TESTIMONY OF MARY D. NICHOLS
ASSISTANT ADMINISTRATOR FOR AIR AND RADIATION
U.S. ENVIRONMENTAL PROTECTION AGENCY
SUBCOMMITTEE ON CLEAN AIR, WETLANDS, PRIVATE PROPERTY, AND NUCLEAR SAFETY
COMMITTEE ON THE ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
July 24, 1997

Mr. Chairman, Members of the Subcommittee, thank you for inviting me to discuss implementation plans for the Environmental Protection Agency's (EPA's) revisions to the national ambient air quality standards for ground-level ozone and particulate matter.

As you know, the Clean Air Act directs EPA to set national standards for certain air pollutants to protect public health and the environment. For each of these pollutants, Congress directed EPA to set what are known as "primary" standards to protect public health without consideration of cost and "secondary" standards to protect public welfare, including the environment, crops, vegetation, and so forth for which costs may be considered. Under the Act, Congress directs EPA to review these standards every five years to determine whether the latest scientific research indicates a need to revise them.

Last week, EPA set new standards for ozone and particulate matter that will be a major step forward in public health and welfare protection. Each year, these updated standards have the potential to prevent as many as 15,000 premature deaths; as many as 350,000 cases of aggravated asthma; and as many as one million cases of significantly decreased lung function in children.

Numerous other public health and welfare benefits will result from implementation of the new standards. Additional public health benefits would include: reduced respiratory illnesses, reduced acute health effects, reduced cancer from air toxics reductions, and the avoidance of various other air pollution-related illnesses and health effects. Public welfare benefits will include: reduced adverse effects on vegetation, forests, and natural ecosystems, improved visibility, and protection of sensitive waterways and estuaries from deposition of airborne nitrogen that can cause algal blooms, fish kills, and loss of aquatic vegetation. Estimated total monetized health and public welfare benefits associated with the new standards are enormous, ranging in the tens of billions of dollars annually. Many additional potentially large benefit categories, such as reduced chronic respiratory damage, infant mortality, and other health and welfare benefit categories, cannot be monetized.

The new ozone and particulate matter standards are based on an extensive scientific and public review process. Congress directs EPA to consult with an independent scientific advisory board, the Clean Air Scientific Advisory Committee (CASAC). In conducting these reviews, EPA analyzed thousands of peer-reviewed scientific studies that had been published in well-respected scientific journals. These studies were then synthesized, along with a recommendation on whether the existing standards were adequately protective, and presented to CASAC. After three-and-a-half years of work, 11 CASAC meetings totaling more than 125 hours of public discussion, and based on 250 of the most relevant studies, the CASAC panel concluded that EPA's air quality standards for ozone and particulate matter should be revised. CASAC supported changing the ozone standards from a 1-hour averaging period to an 8-hour average to reflect increasing concern over prolonged exposure to ozone, particularly in children. CASAC also supported adding a fine particle standard. Fine particles are inhaled more deeply into the lungs.

EPA then proposed updated standards and conducted an extensive public comment process, receiving approximately 57,000 comments at public hearings across the country and through written, telephone and E-mail message communications.

As a result of this extensive process, the final standard for ozone will be updated from 0.12 parts per million (ppm) of ozone measured over one hour to a standard of 0.08 ppm measured over eight hours, with the three-year average of the annual fourth highest concentrations determining whether an area is out of compliance. The new standard also reduces "flip-flopping" in and out of attainment by changing it from an "expected exceedance" to a "concentration-based" form. For particulate matter, EPA is adding new standards for particles smaller than 2.5 micrometers in diameter (known as PM 2.5 or fine particles). The fine particle standard will have two components: an annual standard, set at 15 micrograms per cubic meter and a 24-hour standard, set at 65 micrograms per cubic meter. EPA has also changed the form of the current 24-hour PM 10 standard; this will provide some additional stability and flexibility to states in meeting that standard.

We believe it is critical to move forward with these standards now. The American public deserves to know whether its air is healthy or not. The standards we have set serve as an essential benchmark for people to use in understanding whether the air they are breathing is safe. In addition, the standards will encourage early action to help reduce adverse health effects as soon as possible. By setting the standards now, states will be able to proceed with the monitoring and planning requirements needed for implementing them over the next several years. For PM 2.5 , areas can begin to develop inventories and characterize the nature of their PM 2.5 problem. As I will now discuss, we have developed an implementation strategy through an extensive interagency consultative process to assure that concerns of state and local governments and affected industries, such as transportation and agriculture, are addressed. This strategy will allow states and local areas the time they need to implement these standards in a cost-effective and reasonable way.

