye could face control
costs significantly greater than the average cost incurred by the group
of all Affected facilities. However, the market-based approach
available under EPA 's NOx SIP Call will enable such sources to comply
by purchasing surplus allowances from other sources that are able to
economically reduce emissions beyond the rule's presumptive norm. The
costs of allowances on the open market are expected to be within the
range of those cited in my testimony. (Note: The control costs
referenced in my previous testimony are from the attached NESCA UM
report, ``The Costs of Ozone Transport: Achieving Clean Air in the
East''--see page 9)
The real-world cost of a 65 percent NOx reduction at Northeast
Utility's Merrimack coal-fired power plant in New Hampshire was $404/
ton using selective catalytic reduction (SCR). [Source: NH Dept. Env.
Services] The projected cost for an additional level of SCR control to
achieve an 85 percent NOx reduction is less than $800/ton of NOx
reduced on an annual basis. Clearly, this real-world example of actual
costs and reductions demonstrates how many large coal-f red power
plants can comply at low cost with the NOx SIP Call and generate
allowances for smaller sources to purchase in lieu of installing
expensive controls that are of concern to Mayor Nye.
Furthermore, the situation described by Mayor Nye is not
necessarily a direct result of the NOx SIP Call. States have the
flexibility to choose where and how NOx reductions are made, and can
implement a NOx ``cap and trade `` program to encourage greater
reductions from the cheapest sources to control. The excess allowances
can then be made available to smaller sources, such as the Hamilton, OH
municipal power plant, for complying with the NOx SIP Call. The high
cost cited by Mayor Nye for his particular situation would only apply
(assuming the estimated cost is realistic) if the State of Ohio, not
the U.S. EPA, specifically required the source to install specific
controls under a ``command and control `` approach. The choice is
Ohio's, and is not mandated by the NOx SIP Call. In fact, the State of
Ohio need not require any reductions at all from the Hamilton, OH power
plant. The NOx SIP Call provides each State the flexibility to meet its
State NOx budget through greater reductions at less cost from other
sources in the State if it chooses to do so. Nothing in the NOx SIP
Call requires a specific level of reductions from the Hamilton, OH
municipal power plant or any other power plant.
The success of the market-based approach to compliance has
previously been demonstrated by sources subject to the Clean Air Act's
Title IV acid rain program, as well as by sources in Connecticut (and
elsewhere in the Northeast) covered by Phase I NOx RACT rules and OTC's
current Phase II NOx control requirements. For example, several sources
in Connecticut, which would have faced comparatively high control costs
under a command and control scenario, were able to comply with the
State's 1995 Phase I NOx RACT requirements by purchasing emission
reduction credits on the open market at a much lower cost.
______
Responses by Jane Stahl to Additional Questions from Senator Baucus
Question. What advantages and disadvantages do you believe that the
``Governors' proposal'' on NOx reductions, as alluded to in the
hearing, would have relative to EPA's proposed NOx SIP call?
Response. The primary disadvantages of the Southeast/Midwest
Governors Alternative Plan (hereafter the Alternative Plan) compared to
EPA 's NOx SIP Call are:
No mandatory emissions cap. Unlike the NOx SIP Call, the
Alternative Plan does not include a mandatory cap on emissions.
Therefore, even if fully implemented, future growth to 2007 would
essentially wipe out any overall NOx emission reductions
attributable to the Alternative Plan. As a result, overall NOx
emission levels in 2007 would be virtually equal to Acid Rain
Program Phase II NOx levels in 2000 (see the attached Figure 1,
produced by the Ozone Attainment Coalition), which were found by
EPA to be inadequate to address ozone transport concerns in the
Northeast. Furthermore, with uncapped emissions, NOx emissions
would continue to grow in future years under the Alternative Plan,
eroding any minimal benefits provided by the proposed reductions
through 2007. EPA 's SIP Call budget considers projected economic
growth through 2007 and spreads responsibility without creating a
bar to growth. In addition, note that the Alternative Plan results
in 2007 emission levels approximately 2.5 times higher than
emissions under the NOx SIP Call. The bulk of this difference in
emissions is attributable to sources located in the Midwest and
Southeast States (see Figure 2, also produced by the Ozone
Attainment Coalition).
Early reductions are minimal at best. The ``early
reductions'' contained in the Alternative Plan don 't appear to be
much greater than would be accomplished in the same timeframe under
the NOx SIP Call. The Alternative Plan promises early ``substantial
reductions'' by 2002 (the lesser of a 55/0 reduction or a 0.35 lb/
MMBtu emission rate for affected sources), with 65 percent
reduction or 0.25 lb/MMBtu by 2004. However, under the NOx SIP
Call, prudent planning dictates that the 85 percent reduction
(required by 2003) would be evenly spread over a 3-year period. As
a result, by the second year (i.e., 2002), a 57 percent reduction
would likely be accomplished under the NOx SIP Call. Therefore, the
``early reductions `` of the Alternative Plan do not appear to
offer anything more than what the NOx SIP Call already provides.
Need for further reductions already demonstrated. Under the
Alternative Plan, the need for any future NOx reductions is
contingent upon future modeling efforts conducted by the upwind
States in the Southeast and Midwest. However, the need for region-
wide emission reductions equivalent to the budget set in the NOx
SIP Call to achieve the 1-hour ozone standard has already been
demonstrated using both monitored data and modeled projections.
Connecticut's ozone attainment demonstration, in addition to
utilizing in-state control measures identified in my earlier
testimony which are more stringent than those required by the Clean
Air Act, relies on reductions associated with the region-wide
budget set forth in the NOx SIP Call to meet the l-hour ozone
NAAQS. Using an emissions budget greater than the level that serves
as the basis of the NOx SIP Call, Connecticut is unlikely to
demonstrate attainment of the 1-hour ozone standard. On a regional
basis, the NOx SIP Call only reduces total NOx emissions by 25
percent from projected 2007 levels. Connecticut must still
compensate for 75 percent of the remaining transport problem even
with the full NOx SIP Call. Any control program less stringent than
the full NOx SIP Call will require additional regional control on
other source sectors, or it will be virtually impossible to achieve
the public health standard for ozone.
______
Responses by Jane Stahl to Additional Questions from Senator Lieberman
Question 1. Why not implement a program of fewer reductions as
proposed by the Southeast/Midwest Governors?
Response. Many 1-hour ozone attainment demonstrations by Northeast
States, Connecticut included, are relying on the full NOx SIP Call
reductions to achieve attainment by 2007. Connecticut's demonstration
just barely achieves attainment, indicating that the Southeast/Midwest
Governors' proposal promising fewer reductions is not likely to achieve
that goal.
Shortcomings of the Southeast/Midwest Governors Alternative Plan
(hereafter the Alternative Plan) compared to EPA's NOx SIP Call
include:
No mandatory emissions cap. Unlike the NOx SIP Call, the
Alternative Plan does not include a mandatory cap on emissions.
Therefore, even if fully implemented, future growth to 2007 would
essentially wipe out any overall NOx emission reductions
attributable to the Alternative Plan. As a result, overall NOx
emission levels in 2007 would be virtually equal to Acid Rain
Program Phase II NOx levels in 2000 (see the attached Figure 1,
produced by the Ozone Attainment Coalition), which were found by
EPA to be inadequate to address ozone transport concerns in the
Northeast. Furthermore, with uncapped emissions, NOx emissions
would continue to grow in future years under the Alternative Plan,
eroding any minimal benefits provided by the proposed reductions
through 2007. EPA 's SIP Call budget considers projected economic
growth through 2007 and spreads responsibility without creating a
bar to growth. In addition, note that the Alternative Plan results
in 2007 emission levels approximately 2.5 times higher than
emissions under the NOx SIP Call The bulk of this difference in
emissions is attributable to sources located in the Midwest and
Southeast States (see Figure 2, also produced by the Ozone
Attainment Coalition).
Early reductions are minimal at best. The ``early
reductions'' contained in the Alternative Plan don 't appear to be
much greater than would be accomplished in the same timeframe under
the NOx SIP Call. The Alternative Plan promises early ``substantial
reductions `` by 2002 (the lesser of a 55 percent reduction or a
0.35 lb/MMBtu emission rate for affected sources), with 65 percent
reduction or 0.25 lb/MMBtu by 2004. However, under the NOx SIP
Call, prudent planning dictates that the 85 percent reduction
(required by 2003) would be evenly spread over a 3-year period. As
a result, by the second year (i.e., 2002), a 57 percent reduction
would likely be accomplished under the NOx SIP Call. Therefore, the
``early reductions'' of the Alternative Plan do not appear to offer
anything more than what the NOx SIP Call already provides.
Need for further reductions already demonstrated. Under the
Alternative Plan, the need for any future NOx reductions is
contingent upon future modeling efforts conducted by the upwind
States in the Southeast and Midwest. However, the need for region-
wide emission reductions equivalent to the budget set in the NOx
SIP Call to achieve the 1-hour ozone standard has already been
demonstrated using both monitored data and modeled projections.
Connecticut's ozone attainment demonstration, in addition to
utilizing in-state control measures identified in my earlier
testimony which are more stringent than those required by the Clean
Air Act, relies on reductions associated with the region-wide
budget set forth in the NOx SIP Call to meet the 1-hour ozone
NAAQS. Using an emissions budget greater than the level that serves
as the basis of the NOx SIP Call, Connecticut is unlikely to
demonstrate attainment of the 1-hour ozone standard. On a regional
basis, the NOx SIP Call only reduces total NOx emissions by 25
percent from projected 2007 levels. Connecticut must still
compensate for 75 percent of the remaining transport problem even
with the full NOx SIP Call. Any control program less stringent than
the full NOx SIP Call will require additional regional control on
other source sectors, or it will be virtually impossible to achieve
the public health standard for ozone.
Question 2. Some suggest that the NOx SIP call does not reflect the
collaborative approach to rulemaking. Can you describe what role the
States had in reviewing and commenting on proposals made through the
Ozone Transport Assessment Group?
Response. The NOx SIP Call was EPA's response to recommendations
from the multi-year program known as the Ozone Transport Assessment
Group (OTAG). The OTAG process set a national precedent for active
involvement of stakeholders in developing technical data and
environmental policy. Within OTAG, the Policy Group consisting of the
environmental commissioners from all OTAG States and the District of
Columbia along with several high-ranking EPA of finials (non-voting
members) served as a policy steering committee for the OTAG process and
the various sub-groups. Participation in the OTAG process provided the
States with ample opportunity to review and comment on the overall
direction of the OTAG process as well as specific recommendations
arising from that process. Given the large number of participants from
a diverse group of States, potentially regulated sources, environmental
groups and academia, it is understandable that not every participant
was completely pleased with the results. The OTAG process, nor any
other democratic process, can use 100 percent consensus as a benchmark
for success. The most important aspect of the OTAG experience is that
every participant was heard and each position considered.
OTAG'sfinal recommendations are a reflection of the multiple and
divergent interests among the participants. As a natural result, OTAG
recommended a range of NOx reductions, rather than a specific amount.
EPA 's NOx SIP Call is within that range and supported by OTAG 's
technical finding that greater NOx reductions resulted in greater ozone
reductions across the region.
Question 3. In order to control NOx emissions, there are several
stages of controls that can be utilized. One can change the fuel input;
one can change when and where air is brought into the combustion
process, and back end controls as catalytic and non-catalytic
converters, or ambient enhanced injection technologies. The effect of
failing to look at the air pollution in the regional, and I would say
real world, context, is to force States who are downwind to move
quickly through the series of technological fixes and to force the most
costly, and draconian controls. Would you agree?
Response. Yes. States in the Northeast have been implementing
progressively more stringent and costly emission reduction strategies
aimed at attaining the ozone standard since implementation of the Clean
Air Act in 1970. It has become apparent that the transport of ozone and
its precursors into the Northeast are hindering our efforts. In fact,
draconian controls in the Northeast alone will not guarantee attainment
of the ozone standard.
Question 4. Under the NOx SIP Call Rule what provisions are
included to ensure that States have flexibility in determining a
strategy for achieving the required reductions? Are there options for
achieving reductions using different technical means, and would a
situation that was described by Mayor Nye from Ohio, where a municipal
utility provides the bulk of the power supply have limiting constraints
that could similarly affect Connecticut under the Rule?
Response. The NOx SIP Call has been designed to reduce the
transport component in the most cost-effective manner by allowing
market forces to be considered in the business planning process
concerning the decision on whether add-on emission controls are
appropriate in a given circumstance. Sources contributing to the ozone
precursor burden in the Eastern United States will be provided the
flexibility to reduce emissions through implementation of add-on
controls, by acquiring allowances from other sources who have reduced
emissions at lower cost, or through a combination of less costly (and
less effective controls) and the purchase of allowances.
The real-world cost of a 65 percent NOx reduction at Northeast
Utility's Merrimack coal-fired power plant in New Hampshire was $404/
ton using selective catalytic reduction (SCR). [Source: NH Dept. Env.
