Testimony of Shawn B. Kendall
Executive Assistant, Phelps Dodge Corporation
Before the Senate Subcommittee on Clean Air, Wetlands, Private Property and Nuclear Safety
Committee on Environment and Public Works
October 1, 1998

Mr. Chairman, and members of the Subcommittee. I am Shawn Kendall, Executive Assistant on corporate staff of Phelps Dodge Corporation (Phelps Dodge). Phelps Dodge is the largest producer of copper in the United States, the second largest producer of carbon black, a major manufacturer of copper rod for the wire drawing industry, and a major producer of magnet wire. Phelps Dodge has 15,000 employees operating in 26 countries around the world, with 9,000 operating in 13 states in the U.S. Phelps Dodge has been heavily involved in copper mining since the 1880's, when our operations were in the Arizona Territory.

Phelps Dodge appreciates the opportunity to discuss regional haze with you. I am the Corporation's policy and technical lead with respect to regional haze regulations. I have worked for Phelps Dodge for nearly 23 years in a variety of areas including air quality technical and policy support, budgeting and financial planning at our largest mine in the U.S., and Director of our Corporate Data Center in Phoenix. For the last 13 years I have been in my current position working on a variety of technical and policy issues.

I am testifying today on process issues important to the regional haze debate. These include The Grand Canyon Visibility Transport Commission (Commission) and how it lead to the formation of the Western Regional Air Partnership (WRAP); and how EPA's regional haze rule published last year ignored the work of the Commission and led to the recent proposal based on a input from Western Governor's Association. Finally, I will address the need to encourage the formation of other visibility transport commissions, funding needs of these new processes and the WRAP, and the need for EPA to re-propose the regional haze rule.

The Grand Canyon Visibility Transport Commission

Phelps Dodge was highly committed to the Grand Canyon Visibility Transport Commission process, as evidenced by the almost 6,000 hours of my time which was allowed to be committed to serve on or in support of various committees for the Commission. I was Secretary of the Commission' Public Advisory Committee that delivered consensus recommendations to the Commission in May of 1996. These recommendations were the basis for the Commission's final recommendations forwarded to EPA in June of 1996. In addition to my work with the Public Advisory Committee, I also devoted substantial effort to support and staff the Commission's technical and policy analysis committees.

I commend the Commissioners for designing and utilizing a broad-based stakeholder process in the development of their recommendations, for assembling technical committees which significantly advanced the state of understanding of regional haze in the West, and for having patience and understanding when the consensus process took longer than planned. I came away from the Commission process with an appreciation of the differing views of the many wonderful people who participated in the process and a detailed understanding of what we did well and what we could do better in the future. In the end, I recognized the success of the Commission process as the beginning of a new paradigm for environmental policy development in the West.

Western Regional Air Partnership

One of the key recommendations of the Commission was the need for a follow on entity to assist the states and tribes with the monitoring and implementation of the Commission's recommendations. That entity was established us September of 1997 as a voluntary alliance of governors, tribal leaders, and federal of finials whose mission is to follow through on the Commission's recommendations, and to work collaboratively on odor air quality issues Bat the alliance deems appropriate. It is known as the Western Regional Air Partnership (WRAP). I have been appointed Co-Chair of the Technical Oversight Committee by Tic WRAP, and serve on the WRAP Coordination Committee. The WRAP organization will consist of approximately 250 volunteers from states, tribes, local government, federal agencies, industry, environmental Soups, academic institutions, and the general public working collaboratively to develop sound technical And policy work products to support the WRAP mission. These work products will be a resource the states and Gibes can rely on in developing their implementation plans for the management of visibility in the mandatory classy Federal areas, and for monitoring and reporting on the effectiveness of their programs.

The USEPA Regional Haze Proposal published in July, 1997

Phelps Dodge was quite disappointed with EPA's proposed regional haze regulations released in July of 1997. September of 1997, I testified at an EPA public hearing regarding areas that the proposal failed to recognize or learn Cam the Commission process. I worked with the Western Regional Council, perhaps the leading inter-industry group engaging the regional haze issues in the West, on an extensive comment package. This included a proposed full re-write of the rule to better guide the collaboration needed between states.