Implementation of the Revised Air Standards

In the interagency process leading up to the issuance of these standards, EPA worked with other federal agencies to develop an implementation strategy for implementing the standards. In a memorandum signed July 16, 1997, President Clinton set forth several general principles for implementing the standards, and directed EPA to follow the interagency implementation strategy. I would like to summarize the principal features of that strategy for you today.

Achieving the air quality benefits of the updated standards requires a flexible, common sense, cost-effective means for communities and businesses to meet the standards. The President's implementation package has four basic features, all of which can be carried out under existing legal authority:

1. Implementation of the air quality standards is to be carried out to maximize common sense, flexibility, and cost effectiveness;

2. Implementation shall ensure that the Nation continues its progress toward cleaner air by respecting the agreements already made by States, communities, and businesses to clean up the air, and by avoiding additional burdens with respect to the beneficial measures already underway in many areas. Implementation also shall be structured to reward State and local governments that take early action to provide clean air to their residents; and to respond to the fact that pollution travels hundreds of miles and crosses many State lines;

3. Implementation shall ensure that the Environmental Protection Agency ('Agency') completes its next periodic review of particulate matter, including review by the Clean Air Scientific Advisory Committee, within 5 years of issuance of the new standards, as contemplated by the Clean Air Act. Thus, by July 2002, the Agency will have determined, based on data available from its review, whether to revise or maintain the standards. This determination will have been made before any areas have been designated as 'nonattainment' under the

PM 2.5 standards and before imposition of any new controls related to the PM 2.5 standards; and

4. Implementation is to be accomplished with the minimum amount of paperwork and shall seek to reduce current paperwork requirements wherever possible."

Strategy for Meeting the Revised Ozone Standard

Ozone is a pollutant that travels great distances and it is increasingly important to address it as a regional problem. For the past two years, EPA has been working with the 37 most eastern states through the Ozone Transport Assessment Group (OTAG) in the belief that reducing interstate pollution will help all areas in the OTAG region attain the NAAQS. A regional approach can reduce compliance costs and allow areas to avoid most traditional nonattainment planning requirements. The OTAG was an effort sponsored by the Environmental Council of States, with the objective of assessing ozone transport and recommending strategies for mitigating interstate pollution.

The OTAG completed its work in June 1997 and forwarded recommendations to EPA. Based on these recommendations, in September 1997, EPA will propose a rule requiring states in the OTAG region that are significantly contributing to nonattainment, or interfering with maintenance of attainment, in downwind states to submit state implementation plans (SIPs) to reduce their interstate pollution. EPA will issue the final rule by September 1998.

If the states choose to establish a voluntary regional emission cap and trade system, similar to the current acid rain program, reductions can be at a lower cost. EPA will encourage and assist the states to develop and implement a NOx cap and trade program. Most important, based on EPA's review of the latest modeling, a regional approach, coupled with the implementation of other already existing state and Federal Clean Air Act requirements, will allow the vast majority of areas that currently meet the 1-hour standard but would not otherwise meet the new 8-hour standard to achieve healthful air quality without additional local controls.

Areas in the OTAG region that would still exceed the new standard after the regional strategy, including areas that do not meet the current 1-hour standard, will benefit as well, because the regional NO X program will reduce the extent of additional local measures needed to achieve the 8-hour standard. In many cases these regional reductions may be adequate to meet CAA progress requirements for a number of years, allowing areas to defer additional local controls.

Phase-out of 1-hour Ozone Standards

EPA's revised ozone standard will replace the current 1-hour standard with an 8-hour standard. However, the 1-hour standard will continue to apply to areas not attaining it for an interim period to ensure an effective transition to the new 8-hour standard.