Services] The projected cost for an additional level of SCR control to
achieve an 85/0 NOx reduction is less than $800/ton of NOx reduced on
an annual basis. Clearly, this real-world example of actual costs and
reductions demonstrates how many large coal-fired power plants can
comply at low cost with the NOx SIP Call and generate allowances for
smaller sources to purchase in lieu of installing expensive controls
that are of concern to Mayor Nye.
Furthermore, the situation described by Mayor Nye is not
necessarily a direct result of the NOx SIP Call. States have the
flexibility to choose where and how NOx reductions are made, and can
implement a NOx ``cap and trade `` program to encourage greater
reductions from the cheapest sources to control. The excess allowances
can then be made available to smaller sources, such as the Hamilton, OH
municipal power plant, for complying with the NOx SIP Call. The high
cost cited by Mayor Nye for his particular situation would only apply
(assuming the estimated cost is realistic) if the State of Ohio, not
the U.S. EPA, specifically required the source to install specific
controls under a ``command and control'' approach. The choice is
Ohio's, and is not mandated by the NOx SIP Call. In fact, the State of
Ohio need not require any reductions at all from the Hamilton, OH
powerplant. The NOx SIP Call provides each State the flexibility to
meet its State NOx budget through greater reductions at less cost from
other sources in the State if it chooses to do so. Nothing in the NOx
SIP Call requires a specific level of reductions from the Hamilton, OH
municipal power plant or any other power plant.
The success of the market-based approach to compliance has
previously been demonstrated by sources subject to the Clean Air Act's
Title IV acid rain program, as well as by sources in Connecticut (and
elsewhere in the Northeast) covered by Phase I NOx RACT rules and OTC's
current Phase II NOx control requirements. For example, several sources
in Connecticut, which would have faced comparatively high control costs
under a command and control scenario, were able to comply with the
State 's 1995 Phase I NOx RACT requirements by purchasing emission
reduction credits on the open market at a much lower cost.
__________
Statement of of Russell J. Harding, Director, Michigan Department of
Environmental Quality
Good morning. My name is Russell Harding and I am the Director of
the Michigan Department of Environmental Quality. I would like to thank
you for giving me the opportunity to testify on the very important
issue of achieving improvements in the air quality of our States.
I want to share with you Michigan's disappointment with the
Environmental Protection Agency's inflexible, unworkable, and
scientifically flawed approach toward reducing ozone transport in a
rule that is known as the ``NOx SIP Call.'' Under this approach, EPA is
demanding that Michigan (as well as 21 other States and the District of
Columbia) adopt regulations to drastically reduce the emissions of
oxides of nitrogen from utilities and other major industries in our
State. According to EPA, these reductions are necessary in the Midwest
and Southeast, in order to reduce concentrations of ground level ozone
in the Northeast.
Until recently, these regulations were to be in place by September
of this year. Fortunately, this requirement has been temporarily
``stayed'' by the U.S. Court of Appeals, pending further review by the
Court. We are hopeful that the Court will ultimately agree that the EPA
demand is not justified.
It has long been our contention, indeed it was Michigan that filed
suit against the EPA challenging the NOx controls, that administrative
convenience and not sound policy served as the justification for the
EPA NOx control plan. We believe, along with adopting a rule which has
no scientific justification, the Agency has greatly exceeded its
authority under the Clean Air Act to impose such requirements on
States.
In addition to requiring States to adopt unnecessary NOx
regulations, EPA has taken the unprecedented step of also developing a
Federal implementation plan (or ``FIP'') that would impose these same
extreme controls in our States. EPA has also worked in concert with
States in the Northeast in attempting to use section 126 of the Clean
Air Act to impose these controls at the Federal level. These actions
include petitions by several States in the Northeast seeking these
Federal regulations. In what we consider to be a breach of regulatory
ethics, EPA has stepped outside its assigned role of objective
decision-making, and instead has facilitated setting State against
State in an unnecessary finger pointing battle. Unfortunately, this has
resulted in costly lawsuits and a serious loss of credibility to the
Agency.
Michigan, concerned with the lack of justification for the drastic
program being proposed by EPA, has analyzed our State's contribution to
the ozone problems in the Northeast States. The results of our analysis
showed unequivocally that the EPA's methodology for determining the
culpability of States for significant ozone transport was
scientifically flawed. The analysis showed conclusively that imposition
of extensive controls in Michigan would have very little benefit on
northeastern nonattainment areas.
Our analysis is also consistent with the extensive study that was
completed by the Ozone Transport Assessment Group (OTAG), and which EPA
falsely claims as justification for their rulemaking. In fact, the OTAG
analysis shows that by far the largest contributors to ozone
nonattainment in the northeast are the Northeast States themselves.
Some Northeastern States would actually contribute more to their
neighbors' ozone levels after imposing EPA's controls than some
Midwestern and Southern States contributed before imposing controls.
OTAG also recognized that additional analysis was necessary and
called for the States to be given time to conduct additional
``subregional'' modeling. OTAG further recommended that a range of
controls for the utility industry be considered, depending upon the
results of the additional modeling, and the needs of the particular
State and region. The EPA has effectively disregarded these
recommendations by not allowing time for the additional modeling to be
completed and by demanding an across the board level of control at the
most stringent level possible with no variation between the States.
The extreme level of control demanded by EPA would impose billions
of dollars of costs on sources, which are primarily power producing
facilities, in a very short time period. This would threaten the
reliability of the electric power supply system in the entire Midwest.
In Michigan, this extreme level of control is simply not necessary to
achieve air quality objectives.
I would also like to share with you the Michigan plan for improving
air quality and the sound scientific basis upon which our proposal was
developed. Michigan, along with several other States in the Midwest and
Southeast, developed an alternative proposal for significant reduction
of NOx emissions in our States. This plan would provide for a 65%
reduction in NOx emissions from utilities (instead of the 85% sought by
EPA), and similar reductions from other major industrial sources of
NOx. The reductions at utilities will be accomplished in two phases,
with substantial reductions by 2002, and final reductions by 2004.
Michigan is also providing flexibility to the affected sources in
Michigan, by allowing one facility to trade emission reduction credits
with another. We are doing so in accordance with an innovative and
comprehensive emission-trading program that Michigan developed several
years ago. The Michigan trading program is an open and voluntary
system, as opposed to the closed and restrictive trading program
developed by EPA. In addition, our system avoids the unnecessary
restrictions on growth and economic development that are hallmarks of
the EPA trading program.
In developing our proposal, Michigan also evaluated whether air
emissions from sources in Michigan are having a ``significant'' impact
on air quality in States that are downwind of us. We also analyzed the
air quality improvement in downwind States that might result from
controls in Michigan. This technical analysis reveals that Michigan is
having a very slight impact on downwind States, and supports the
control levels we are adopting.
The Michigan analysis is precisely the kind of analysis that EPA
has refused to conduct. Instead of basing the emission reductions on
real air quality impact, EPA has attempted to define ``significant
contribution'' in terms of the cost of controls, and erroneously
concludes that virtually all ozone transport is significant.
Michigan also was a party to the lawsuit that challenged the new
national ambient air quality standard for ground level ozone, claiming
that the EPA failed to provide a sound scientific basis for the
standard it chose. This position has also been vindicated by another
recent U.S. Court of Appeals ruling. The court, in its opinion, stated
that the EPA had failed to provide an ``intelligible principle'' for
the ozone standard and ruled that EPA cannot enforce the new standard.
It was clear from a panel of scientists that reviewed the standard
that there was no clear benefit to human health or the environment in
setting a new standard for ozone at the levels under consideration, and
that setting a new standard was a ``policy call'' by the EPA.
Nonetheless, EPA adopted a new ozone standard that would have
immediately thrown Michigan and most other States into noncompliance,
despite the fact that immense improvement has been made in air quality.
Michigan is proud of the clean air accomplishments in our State,
and is committed to being a good neighbor. Michigan's two largest
metropolitan areas have been redesignated as attainment of the old 1-
hour standard for ozone, including the Detroit area, which became the
largest metropolitan area in the country to achieve this goal several
years ago. More recently, on the basis of air quality data, EPA has
taken action recognizing that the 1-hour standard for ozone has been
met in all other areas of the State.
Despite the recent court rulings that have placed the EPA
requirements on hold, Michigan is moving forward with a NOx control
program consistent with the alternative we proposed to EPA last year in
conjunction with several Midwestern and Southern States. We are
convinced that this level of NOx control is appropriate to address any
contribution we may make to ozone problems in States that are downwind
of us and will not threaten the reliability of the power supply in our
State. In addition, it is a program that ensures the continued economic
growth of our State. We are continuing to work with our neighboring
States to encourage them to also proceed with NOx emission reduction
strategies that are appropriate for their respective States and the
region.
We are also committed to continuing our legal challenge as EPA has
steadfastly refused to consider our proposal, or to honestly consider
the many technical and legal flaws we have identified in the EPA rule.
It is unfortunate that States such as Michigan have had to resort to
litigation because of EPA's refusal to really listen to our concerns.
Fortunately, the courts have now begun to hear our concerns, and are
agreeing with the compelling arguments we are making. The courts will
hopefully recognize the primary role that Congress has given the States
in developing air pollution control programs, rather than having these
programs dictated by EPA.
__________
[Prepared for Northeast States for Coordinated Air Use Management, July
1998]
The Role of Ozone Transport In Reaching Attainment in the Northeast:
Opportunities, Equity and Economics
(By Tim Woolf, David White, Bruce Biewald Synapse Energy Economics, and
William Moomaw The Global Development and Environment Institute)
1. Introduction and Summary
Under the Clean Air Act, the Environmental Protection Agency (EPA)
has established National Ambient Air Quality Standards for ozone that
must be met in order to prevent significant damage to public health and
the environment. Yet a large number of States, particularly those in
the eastern US, do not meet these standards, and are expected to face
great difficulty in meeting them for the foreseeable future.
In November 1997 the EPA acknowledged that the transport of ozone
and its precursors from upwind sources significantly contributes to the
level of ozone in certain downwind States. Consequently, the EPA
proposed a ``SIP call'' requiring certain upwind States to reduce NOx
emissions to prescribed budget levels by 2003.
The transport of ozone and its precursors imposes economic costs
upon downwind States, as those States must implement increasingly
expensive options to reduce local emissions of NOx and VOCs in order to
achieve attainment with the Federal ozone standards. The objective of
this study is to estimate the extent of the economic impact experienced
by downwind States as a consequence of transported ozone. We estimate
the costs to the Northeast States of reducing local NOx emissions in
order to offset the transported ozone.
Much of this study focuses on the opportunities and costs of
controlling NOx emissions from the electric utility sector. This sector
is a large source of NOx emissions--contributing 37 percent of the
total NOx emissions in the Northeast, and 51 percent in the East-
central region.\1\ Electric power plants also offer the lowest-cost
options for controlling NOx emissions, in general.
---------------------------------------------------------------------------
\1\ We define the Northeast to include New England, NY, NJ, PA, and
MD; and the East-central region to include KY, IN, MI, OH, VA, and WV
(see Section 3).
---------------------------------------------------------------------------
As of 1990, power plants in the East-central region produced
roughly twice as much NOx emissions as power plants in the Northeast.
This disparity is increasing over time as the Northeast States take
greater measures than the East-central States to reduce NOx emissions.
In 1996, power plants in the East-central region produced nearly four
times as much NOx as those in the Northeast. If the East-central region
does not meet the budget requirements of the EPA SIP call, then by 2003
the East-central power plants will be producing over seven times as
much NOx as those in the Northeast.
Because of the relatively large volume of NOx emissions from the
East-central region, the transport of ozone into the Northeast could be
quite large relative to the amount of ozone that would be created by
local NOx emissions in the Northeast. We estimate, using a range of
ozone transport scenarios provided by Northeast States for Coordinated
Air Use Management (NESCAUM), that the amount of transported ozone
generated by NOx produced by East-central power plants, could be
roughly one to three times as much as the local ozone generated by all
of the NOx emitted from Northeast power plants.
We estimate that even after the East-central sources install
additional NOx controls in accordance with Title IV of the Clean Air
Act, the transport of NOx and ozone from the East-central electricity
industry alone would require the Northeast States to incur roughly $1.4
to $3.9 billion in additional local NOx control costs each year. These
costs would be incurred by controlling emissions from industrial point
sources, motor vehicles, area sources, and the electric utility sector.
In addition, we have found that in some scenarios the Northeast
sources are not able to offset all of the ozone transported from upwind
sources--even after utilizing all currently known NOx reduction
options. This result suggests that the Northeast will be unable to
reach attainment of the ozone standard unless the East-central sources
meet the EPA's proposed NOx budgets. This result also suggests that our
estimates of costs imposed on the Northeast sources due to ozone
transport might be significantly understated.
