Air Pollution:

EPA air chief Holmstead discusses energy bill, ozone, CAIR, mercury, more

The Bush administration has a number of initiatives to revise the Clean Air Act. The House energy bill has several controversial provisions affecting air quality. EPA has issued new rules on a range of pollutants, but Bush's "Clear Skies" initiative is stalled in a Senate committee deadlock. EPA's top official on air pollution issues, Jeff Holmstead, joins OnPoint to discuss administration plans and policies on mercury, ozone, greenhouse gases and other clean-air controversies.

Transcript

Darren Samuelsohn: Hello, and welcome to OnPoint. I'm Darren Samuelsohn. Joining us today in the E&ETV studios in Washington is Jeff Holmstead, the top air pollution official for the U.S. EPA. Mr. Holmstead, thanks for being here.

Jeff Holmstead: Thank you for having me.

Darren Samuelsohn: You've been at the U.S. EPA for four and a half years. You're the longest-serving acting -- I'm sorry, assistant administrator at EPA. It's a controversial job. I'm wondering how have you managed to stay in this position for so long?

Jeff Holmstead: I've just really enjoyed it, to be quite honest. Even more than I expected to. It's a very important set of issues, and really good people to work with, and so I've thoroughly enjoyed the opportunity to serve in the air program at EPA.

Darren Samuelsohn: Do you often have to find yourself picking, you know, the knives out of your back as you're leaving a room?

Jeff Holmstead: You know, I haven't felt, I really haven't felt that way very much. Obviously, these are controversial issues, but I must say, one of the things that's impressed me most is just the professionalism of the staff, and I feel like, being in my job, I have access to the world's experts, so I have access to some of the best analytical tools, and as we work through these issues, so, you know, sometimes we have intense discussions within the agency, but most of the controversy is outside.

Darren Samuelsohn: When you have a controversial decision to make, what's going through your mind in terms of how -- is it presentation? Is that probably the most important thing to do from your perspective?

Jeff Holmstead: You know, this sounds -- may sound corny, but, really, first we try to make sure we just get it right, that we're doing the right thing, and we spend time with the analytical folks, and we spend time with the lawyers. And then, once we figure out what, really, what the right decision is, then we do spend time with the communications staff trying to understand how to communicate a decision, and that can sometimes be a separate challenge, but that really is kind of a separate stage in the way we approach these issues.

Darren Samuelsohn: Twice in four and a half years, I believe, my account says that you've been called on to resign. Once was Senator Edwards over Senator Carper's request for information on Clear Skies back in 2003, and then once the Competitive Enterprise Institute called for your resignation after a story that we reported where you said that eventually carbon caps would come about for U.S. industries.

Jeff Holmstead: Oh, but that's not what I said.

Darren Samuelsohn: What did you say?

Jeff Holmstead: No, no, it, I remember both of those instances.

Darren Samuelsohn: Yeah.

Jeff Holmstead: And it sort of comes with the territory. I had some idea of -- that I was getting into some controversial areas. Some of the things have surprised even me, but, you know, you have to know what you're getting into when you get into one of these jobs. And people feel really passionately about air pollution control.

Darren Samuelsohn: When somebody calls for your resignation, you don't take that very seriously, I guess?

Jeff Holmstead: Honestly, I really don't. You know, I was appointed by the president. I feel like I have his full support, the full support of the administrators I work for. I serve at the pleasure of the president, and so if he was concerned about it, then I would be, but I feel like I've gotten good support from the people who really matter.

Darren Samuelsohn: OK. Let's talk about something that's going on right now on Capitol Hill. The energy bill is being debated, and in the House version of the energy bill, Congressman Barton has put in some language that would delay for 10 years the ability for an area to get -- come into compliance with the U.S. EPA's federal ozone standards around the country, and for an area to get this exemption, they would need to prove that their pollution is coming from somewhere else. It's coming from an upwind source. What's EPA's position on this idea?

Jeff Holmstead: Well, this is actually the codification of a policy that's been in place at EPA since the mid-'90s, so this is not, you know, this is, I think, one of my predecessors, Mary Nichols, during the Clinton administration, and it really is designed to reflect the fact that we need to strike the right balance between upwind controls and local controls of air pollution. So I think some people have mischaracterized as, you know, a 10-year delay, and that's really not what it is. The idea is these areas would still be required to come into attainment as expeditiously as practicable. Those are the words of the statute.

Darren Samuelsohn: Could it set off a domino effect, though? Where one city says, "Well, you know, this source -- this city is hurting us," etc., etc., and it could eventually just bump up everybody for 10 years?

