Mr. Chairman, thank you for calling this hearing on the budget of the Environmental Protection Agency. I am pleased that you are holding this hearing, as I take our oversight responsibilities very seriously.
In addition, I would like to thank Administrator Leavitt for being here today to discuss the President’s proposed budget for the EPA. It was not too long ago that we were here at your confirmation hearing and you were sitting in that very seat. I am glad that you are back today, and I look forward to spending some time with you to discuss your presentation, understanding that you have not been in the saddle a long time.
As a former Governor and Mayor, I respect and know firsthand the enormous challenges that you have to address when working out a budget proposal. Putting together a budget is a process that requires responsible prioritizing and fiscal discipline in order to avoid breaking the bank and to respond to the orders you get from OMB. Unfortunately, as is often the case around here, responsibility often gives way to rhetoric and the knee-jerk response to offer pie-in-the-sky budget numbers that are not feasible in light of the war, the need for continuing stimulation of the economy, and other priorities.
In 2003, this past fiscal year, we suffered a budget deficit of $375 billion. In other words, we spent the entire $161 billion Social Security surplus and then had to go out into the private markets and borrow an additional $375 billion.
And according to CBO’s numbers, even though we kept discretionary spending down in FY2004 and the President’s FY2005 budget keeps discretionary spending to an increase of 4 percent, we will still suffer budget deficits of $477 billion in FY2004 and $363 billion in FY2005.
The 4 percent increase in spending is a good start down a fiscally responsible path. I am pleased that President Bush forced some hard decisions to be made but still developed a budget for EPA that will allow the Agency to continue to focus on cleaning up and protecting our environment.
Administrator Leavitt, in the face of all of these budget difficulties, there is some good news in your budget.
Revitalizing our urban areas has been an issue that I have been passionate about for many years. As a former Mayor, I have experienced firsthand the difficulties that cities face in redeveloping these sites for reuse. I worked hard with my colleagues on this Committee to pass brownfields legislation on a bipartisan basis, and I am pleased that EPA is committing more funding in their budget to address the cleanup of brownfields. These actions put abandoned sites back into productive use, creating jobs and healthier downtowns while addressing urban sprawl and preserving farmland and green spaces.
I am also pleased that the Agency’s budget builds on the Cleveland Air Toxics Pilot Project and proposes to expand the program. As a former Mayor, I strongly believe that we need to work more closely with our communities and approach the environment more holistically. In that regard, I also support the Agency’s proposal to provide $65 million to retrofit and replace school buses across the nation to reduce particulate matter emissions and help communities achieve new ambient air quality standards.
Last Congress, I worked with my colleagues in this Committee to pass the Great Lakes Legacy Act to cleanup contaminated sediments. I am pleased that the President has provided nearly five times more than previous levels ($45 million) for this Program. I plan to work hard to keep this funding through the appropriations process, especially since it was decreased from the $15 million in the 2004 budget request to $10 million.
However, there are a few issues in this budget proposal that I would like to address today.
The lack of funding for water and wastewater infrastructure is one of those issues. I have participated in several of these hearings on the EPA’s budget since 1999, and I feel like a broken record. This year is no exception – the EPA’s budget is woefully inadequate to take care of the nation’s pressing water and wastewater infrastructure needs. What we have is a ticking time bomb, ready to blow up if we continue to ignore these nationwide needs.
As a member of this Committee, I have worked hard to bring attention to the nation’s wastewater infrastructure needs. That is why I have introduced legislation (S. 170) that would reauthorize Clean Water State Revolving Loan Fund (SRF) program, providing a total of $15 billion over five years and improving state flexibility. Investment in water and wastewater infrastructure is one way to show we care about the people who are not working and respond to the challenges of our nation’s infrastructure issues. The Water Infrastructure Network estimates that $1 billion in water and sewer infrastructure creates over 40,000 jobs.
As we on this Committee know, billions of dollars have already been spent and billions more are needed to upgrade the nation’s aging wastewater infrastructure. I firmly believe the federal government is responsible for paying its fair share. The City of Akron, for example, has proposed to spend $377 million over 30 years to fix the City’s combined sewer overflow problems. Yet, City and state officials are concerned that the federal government is pressuring them to do the work in half the time and suggesting enforcement action.
In addition, EPA’s 2005 budget proposes spending cuts for this important program. What I would like to know from you, Administrator Leavitt, is how you expect cities like Akron to spend millions of dollars for water infrastructure upgrades when the Administration plans to cut funding for the Clean Water SRF program. I would like to know what kind of assistance EPA can give local communities – in the absence of sufficient federal funding – who are trying to improve water quality by investing in infrastructure upgrades.