The rationale for requiring the East-central sources to meet the
EPA's proposed budgets is supported by the fact that there are
significantly more low-cost opportunities for reducing NOx emissions in
the East-central region than in the Northeast. We estimate that the
East-central power plants can meet the NOx emission budgets required in
the EPA SIP call at an average cost of $662/ton. The Northeast power
plants, on the other hand, will spend an average of roughly $1,031/ton
to meet the EPA budgets--roughly 50 percent higher than the average
cost to the East-central region.\2\
---------------------------------------------------------------------------
\2\ While these Northeast control options are expensive relative to
those available in the East-central region, they are less expensive
than control options available from other sectors ire the Northeast.
---------------------------------------------------------------------------
It is important to recognize that even if all States were to meet
the EPA SIP call NOx budgets, the East-central sources will continue to
emit relatively large volumes of NOx that will contribute to ozone in
the Northeast. We estimate that if the East-central sources were to
reduce NOx emissions from the electricity sector down to the levels
implied by the EPA's SIP call budgets, the economic impact on the
Northeast would be as high as roughly $0.2 to $1.1 billion each year.
Our study suggests that the overall costs of controlling NOx
emissions could be reduced if the EPA were to adopt some form of NOx
credit trading system--to allow the Northeast sources to purchase some
of the relatively low-cost NOx reductions that are available from the
East-central sources. A NOx credit trading system will help mitigate
the burden on the Northeast sources in reaching attainment of the ozone
standard, and will also mitigate the net costs to the East-central
sources of meeting the EPA SIP call budgets.
The public health impacts of the ozone transported into the
Northeast are not considered in this report. Hence, the total health
and economic costs of transported ozone are greater than the costs
presented above.
The large ozone reservoir in the Ohio River Valley returns each
summer with little abatement. Researchers have found no significant
trends in regional ozone levels from 1980 to 1995 (Five, et al., 1998).
While urban levels have decreased somewhat due to pollution controls on
automobiles regional ozone and NOx levels have not significantly
changed. This is due in large part to the lack of significant NOx
reductions from fossil fuel power plants which, in places such as the
Ohio River Valley, contribute 40-50 percent of the total NOx emissions
in a given region. Between 1987 and 1996, NOx emissions from power
plants rose 3 percent nationally (EPA, 1998). Because regional ozone is
more sensitive to NOx controls than VOC controls, the lack of
significant NOx reductions from power plants is impeding progress
toward reducing ozone levels.
The movement of ozone from the Ohio River Valley into the Northeast
was seen as early as 1979. During early August in 1979, scientists
tracked a mass of ozone leaving Ohio, crossing Pennsylvania and
southern New York, and entering into the Northeast Corridor (Clarke and
Ching, 1983). When this mass of air from the Ohio River Valley entered
into the Northeast . Corridor, it contained about 99 parts per billion
(ppb) of ozone.\3\ The 1-hour Federal ozone standard is equivalent to
120 ppb (0.12 parts per million). Therefore, the amount of ozone
observed entering the Northeast was more than 80 percent of the 1-hour
ozone standard and represented a significant contribution to the
overall ozone burden experienced in the Northeast during that time.
---------------------------------------------------------------------------
\3\ The researchers also indicated that as the air mass entered the
Northeast corridor, it contained enough transported precursor.emissions
(NOx and VOCs) to generate an additional 35 ppb of ozone on top of the
99 ppb already formed. Consequently, the amount of background ozone and
precursors entering the Northeast could have resulted in an exceedance
of the l-hour ozone standard in the Northeast even if no additional
precursor emissions occurred locally.
---------------------------------------------------------------------------
As the persistent ozone reservoir establishes itself every summer
in the Ohio River Valley, large amounts of ozone continue to be
transported into the.Northeast from the west. During the summer of
1995, the North American Research Strategy for Tropospheric Ozone-
Northeast (NARSTO-NE) conducted aircraft measurements of ozone in air
masses along the western edge of the Northeast Corridor. During pre-
dawn hours, scientists measured ozone levels up to and in excess of 100
ppb above Shenandoah, VA, Gettysburg, PA, Poughkeepsie, NY, and other
locations in the Northeast (Lurmann, et al., 1997). During this time of
morning, the ozone could not have been formed locally (no sunlight is
present to initiate the formation of ozone), so it must have been
transported during the overnight hours. Wind direction on some of the
highest ozone days (e.g., July 14, 1995) was out of the west
(Blumenthal, et al., 1997). Therefore, it is reasonable to conclude
that the ozone traveled into the Northeast from points to the west,
i.e., the Ohio River Valley.
At transported ozone levels of over 100 pub during the pre-dawn
hours, the Northeast is already over 80 percent on the way to an
exceedance of the 1-hour standard before the sun rises. The Northeast
is in the predicament of achieving the 1-hour 120 ppb Federal ozone
standard in situations where 100 ppb or more of the ozone is beyond its
control. Only an additional 20 ppb of ozone generated within the
Northeast will cause an exceedance of the 1-hour standard, and the
situation is even worse for the 80 ppb 8-hour standard. The high levels
of transported ozone virtually guarantee that the Northeast will not
achieve air quality goals without NOx reductions from upwind sources.
3. Estimating Ozone Transport Into the Northeast
A range of ozone transport into the Northeast can be estimated from
the field measurements mentioned in the preceding section, and from
computer modeling of ozone formation and transport. Based on results
from a model called CALGRID\4\ we estimate a plausible contribution of
transported ozone from outside the Northeast to ozone exposure above
the 1-hour 120 ppb and the 8-hour 80 ppb standards inside the Northeast
in the range of 20-45 percent. This was estimated as described in the
following text.
---------------------------------------------------------------------------
\4\ USEPA has approved the CALGRID model for ozone attainment
planning purposes in the New England Domain.
---------------------------------------------------------------------------
Two modeled scenarios were generated for a severe ozone episode
occurring on 11-15 July 1995 in the eastern United States.\5\ In the
first modeled scenario, the reductions proposed in the EPA NOx SIP call
were applied only within the Northeast Ozone Transport Region (OTR),
and current Clean Air Act measures were put in place outside the OTR
using emissions projected for 2007 (Run 1). In the second scenario, the
EPA NOx SIP call reductions were applied throughout 22 eastern States
(Run 2).
---------------------------------------------------------------------------
\5\ Communication from Mark Fernau, Earth Tech, Inc., Concord, MA.
---------------------------------------------------------------------------
In each scenario, the total ozone exposure above the 1-hour 120 ppb
standard and the 8-hour 80 ppb standard was determined. The total
exposure to ozone above the 1-hour standard was calculated from the
model by multiplying all calculated ozone concentrations above 125 ppb
by the total hours above 125 ppb and the area of each modeled grid cell
(144 km\2\) in which an ozone concentration above 125 ppb occurred. For
the 8-hour standard, a surrogate 1-hour value of 110 ppb was used as
the threshold exposure level in the model, and the total exposure was
calculated in the same manner as for the 125 ppb threshold. The 1-hour
threshold of 110 ppb is used because ozone monitoring data suggest that
when a 1-hour concentration of 110 ppb is reached or exceeded, it
typically coincides with an 8-hour average above 85 ppb at the same
monitor.\6\
---------------------------------------------------------------------------
\6\ The values of 125 ppb (1-hour) and 85 ppb (8-hour) are used to
be consistent with USEPA's monitoring test for an ozone exceedance.
According to USEPA's data truncation guidance, an exceedance of the l-
hour ozone standard does not occur until monitored 1-hour
concentrations reach or exceed 125 ppb, and an 8-hour exceedance does
not occur until the 8-hour average reaches or exceeds 85 ppb. For the
modeling test, this may be a conservative threshold to use because
models often underestimate observed peak ozone concentrations.
---------------------------------------------------------------------------
The reduction in ozone exposure within the Northeast Ozone
Transport Region (OTR) due to NOx controls outside the Northeast is
shown in Table 1. The reduction is given as the percentage decrease in
ozone exposure between Run 1 (EPA NOx SIP call in the OTR only) and Run
2 (EPA NOx SIP call in 22 eastern States).
Table 1. Percent reduction in ozone exposure (ppb hr/km2) greater than
125 ppb (1-hour standard) and 110 ppb (surrogate for 8-hour standard)
within the Northeast Ozone Transport Region due to applying the EPA NOx
SIP call beyond the borders of the QTR.
Percent daily reduction in modeled ozone exposure within the Northeast Ozone Transport Region due to 22 State
NOx SIP call
----------------------------------------------------------------------------------------------------------------
July 11 July 12 July 13 July 14 July 15
----------------------------------------------------------------------------------------------------------------
Reduction in ozone exposure >125 ppb............................... -31% -16% -35% -33% -42%
Reduction in ozone exposure >110 ppb............................... -37% -27% -32% -34% -47%
----------------------------------------------------------------------------------------------------------------
Modeled reductions are based on 11-15 July 1995 ozone episode.
Based on the modeled reductions in Table 1 and the high levels of
ozone observed entering the Northeast during the field studies
mentioned above, we estimate a plausible contribution range of 20-45
percent to ozone exposure above the 1-hour and 8-hour standards in the
Northeast Ozone Transport Region due to transported ozone from outside
the region.
The estimated range is consistent with modeling results from the
Ozone Transport Assessment Group (OTAG). OTAG estimated ozone transport
impacts by ``turning off'' all human-related sources of NOx and VOC
emissions in various parts of the eastern United States. When human-
related emission sources were set to zero in the OTAG model (OTAG used
a model called UAM-V), changes in ozone levels in downwind receptor
regions could be estimated. These modeling runs indicated that human-
related emissions in various upwind regions significantly contributed
to ozone levels in downwind receptor regions. For example, OTAG results
for the July 1995 episode indicated that turning off NOx and VOC
emissions in parts of the Ohio River Valley reduced ozone exposure
above 120 ppb in the Philadelphia area by 41 percent, and in the
Baltimore/Washington, DC area by 43 percent.\7\
---------------------------------------------------------------------------
\7\ Tables of ozone exposure data calculated from the OTAG July
1995 modeled episode can be found at the OTAG Northeast Modeling and
Analysis Center web address: http://sage.mcnc.org/OTAGDC/agm/uamv/
jul95.
---------------------------------------------------------------------------
4. The Economic Impact of Ozone Transport Into the Northeast
The estimated contribution of 20-45 percent from out-of-region
ozone transport to ozone levels above Federal standards within the
Northeast Ozone Transport Region raises the possibility of additional
economic costs within the Northeast due to more stringent local control
levels as well as Federal penalties for failure to achieve the ozone
standards. With this in mind, NESCAUM asked Synapse Energy Economics
and The Global Development and Environment Institute to analyze the
potential economic costs to the Northeast should the EPA NOx SIP call
not be fully implemented.\8\
---------------------------------------------------------------------------
\8\ While certainly not insignificant, the additional health and
ecological costs for the Northeast were not included in the analysis.
---------------------------------------------------------------------------
The attached analysis finds that if no additional NOx measures
beyond Clean Air Act acid rain controls are applied on sources upwind,
the additional control costs in the Northeast to compensate for ozone
transport could be from $1.4 to $3.9 billion each year. If upwind
sources met the reductions in EPA's NOx SIP call, the economic costs to
the Northeast will be reduced to about $0.2 to $1.1 billion each year.
In addition, there are significantly more low-cost opportunities
for reducing NOx emissions at upwind sources than in the Northeast.
Upwind power plants are estimated to be able to meet the EPA NOx SIP
call budgets at an average cost of $662/ton. Northeast power plants
will spend about 50 percent more to achieve the same budget
requirements--about $1,013/ton. While the cost to Northeast power
plants is still reasonable, there are not enough reductions remaining
available from these emission sources to fully offset the impact of
transported ozone. The remaining reductions must come from other
emission sectors at higher costs. A full description of the cost
analysis is presented in the following attachment.
5. Additional Economic Costs of Ozone Nonattainment to the Northeast
The Clean Air Act imposes penalties upon States that do not meet
the ozone standard by prescribed timelines. Transported ozone from
outside the region will increase the likelihood that Northeast States
will not reach attainment by the deadlines and will be subject to at
least some of the Federal penalties. These nonattainment penalties
represent an additional cost that out-of-region sources can impose upon
the Northeast due to unmitigated ozone transport.
The penalties imposed by the Clean Air Act will depend upon the
circumstances in each State, the degree to which the State has not
reached attainment, and the actions that the EPA decides are necessary
in order for the State to reach attainment. There are three main types
of penalties imposed for not meeting attainment deadlines. The first is
the loss of Federal funding for highway projects. A nonattainment State
can lose Federal funding for the majority of highway projects, such as
highway capacity increases, transportation enhancements, transportation
control measures, transit projects, traffic flow improvements, and
more. A few projects such as safety-related measures will be exempted,
and will be available for Federal funding.