Jeff Holmstead: I don't think so. We -- I haven't seen the most recent language, but I have spoken with Chairman Barton about this in the past, and we have enough discretion under the language that I saw to make sure that we just have a sensible approach doing these things that reflect the fact that some areas do contribute significantly to downwind nonattainment. And so we've publicly said we support this provision as long as we have the flexibility to make those refinements, to balance the need between upwind and downwind controls, so we are supportive of this.

Darren Samuelsohn: EPA's work on ozone pollution since you named, I think it was like 230 counties or something like that.

Jeff Holmstead: Right.

Darren Samuelsohn: For nonattainment for the ozone standard. You've done the non-road diesel rule, and then the Clinton administration did the on-road diesel rule. You also did the Clean Air Interstate Rule recently to affect Eastern power plants.

Jeff Holmstead: Right.

Darren Samuelsohn: Can this Barton provision undo what you've tried to do here with CAIR? That's certainly been some of the criticism from the environmental groups.

Jeff Holmstead: I don't -- in no way could it undo that. The answer to that is just clearly no. Those policies are -- or those are the final rules that are now in place, those will make an enormous difference in helping people to come into attainment, and so it will certainly minimize the people who are on the receiving end of upwind pollution. And, interestingly, if you look at our most recent projections on ozone, we go, I think, from 100 and some odd counties down to just a small handful. It's four or five areas that we project would continue to be in nonattainment by the time you get out to 2015, so all of those federal actions really make an enormous difference in helping states and local governments reach attainment, and for those areas that still need local controls, they would still be required to do those as expeditiously as practical.

Darren Samuelsohn: Has EPA done some work looking at this Barton language and actually figuring out what it would do for attainment deadlines for ozone when you have, I think it's Baltimore/Dallas/New York are 2010 compliance deadlines. California cities, Riverside/Sacramento 2013, Los Angeles 2021. By getting this time that Chairman Barton has called for, is that going to push those off until, you know, 2020 for those Midwestern and Texas cities, do you think?

Jeff Holmstead: We've not -- as far as I know, we've not specifically looked at it. One of the things that I've said publicly before is we do recognize that there are some areas that have -- that are going to have a real challenge meeting their attainment deadlines, especially pockets in the Northeast that just have very heavy concentrations of population, of vehicle traffic, and we've already publicly talked to some of those people about saying, you know, as much as we can do, we still think it may take you longer than 2010 to meet those deadlines, and they've been reluctant to do what's called a voluntary bump up, and, at this point, I think they would have to decide whether they're still on the receiving end of upwind pollution. But, for those areas that we project that would still be nonattainment, say in 2015, I don't think it's an upwind emissions problem. It's primarily those local emissions in those areas where you just have a lot of economic activity, a lot of vehicle miles traveled.

Darren Samuelsohn: OK, another piece in the energy bill that Chairman Barton has put in has to do with the permitting process for new refineries, starting up old refineries that weren't operating. Do you have any sense, I mean, what kind of affect that would have on air pollution if we started up refineries that have been, you know, mothballed for a while?

Jeff Holmstead: That's not something that we've specifically looked at as a legal matter. Everybody needs to come into attainment, and so any new emissions that come along would have to be offset by emissions somewhere else, so I assume that any new startup would be subject to the best available control technology. But in terms of, you know, I'm not even sure that we project a lot of new refineries to be started up.

Darren Samuelsohn: OK.

Jeff Holmstead: So, at this point, we've not specifically looked at that, but it's not a -- and it's not a provision that we've taken a position on at this point.

Darren Samuelsohn: The other provision in there has to do with gasoline blends.

Jeff Holmstead: Right.

Darren Samuelsohn: And expediting, again, the permitting process, I think, or getting boutique fuels online when you might have a major supply problem. I know this isn't your cup of tea, but do you have any sense of if EPA were able to, you know, waive requirements in the summertime ozone season, what that might do for air quality and also for gas prices, do you have any sense?

Jeff Holmstead: I'm not familiar with that provision, but we already have authority that we have exercised where there's some sort of an unexpected supply disruption. I know this happens from time to time when there's a refinery fire. There's a problem in a pipeline. And what we do is we look at the need to have supply, and we do something called enforcement discretion waivers, and we've done a handful of times since I've been there. And, in doing that, we always look at a couple of things. One is kind of the equity issues, because there are companies who invested a lot of money to make sure they're supplying clean fuels, and we don't want them to be penalized or someone else to be advantaged. And so we try very hard to maintain a level playing field. We also look at any adverse air quality impacts that may occur. And, in those isolated cases, we've never seen an episode of nonattainment because of that, but we're pretty careful to look at those and to only grant that sort of a waiver where it's really necessary because of supply disruption. And so, to the extent that the bill simply codifies our current practice, I don't think that would be a real issue.

