With U.S. EPA attorneys defending the agency's authority to regulate carbon dioxide in a courthouse nearby, EPA Administrator Lisa Jackson returned to Capitol Hill yesterday to make her case for the president's fiscal 2013 budget.

Members on the House Interior, Environment and Related Agencies Appropriations Subcommittee grilled Jackson on everything from air quality regulations to a hydraulic fracturing study to EPA's proposal for funding cleanup of Puget Sound, the Chesapeake Bay and the Great Lakes.

EPA's funding request is $8.3 billion, more than 1 percent below current funding levels. The number is likely to drop still further before the appropriations process ends -- likely with a continuing resolution or series of resolutions later this year.

But subcommittee Chairman Mike Simpson (R-Idaho) said in his opening remarks that the cuts were not "draconian."

"It is important to remember that these reductions come on the heels of unprecedented historic increases," he said. The EPA budget increased 35 percent between fiscal 2009 and 2010, after Democrats gained control of the White House.

But Appropriations Committee ranking Democrat Norm Dicks of Washington said that by cutting EPA spending, Congress was setting up future generations for deferred maintenance costs and passing other infrastructure and regulatory costs on to cash-strapped states.

"Keep doing your job," he told Jackson. "You are good at it, and the health of the American people depends on it."

The subcommittee's top Democrat, meanwhile, made a plea for fewer policy riders to be included in the committee's bill this year. Rep. Jim Moran (D-Va.) noted that the Interior-EPA bill did not even pass the House last year because too much time was spent on amendments, most of which would have delayed, limited or rolled back EPA's air and water regulations.

"I trust that last year's lesson though has been learned," he said, adding that if authorizing committees such as the House Energy and Commerce Committee want to change existing environmental laws they should do so through normal channels, not the appropriations process.

Simpson told reporters later that he hoped for fewer riders himself, because it "muddies up the bill and makes it difficult for the bill to get done."

Still, he said he expected many committee members and members of the House to offer amendments that reflect their constituents' concerns.

"You've got to understand, a lot of people offer an amendment knowing that it's probably not going to survive until the end," he said. "But they're representing their constituents and doing what their constituents want them to do."

He said that the Interior and EPA subcommittee would complete its hearings by the end of March.

Controversy over coal mine permits

By far the most heated questioning came from Appropriations Chairman Hal Rogers (R-Ky.), who said that, in his opinion, Jackson was likely in contempt of court because EPA continued to hold up permits for coal mines throughout Appalachia.

"I've got people with pink slips all over the landscape because you will not process any of these permits in a timely manner as the court has ordered you to do," he said.

A federal court in October overturned EPA's enhanced review of dozens of mountaintop-removal mining permits in Appalachia, but the decision did not affect EPA's authority to review -- and in some cases veto -- permit applications it deems in violation of the Clean Water Act.

But Rogers insisted that the U.S. District Court decision meant EPA was illegally sitting on more than a hundred mining permits in his region, killing thousands of much-needed jobs.

"An impoverished area is getting more impoverished thanks to your actions," he told Jackson.

Jackson countered that the 37 mining permits the agency has objected to were rejected because scientists said they would have contaminated local water.

Rogers asserted that EPA had not allowed any new permits to move forward since Jackson has been at its helm, but Jackson said after a brief recess that the Army Corps of Engineers had in fact issued 38 permits for mining projects that had been reviewed by her agency, including five in Rogers' home state of Kentucky.

Fracking, clean water disputes

EPA's involvement in an interagency study on the use of hydraulic fracturing to produce natural gas also generated some controversy. A relatively small budget item -- the agency has requested $14 million to complete the study -- it was the subject of substantial debate nonetheless.

Rep. Maurice Hinchey (R-N.Y.), a longtime opponent of hydraulic fracturing who will retire at the end of this year, said the country was trying to understand the effects of "fracking."

"The public needs more scientifically credible info about what is going on," Hinchey said.

But Republicans quizzed Jackson about the direction the study could take. Rep. Cynthia Lummis (R-Wyo.) said she was concerned that Jackson said the agency would review how the method affects air quality, as well as water safety and ecosystems. She asked Jackson to promise that the study would be reviewed by scientists with no anti-fracking bias, and the administrator agreed.

Rep. Steven LaTourette (R-Ohio) noted that several agencies will be involved in the study, adding that he hoped they would coordinate their efforts so that they did not duplicate work.

"We have a lot of urban legends springing up right now because of hydraulic fracturing," LaTourette said, adding that a study could put to rest questions of whether fracking causes earthquakes, for example.

Subcommittee Chairman Simpson questioned Jackson last, asking about EPA's move to classify some additional waterways as falling under its Clean Water Act authority. The White House Office of Management and Budget is currently reviewing a guidance by EPA and the Army Corps, though it would be nonbinding and lacks the force of law.

Jackson said EPA and the Army Corps drafted the guidance because it had proved very difficult to determine under whose jurisdiction certain rivers, streams and wetlands fell.

"This was meant to provide some greater level of certainty" she said. "The conservation community has been saying for quite some time that we need to have a better definition of what waters are protected under the Clean Water Act," she added.

But Simpson said that some environmentalists would likely prefer that every wetland and cow paddy in the country was subjected to regulation under the Clean Water Act.

"There is state protection of some of those waters," he noted. "It's just a question of whether the state does it or the federal government does it."

The rumor mill

Simpson also admonished Jackson to do a better job of responding quickly to rumors about EPA's regulatory plans. In the past year, anti-regulatory industry groups and lawmakers have circulated reports that EPA was preparing to regulate milk spills at dairies as if they were oil spills and to crack down on farm dust. He acknowledged that neither rumor had been true but appeared to blame Jackson for the misunderstanding.

"I think EPA has to get on top of the rumors and accusations quicker than you do and let the public know your intentions," he said. "Because we're always going to fear the worst."

After the hearing, Simpson told reporters that the public perceived that EPA was overreaching, and it was undermining the important work the agency does in cleaning the environment and helping support state and local infrastructure projects.

"The amount of concern by the public that the EPA is overregulating the country, you can cut it with a knife out there," he said.

Reporter Manuel Quinones contributed.