The second penalty for not meeting attainment deadlines is an
increase in the offset ratio applied to new sources of NOx and VOC
emissions. Currently, if a business or industry in the Northeast wishes
to create a new source of NOx or VOC emissions, it must obtain emission
``offsets'' that are greater than the amount of new emissions. The
emission offset ratio ranges between 1.15-to-1 and 1.3-to-1, depending
upon how far the region is from reaching attainment. If attainment
deadlines are not met, this offset ratio could be increased to a ratio
as high as 2-to-1. Such a change could pose significant barriers to new
industries locating in the State, thus hindering the State's
opportunities for economic growth.
The third penalty for not meeting attainment deadlines is the
imposition of a Federal implementation plan (FIP), which would
supersede the State implementation plan in order to assist the State in
reaching attainment. The emission control measures required by a
Federal implementation plan would depend upon the types of emissions in
the State, as well as the degree to which the State was in
nonattainment. The FIP would potentially add new Federal oversight,
reporting and permitting processes to the State's existing processes.
References
Blumenthal, D.L., et al. 1997. Transport and Mixing Phenomena
Related to Ozone Exceedances in the Northeast United States, Sonoma
Technology Report STI-996133-1710-WD1.1, February.
Clarke, J.F. & J.K.S. Ching 1983. Aircraft Observations of Regional
Transport of Ozone in the Northeastern United States, Atmos. Envt.,
Vol. 17, pp. 1703-12.
EPA 1998. National Air Quality and Emissions Trends Report, 1996,
EPA 454/R-97-013, p. 17, January.
Fiore, A.M., D.J. Jacob, J.A. Logan, & J.H. Yin 1998. Long-Term
Trends in Ground Level Ozone over the Contiguous United States, 1980-
1995. J. Geophys. Res., Vol. 103, pp. 1471-80. Gillani, N.V. & W.E.
Wilson 1980. Formation and Transport of Ozone and Aerosols in Power
Plant Plumes, Ann. N.Y. Acad. Sci., Vol. 338, pp. 276-96.
Husar, R.B. 1996. Spatial pattern of daily maximum ozone over the
OTAG region, Web address: http://capita.wustl.edu/OTAG/Reports/
otagspat/otagspat.html.
Lippmann, M. 1993. Health effects of tropospheric ozone: Review of
recent research findings and their implications to ambient air quality
standards. J. Exposure Analysis and Envtl. Epidemiology 3: 103-127
Lurmann, F.W., et al. 1997. Evaluation of the UAM-VModel
Performance in the Northeast Region for OTAG Episodes, Sonoma
Technology Report STI-996133-1716-WD2.1, March.
Miller, D.F., A.J. Alkezweeny, J.M. Hales, & R.N. Lee 1978. Ozone
Formation Related to Power Plant Emissions, Science, Vol. 202, pp.
1186-88.
Ozkaynak, H., J.D. Spengler, M. O'Neill, J. Xue, H. Zhou, K.
Gilbert and S. Ramstrom-Harvard School of Public Health. 1996.
Breathless: Ambient ozone exposure and emergency hospital admissions/
Emergency room visits in 13 cities. American Lung Association Report.
Washington, D.C.
White, W.H., D.E. Patterson & W.E. Wilson, Jr. 1983. Urban Exports
to the Nonurban Troposphere: Results from Project MISTT, J. Geophys.
Res., Vol. 88, pp. 10,745-52.
2. Background and Context
In general, the Clean Air Act provides each State with the
responsibility for achieving compliance with the National Ambient Air
Quality Standards. However, pollutant emissions and impacts within one
State often affect the environment and compliance plane of downwind
States. In 1990, the Clean Air Act Amendments established the Ozone
Transport Region (OTR) in order to address the problem created by the
transport of ozone across State boundaries in the Northeast.\3\ In
1995, the Ozone Transport Assessment Group (OTAG) was established to
investigate the significance of ozone transport among the 37 eastern-
most States in the United States.
---------------------------------------------------------------------------
\3\ The OTR includes CT, DE, MA, ME, MD, NJ, NY, NH, PA, RI, VT,
the District of Columbia (DC), and the DC metropolitan area that is
within northern VA.
---------------------------------------------------------------------------
After reviewing OTAG's findings and recommendations, the EPA found
in October 1997 that the transport of ozone and its precursors from
certain States within OTAG contributes to the nonattainment problems in
other downwind States. Consequently, the EPA issued a ``SIP call''
under Section 110 of the Clean Air Act, requiring certain upwind States
to revise their State implementation plans (SIPs) and to achieve NOx
emission limits in order to mitigate the problem of transported ozone
(EPA 11/1997).
The SIP call proposes a specific summer NOx emission budget for
each of the 22 States (and the District of Columbia) that contribute to
the ozone transport problem.\4\ The summer NOx emission budgets for the
electricity sector are determined by assuming that fossil-fueled plants
in each State install currently available, cost-effective control
technologies, to achieve an average emission rate of 0.15 lb/MMBtu.
Summer NOx emission budgets are also derived for other industry sectors
and mobile sources. While EPA derived NOx budgets for each NOx emission
sector, the States have flexibility in determining how to achieve their
overall NOx budget. The EPA proposes that States be required to meet
these summer NOx emission budgets by 2003 or shortly thereafter.
---------------------------------------------------------------------------
\4\ The EPA assigned a NOx budget to DC and the following States:
AL, CT, DE, GA, IL, IN, KY, MD, MA, MI, MO, NJ, NY, NC, OH, PA, RI, SC,
TN, VA, WV, WI (EPA 11/1997).
---------------------------------------------------------------------------
Many electric utilities are already taking steps to reduce their
NOx emissions. Under Title IV of the Clean Air Act, all US utility coal
plants larger than 25 MW are required to meet NOx emission standards.
Phase I of these standards began in 1996, and Phase II will begin in
the year 2000. These NOx standards range from 0.40 to 0.86 lb/MMBtu,
depending upon the type of power plant boiler. Thus, they are
significantly less stringent than the average emission rate used by the
EPA to set the SIP call budgets.
In addition, the Northeast States have agreed to reduce NOx
emissions from the electricity sector by May 2003, as a consequence of
their efforts in the Ozone Transport Commission (OTC). They have agreed
to reduce NOx emissions to 75 percent of 1990 levels, or to emit NOx at
a rate no greater than 0.15 lb/MMBtu, whichever is less stringent.\5\
Hence, the Northeast States have already agreed to reduce their NOx
emissions to levels that are close to those required by the EPA NOx SIP
budgets. Even with these NOx reductions, some Northeast States are
expected to remain in nonattainment for the 1-hour ozone standard, and
more are expected to be in nonattainment for the 8-hour ozone standard.
---------------------------------------------------------------------------
\5\ In fact, the OTR is divided into three zones: Inner, Outer and
Northern. The Northern Zone, which includes Maine, New Hampshire,
Vermont, and northeastern New York, will be required to reduce NOx
emissions by 55 percent from 1990 levels, or to emit NOx at a rate no
greater than 0.2 lb/MMBtu, whichever is less stringent.
---------------------------------------------------------------------------
3. Methodology
Our analysis focuses primarily on NOx emissions and controls in the
electricity industry, because of large volume of emissions and the
opportunities for relatively low-cost NOx reductions from fossil-fueled
power plants. We utilize a data base consisting of nearly all coal, oil
and natural gas plants larger than 25 MW in the Northeast and East-
central regions.\6\ The database includes information on the operating
costs, electricity generation, NOx emissions and existing NOx controls
for these plants in 1996. The data base was assembled using (a) unit
characteristic data from the Energy Information Administration of the
Department of Energy, (b) NOx emissions data from the Environmental
Protection Agency, and (c) power plant cost and operation data from the
Utility Data Institute.
---------------------------------------------------------------------------
\6\ The data base does not contain information on gas turbines. The
power plants in the data base represent 98 percent of the generation in
the Northeast and 99 percent in the East-central region.
---------------------------------------------------------------------------
We also compiled information on the performance and costs of
various NOx control technologies for coal, oil and natural gas plants.
All of our assumptions for NOx control technologies in the electricity
sector were the same assumptions used by the EPA in its analysis of the
ozone transport proposed rulemaking (EPA 1996; EPA 9/1997). For coal-
fired power plants, we considered low-NOx burner (LNB) options, low-NOx
coal-and-air nozzles, gas reburn, selective noncatalytic reduction
(SNCR), and selective catalytic reduction (SCR) technologies. For oil-
and gas-fired power plants we considered gas reburn, SNCR and SCR.
Combustion technologies were applied in combination with post-
combustion technologies, where cost-effective.
NOx control technologies often require significant up-front capital
costs, as well as on-going annual operation and maintenance costs. We
have levelized the capital costs in order to present total control
costs in annual terms. All costs presented in this study are in 1995
dollars. We do not account for increases or decreases in NOx control
costs beyond inflation. A more detailed discussion of our assumptions
regarding NOx control cost in the electricity sector is provided in
Appendix A.
Our general approach is to identify the NOx control technologies
that would likely be adopted on a plant-by-plant basis to meet various
levels of NOx standards in the Northeast and East-central regions. We
begin with a snapshot of control technologies that are in place today.
We then develop reference scenarios that account for all of the NOx
controls that utilities are expected to install by 2003 to comply with
provisions of the Clean Air Act. We then look at increasingly stringent
levels of NOx standards, and identify the least-cost control
technologies that would be installed and the costs that would be
incurred in meeting them. This allows us to develop curves indicating
the average and marginal costs of NOx controls in the two regions.
We define the Northeast States as all of the New England States,
New York, New Jersey, Pennsylvania and Maryland. We define the East-
central States as Kentucky, Indiana, Michigan, Ohio, Virginia and West
Virginia. These regions are presented in the map in Figure 3.1. These
regions were defined this way because they correspond to regions that
were modeled by OTAG.
In discussing the transport of ozone, we generally refer to the
Northeast region as ``downwind,'' and the East-central region as
``upwind.'' In fact, the transport of ozone is much more complicated
than this. Some States within the Northeast (e.g. Pennsylvania) are
upwind of other States in the Northeast. A number of States outside the
Northeast are upwind from the East-central sources. In addition, other
States contribute to ozone transport within and outside the East-
central and Northeast regions. We have defined these two regions as
upwind versus downwind in order to simplify our analysis. We do not
mean to imply that States falling outside either of these regions do
not contribute to (or suffer from) the ozone transport problem.
Given that the EPA has proposed NOx budgets for the year 2003, we
have modified our data base to reflect the operation of existing power
plants in that year. We use the same assumptions for the growth in
power plant utilization that were used by the EPA in its analysis of
NOx budgets in the proposed rulemaking. The existing fossil-fired power
plants can meet all of the EPA's assumed growth in utilization by
increasing their capacity factors. Therefore, we have assumed that no
new power plants will be operating in 2003.
Our assumptions regarding NOx control options for the electricity
sector are limited to ``bolt-on'' control technologies. We do not
consider other options such as fuel-switching, repowering, plant
retirement, alternative dispatching approaches or power plant
efficiency improvements. In addition, we do not account for
technological improvements and cost reductions for NOx control measures
as the market demand for them increases over time. Consequently, our
estimates of NOx control costs for the electricity sectors in both the
Northeast and East-central region represent high-side estimates.
4. The Sources of NOx Emissions in the Northeast and East-Central
Regions
Table 4.1 presents an overview of the anthropogenic NOx emissions
in both the Northeast and East-central regions in 1990. The same
information is presented in Figure 4.1 below. Two points are relevant
for our analysis. First, electric utilities are responsible for a large
portion of NOx emissions--accounting for roughly 37 percent of
emissions in the Northeast and 51 percent of emissions in the East-
central region. Consequently, the potential for NOx reductions is
greater in the electricity sector, simply on the basis of the volume of
emissions.
Second, power plants in the East-central States are responsible for
roughly twice as many NOx emissions as power plants in the Northeast
States. As a result, the power plants in the East-central region
provide the greatest opportunity for reducing NOx emissions.
Table 4.1 Volume of 1990 NOx Emissions, by Sector (tons/summer day).
------------------------------------------------------------------------
East-
Northeast Central
------------------------------------------------------------------------
Electric Utility.............................. 3,740 7,205
Point Sources: Non-Utility.................... 1,229 1,363
Motor Vehicles................................ 3,439 3,318
Area Sources: Non-Road........................ 1,324 1,380
Area Sources: Other........................... 460 794
Total..................................... 10,192 14,060
-------------------------
------------------------------------------------------------------------
Source: The Ozone Transport Assessment Group.
The high emissions of NOx from the East-central electric utilities
are due in part to the fact that the East-central region relies upon
coal-fired power plants for the majority of its electricity generation.
In 1996 the East-central region obtained nearly 87 percent of its
generation from coal-fired plants, whereas the Northwest relied upon
coal plants for only 46 percent of its generation.