Darren Samuelsohn: Switching from the energy bill to the Clear Skies debate. Seems like we're in a Texas standoff right now, where Steven Johnson, the EPA nominee, is saying that he will not provide information to Senator Carper unless there's a serious desire to move on Clear Skies from the committee, and also if Senator Inhofe provides a letter saying, "I want this information, too." But Senator Carper is also saying, you know, "If you give me the information, I will negotiate." How do you untangle this situation right now?

Jeff Holmstead: We're trying to do exactly that. We recognize that Senator Carper and others have a legitimate interest in the kind of analysis that we can do. The requests that have been made thus far are extraordinarily broad and would just require months and months and months of model redesign and development, so what we're hoping that we can do, working with both Senator Carper and Senator Inhofe and others, is come up with a plan that everybody can agree upon for further analysis, because we do understand that members of Congress are entitled to that in order to make good decisions, but we also just have some practical constraints in terms of, you know, how much we can do and what our models are designed to do, and there are features in some of the bills that our models just can't deal with, and so we've tried to explain those things and make sure we can do something that really is helpful to Senator Carper and to Senator Inhofe, and I'm confident that we'll work something out.

Darren Samuelsohn: So they'll get some apples to apples comparisons that they'll be able to put on the table and be able to negotiate?

Jeff Holmstead: Yes, yeah, yeah.

Darren Samuelsohn: In terms of time, I think the modeling Senator Carper has said could take up to about three months to do all of the modeling that he wants. That's what Steven Johnson has related to him. Three months of time puts us into the mid-summer. At some point, though, the appropriations process and everything else that's happening on Capitol Hill is going to start to take over. Then you get into midterm elections. At what point is this Clear Skies debate kind of finished, I guess, because, at that point, we start getting into the presidential election cycle. Are you concerned that this is almost over?

Jeff Holmstead: We certainly wish it were moving along more quickly, and that's one of the reasons that we've been trying to work out some modeling that can be done relatively quickly, because our expectation is it wouldn't necessarily just be one, you know, one model run, but that there might need to be some iterations, and so our interest is in providing that, making that happen fairly quickly, because we do think that there's some real reasons that we ought to try to get it done this summer. And I think Senator Carper's interest in that, I know Senator Inhofe and Senator Voinovich are both quite interested in that, so --

Darren Samuelsohn: Do you think that the bill that Senator Inhofe has proposed has strayed very far from what President Bush proposed back in 2002?

Jeff Holmstead: There are certainly some areas that are different from our bill. There are some things that I think we would probably want to refine a little bit, and we look forward to having those conversations during the process. You know, from where I sit, there does seem to be a real interest on the part of the key players up there, and we need to be involved, I think, in those discussions, so that people can really understand the implications of the different provisions, so, you know, what we support is the president's bill. To the extent that some bills are different from that, those are issues that would have to take a pretty careful look at.

Darren Samuelsohn: And CO2, President Bush clearly has said it's not going to happen. I'm curious, with Duke Energy most recently coming out and saying that they're now going to lobby for a carbon tax on the American electric power. Cinergy also making some statements. At one point, does it tip over, and you've got the electric utility industry starting to say let's deal with CO2 in the context of the Clear Skies debate.

Jeff Holmstead: I think there's a willingness to consider options to encourage the kind of things the president has been supporting -- the development of advanced technologies, and we think there are a lot -- we're investing an enormous amount of money in some of these efforts, but the idea that there would be a mandatory, you know, carbon regulation is just something that we don't support. We think it would be very expensive. We think it would -- it's really unnecessary to achieve the goals that we're looking at, so I think there may be opportunities to support efforts to reduce CO2 emissions, but to do it a more sensible way than just putting a regulation in place or some sort of a cap in place.

Darren Samuelsohn: A question I'm sure you've gotten many times, but it's worth bringing up here again. When you're doing a bill that regulates NOx, nitrogen oxide, sulfur dioxides, mercury, why not put that forth "P" into the mix, carbon dioxide, especially, you know, as the Clean Air Act is open. I mean considering how long it takes to open up the Clean Air Act, it's been 15 years already.

Jeff Holmstead: [Laughter] Right.

Darren Samuelsohn: I mean if you did -- if you moved Clear Skies, it's justifiably not till 2020 when the next time Congress will probably look at, you know, the Clean Air Act again. So --

Jeff Holmstead: And I guess part of the concern I have when people raise that issue is the whole issue of global climate change is just very different than anything with deal with under the Clean Air Act. When we're looking at the U.S. power sector, we're looking primarily at SO2 and NOx and mercury, which address, you know, immediate problem that are directly related to those sources. The whole issue of climate change is much broader, not only in the U.S., but in the world, and there needs to be a broader approach, and so just looking at the power sector could really be counterproductive, and one of the things that I think a lot of people have seen is, you know, you put regulations on the U.S. power sector, you increase the cost of energy, you drive jobs to other countries where they may have no constraints, and you actually could end up with more CO2 emissions and a significant job loss. And we obviously want to do things in a much more sensible way.