As you know, the Clean Air Act includes provisions (Subpart 2 of part D of Title I) that address requirements for different nonattainment areas that do not meet the 1-hour standard (i.e., those classified as marginal, moderate, serious, severe and extreme). These requirements include such items as mandatory control measures, annual rate of progress requirements for emission reductions and emission offset requirements. All of these requirements have contributed significantly to the improvements in air quality since 1990. Although EPA initially proposed an interpretation of the Clean Air Act that would have been more flexible in how these provisions applied to existing ozone nonattainment areas after promulgation of a new ozone standard, based on comments received, EPA has reconsidered its interpretation and EPA has concluded that these provisions should continue to apply as a matter of law for the purpose of achieving attainment of the 1-hour standard. Once an area attains the 1-hour standard, those provisions and the 1-hour standard will no longer apply to that area. An area's implementation of the new 8-hour standard would then be governed only by the provisions of Subpart 1 of Part D of Title I.

The purpose of retaining the current standard is to ensure a smooth legal and practical transition to the new standard. It is important not to disrupt the controls that are currently in place as well as those that are underway to meet the current ozone standard. These controls will continue to be important to reach the new 8-hour standard.

General Time Line for Meeting the Ozone Standard

Following promulgation of a revised NAAQS, the Clean Air Act provides up to three years for state governors to recommend and EPA to designate areas according to their most recent air quality. In addition, states will have up to three years from designation to develop and submit SIPs to provide for attainment of the new standard. Under this approach, areas would be designated as nonattainment for the 8-hour standard by 2000 and would submit their nonattainment SIP by 2003. The Act allows up to 10 years plus two 1-year extensions from the date of designation for areas to attain the revised NAAQS.

Transitional Classification

For areas that attain the 1-hour standard but not the new 8-hour standard, EPA will follow a flexible implementation approach that encourages cleaner air sooner, responds to the fact that ozone is a regional as well as local problem, and eliminates unnecessary planning and regulatory burdens for state and local governments. A primary element of the plan will be the establishment under Section 172(a)(1) of the CAA of a special "transitional" classification for areas that participate in a regional strategy and/or that opt to submit early plans addressing the new 8-hour standard. Because many areas will need little or no additional new local emission reductions to reach attainment, beyond those reductions that will be achieved through the regional control strategy, and will come into attainment earlier than otherwise required, EPA will exercise its discretion under the law to eliminate unnecessary local planning requirements for such areas. EPA will revise its rules for new source review (NSR) and conformity so that states will be able to comply with only minor revisions to their existing programs in areas classified as transitional. During this rulemaking, EPA will also reexamine the NSR requirements applicable to existing nonattainment areas, in order to deal with issues of fairness among existing and new nonattainment areas. The transitional classification would be available for any area attaining the 1-hour standard but not attaining the 8-hour standard as of the time EPA promulgates designations for the 8-hour standard. In terms of process, areas would follow the approaches described below based on their status.

(1) Areas attaining the 1-hour standard, but not attaining the 8-hour standard, that would attain the 8-hour standard through the implementation of the regional NO X transport strategy for the East.

Based on the OTAG analyses, areas in the OTAG region that would reach attainment through implementation of the regional transport strategy would not be required to adopt and implement additional local measures. When EPA designates these areas under section 107(d), it will place them in the new transitional classification if they would attain the standard through implementation of the regional transport strategy and are in a state that by 2000 submits an implementation plan that includes control measures to achieve the emission reductions required by EPA's rule for states in the OTAG region. This is three years earlier than an attainment SIP would otherwise be required. We anticipate that we will be able to determine whether such areas will attain the revised ozone standard based on the OTAG and other regional modeling and that no additional local modeling would be required.

(2) Areas attaining the 1-hour standard but not attaining the 8-hour standard for which a regional transport strategy is not sufficient for attainment of the 8-hour standard.

To encourage early planning and attainment for the 8-hour standard, EPA will make the transitional classification available to areas not attaining the 8-hour standard that will need additional local measures beyond the regional transport strategy, as well as to areas that are not affected by the regional transport strategy, provided they meet certain criteria. To receive the transitional classification, these areas must submit an attainment SIP prior to the designation and classification process in 2000. The SIP must demonstrate attainment of the 8-hour standard and provide for the implementation of the necessary emissions reductions on the same time schedule as the regional transport reductions.

(3) Areas not attaining the 1-hour standard and not attaining the 8-hour standard.

The majority of areas not attaining the 1-hour standard have made substantial progress in evaluating their air quality problems and developing plans to reduce emissions of ozone-causing pollutants. These areas would be eligible for the transitional classification provided that they attain the 1-hour standard by the year 2000 and comply with EPA's regional transport rule, as applicable.