In addition, the Northeast States have already taken more steps
than those in the East-central region to reduce their NOx emissions. In
the Northeast, electric utilities have installed low-NOx burners on
roughly 75 percent of coal plants, 41 percent of oil plants, and 54
percent of gas plants. Electric utilities in the East-central region,
on the other hand, have to date installed low-NOx burners on only 43
percent of their coal plants and none on their oil and gas plants.
As a result of these NOx control efforts, the average NOx emission
rate from all fossil-fired power plants in the East-central region is
currently significantly higher than that in the Northeast. In 1996 the
average NOx emission rate from fossil plants in the Northeast was 0.42
lb/MMBtu, whereas the average rate in the East-central region was 0.69
lb/MMBtu--roughly 67 percent higher than in the Northeast.
In addition, the Northeast relies less heavily on fossil-fired
plants for generating electricity than the East-central region.
Consequently, the difference in the average NOx emission rate across
all electric generation is even greater than for the emission rate that
only includes fossil units. In 1996 the average NOx emission rate from
all power plants in the Northeast was 2.6 lb/MWh, whereas the average
NOx emission rate from all power plants in the Midwest was 6.6 lb/MWh--
roughly 2.5 times higher than in the Northeast.
5. Opportunities for NOx Reductions in the Electric Utility Sector
We investigate the likely cost of NOx controls in the East-central
and Northeast regions under different future scenarios. For the East-
central region, our reference scenario assumes that utilities meet the
NOx standards required by Phase II of Title IV of the Clean Air Act. In
other words, this scenario accounts for all of the NOx controls that
East-central utilities are expected to install by 2003 in the absence
of any requirements of the EPA SIP call. Under this scenario we
estimate that East-central utilities would reduce their NOx emissions
to an average rate of 0.5 lb/MMBtu.\7\ We refer to this scenario as the
``Title IV Only Scenario.''
---------------------------------------------------------------------------
\7\ The NOx emission standards required by Title IV range from 0.40
to 0.86 lb/MMBtu, depending upon boiler design. The majority of boilers
are required to meet standards of 0.4 and 0.46 lb/MMBtu.
---------------------------------------------------------------------------
For the Northeast region, our reference scenario assumes that
utilities meet the much more stringent standard of 0.15 lb/MMBtu, as
required by the EPA SIP call. We therefore refer to this scenario as
the ``EPA Budget Scenario.''\8\
---------------------------------------------------------------------------
\8\ We choose the EPA Budget Scenario as our reference scenario
because it is similar to the standards already agreed to by the OTR
States in the OTC Memorandum of Understanding, where States have a
choice of meeting a 0.15 lb/MMBtu average emission rate or achieving a
75 percent reduction from 1990 emissions. (OTC 1994).
---------------------------------------------------------------------------
We then analyze scenarios where greater NOx controls are applied in
Me East-central and the Northeast electricity sectors. For each
scenario we estimate Me types of NOx control technologies likely to be
applied on a plant-by-plant basis, as well as the associated costs. For
the East-central region, we analyze an ``EPA Budget Scenario'' in order
to estimate the impact of meeting Me NOx budgets in the EPA SIP call.
For the Northeast region we also analyze a ``Beyond EPA Budget
Scenario,'' which goes beyond the requirements of the EPA SIP call and
utilizes all of the reasonably available bolt-on control technologies.
Our results are presented in Table 5.1 and Figure 5.1.
Table 5.1 Costs of Controlling NOx in the East-Central and Northeast Electricity Sectors in 2003.
----------------------------------------------------------------------------------------------------------------
NOx Control
Reduction cost from Average
Average NOx from current control
Emissions current year cost ($/
(lb/MMBtu) year (1000 (million $/ ton)
tons/year) year)
----------------------------------------------------------------------------------------------------------------
Northeast:
1996 Control Level...................................... 0.40 n.a. n.a. n.a.
EPA Budget.............................................. 0.15 344 354 1,031
Beyond EPA Budget....................................... 0.10 412 472 1,145
East-Central:
1996 Control Level...................................... 0.68 n.a. n.a. n.a.
Title IV Only........................................... 0.50 571 59 103
EPA Budget.............................................. 0.15 1,641 1,087 662
----------------------------------------------------------------------------------------------------------------
Notes: All costs are in 1995 dollars. See Appendix A for control cost assumptions. The Average Nt)X emission
rates for the 1996 Control Level Scenario are slightly lower than the actual rates in 1996 because they are
based on generation that has been adjusted to 2003 levels.
Our results in Table 5.1 indicate that the costs of controlling NOx
in the Northeast is significantly higher than in the East-central
region. If the Northeast States meet the EPA Budget Scenario, while the
East-central power plants meet the Title IV Only Scenario, then their
average control costs (in $/ton) will be ten times higher than for the
East-central region. Even in the scenarios where the two regions meet
the same average NOx emission rate of 0.15 lb/MMBtu, the Northeast will
incur average NOx control costs of $1,031/ton--roughly 56 percent
higher than the $662/ton incurred by the East-central region. This
difference in control costs is partly because the Northeast has already
taken many measures to control NOx emissions under the OTC Memorandum
of Understanding.
Marginal costs provide another indication of the extent to which
NOx control costs in the Northeast are higher than in the East-central
region.\9\ Figure 5.1 presents a graphical representation of the
marginal NOx control costs for both the Northeast and East-central
regions, at various levels of NOx controls. The X-axis indicates the
cumulative amount of NOx reductions relative to the 1996 control
levels, while the Y-axis indicates the marginal NOx control costs (in
$/ton) for each level of NOx reduction. The Northeast control cost
curve intersects the Y-axis at the 1996 Control Level Scenario emission
rate of 0.40 lb/MMBtu, and climbs up to the Beyond EPA Budget Scenario
emission rate of 0.10 lb/MMBtu. The East-central.control cost curve
intersects the Y-axis at the 1996 Control Level Scenario emission rate
of 0.68 lb/MMBtu, and climbs up to the EPA Budget Scenario emission
rate of 0.15 lb/MMBtu.
---------------------------------------------------------------------------
\9\ Marginal control costs represent the cost of controlling a
small increment of NOx at a particular level of control (e.g., at the
0.15 lb/MMBtu point). Average control costs, on the other hand,
represent the cost of controlling all of the NOx emissions from a
baseline level (e.g., 1996 control levels) to a higher level of
control.
---------------------------------------------------------------------------
The two control cost curves in Figure 5.1 indicate the extent to
which there are significantly greater low-cost opportunities to control
NOx emissions in the East-central region relative to the Northeast. In
the Northeast the low-cost options have already been adopted, and there
are fewer plants on which to apply the higher-cost options. The
Northeast curve becomes quite steep after the average emission rate of
0.15 lb/MMBtu is achieved. Our analysis indicates that it is difficult
to achieve further NOx reductions in the Northeast after the 0.10 lb/
MMBtu average emission rate is achieved.\10\
---------------------------------------------------------------------------
\10\ A few plants remain without SCR control technologies in this
scenario, but their capacity factors are so low that installing SCR
does not significantly reduce NOx emissions. Power plant owners could
begin reflowering with natural gas or retiring coal-fired plants to
achieve additional reductions beyond the 0.10 lb/MMBtu average level,
but we have not evaluated the economics of these options.
---------------------------------------------------------------------------
In the East-central region the marginal control cost curve is much
less steep than the Northeast, and there are many more opportunities
for low-cost emission reductions. For example, in the Title IV Only
Scenario the East-central power plants would be able to achieve 571,000
tons of NOx reductions--more than the amount available in the Northeast
under the Beyond EPA Budget Scenario--at a marginal cost of less than
$500/ton and an average cost of roughly $103/ton.
Figures 5.2 and 5.3 present the extent to which the Northeast and
East-central utilities are expected to install NOx controls in the
various scenarios that we investigate. For simplicity we group NOx
control technologies into two categories. The combustion control
category includes the relatively low-cost options, such as low-NOx
burners, low-NOx coal-and-air models, coal reburning, and others. The
SCR category includes the more expensive SNCR and SCR post-combustion
controls. In some cases, plants are assumed to install both combustion
controls and SCR post-combustion controls to achieve the maximum amount
of NOx reductions.
As indicated in Figures 5.2 and 5.3, the Northeast has currently
installed significantly more low-cost combustion controls than the
East-central region. In order to meet the requirements of the EPA
Budget Scenario, the Northeast will have to install combustion controls
on almost all of its fossil-fired generation units, as well as SCR
controls on 82 percent of the fossil-fired units. If the East-central
utilities simply meet the Title IV Ohly Scenario, they could install
only combustion controls on roughly 80 percent of their fossil-fired
generation units. In order to achieve the average emission rate of 0.15
lb/MMBtu, the two regions will both have to install combustion controls
on nearly all fossil-fired generation units, as well as SCR controls on
over 70 percent of the units. If the Northeast utilities wish to
achieve the lower average emission rate of 0.10 lb/MMBtu, they will
have to also install combustion controls and SCR controls on nearly all
fossil-fired units.) \11\
---------------------------------------------------------------------------
\11\ As described in Section 3, we do not consider all of the power
plant control options available, such as fuel-switching, repowering or
coal unit retirement. In practice, therefore, it may not be necessary
to implement all of the control options presented in Figures 5.2 and
5.3.
---------------------------------------------------------------------------
6. The Economic Impact of the Transport of Ozone
6.1 The Extent Ozone Transport from the East-Central Power
Plants
The transport of ozone and its precursors from the East-central
region to the Northeast will require the Northeast States to adopt more
local NOx and VOC controls than they otherwise would adopt to meet
ozone attainment standards. These local NOx and VOC controls will be
relatively expensive because most of the low-cost NOx and VOC controls
would have already been implemented by the Northeast States.
In order to estimate the extent of the additional costs to the
Northeast, we begin by estimating the approximate amount of NOx and
ozone that is transported from the East-Central region to the
Northeast. While OTAG has addressed this question In its air quality
modeling analyses, there still remains considerable debate about the
extent to which ozone is transported between the two regions.
In order to provide an illustration of the plausible extent of
ozone transport, we assume a range of amounts of ozone transported from
the East-central region. This range was developed by NESCAUM, and is
described in a companion document prepared by them. In our Low
Transport Case, we assume that 20 percent of the NOx emissions from the
East-central power plants are transported to the Northeast States, as
either NOx or an equivalent level of ozone. In our Medium and High
Transport Cases, we assume that 30 and 45 percent of the NOx emissions
from the East-central plants are transported to the Northeast, as
either NOx or an equivalent level of ozone.\12\
---------------------------------------------------------------------------
\12\ In fact, a significantly larger portion of NOx emissions from
the East-central region will be transported to nearby regions in the
Northeast (e.g., Pittsburgh) than to regions farther away (e.g.,
Maine). Our assumptions here about the percent of NOx that is
transported to the Northeast represent an average impact across the
entire Northeast region.
---------------------------------------------------------------------------
We estimate that the NOx emissions from East-central power plants
in the Title IV Only Scenario will be roughly 1,525 thousand tons per
year. Consequently, our Low, Medium and High Transport Cases imply that
the ozone transported from the East-central region to the Northeast is
equivalent to roughly 305, 457 or 686 thousand tons of NOx emissions.
For comparison purposes, in the EPA Budget Scenario the Northeast
States are expected to produce roughly 232 thousand tons of NOx
emissions. Therefore, the amount of ozone transported from the East-
central power plants could be roughly one to three times as much as
that generated by the NOx emissions from the power plants located in
the Northeast.
6.2 The Costs of Controlling NOx Emissions in the Northeast
We then identify the options available for reducing NOx emissions
in the Northeast. Under most scenarios the potential NOx emission
reductions from Northeast power plants are not sufficient to offset all
of the ozone that is transported from the East-central power plants, so
we investigate options for reducing NOx from other sectors of the
economy. The details of our control cost assumptions for the non-
utility sectors are provided in Appendix B.
A summary of our Northeast NOx control cost assumptions is provided
in Table 6.1.\13\ These costs represent the control options available
after the various sectors have already reduced NOx emissions down to
the level required by the EPA budgets in the SIP Call. As indicated in
Table 5.1 above, the Northeast could reduce NOx emissions in the
electricity sector by roughly 68 thousand tons/year, by lowering the
average emission rate from 0.15 to 0.10 lb/MMBtu. These reductions
would cost an average of $1,717 per ton.
---------------------------------------------------------------------------
\13\ We do not consider opportunities for reducing VOC emissions in
the Northeast. Regional scale modeling indicates that reductions of VOC
emissions are likely to affect only local ozone formation, with
relatively little impact on transported ozone.
---------------------------------------------------------------------------
The other sectors that create NOx emissions are characterized as
point sources, area sources, and motor vehicles. We rely upon OTAG
information as the primary source for estimates of NOx control costs in
these sectors (Pechan). As indicated in Table 6.1, the average cost of
controlling NOx from these sectors is significantly greater than from
the electric utility sector.
