TESTIMONY OF DAVE OUIMETTE
BEFORE THE SENATE ENVIRONMENT AND PUBLIC WORKS COMMITTEE
November 1, 2001
On behalf of the State of Colorado, thank you for the opportunity to present the State’s views on Senate Bill 556, The Clean Power Act of 2001.
My name is David Ouimette and I direct the activities of the Stationary Sources Program for the State of Colorado. I have worked in this area for the last 17 years.
Colorado is in support of legislation to reduce the health and environmental impacts of air pollution especially if this includes some streamlining of the Clean Air Act by replacing outmoded procedures with stringent standards for reducing air pollution. I will speak more about this streamlining in a moment.
However, prior to commenting on S. 556, I would like to point out the important strides made by Colorado in the recent past in improving air quality. Two years ago we negotiated a voluntary emissions reduction agreement with our local utility. The Agreement is now being implemented and it will result in a reduction of up to 10,000 tons per year of sulfur dioxide. This will aid in reducing the “Brown Cloud” so often seen in the Denver metro area.
In addition to this, we have begun to implement creative enforcement settlements that call for the violator to purchase green power and to implement other measures to improve energy efficiency. Such activities have resulted in small, but measurable decreases in demands for power from traditional electric utilities.
These efforts are above and beyond what is required by the Clean Air Act, and we believe it is important for the Committee to keep in mind that states are not only implementing basic requirements but are also taking the initiative to go beyond what is envisioned in the Act.
Moving on to S. 556, we examined the proposed legislation in relation to several broad principles and I would like to first tell you what they are and how they would apply to the proposed legislation. Our principles are:
1. There cannot be “backsliding” from the environmental protections found in current law;
2. Any new legislation should not overlay the new standards or requirements on top of the existing Clean Air Act. Instead, any new requirements need to be integrated into the Act to avoid redundancy;
3. “Certainty” for both regulators and the regulated is crucial. Certainty, in this case, means establishing clear regulations all can readily understand;
4. With respect to the West we believe that there needs to be consideration of our energy demands and our tight supplies.
There should be no less, aggregate emissions reductions under a multi-pollutant control strategy than that which would be achieved under the current “command and control” permitting program. We believe this principle can be met through an emissions trading program such as that contemplated by S.556.
In addition, there should be no detrimental, localized effects which would threaten or exacerbate attainment of the National Ambient air quality Standards. In this regard, states need to continue to have the authority to deal with ambient air problems even after passage of multi-pollutant legislation.
2. New requirements should not merely be added to the existing program
We believe S.556 is incomplete because it does not eliminating unnecessary parts of the Clean Air Act. For example, we believe that while crucial portions of the New Source Review permitting program, such as modeling and ambient air protection, should be maintained for new sources, we also believe that there are other parts of the NSR program that would be unnecessary. To illustrate, this legislation would likely result in the placement of all facilities under an area-wide or national emissions cap which will, presumably, require pollutant reductions at many facilities. In our opinion, these reductions in the aggregate will exceed that which could be obtained on a facility-by-facility basis, and, if this is so, there is no need for major modification permitting under the New Source Review rules. Therefore, states would no longer need to worry about interpreting what exactly constitutes a “Major Modification” versus “Routine Maintenance, Repair, or Replacement.” Concerns about whether repair/replacement of certain power plant components once a year might be viewed as routine maintenance, but twice a year might be a major modification, would no longer exist saving considerable state and local program resources. S. 556 could serve as an excellent tool for cutting through these issues and instead substitute certainty with respect to both environmental gains as well as an understanding of the rules that regulators and the regulated must abide by.
An additional part of the Clean Air Act that should be examined is Regional Haze. Colorado strongly believes that the visibility of our pristine areas should be improved. However, to have both a multi-pollutant bill as well as a regional haze rule apply to utilities will be redundant. Either the Regional Haze rule needs to be implemented or multi-pollutant legislation, but probably not both. At this point we believe that it is still too early to make the determination as to which is best for the West and for improving visibility; both options have benefits and we hope the Committee does not forestall either without further discussion. If Congress, in consultation with Western states, determines that eliminating the Regional Haze rule as it applies to utilities is the appropriate policy then more state efforts could be spent on other issues which will require regional collaboration, such as mercury control.
By this we mean that certainty is necessary for both the regulated entities and states who are responsible for implementing and enforcing the rules. One of the issues where Colorado, and most likely other states, have concerns is with respect to our ability to rely upon determinations made by EPA. Without wandering too far afield from our topic today, the numerous informal policies, letters, and written determinations from EPA make implementing the New Source Review program very difficult. In fact we are often subject to critical review from EPA because we made a decision based upon our understanding of the rules only to find we were unaware of the existence of an old interpretive memo. S.556, with some changes, could provide us with an opportunity to start over and create a new program that will significantly lessen the burden to states to implement these complex rules.