These comments also explained why the establishment of arbitrary visibility objectives without consideration of other factors required by the Clean Air Act was not the correct way to formulate long-term strategies. The development of these strategies rests with states and tribes, and must take into consideration a multitude of factors in order to develop an equitable, politically acceptable and environmentally effective long-term strategy which will be implemented and succeed in protecting visibility in EPA's mandatory class-I Federal areas.

The most serious oversight in proposed rule was the lack of guidance with respect to the Commission's recommendations.

The Commission's technical and policy analysis committees and Public Advisory Committee generated a significant number of work products that the public should have had access to during this rulemaking. Since EPA staff worked in the Commission process, these work products were part of the history that any participant would rely on in forming opinions. I was disturbed to find that as of two weeks prior to the end of the comment period last December, the rulemaking docket only contained the Commission's final report. None of the other key Commission work products were in the docket. Phelps Dodge filed comments on December 5, 1997, and included all of these work products and meeting minutes of the Public Advisory Committee that were in the company's files.

Based on the serious deficiencies I determined existed in the proposed Ale, and the lack of these key Commission work products in the docket, Photos Dodge requested that the Agency reconsider its approach to the rule, fix it, and repropose the rule. A corrected rule that reflects the lessons learned from the Commission process would be significantly different than EPA's proposal. I determined, and still believe, that the public and private sector should be given a chance to comment on a reproposed rule conforming to the lessons learned in the Commission process.

Western Governor's Association Comments on the Regional Haze Rule

The Western Governor's Association (WGA) also filed comments on the proposed rule in December of 1997 and provided an update to this proposal in early April of 1998. The concept being put forth in the SAGA proposal was the establishment of a formal Regional Plan, which EPA would approve, and the States and Tribes would rely on for implementation plans. Several members of the environmental community who participated in the GCVTC process and the WRAP process protested this treatment to EPA Administrator Browner and Governor Leavitt, since Here is no statutory basis for such a regional plan, and the procedural requirement for implementation plans could be bypassed. In addition, many industrial representatives disagreed with the concept.

Governor Leavitt of Utah, who was Vice-Chair of the GCVTC, and currently is Cochair of the WRAP and the lead governor for the WGA on this issue, was concerned about the reaction to the WGA proposal. He had his staff assemble a small stakeholder group to try to come to consensus on the issue and provide him win an alternative that he could review with other governors and then forward to EPA. The mission of the group was to develop a consensus work product under a very tight timeframe. The group consisted of representatives from two environmental organizations, two industrial organizations, two state environmental regulatory organizations and the National Park Service, and was supported by staff from the Western Governors Association and the National Tribal Environmental Council. I served as on of the industry representatives in the process. The key stakeholders outreached to the broader sector they represented.

Although the outreach was generally effective, some stakeholders felt disenfranchised by the process. In the end, the group came to a consensus on a recommendation for the States to review, and it was the basis for the submittal to USEPA at the end of June of this year by Governor Leavitt.

The recommendation from WGA has several key points on how the Agency should treat the GCVTC recommendations in a rule context. The guidance to the agency called for specific rule and preamble language to be added to the rule, consistent with the GCVTC recommendations. In addition, the specific rule components for stationary sources were to be deferred until the Commission could provide an annex containing the details of regional targets, and backstop contingency regulations for a market-trading program. The Commission had envisioned delivering this to the Administrator within one year after the Commission's original report (i.e., in June of 199 7), but Dad group agreed that the current WRAP Room working on this issue should be given a chance to finish their work. As such. an agreement was reached that the Commission would submit the annex describing the details of the stationary source targets and backstop program to the Administration by October 1, 2000.

Another key consideration in the proposal was the need to ensure that states and tribes would be allowed to focus on the GCVTC based rule, and not be distracted by over programmatic issues for other class I areas. The group agreed that with the momentum and progress of the WRAP, states and tribal should be able to submit long-term strategy implementation plans in 2003. Most of the technical and policy work should be completed by the end of 2001, allowing the states and tribes two years to move through the implementation plan review process. In addition, states and tribes could defer consideration of additional measure for non-GCVTC class I area until 2008 if they include a modeling analysis of the effects of the 2003 long-term strategy based son the GCVTC rules with the 2003 submittal. This would allow the effects of the GCVTC rules to be assessed for their impact on non-GCVTC class I areas, and preclude the formation of a bifurcated program.