Table 6.1 NOx Reductions Available in the Northeast From Utility and Non-
Utility Sectors, After the EPA SIP Call Budgets Have Been Met.
------------------------------------------------------------------------
Potential
reduction Average Average
(1000 Cost Low Cost High
tons/ Case ($/ Case ($/
year) ton) ton)
------------------------------------------------------------------------
Electric Utilities................. 68 1,717 1,717
Point Sources: Industrial.......... 56 5,000 7,000
Point Sources: Incinerators........ 7 5,000 7,000
Point Sources: Other Industrial.... 24 5,000 7,000
Area Sources: Industrial........... 67 5,000 7,000
Motor Vehicles..................... 235 6,800 11,500
Area Sources: Off-Road Diesel Fuel. 6 8,000 23,000
Area Sources: Off-Road Gasoline.... 5 10,000 10,000
Total Potential Reductions..... 468 -- --
------------------------------------------------------------------------
Source. See Appendix B. These reductions and costs represent those
available after the Northeast States achieve the NOx budgets proposed
in the EPA SIP call. Note that this table only lists options
identified by OTAG. There are, however, additional cost-effective
measures which may have not been considered by OTAG, such as heavy-
duty diesel controls, that win be feasible options for additional NOx
reductions.
Figure 6.1 provides a graphical representation of the costs of
controlling NOx in the Northeast from the various sectors of the
economy. The control options are presented in order of the lowest to
highest cost, beginning at the left and moving to the right. The X-axis
indicates the cumulative volume of NOx reductions available from each
sector. The Y-axis indicates the average costs (in $/ton) required to
achieve the associated volume of reductions. \14\
---------------------------------------------------------------------------
\14\ In practice, each sector offers a number of NOx control
options, each with costs that may be above or below the averages
presented here.
---------------------------------------------------------------------------
Figure 6.1 indicates that the majority of NOx emission reductions
in the Northeast is available from point sources (at $5,000 to $7,000/
ton), and motor vehicles (at $6,800 to $11,500/ton). The extent to
which these NOx reductions would be used to offset ozone transported
from the East-central region depends upon the transport assumptions:
In our Low Transport Case, the Northeast will have to offset the
equivalent of roughly 305 thousand tons of NOx per year from the East-
central region, which can be done by utilizing additional NOx controls
from the electric utility sector, the point source sectors, and part of
the motor vehicle sector.
In the Medium`Transport Case, the Northeast will have to offset the
equivalent of roughly 457 thousand tons of NOx emissions from the East-
central region, which requires essentially all of the control cost
options presented in Table 6.1.
In the High Transport Case, the Northeast will have to offset the
equivalent of roughly 686 thousand tons of NOx emissions from the East-
central region, which would require roughly 218 thousand tons of
reductions beyond those presented in Table 6.1.
6.3 The Economic Impact of NOx Transported From East-
Central Power Plants
We use the data in Table 6.1 and Figure 6.1 to-estimate the
economic impact upon the Northeast as a consequence of transported
ozone. Our analysis is summarized in Table 6.2. The public health
impacts of not attaining the ozone standard in the Northeast are not
considered in this report.
In the Title IV Only Scenario, the Northeast States would have to
reduce local NOx emissions by 305 thousand tons per year under our Low
Transport Case. Roughly 68 thousand tons of NOx reduction could be
achieved by installing additional controls on Northeast power plants
(our Beyond EPA Budget Scenario). At an average cost of roughly $1,717
per ton, these NOx reductions from the electricity sector cost a total
of approximately $117 million.
The remaining 237 thousand tons of NOx would have to be obtained
from sources in other sectors. This amount of reduction could be
achieved from point sources and motor vehicles, at an average cost of
$5,600 to 8,500 per ton, requiring a total cost of $1.3 to $2.0
billion. The total economic impact imposed upon the Northeast States
under the Title IV Only Scenario and the Low Transport Case would
therefore be roughly $1.4 to $2.1 billion.
Table 6.2 Control Costs in the Northeast Due to NOx Emissions from East-Central Power Plants
----------------------------------------------------------------------------------------------------------------
Low Transport Medium Transport High Transport
----------------------------------------------------------------------------------------------------------------
Title IV Only Scenario: (East-Central
NOx = 0.50 lb/MMBtu)
Total Emissions from East-Central 1,525.................. 1,525.................. 1,525
Power Plants (1000 ton/year).
Emission transport from East-Central 305.................... 457.................... 686
to NE (1000 ton/year).
NOx Reductions from NE Power Plants 68..................... 68..................... 68
(1000 ton/year).
NOx Reductions from Other NE Sectors 237.................... 389.................... 618
(1000 ton/year).
Average Cost of NOx Reductions from 1,717.................. 1,717.................. 1,717
NE Power Plants ($/ton).
Average Cost of NOx Reductions from 5,600-8,500............ 6,100-9,700............ >7,500
Other NE Sectors ($/ton).
Total Cost of NOx reductions (billion 1.4-2.1................ 2.5-3.9................ >3.9
$/year).
EPA Budget Scenario: (East-Central 454.................... 454.................... 454
NOx rate=0.15 lb/MMBtu)
Total Emissions from East-Central 91..................... 91..................... 91
Power Plants (1000 ton/year)
Emission transport from East-Central 91..................... 136.................... 205
to NE (1000 ton/year)
NOx Reductions from NE Power Plants 68..................... 68..................... 68
(1000 ton/year)
NOx Reductions from Other NE Sectors 23..................... 68..................... 136
(1000 ton/year)
Total Cost of NOx reductions (billion 0.2-0.3................ 0.5-0.6................ 0.8-1.1
$/year)
----------------------------------------------------------------------------------------------------------------
In the Medium Transport Case the Northeast would have to achieve
reductions in local NOx emissions of 457 thousand tons. This requires
utilizing almost all of the control options listed in Table 6.1 and
Figure 6.1, and therefore causes a much higher total cost ranging from
$2.5 to $3.9 billion.
In the High Transport Case the Northeast would have to achieve
reductions in local NOx emissions of 868 thousand tons. This requires
utilizing all of the control options listed in Table 6.1 and Figure
6.1, as well as 281 thousand tons of additional NOx reductions.
However, it is not clear whether there will be many additional sources
of NOx reductions beyond those identified in Table 6.1 Consequently, it
may not be possible for the Northeast States to offset the full amount
of ozone transported in from the East-central sources. If such
reductions are available, they will most likely cost more than those
reductions assumed in the Medium Transport Case. We therefore simply
note in Table 6.2 that the total cost of NOx reductions in the High
Transport Case will be greater than $3.9 billion per year.
In sum, the economic impact on the Northeast could range from $1.4
to over $3.9 billion per year, if the East-central sources do not meet
the EPA SIP call budgets. To put these costs in perspective, the
Northeast States will have to incur roughly $354 million to reduce
their average emission rates from today's level to the 0.15 lb/MMBtu
level. Thus, the transport of NOx and ozone from the East-central
region creates an economic impact on the Northeast that could be
anywhere from roughly four to over ten times as much as its own costs
required to achieve the budget levels proposed by the EPA.
Our EPA Budget Scenario assumes that the East-central sources
reduce their NOx emissions to the levels required in the EPA SIP call.
In this scenario the economic impact on the Northeast would be
considerably smaller. In the Low Transport Case, all of the transported
ozone could be offset through reductions in the electric utility
sector, for a total cost of $0.2 to 0.3 billion. In the Medium
Transport Case, the transported ozone would be offset by equal amounts
of emissions from the utility and point sources, resulting in a total
cost of $0.5 to $0.6 billion. In the High Transport case, the costs
could be as high as $0.8 to $1.1 billion.
The difference between the costs of the Title IV Scenario and the
EPA Budget Scenario indicates the economic impact that the East-central
utilities are likely to place on the Northeast as a consequence of not
meeting the budgets in the EPA SIP call. In our Low Transport Case this
difference is roughly $1.2 to 1.9 billion, and in the Medium Transport
Case it is roughly $2.0 to $3.3 billion. In the High Transport Case, it
will be significantly higher.
6.4 Limitations, Uncertainties and Approximations
Our results should be seen as approximate illustrations of the
costs of offsetting ozone transported from the East-central region. The
complexity of the issue makes accurate calculations challenging. The
two greatest uncertainties in our analysis are the amount of ozone
transported from the East-central region, and the costs of controlling
NOx from utility and non-utility sectors. The more important
uncertainties in our analysis are addressed in turn below.
The transport of ozone. We believe that our assumption of 20 to 45
percent represents a reasonable range of likely ozone transport
scenarios. (Please refer to the companion document prepared by
NESCAUM.) Evidence indicates that in some regions of the Northeast the
transport will be significantly greater. In some regions it will be
lower. On average, our assumptions cover the plausible range of ozone
transport.
Non-utility NOx control costs. We have used conservative
assumptions for the cost of controlling NOx emissions from non-utility
sectors. Many of the reductions will be available from point sources,
which OTAG has estimated to cost greater than $5,000 per ton. In some
cases, they may cost significantly more than this. We have assumed that
these reductions will cost only $5,000 to $7,000 per ton.
Utility NOx control costs. We have not accounted for some important
electricity sector NOx reduction opportunities, such as fuel-switching,
coal-to-gas repowering. or coal unit retirement. These opportunities
might be more cost-effective than some of the utility control costs
assumed here--particularly if the benefits of reducing other pollutants
(e.g., CO2) are accounted for.
Improved efficiencies and economies of scale. Our assumptions for
NOx control costs in both the electric sector and the non-utility
sectors might overstate the actual control costs, as a consequence of
efficiencies that might be achieved over time. As industries come under
increasing pressure to reduce NOx emissions, they can be expected to
identify new control options and to achieve reductions more efficiently
than in the past. In addition, increased demand for NOx control
technologies may allow for them to be produced with increased
economies-of-scale.
Annual versus seasonal control costs. Our analysis estimates the
costs of achieving annual NOx reductions from the electric utility
sector, as opposed to the seasonal reductions required in the EPA SIP
call. Annual NOx reductions are likely to be more expensive than
seasonal reductions, because some of the power plant NOx controls might
not have to be operated during the off-season periods. However, we
believe that using annual control costs does not overstate our control
cost results significantly, and does not affect our overall
conclusions; The control costs we assume for reducing NOx from non-
utility sources are based on seasonal control costs; it is only the
utility sources that are based on annual costs. The non-utility sources
represent the greatest contribution to the total control costs in our
analysis, both in terms of dollars per ton and number of tons. For
example, in our Medium Transport Case the non-utility control costs
represent 95 to 97 percent of the total cost of NOx reductions reported
in Table 6.2.
Transported ozone from non-utility sources in the East-central
region. Our estimates of the costs imposed upon the Northeast only
present a portion of the economic impact of NOx transport, because they
only account for the NOx emissions from East-central electric power
plants. As indicated in Table 4.1 above, power plants are responsible
for only about one-half of the total NOx emissions from the East-
central region. Consequently, we have accounted for only a portion of
the transported ozone problem. The NOx emissions from other sectors in
the East-central region will impose additional costs on the Northeast
States.
Insufficient NOx control measures in the Northeast. As indicated in
Figure 6.1, the Northeast States may have to apply nearly all currently
known NOx controls to offset the volume of the ozone transported from
the East-central region. In the High Transport Case, there is unlikely
to be enough NOx control options available to offset the transport of
ozone generated from all East-central sources. \15\ Consequently, the
economic and residual environmental costs could be much higher than we
have identified here.
---------------------------------------------------------------------------
\15\ While there is likely to be some NOx reduction measures
available in the Northeast beyond those presented in Table 6.1 and
Figure 6.1, they are likely to be increasingly expensive and difficult
to find.
---------------------------------------------------------------------------
Low-cost NOx control measures are needed to address local NOx
emissions first. OTAG modeling has indicated that the Northeast States
might not be able to reach attainment of the 1-hour ozone standard--
even after they meet the NOx budgets proposed in the EPA SIP call.
Therefore, they may need to implement some of the control options
presented in Table 6.1, regardless of whether there is any ozone
transported from the East-central region. A more appropriate estimate
of the economic impact caused by transport would therefore assume that
such options are not available for offsetting transported ozone.
Consequently, the control options that are used to offset the
transported ozone will be more expensive--if they are available at all.
In sum, our analysis generally indicates that the transport of
ozone and its precursors from the electricity sector in the East-
central region is likely to require the Northeast States to implement a
large portion of the available local NOx control options, including
control options from all NOx-emitting sectors. This will require the
Northeast States to incur costs on the order of billions of dollars per
year, and might still leave some regions in the Northeast in
nonattainment of the ozone standard.
If the East-central sources achieve the NOx reductions proposed in
the EPA SIP call, then this economic impact will be significantly
reduced. Even then, however, the impact imposed upon the Northeast will
still be on the order of hundreds of millions of dollars, if not more.
Even in this scenario, the transport of ozone will make it more
difficult for the Northeast States to reach attainment of the ozone
standard.