Our last guiding principle is that new legislation should take into account the West’s growing power needs. Earlier this year California had tremendous electrical power stresses that affected all of the West. We think it is important that legislation reflect that power supplies in the West are at a crucial juncture. While we made it past this summer without brownouts next summer will again be a challenge for the state. It is because of this future challenge to our generating capacity that we believe we should closely examine whether CO2 targets are appropriate at this time.
Our concern is that we do not fully understand the implications of the CO2 rollback provisions and there may be unintended consequences for energy supplies in the West that may be difficult to cope with. Conventional wisdom indicates that the only practical way to reduce CO2 emissions from power plants while at the same time meeting electricity demand, is to burn fossil fuel more efficiently. This is an admirable goal. However, Colorado, like many Western states, depends upon coal-fired plants for a substantial portion of its generating capacity and these plants have limited ability to improve efficiency. The result is that they may not be able to be run at present levels and some may need to be shutdown. Given our tight energy supply, this could be a major problem for Western states. In lieu of the current CO2 proposal in S. 556, we believe that an intense study of the impact of CO2 reductions on power in the West as well as perhaps future hearings on the topic would be advisable to ensure that any reductions agreed upon do not have a secondary effect of causing power shortages or dramatically inflating the cost of power to consumers.
I hasten to add my hope that you do not misconstrue our statements to mean we are not concerned about CO2 emissions. As you know there are many dimensions to the CO2 debate beyond just power plants, including increased energy efficiency and use of renewable energy sources in other sectors of our economy. These strategies can effectively reduce overall CO2 emissions and Colorado has robust, ongoing programs in these areas.
I would now like to walk through some additional comments on the provisions of S. 556. As your staff has already heard at a stakeholders meeting conducted October 4th and 5th, the Western part of the country differs from the East with regard to the nature and extent of air pollution problems. For instance, with the exception of California, there are few serious ground level ozone problems out West that would argue for aggressive nitrogen oxide reductions at power plants. While we strongly believe that there should be no backsliding with respect to any proposal, we also believe that there needs to be a common sense approach to regulation such that if an area does not have a problem with a certain pollutant then programs in those areas should be able to focus efforts elsewhere where problems do exist. Therefore, we recommend that the bill be amended to reflect these East vs. West differences where they exist.
As a general proposition, Colorado supports emissions trading in a way that reduces overall costs to society to achieve emissions reductions. Colorado believes that a trading program would be beneficial in two ways, first it would provide incentives for sources to go beyond compliance in order to have marketable credits; and, second, it would allow certain sources to determine what is most cost effective for them in terms of coming into compliance. Therefore, we support the emissions trading provisions in S. 556.
Next, it is our view that the time frame for making the requisite emissions reductions is impractical especially if these reductions are going to occur with the assistance of a trading program. In order for a 2007 target date to work, federal legislation will have to pass, a market for emissions trading will have to be set up, EPA will have to promulgate the appropriate regulations, industry will have to determine if it is more cost effective for them to reduce emissions or buy reduction credits, and, states will have to work with their legislatures to make any necessary changes to state laws. A 5 year time frame for all of this is insufficient and this issue needs to be addressed.
On the proposed Nitrogen Oxides reductions, again we note that the West does not face the same problems as other areas and, because of this, suggest that any reductions required of power plants be no greater than that which can be achieved by good combustion technology, as opposed to use of add-on control devices. This approach would still provide an environmental benefit to the West with respect to regional haze reduction.
Next, Colorado supports the goal of reducing mercury emissions especially since the benefits of doing so are multi-media, affecting both air and water. However, the proposed legislation requires a 90% reduction of mercury from 1999 levels without regard for the emissions reductions that may already be achieved as a co-benefit of operating existing non-mercury pollution control equipment. This may put state regulators in the untenable position of having to enforce a 90% reduction without having technology available to industry to achieve that goal. Of further concern to state regulators is that current information suggests to us that the chemistry of Western coal with respect to mercury content and the presence of other minerals is such that mercury emissions are very difficult to control. This is an issue that warrants more study before emission reduction targets are set. Having said this, we do believe that an appropriate reduction number can be placed in legislation in the near future.
In the spirit of advancing the discussion on multi-pollutant legislation, we have a recommendation for the Committee to consider. That is, in order for states and other stakeholders to more fully grasp the implications of the proposal, additional analysis would be helpful to flesh out various options as to how the multi-pollutant program would work. These analyses would be helpful for each pollutant, for market trading programs, for West vs. the East issues and for ideas to streamline existing Clean Air Act requirements.
Thank you again Mr. Chairman for seeking the views of Western states. We are a large and diverse area and more than one voice is necessary to adequately understand the concerns and environmental issues we face. We believe that the time is right for a multi-pollutant bill and that it would be of great benefit to human health and the environment.