The WGA requested that the Agency notice the receipt of its suggestions for how to implement the GCVTC recommendations in the regional haze rule, and open a thirty-day comment period lo allow others, especially those that may have felt disenfranchised, to provide input to the process. On September 3, 1998, EPA noticed the receipt of the WGA recommendation, released its proposal on the specific rule language which it derived Am the WGA recommendation, and opened the record for comment for thirty days. This comment period will close next Monday, October 5, 1998.

Phelps Dodge commends the Agency for taking the WGA recommendation to heart, not only in allowing the public an opportunity to provide input, but also for drafting proposed rule language which is substantively consistent with the WGA recommendation. Phelps Dodge will be filing comments on this rule later this week, noting some minor changes that should be made, and requesting clarification of some issues that night not be interpreted correctly in the fixture. It is, however, Phelps Dodge's position that the entire rule package should be corrected and reproposed before being finalized.

Other Visibility Transport Commissions

Of all the lessons learned in the GCVTC process, the most important is that states and tribes can not develop effective long-term strategies for mandatory class I Federal areas in their jurisdiction without consideration of the developments in neighboring jurisdiction. Regional haze is heavily influenced by long-range transport. The plowing for other class I areas should occur through alliances or partnerships. States and tribes should be encouraged to from transport commissions in order to guide Agency rulemaking needed to ensure reasonable progress. Phelps Dodge is aware of efforts to allow other visibility transport commissions to be formed. Phelps Dodge supports these initiatives and believes, based on the regional haze timing requirements legislated earlier this year, that the formation of these commissions will accelerate the development of sound long-term strategies for the non GCVTC mandatory class I Federal areas. The governors, tribal leaders, and stakeholders in the rest of the country should have the same opportunity that the GCVTC process provided.

Funding

Funding for the regional collaborative processes is essential for their success. This funding is generally limited to travel, meeting, staff and consulting services. It is essential that travel reimbursement for date, tribal, local regulatory, environmental and academic participants is available if those participants would otherwise not be able to participate. Keep in mind that the in-kind contribution of their time is worm much more than travel costs, and a consensus work product can not be realized unless there is balanced participation. Another mayor cost is for meeting facilities, and in some cases professional facilitation services. Staff support is needed for the organization, especially for coordination, and internal and external communications. In the course of developing a consensus work product, it is sometimes necessary to undertake technical or policy analysis work. This work is best done by a reputable outside firm without a stake in the outcome. Although this can be costly, it may be necessary to ensure the process outcome has a credible basis that will stand up to public scrutiny.

The WRAP was advised that available BPA grant funds would probably be reduced to $150,000 in FY99 from the $369,000 received in FY98. The Coordination Committee for the WRAP is currently investigating sources of few for the nearly $1,000,000 in costs projected for FY99, especially recognizing the needed developments for the Commission's Annex. The House has proposed up to $500,000 each for a maximum of eight visibility transport commissions to allow other groups to begin regional planning. Phelps Dodge believes that $1,000,000 per year for the next two years should be allocated for the development of the Commission's Annex. Based on the experience of the Commission and the WRAP, this could come out of the same pool of funds since the initial planning costs for a new Commission will be less than $500,000 in the first year.

Re-Proposal

Phelps Dodge believes EPA's original proposal was off the mark, and although the recent WGA development goes a long way to rectify the deficiencies with respect to the GCVIC recommendations, the full context of the final rule is still unclear. A full re-proposal is in order. Such a move can only help, and can not hurt the process. The timing of the regional haze requirements for non-GCVTC states has been delayed, and the WRAP is proceeding to follow through on the GCVTC recommendation, regardless of whether the regional haze rule is published this year or next year. The regional haze issue is one that will require continuous monitoring and updating to ensure reasonable progress toward the goal. It will have a direct impact and benefit not only on us, but on our grandchildren's grandchildren. Phelps Dodge continues to request that the rule be corrected and re-proposed to allow all interested parties to providing meaningful input to the rulemaking.

Thank you for your attention to this very important issue to Phelps Dodge, and to all my colleagues in the WRAP process. I would be happy to answer any questions.