Clean water has been a priority of mine ever since I was elected to the Ohio General Assembly in 1967 and made a commitment to stop the deterioration of Lake Erie and to wage what I call the “Second Battle of Lake Erie.” I have continued that fight throughout my career. Last year, I held 2 hearings on a GAO report, which stated that restoration of the Great Lakes is being hindered because there is little coordination and no unified strategy for the region’s environmental activities. I hope to hear from you today on what the Agency is doing to help restore the Great Lakes.
To strengthen science at the EPA, Senator Carper and I introduced legislation in the last Congress to create a Deputy Science Administrator at the Agency and we will be reintroducing this bill in the coming weeks. This legislation was based on a 2000 National Research Council study (entitled Strengthening Science and the U.S. EPA). That report included several recommendations on how to improve the research, management, and peer review practices at the Agency. While I commend the Administration for the great strides they have made to improve the science that EPA relies on to make decisions, I believe our legislation will build on these improvements.
Lastly, Chairman Inhofe and I sent a letter to you yesterday on the Agency’s supplemental to the proposed Utility Mercury Reductions Rule. I ask that it be inserted into the record. I am greatly concerned about this proposal as it will disproportionately impact bituminous coal, the Midwest, and my state of Ohio. I hope to work with you in the upcoming weeks to make sure that the mercury rule does not disproportionately affect one region of the country over another and further exacerbate the natural gas crisis our nation is facing. This crisis would not be occurring if this country’s environmental policies had been harmonized with our energy needs and paid more attention to the impact on the U.S. economy and the needs of millions of Americans to have affordable heating in their homes.
Again, I would like to thank you for your attendance today, and I look forward to hearing your thoughts on these issues. Thank you, Mr. Chairman.
March 9, 2004
The Honorable Michael O. Leavitt
Environmental Protection Agency
Ariel Rios Building
1200 Pennsylvania Avenue, NW
Washington, DC 20460
Dear Administrator Leavitt:
We are writing to express our concern with the Environmental Protection Agency’s February 24, 2004 supplemental to the proposed Utility Mercury Reductions rule.
As you know, the Agency proposed on December 15, 2003 to allocate mercury allowances based on a unit’s baseline heat input and the adjustment factors in the President’s Clear Skies Act (1 for bituminous, 1.25 for subbituminous, and 3 for lignite coals). As the sponsors of this legislation in the Senate, we know that these factors represent a carefully crafted compromise designed to distribute mercury allowances equitably throughout the nation. Although this is a contentious regional issue, Members of Congress and the industry have generally accepted the factors in the proposed legislation.
Unfortunately, the supplemental to this proposed rule offers another option that undermines the consensus that has been so painstakingly built. The supplemental seeks comment on using the maximum achievable control technology (MACT) emission rate (2 pounds of mercury per trillion British thermal unit for bituminous, 5.8 for subbituminous, and 9.2 for lignite coals) in the proposed rule to allocate allowances. While the coal and utility industries have united around the President’s Clear Skies initiative, EPA’s alternative mercury proposal has begun to disrupt that unity. Moreover, there appears to be little rationale for the new option because these alternative allocation rates were designed specifically to statistically account for MACT’s source-by-source requirement, which is inapplicable to a cap and trade approach.
While its impact on passing multi-emissions legislation is important, the most troubling aspect of the proposed supplemental is its projected effect on the Midwest. The alternative mercury allowance allocation could significantly and disproportionately increase the cost of compliance for bituminous coal users, and we are concerned that this may ultimately lead to an increased reliance on natural gas, both eliminating coal-related jobs and further stressing the supply-demand ratio of natural gas.
Our country is in the midst of a natural gas crisis that is destroying the backbone of our economy – manufacturing. We simply cannot afford to encourage increased reliance on natural gas for electricity generation. The proposed rule must be crafted in a way that does not exacerbate the natural gas problem.
We applaud the President’s efforts in bolstering coal as a low cost source of energy for the nation. His commitment to clean coal technologies and rejection of command and control mandates has kept coal as an important fuel source. We urge you to carefully consider the Agency’s proposals to reduce mercury emissions from power plants and ask that you seek an equitable allocation system that does not disproportionately affect one region of the country over another. We look forward to working with you as this proposed rule moves forward to ensure the President’s and our own goal of a continued robust coal industry.
If you or your staff have any questions, please contact John Shanahan at (202) 224-8072 and Brian Mormino at (202) 224-8098.
George V. Voinovich, Chairman
Subcommittee on Clean Air, Climate Change, and Nuclear Safety
James M. Inhofe, Chairman
Committee on Environment and Public Works