Areas not Eligible for the Transitional Classification

Existing nonattainment areas which cannot attain the 1-hour standards by 2000 will not be eligible for the transitional classification. However, their work on planning and control programs to meet the 1-hour standard by their current attainment date will take them a long way toward meeting the 8-hour standard. While areas will need to submit an implementation plan for achieving the 8-hour standard within three years of designation as nonattainment for the new standard, such a plan can rely in large part on measures needed to attain the 1-hour standard. For virtually all of these areas, no additional local control measures beyond those needed to meet the requirements of Subpart 2 and needed in response to the regional transport strategy would be required to be implemented prior to their applicable attainment date for the 1-hour standard. This approach allows them to make continued progress toward attaining the 8-hour standard throughout the entire period without requiring new additional local controls for attaining the 8-hour standard until the 1-hour standard is attained.

Implementing the New Particulate Matter Standards

Implementing the new particulate matter standards will require a different path from the one I just discussed for ozone. As required under the Act, within the next 5 years EPA will complete the next periodic review of the particulate matter criteria and standards, including review by the CASAC. As with all NAAQS reviews, the purpose is to update the pertinent scientific and technical information and to determine whether it is appropriate to revise the standards in order to protect the public health with an adequate margin of safety or to protect the public welfare. EPA has concluded that the current scientific knowledge provides a strong basis for the revised PM 10 and new PM 2.5 standards. We, along with the Departments of Transportation, Health and Human Services, Labor, and others, will continue to sponsor research to better understand the causes and mechanisms, as well as the effects of fine particles on human health, and the species and sources of PM 2.5 . EPA will also promptly initiate a new review of the scientific criteria on the effects of airborne particles on human health and the environment. By July 2002, we will have determined, based on data available from its review, whether to revise or maintain the standards. This determination will have been made before any areas have been designated nonattainment under the PM 2.5 standards and before imposition of any new controls related to the PM 2.5 standards.

Implementation of New PM 2.5 NAAQS

The first priority for implementing the new PM 2.5 standard is establishing a comprehensive monitoring network to determine ambient fine particle concentrations across the country. The monitoring network will help EPA and the states determine which areas do not meet the new air quality standards, what the major sources of PM 2.5 in various regions are, and what action is needed to clean up the air. EPA and the states will consult with affected stakeholders on the design of the network and will then establish the network, which will consist of approximately 1,500 monitors. All monitors will provide for limited "speciation," or analysis of the chemical composition, of the particles measured. At least 50 of the monitors will provide for a more comprehensive speciation of the particles. EPA will work with states to deploy the PM 2.5 monitoring network. Based on the ambient monitoring data we have seen to date, these would generally not include agricultural areas. The EPA will fund the cost of purchasing the monitors, as well as the cost of analyzing particles collected at the monitors to determine their chemical composition.

Because we are establishing standards for a new indicator for particulate matter (i.e., PM 2.5 ), it is critical to develop the best information possible before attainment and nonattainment designation decisions are made. Three calendar years of monitoring data that complies with EPA's monitoring requirements will be used to determine whether areas meet or do not meet the PM 2.5 standards. Three years of data will be available from the earliest monitors in the spring of 2001, and 3 years of data will be available from all monitors in 2004. Following this monitoring schedule and allowing time for data analysis, governors and EPA will not be able to make the first determinations as to which areas should be designated nonattainment until at least 2002, 5 years from now. The Clean Air Act, however, requires that EPA make designation determinations (i.e., attainment, nonattainment, or unclassifiable) within two to three years of revising a NAAQS. To fulfill this requirement, in 1999 EPA will issue "unclassifiable" designations for PM 2.5 . These designations will not trigger the nonattainment planning or control requirements of Title I of the Act.

When EPA designates nonattainment areas for PM 2.5 pursuant to the governors' recommendations beginning in 2002, areas will be allowed three years to develop and submit to EPA pollution control plans showing how they will meet the new standards. As for ozone, areas will have up to 10 years from the date of being redesignated as nonattainment until they will have to attain the PM 2.5 standards. In addition, two 1-year extensions are possible.