7. Conclusions
Our analysis finds that there is a clear need to reduce the inter-
regional transport of ozone and its precursors. Simply put, ozone is a
regional problem with regional implications, and upwind States cannot
act without regard for the NOx and ozone that is transported out of
their borders.
NOx emissions from East-central power plants significantly
contribute to the nonattainment of ozone standards in the Northeast--in
addition to contributing to the local ozone problem in the East-central
region. Not only does this East-central contribution threaten public
health by preventing the Northeast States from reaching attainment, it
also requires the Northeast States to incur significantly higher NOx
control costs than they would in the absence of transported ozone.
Based on OTAG modeling to date, the Northeast States will likely
have to take additional aggressive measures to reach attainment of the
ozone standard even after the EPA NOx SIP call is fully in place
throughout the eastern United States. As this study shows, the most
effective approach is to implement low-cost upwind NOx controls so that
a greater portion of the additional local measures can be applied
toward reaching attainment, rather than compensating for outside
transport. Therefore, the East-central sources should be required to
meet the State NOx emission budgets in the EPA's proposed rulemaking.
The EPA NOx SIP call is a good first step in addressing the
regional ozone problem in the eastern United States. Even at the EPA
NOx budget levels, however, upwind sources will continue to impose
significant costs on downwind States, and will continue to impede the
ability of downwind States to reach attainment. The U.S. EPA and the
States should monitor the ozone transport problem over time to
determine what additional measures might be necessary to reduce ozone
transport further beyond the EPA NOx SIP call budgets.
references
Andover Technology Partners 1998. Status Report on NOx: Control
Technologies and Cost Effectiveness, Submitted to Northeast States for
Coordinated Air Use Management, Draft Report, January.
Energy Information Administration 1997. Annual Electric Generator
Data: 1996, Form EIA-860.
Environmental Protection Agency (EPA) 5/1998. Staff Paper on
Gasoline Sulfur Issues, Office of Mobile Sources, EPA420-R-98-004 May
1.
EPA 1997. Summary Emission Reports: 1996, Acid Rain Division, Year-
to-Date and Quarterly.
EPA 11/1997. Finding of Significant Contribution and Rulemaking for
Certain States in the Ozone Transport Assessment Group Region for
Purposes of Reducing Regional Transport of Ozone; Proposed Rule, 40 CFR
Part 52, Federal Register, November 7.
EPA 9/1997. Proposed Ozone Transport Rulemaking Regulatory
Analysis, Office of Air and Radiation, September.
EPA 7/1996. Analysis of Electric Power Generation Under the Clean
Air Act Amendments, July.
Northeast States for Coordinated Air Use Management (NESCAUM) 1997.
The Long-Range Transport of Ozone and Its Precursors in the Eastern
United States, March.
Pechan & Associates 1997. OTAG Cost Parameters Applied To Non-
Utility Strategies To Reduce Ozone Transport, Prepared for U.S. EPA,
Contract No. 68-D4-0107, Pechan Report No. 97.05.001/1150.020, May 29.
Synapse Energy Economics 1998. Grandfathering and Environmental
Comparability: Air Emission Regulations and Electricity Market
Distortions, prepared for the National Association of Regulatory
Utility Commissioners, with the Global Development and Environment
Institute, Forthcoming.
Utility Data Institute 1997. 1996 Production Costs Operating Steam-
Electric Plants, UDI-2011 -97, September.
______
appendix a. nox control options for the electric utility sector
Table A.1 presents a summary of the NOx control technologies for
achieving NOx reductions in the electricity sector. All of the data in
Table A. 1 are taken from the same study (EPA 1996) that EPA used in
its ozone transport rulemaking (EPA 9/1997).
The majority of the NOx controls available are designed for coal
plants, due to their high emission rates. Some controls are applied in
the combustion process itself, while others are applied after the fuel
has been burned. On any one unit it is possible to apply both
combustion and post-combustion controls. In such case the removal rates
are multiplicative.
It is important to note that in practice, the cost of these control
measures, and the amount of NOx removal, might vary considerably from
the costs presented in Table A.1. The cost might depend upon the unique
characteristics of a unit's design, location, and operating patterns.
For example, the costs of the few SCR technologies installed to date
have varied significantly (Andover Technology Partners 1998).
Figure A.1 indicates the removal rates from some of the key NOx
control options. It presents the NOx removal rate and control cost for
a typical coal plant operating at 50 percent capacity factor, for six
different combinations of combustion and post-combustion controls. The
greatest opportunity for removing NOx emissions can be found by
combining 10w-NOx burners with SCR controls.
The cost of reducing NOx emissions (in $/ton) will vary depending
upon the extent that a unit operates. Figure A.2 presents the NOx
control costs for three control technology options, for a typical coal
plant at various levels of plant operation. The control costs increase
with lower levels of plant operation. The low-NOx burner represents the
least-cost control option available, while the combination of low-NOx
burners and SCR controls provides the greatest level of NOx removal.
In our economic analysis we have levelized the capital costs over
30 years using a fixed charge factor of 12 percent, in order to present
total control costs in annual terms. All costs presented in this study
are in 1995 dollars. We do not account for increases or decreases in
NOx control costs beyond inflation.
The general approach in our economic analysis is to identify the
NOx control technologies that would likely be adopted on a plant-by-
plant basis to meet various levels of NOx standards in the Northeast
and East-central regions. We begin with a snapshot of control
technologies that are in place today. We then look at increasingly
stringent levels of NOx standards, and identify the least-cost control
technologies that would be installed and the costs that would be
incurred in meeting them. This allows us to develop curves indicating
the average and marginal costs of NOx controls in the two regions.
appendix b. nox control options for non-utility sectors
We rely upon the OTAG information for the primary source of data on
NOx control options for non-utility sectors (Pechan 1997). This
information includes inventories of NOx control costs by sector and by
State. The inventories include different groupings of control options,
to achieve different degrees of NOx reductions. These groupings are
referred to as Level 1, Level 2 and Level 3, with Level 3 being the
most stringent.
We seek to identify those NOx options that can be applied in the
Northeast in the EPA Budget Scenario--i.e., after the Northeast States
have meet the NOx budgets proposed in the EPA SIP call. To identify the
NOx options available in this scenario, we have relied upon Round 3,
Run I of the OTAG modeling. \16\ This run is comparable to the NOx
reduction requirements of the NOx SIP call.
---------------------------------------------------------------------------
\16\ A State-level ``Tier 2'' emissions inventory description
broken down by emission sector is found through OTAG's website html:://
www.iceis.mcnc.org/OTAGDC/index.html.
---------------------------------------------------------------------------
The OTAG runs model the NOx control options for point sources (both
utility and non-utility), area sources and motor vehicles. The results
for Round 3, Run I are summarized in Table B. 1, and are described
below.
Non-Utility Point Sources
From the Run 2, Round 9 OTAG inventory, \17\ three general emission
sectors are identified. \18\ These are industrial and other point
sources, incinerators, and other industrial processes. These are
assumed to be already controlled at OTAG Level 2 under the NOx SIP
call. On average, Level 2 is assumed to be a 55 percent reduction from
the initial OTAG baseline inventory. Going beyond Level 2 to Level 3 is
assumed to be an average 75 percent reduction from the OTAG baseline
inventory. Therefore, going beyond the NOx SIP call (Level 2 controls)
to Level 3 will mean an average additional 44 percent reduction beyond
Level 2. The total available reductions in the Northeast from the
industrial, incinerators, and other industrial categories are 56, 7,
and 24 thousand tons per year beyond the EPA SIP call levels. \19\
---------------------------------------------------------------------------
\17\ The Round 3, Run I, NOx point source inventory was missing
from the OTAG website. As a surrogate, the NOx point source inventory
from Round 2, Run 9 was used. In this inventory, NOx power plant
controls were equivalent to Run I. For non-utility point source NOx
emissions, the inventory was equivalent to Run I for boilers >250
MMBtu. The Round 2, Run 9, inventory was more stringent than Run I for
boilers <250 MMBtu, but these are not a significant portion of the
total NOx inventory.
\18\ Costs are based on an OTAG cost matrix that does not exactly
correlate with the emission sectors of the Tier 2 OTAG inventories.
Therefore, several general, rather than specific, emission sectors are
identified, and average reductions across the general sectors are
estimated based on the control effectiveness numbers given in the OTAG
cost matrix.
\19\ The OTAG model runs provide the NOx emissions and reductions
in terms of tons per Summer day. Throughout this study, we use an
approximate scaling factor of 300 to translate these into tons per
year. The scaling factor is less than 365 because the emissions tend to
be highest on Summer days.
---------------------------------------------------------------------------
Using a cost matrix derived by OTAG, all Level 3 controls are
listed as greater than 5,000 dollars/ton for non-utility point sources.
Using 5,000 dollars/ton as the lower limit, the total costs of relying
upon each of the non-utility point source sectors would require an
annual cost of $435 million.
Area Sources
NOx area emissions are split into three general categories--
industrial and other combustion sources, off-road diesel, and off-road
gasoline. For industrial and other combustion area sources, the same
approximation to estimate additional NOx reductions is used as for the
non-utility point sources (i.e. 44 percent beyond Level 2 controls used
in Run [). For off-road diesel, the control measure is going from 50
octane diesel to 55 octane diesel. \20\ This will result in a 3 percent
NOx reduction based on figures from Ethyl Corporation. For off-road
gasoline, more uncertainty is involved. The presumed control measure is
California reformulated gas (RFG) II. This is an average 40 ppm sulfur
gasoline. If the impact of Cal RFG II on off-road gasoline vehicles is
comparable to older conventional cars (Tier 0), then the impact might
be a 10 percent reduction in NOx, based on an EPA staff report (EPA 5/
1998). The total available reductions in the Northeast from the area
industrial, off-road diesel and off-road gasoline are 67, 6, and 5
thousand tons per year beyond the EPA SIP call levels.
---------------------------------------------------------------------------
\20\ Additional strategies exist to achieve NOx reductions from
off-road diesels, but were not explicitly included in the OTAG cost
estimates. One option is to accelerate the introduction of proposed
non-road diesel engine emissions standards between 2000 and 2008. The
proposed emissions standards for off-road diesels will result in large
NOx reductions over the next two decades. Nationally, between one to
two million tons of NOx a year (beginning in 2010) will be reduced as a
result of introduction of the standards at a cost of less than $1,000
per ton.
In addition, the use of some types of electrically powered off
road equipment can reduce NOx in a cost effective manner. Use of
natural gas fuel can also greatly reduce off-road vehicle NOx
emissions. Cost estimates prepared for natural gas highway vehicles
suggest that NOx reductions can be also be achieved in a cost effective
manner from off-road vehicles.
---------------------------------------------------------------------------
Level 3 costs for industrial and other combustion area sources are
listed in the OTAG cost matrix as greater than 5,000 dollars/ton. For
off-road diesel using 55 octane fuel, the OTAG cost matrix gives a
range of 8,000-23,000 dollars/ton. This range is used to set a low and
high cost estimate range. For off-road gasoline, an estimate of 10,000
dollars/ton is used. This estimate is taken from the calculation
described below for mobile source costs. It basically is chosen as a
cost that falls within the range described below. While this is a rough
estimate, the potential reduction of 5 thousand tons per year from this
sector make the overall Northeast cost estimate relatively insensitive
to this particular emissions sector.
Motor Vehicles
The control measure assumed for motor vehicles is going from
Federal RFG (150 ppm sulfur) to Cal RFG II (40 ppm sulfur). Run I
assumes national low emission vehicles (NLEV) in the Northeast. Based
on an EPA staff report for 40 ppm sulfur gasoline, an average reduction
in NOx of 55 percent from NLEV could be expected (EPA 5/1990). A
reduction of 55 percent is used in this analysis, but it is an
overestimation of available reductions in the Northeast because it does
not take into account non-LEV vehicles in the Northeast in 2007.
Therefore, 235 thousand tons per year represents a generous estimate of
available NOx reductions from mobile sources in the Northeast beyond
the NOx SIP call.
The cost of Cal RFG II in the Northeast is estimated as follows.
Based on EPA's staff report on sulfur in gasoline, an NLEV car will
emit 0.50 g/mile at 100,000 miles when using fuel with 150 ppm sulfur.
:A vehicle fleet average of 25 miles/gal in 2007 is assumed (this is
optimistic and ignores sport utility vehicles and heavy duty trucks).
From this, the NOx tons/gal can be calculated. From this value, a 55
percent NOx reduction is estimated by going from 150 ppm sulfur
gasoline to 40 ppm sulfur fuel. An EPA staff report gives costs of 40
ppm sulfur (Cal RFG II) gasoline in a range of 5.2-8.7 cents/gal. From
this we calculate a low cost estimate of $6,845/ton, and a high cost
estimate of $11,452/ton.