Darren Samuelsohn: U.S. EPA has been really busy in terms of doing things outside of the Clear Skies context on the Hill. I guess recognizing that Congress can't move this bill. And one of them was your mercury rule that you put out last month trading amongst power companies around the country, power utilities around the country. This is clearly going to court. You've already got some states that have come out and said that they're going to sue. How much do you believe that this is going to actually survive a legal challenge? Certainly, the environmental groups and the states are making a lot of noise that they think that they can back this back.

Jeff Holmstead: You know, it's interesting. You're not the first person to say, "Well, the states are opposing this." That's not true. There's a handful of states who have said they oppose it, but the vast majority of states have been supportive thus far. And also no one has yet sued us on the actual cap-and-trade approach.

Darren Samuelsohn: You haven't published that yet.

Jeff Holmstead: Well, no, but I think that there are also questions as to whether will sue on that. It is true that the environmental community in a handful of states have brought suit on the revision to the 112 determination.

Darren Samuelsohn: Sure.

Jeff Holmstead: And we think that we're in very strong legal position to defend that. I mean if you just look at the facts and the analysis that we did that really show that, under our existing authority, we can fully address the problem of mercury from power plants, and that's the test that Congress set up. So --

Darren Samuelsohn: Just for people back home. The 112 --

Jeff Holmstead: Oh, I'm sorry, is the --

Darren Samuelsohn: Go ahead.

Jeff Holmstead: I'll let you summarize it.

Darren Samuelsohn: The 112 is, of course, when every power plant across the country --

Jeff Holmstead: Right.

Darren Samuelsohn: Would be required to put maximum achievable control technologies on their power plants.

Jeff Holmstead: Right, there would be some sort of source-by-source regulation. It doesn't mean that they -- everyone would be required to put on controls, but it does mean there would need to be under 112, and what we discovered is that there's just a lot of problems with that approach, the way it would work under the statute, and so the combination of our Clean Air Interstate Rule and our Clean Air Mercury Rule, which really provides a much better framework to, not only encourage, but require the development of new, advanced technologies is a much better way to go.

Darren Samuelsohn: OK, another issue just quickly that was something that we were dealing with much earlier, I guess, in your time, was New Source Review. It's still out there, and there's court cases still to come. But I wanted to bring up with you, Christie Todd Whitman was here on the show, and she's written a book, and she's talked about this. She says that she was really glad that she didn't have to sign the New Source Review revisions, the final changes to the Clean Air Act, which have exemptions for -- I'm sorry, let me try and put this in English where routine maintenance for an industrial facility has a 20 percent threshold, so they can spend that much money before they have to install best available pollution control technologies. For Whitman to say that she didn't want to sign that, and she's glad she left, I mean what are your thoughts about how Whitman portrays this?

Jeff Holmstead: You know, I didn't see her on your show. I apologize for that, and so I don't know exactly what she may have said. What we've done on New Source Review from a policy perspective is absolutely the right thing to do. I think there's just no question about that. For anybody who's willing to look at the analysis, you know, whether she has, you know, political concerns, because it has been very controversial for reasons that are honestly puzzling to me --

Darren Samuelsohn: She was worried about it affecting the court cases, was her major reason.

Jeff Holmstead: Yeah, but, again, as we've shown with a lot of analysis recently, even just with the old program in place, the so-called acid rain program, but especially now with CAIR in place, any, you know, any individual requirements on a specific power plant doesn't improve the environment. All it does is make your cap-and-trade program more expensive. There's simply no -- so it -- part of what we've been trying to do in the last four years is say, "We want to do things in a better way. We want to approach it in a way that gets you the most bang for your buck, the most efficient possible way of doing this, and in a way that's fair and predictable for everybody." And, clearly, NSR is not that, and so that's, again, another reason why we've really tried to do all of this in a much more sensible way, and it's another reason why we've tried to do mercury and SO2 and NOx all in a package to give some regulatory certainty to the power section. And, clearly, it would be better to do that in legislation, but -- and we're still optimistic that that can happen. But, in the meantime, we've forward with the regulatory approach.

Darren Samuelsohn: Do you think we'll see you at EPA for the next three and half years?

Jeff Holmstead: I don't know if I'll last three and a half years, but I still have a lot of things I'd like to accomplish.

Darren Samuelsohn: OK.

Jeff Holmstead: As I say, I've really enjoyed the opportunity to be here, and so I have some more things I'd like to do before start thinking about other options.

Darren Samuelsohn: OK, Jeff Holmstead, the head of the EPA Air Office. Thank you very much for being here.

Jeff Holmstead: My pleasure.

Darren Samuelsohn: This is Darren Samuelsohn for OnPoint. We'll see you again for another edition.

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