In developing strategies for attaining the PM 2.5 standards, it will be important to focus on measures that decrease emissions that contribute to regional pollution. Available information indicates that nearly one-third of the areas projected to not meet the new PM 2.5 standards, primarily in the Eastern U.S., could come into compliance as a result of the regional SO 2 emission reductions already mandated under the Clean Air Act's acid rain program, which will be fully implemented between 2000 and 2010. Similarly, the Grand Canyon Visibility Transport Commission, consisting of western states and tribes, committed to reductions in regional emissions of PM 2.5 precursors (sulfates, nitrates, and organics) to improve visibility across the Colorado Plateau.

As detailed PM 2.5 air quality data and data on the chemical composition of PM 2.5 in different areas become available, EPA will work with the states to analyze regional strategies that could reduce PM 2.5 levels. If further cost-effective regional reductions help areas meet the new standard, EPA will encourage states to work together to use a cap and trade approach similar to that used to curb acid rain. The acid rain program delivered environmental benefits at a greatly reduced cost.

Given the regional dimensions of the PM 2.5 problem, local governments and local businesses should not be required to undertake unnecessary planning and local regulatory measures when the problem requires action on a regional basis. Therefore, as long as the states are doing their part to carry out regional reduction programs, the areas that would attain the PM 2.5 standards based on full implementation of the acid rain program will not face new local requirements. Early identification of other regional strategies could also assist local areas in completing their programs to attain the PM 2.5 standards after those areas have been designated nonattainment.

The EPA will also encourage states to coordinate their PM 2.5 control strategy development and efforts to protect regional visibility. Visibility monitoring and data analysis will support both PM 2.5 implementation and the visibility program.

Implementation of Revised PM 10 NAAQS

In its rule, EPA is revising the current set of PM 10 standards. Given that health effects from coarse particles are still of concern, the overall goal during this transition period is to ensure that PM 10 control measures remain in place to maintain the progress that has been achieved toward attainment of the current PM 10 NAAQS (and which provides benefits for PM 2.5 ) and protection of public health. To ensure that this goal is met, the existing PM 10 NAAQS will continue to apply until actions by EPA, and by states and local agencies, are taken to sustain the progress already made.

Cost-Effective Implementation Strategies

Consistent with states' ultimate responsibility to attain the standards, EPA will encourage the states to design strategies for attaining the particulate matter and ozone standards that focus on getting low cost reductions and limiting the cost of control to under $10,000 per ton for all sources. Market-based strategies can be used to reduce compliance costs. EPA will encourage the use of concepts such as a Clean Air Investment Fund, which would allow sources facing control costs higher than $10,000 a ton for any of these pollutants to pay a set annual amount per ton to fund cost-effective emissions reductions from non-traditional and small sources. Compliance strategies like this will likely lower the costs of attaining the standards through more efficient allocation, minimize the regulatory burden for small and large pollution sources, and serve to stimulate technology innovation as well.

Future Activities

In accordance with the President's July 16th directive, to ensure that the final details of the implementation strategy are practical, incorporate common sense, and provide for appropriate steps toward cleaning the air, input is needed from many stakeholders including representatives of state and local governments, industry, environmental groups, and Federal agencies. EPA will continue seeking advice from a range of stakeholders and, after evaluating their input, propose the necessary guidance to make these approaches work. In particular, EPA will continue working with the Subcommittee on Implementation of Ozone, Particulate Matter and Regional Haze Rules which EPA established to help develop innovative, flexible and cost-effective implementation strategies. Moreover, EPA will continue to work with a number of Federal agencies to ensure that those agencies comply with these new standards in cost-effective, common sense ways. EPA plans to issue all guidance and rules necessary for this implementation strategy by the end of 1998.

EPA will continue to work with the Small Business Administration (SBA) because small businesses are particularly concerned about the potential impact resulting from future control measures to meet the revised PM and ozone standards. EPA, in partnership with SBA, will work with the states to include in their SIPs flexible regulatory alternatives which minimize the economic impact and paperwork burden on small businesses to the greatest possible degree consistent with public health protection.

Conclusions

In summary, EPA believes that the new ozone and particulate matter standards will provide important new health protection and will improve the lives of Americans in coming years. Our implementation strategy will ensure that these new standards are implemented in a common sense, cost-effective and flexible manner. We intend to work closely with state and local governments, other Federal agencies and all other interested parties to accomplish this goal.

Mr. Chairman, this concludes my written statement. I will be happy to answer any questions that you might have.