__________
[From the Magazine EM, pp. 19-23, April 1999]
Lifting the Veil of Smog: Why a Regional Ozone Strategy is Needed in
the Eastern United States
(by Paul J. Miller, Northeast States for Coordinated Air Use
Management)
In Bertolt Brecht's play The Life of Galileo, dogma clashes with
modern science during a scene in which two representatives of the
Inquisition visit the workroom of Galileo. The Inquisitors are there to
look through a telescope at the recently discovered moons of Jupiter.
The claim that moons orbit Jupiter, or any other planet for that
matter, is heretical because it contradicts the view that all celestial
objects revolve around the earth. The two representatives insist on
debating Galileo over the question Can such planets exist? Galileo
responds that all they need do is look through his telescope tube to
see for themselves. His plea is met with the retort, If your tube shows
something that cannot be there, it cannot be an entirely reliable tube,
would you say?
So seems to be the current state of debate over the long-range
transport of ground-level ozone (or smog) in the eastern United States.
The U.S. Environmental Protection Agency (EPA) recently promulgated a
regional plan to reduce the formation and transport of ozone within 22
eastern States and the District of Columbia. \1\ EPA's regional ozone
plan is not without controversy. A number of States along with utility
and business groups have filed lawsuits challenging it, and Congress
may get involved in reviewing the plan. Much of the criticism focuses
on computer modeling to dispute the notion that upwind pollution
sources significantly contribute to smog problems experienced far
downwind. Within this computer-generated realm, however, reference to
real world observation is sometimes ignored, perhaps because
observation will contradict what one would like to believe about the
world around us.
Because computer modeling is inherently limited by the lack of
perfect knowledge of the natural world, interpretation of modeling
results needs to be grounded in real-world observations. \2\ The
purpose of this article is to present a brief synopsis of observed
ozone transport described in the peer-reviewed scientific literature
over the past 25 years. Part of this article's focus is on fossil fuel
power plants because EPA predicates its regional ozone plan largely
upon reductions from these pollution sources. Even so, automobiles and
other mobile sources, as well as smaller stationary sources, can also
be major contributors to regional ozone formation. EPA's plan does not
preclude State efforts to control pollution sources other than power.2
plants, but EPA believes the control costs will be relatively more
expensive.
A reading of the peer-reviewed scientific literature finds that
researchers have long recognized the regional nature of the ozone
problem across the eastern United States. Researchers have observed
regional ozone formation and transport not just from the Midwest to the
Northeast, but in other areas throughout the eastern United States. In
the specific context of ozone transport from the Midwest to the
Northeast, the observed transported ozone levels are at such high
levels as to make it impossible as a practical matter for the Northeast
to achieve air quality standards without implementing upwind controls.
History of regional ozone research in the eastern United States
As summarized in a report from the National Research Council, the
major characteristics of high ozone episodes were first identified
during the early 1970's in rural field studies sponsored by the U.S.
Environmental Protection Agency. \3\ Researchers described periods of
high ozone (>0.08 parts per million) lasting several days and spanning
areas larger than 100,000 km \2\ in the eastern United States. In one
case, researchers described a river of ozone extending from the Gulf
Coast, throughout the Midwest, and up to New England. \4\ High ozone
levels were also observed transported out of the U.S. Great Lakes
region into southern Ontario. \5\
An example of a recent large ozone episode occurring across much of
the east-central United States is shown in the map of Figure 1. The map
displays ozone concentrations measured on September 13, 1998 at
monitoring stations throughout the East. Ozone levels above the Federal
8-hour health standard of 0.08 parts per million (ppm) were observed
across large sections of the eastern United States in places far
removed from urban centers. This is typical of severe ozone episodes in
the East when summertime high pressure systems move from west to east
across the eastern United States, picking up and transporting air
pollution along the way. \6\
Power plants are major contributors to regional smog
EPA's regional ozone plan relies on reducing emissions of nitrogen
oxides (NOx), an important precursor of ozone formation in the
atmosphere. NOx is formed during the combustion of fossil fuels by
power plants as well as motor vehicles and industrial sources.
Studies show that emissions of NOx from fossil fuel power plants
play a major role in the formation and transport of regional ozone. For
example, high ozone levels formed and transported within power plant
plumes have been observed in Maryland, \7\ from Wisconsin into
Michigan, \8\ from Tennessee toward Indiana, \9\ from Missouri toward
Chicago, \10\ \11\ and across southern Alabama and Mississippi. \12\
These studies show that NOx in power plant plumes produces ozone
approaching or exceeding health standards, and the ozone can travel
long distances into neighboring States. Two of the studies also found
that individual power plant plumes can produce ozone on a regional
scale comparable to the amount of ozone generated in an urban plume.
\11\ \12\ These two studies demonstrate that power plant plumes and
urban plumes both contribute to downwind ozone transport.
Within the Ohio River Valley, there is a large and persistent area
of high ozone during the summer months relative to air in other parts
of the country. \13\ In this region, winds intermingle ozone pollution
from different power plant plumes (as well as other pollution sources).
Because of this mixing, a large reservoir of ozone is formed across
much of the east central United States (Figure 2). Somewhat
surprisingly, people living in the Ohio River Valley are exposed to
higher average smog levels over a more prolonged period of time than
people living in Chicago or Boston.
The areas of the eastern United States experiencing chronically
high smog levels are also the same areas where many large fossil fuel
power plants are located (Figure 3). A single power plant can emit as
much NOx in 1 year as all the cars and trucks in a large metropolitan
area. For example, the General James M. Gavin power plant in rural
southern Ohio emitted over 110,000 tons of NOx pollution in 1996. \14\
By comparison, all highway vehicles (cars and trucks) in the Boston-
Lawrence-Worcester, Massachusetts/New Hampshire ozone nonattainment
area emitted about 125,000 tons of NOx in 1996. \15\ When many power
plants are grouped together as in the Ohio River Valley, they will emit
as much NOx pollution as a major metropolitan region extending over
several hundred miles.
Ozone is transported out of the Ohio River Valley
The movement of ozone out of the Ohio River Valley was seen as
early as 1979. During early August 1979, scientists tracked a mass of
ozone leaving central Ohio, crossing Pennsylvania and southern New
York, and entering into the Northeast Corridor a distance of over 450
miles. \16\ When this mass of air from the Ohio River Valley entered
into the Northeast Corridor, it contained about 0.09 ppm of ozone. By
comparison, the Federal 8-hour ozone standard is 0.08 ppm and the 1-
hour standard is 0.12 ppm. With transported ozone levels approaching
0.09 ppm, it is difficult to conceive as a practical matter how an area
such as the Northeast can achieve health standards on its own without
additional control measures applied in upwind regions.
As the persistent ozone reservoir re-establishes itself every
summer in the Ohio River Valley, large amounts of ozone continue to be
transported into the Northeast from the west. During the summer of
1995, the North American Research Strategy for Tropospheric Ozone
Northeast (NARSTO-NE) conducted aircraft measurements of ozone in air
masses along the western edge of the Northeast Corridor. During
overnight hours, scientists measured ozone levels above Shenandoah, VA,
Gettysburg, PA, Poughkeepsie, NY and other locations in excess of 0.10
ppm (two ozone profiles above Poughkeepsie, NY are shown in Figure 4).
\17\ \18\ During the night, ozone can not have been formed locally (no
sunlight is present to initiate the formation of ozone), so it must
have been transported during the pre-dawn hours. Upper air flow
direction during the highest ozone days (July 12-15, 1995) indicated
that the polluted air masses were arriving from the west. \18\ Later
during the day, the transported ozone trapped aloft mixed down to the
earth's surface, significantly contributing to ozone concentrations
experienced far downwind of the ozone's source region. High
concentrations of ozone trapped aloft during overnight hours were
observed in several studies to significantly contribute to ground-level
ozone concentrations experienced later during the day. \17\ \19\ \20\
The field studies are consistent with evaluations of air mass
trajectories associated with the highest ozone levels observed in
southern New England. In a recent study, researchers found that the
highest ozone levels observed at a site in rural western Massachusetts
are associated with air masses arriving from the west. \21\ Based on an
analysis of air masses arriving in western Massachusetts, the
researchers concluded:
Anthropogenic pollutants (combustion-derived products) were highest
under [southwest] flow conditions, which were generally warm,
moist, and relatively cloudy. This is indicative of warm sector
transport. The highest O3 concentrations did not occur under these
conditions, which had a low O3 production efficiency. Instead, the
highest average summer O3 occurred under [west] flow. . . which
delivered well-aged air masses with high O3 production efficiency.
This implies an important contribution of advected pollutants from
Midwest source regions.
The large ozone reservoir in the Ohio River Valley returns each
summer with little abatement. Researchers have found no significant
downward trend in regional ozone levels from 1980 to 1995. \22\ While
urban NOx levels have decreased (as have urban ozone levels in a few
large metropolitan areas) due in large part to pollution controls on
automobiles, regional ozone and NOx levels have not significantly
changed. In contrast to a decrease in NOx pollution emitted by cars,
regional NOx emissions from power plants increased by 3 percent between
1987 and 1996. \23\ The lack of regional NOx reductions is significant
because it is well established that regional ozone formation over the
eastern United States is limited primarily by the supply of NOx. \24\
\25\ \26\ \27\ \28\ \29\ \30\
Health and ecological problems caused by regional NOx pollution
Medical researchers have observed that prolonged exposures to ozone
at concentrations as low as 0.08 ppm for several hours or over a period
of several days produce health effects similar to shorter exposures at
higher ozone concentrations. \31\ \32\ The observed detrimental health
effects include:
increased airway responsiveness in the general population
increased severity and incidence of asthma attacks
Increased severity and incidence of respiratory infections
Increased prevalence of chronic respiratory symptoms
Development of chronic respiratory bronchiolitis.
The recent change in the Federal ozone health standard from a 0.12
ppm 1-hour concentration to a 0.08 ppm 8-hour concentration is intended
to reduce the observed health impacts from prolonged exposures to lower
ozone concentrations. As described previously, such chronic long-term
ozone levels are often observed over large areas of the eastern United
States.
In addition to public health impacts, transported smog and NOx
affect natural resources. Scientists are raising concerns that
prolonged ozone exposure can increase the death rates of trees in
forests of the Appalachian region. \33\ This could alter the long-term
tree composition of eastern forests, thereby affecting the forests
value as timber and recreational resources.
Agricultural productivity can also be affected by regional ozone
pollution. Eastern North America has been identified as a region where
the correlation between agriculture and fossil fuel burning may lead to
reductions in crop yields due to prolonged ozone exposure during the
growing season. \34\
Aside from their role in ozone formation, NOx emissions also
contribute to ecologically damaging acidic precipitation on forests and
nitrogen deposition in bays and estuaries. Nitrate deposition is
highest in the northeastern United States directly downwind of major
NOx pollution sources in the Ohio River Valley (Figure 5).
Conclusion
Based on observations of high ozone levels throughout the eastern
United States, EPA's recent plan to reduce NOx emissions in 22 eastern
States and the District of Columbia makes sense. On a regional scale,
ozone formation depends largely upon the presence of NOx, a byproduct
of fossil fuel combustion. The largest individual sources of NOx are
fossil fuel power plants, and numerous studies have observed
significant amounts of ozone being formed and transported within power
plant plumes.
When a downwind area already produces harmful levels of ozone from
its own pollution sources, transported ozone from upwind regions will
hinder efforts to improve local air quality. Field studies have
recorded ozone levels approaching or exceeding 0.09 ppm in air masses
traveling long distances in the eastern United States. Whether a
downwind area is subject to the 1-hour ozone health standard (0.12 ppm)
or the 8-hour ozone standard (0.08 ppm), the observed levels of
transported ozone are significant obstacles to achieving clean air.
While the scientific justification for a regional ozone approach
has existed for some time, EPA's NOx reduction strategy is the subject
of continued debate. Many States, notably Tennessee and a number of
Northeastern States, support EPA's approach, while other States,
primarily in the Midwest and Southeast, oppose it. Interestingly,
several States suing to stop EPA's regional smog plan would receive
some of its largest benefits due to the persistent nature of ozone
within their own borders (e.g., Indiana, North Carolina, Ohio,
Virginia, West Virginia). Ultimately, all the eastern States may come
to see that the resiliency of the regional ozone problem is a shared
concern. After all, as Bertolt Brecht writes in The Life of Galileo,
Once something is seen, it cannot be made to be unseen.
About the Author
Paul J. Miller is Senior Scientist with the Northeast States for
Coordinated Air Use Management (NESCAUM) in Boston, MA. NESCAUM is a
regional organization providing technical and policy advice to the air
quality agencies of eight northeastern States. Dr. Miller received a
Ph.D. in chemical physics from Yale University and was a National
Research Council Associate at the Joint Institute for Laboratory
Astrophysics, University of Colorado. Prior to NESCAUM, he was a
Visiting Fellow at the Center for Energy and Environmental Studies,
Princeton University.
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