After announcing his resignation from the top air pollution post at the U.S. EPA in July, Jeffrey Holmstead takes a look back at his four years at the agency. In a wide-ranging OnPoint interview, Holmstead -- assistant administrator for the agency's Office of Air and Radiation -- points to notable successes during his time at EPA, including progress on the Clean Air Interstate Rule and non-road diesel regulations. But he also laments Congress' inability to pass "Clear Skies" legislation and looks ahead to future fights over the controversial air pollution bill, Bush administration efforts on climate change and New Source Review litigation. This episode of OnPoint was taped on August 4, 2005.
Darren Samuelsohn: Welcome to OnPoint. I'm Darren Samuelsohn. Joining us today in the E&ETV studios in Washington is Jeff Holmstead, the outgoing EPA air pollution director. Mr. Holmstead thanks for being back on the show.
Jeff Holmstead: My pleasure, thanks.
Darren Samuelsohn: You're about to head off on a one year sojourn around the world with your four children, leaving us all behind here in Washington. We're all very jealous to see you go.
Jeff Holmstead: I've had several people mention that, yes.
Darren Samuelsohn: What are you going to miss most about your time here in Washington?
Jeff Holmstead: I'm really just going to miss working on these issues. The people I work with at EPA are incredibly good. We have a good set of analytical tools and just the ability to be involved in these important issues and to feel like you're really making a difference in the world. I'll miss that, but it's really time for me to be a full-time father and husband for a year and it was something we could afford to do. So we're looking forward to that year off.
Darren Samuelsohn: Looking back, you are the longest serving EPA assistant administrator in the Bush administration. You've worked through three full-time EPA chiefs and a couple of acting ones as well. What do you think has been your biggest accomplishment in your four-and-a-half years at EPA?
Jeff Holmstead: I have to say I came to my job with a basic set of principles that I really thought we ought to apply in all of our decisions. And as I look back I'm proud to say we were consistent as we applied those principles.
Darren Samuelsohn: Is there any one particular thing that you did or one particular rule?
Jeff Holmstead: Obviously we look at the public health benefits of the rules that we do and we've looked back over the history of the agency and there are three -- of any rule that EPA has initiated, there's really three that stand out. And two of those are things that we've done in the last couple of years. One is the Clean Air Interstate Rule, which provides enormous public health benefits. The other one is the non-road diesel rule and those are the most significant things EPA has done since lead was faded out of gasoline. So both of those things are, I think, big accomplishments.
Darren Samuelsohn: I know that some people would argue with the statement that I'm about to make here, but clearly your tenure has been filled with controversy. Whether or not it was you or whether or not it was just the issues that you were dealing with, they've been controversial. Democrats, whether they were running for president or running on Capitol Hill or challenging you, have questioned things. What's your biggest disappointment? What's the thing you most regret about your time at EPA?
Jeff Holmstead: I guess the biggest disappointment is how hard it is to have just sort of real discussions about some of these issues. I continue to be surprised by people who make these pronouncements about things that we're doing when they really just don't understand them. And the chance to sit down and really talk through these issues, I mean they're complicated and those are the kind of discussions that we have within the agency, within the administration, but in the political arena it's hard to do that. As I look back at things that I -- in retrospect I wish I could have really developed better relationships on the Hill, just to make sure that we did a good job of helping people to understand what we wanted to do. I sure wish we could have passed the president's Clear Skies bill before I left. That was something that he cares about, that I obviously care about and I still expect that will happen, but it will happen on someone else's watch.
Darren Samuelsohn: I want to get to Clear Skies in one second. I guess, bigger picture, you'll be away from EPA and you bring, I guess, an interesting perspective in terms of looking ahead for what the next three years will hold for President Bush here in his second term as he closes out his time here in Washington. What do you see as the biggest environmental -- things that are going to be forward and what is the Bush administration going to be looking to do?
Jeff Holmstead: Well, just from an air perspective we have the new fine particle standard, which is a big deal and there's still a lot of work to do to implement that. There's work to do on that standard as well as reviewing the air quality standards. I think from a presidential perspective Clear Skies will continue to be important, dealing with the issue of climate change. I think that will be an issue probably for decades to come, but I think we're on a good path and I think it's something that the president and administration will continue to work on over the next three years.
Darren Samuelsohn: Do you see Clear Skies and climate change as two separate debates?
Jeff Holmstead: I really do. Clear Skies is about an air pollution problem that we know how to deal with. We have the technology. We know how far we need to go and we understand how to do it. Climate change is a much bigger issue. It's much bigger than the U.S. power sector. It's much bigger than the U.S. and one of the things that I think everybody agrees on, who's sort of thoughtful about this, is to the extent that climate change is a big issue the only way to deal with it is transformational technologies. You can't just put a scrubber on it. You've got to fundamentally change the way we produce energy. You've got to fundamentally change the way that we fuel the transportation sector and that's a long-term international effort.
Darren Samuelsohn: Coming back to Clear Skies for a moment, you're not going to be here, but in the next couple of months we're going to obviously be watching Capitol Hill to see what kind of interest do they actually want to take with this bill? And by passing the energy bill maybe one big hurdle has moved away. Do you agree with that statement?
Jeff Holmstead: I do and more importantly I think a lot of other people around town do. I think the sense is they've addressed some key issues there. It's time to move on. We are, right now, doing some of the analysis that Senator Carper and Chairman Dingell and others, Congressman Dingell and others have been asking for. So that analysis will, I think, allow people to engage in this debate in a constructive way. So I think with the passage of the energy bill sort of wiping the slate clean, having that analysis should help to move that along.
Darren Samuelsohn: And that analysis was a key sticking point in administrator Stephen Johnson's confirmation. It's something that Senator Carper was screaming about and it's something that goes back to, I guess, even Senator Jeffords was asking for things like this when he was running the Environment and Public Works Committee. Do you think, when we get this analysis from EPA, timeline-wise I guess it's going to be in September or so, we're thinking?
Jeff Holmstead: Yeah.
Darren Samuelsohn: Is it going to be enough? Is it going to satisfy everybody? When you see this, you know these documents, is it going to show us apples to apples to apples, all of the legislative proposals and the public health benefits and the environmental benefits and everything?
Jeff Holmstead: Yes. One of the things that I guess has been a concern to me is there seems to be a misperception that somehow more analysis will give you a different answer. This is the analysis -- I guess I don't expect that this analysis isn't going to tell us anything we don't already know. It will present it in a different level of detail and it will present what Senator Carper in particular has been asking for, is an apples-to-apples comparison of different proposals. We've done that comparison based on interpolations, but he said he wanted something more detailed than that. So we're going to provide it, but it isn't going to lead to an answer.
Darren Samuelsohn: Ultimately this is the policymakers' decision.
Jeff Holmstead: It's a policymakers decision and the analysis helps to inform that and I think it will lead people to see why the president made the choices that he did, but that's a discussion that we need to have and I'm hopeful that will happen next few months.
Darren Samuelsohn: Do you think that, I mean we had a 9-9 deadlock on Clear Skies in March, in the Senate committee, and right now no indication that any changes has happened there. But the House, if they wanted to move the bill I bet they probably have the votes to move something in the House. How close are we to Congress passing and President Bush signing Clear Skies before he leaves office in 2008?
Jeff Holmstead: I'm pretty optimistic about that. I think the debate over the energy bill, a lot of the debate, much in the Senate side -- the issues have been primarily about climate change. That issue has really kind of played out now on the energy bill, so I'm hopeful that the people on the Senate side will sort of get about the business of writing an anti-pollution bill. I believe, and I've talked with Chairman Barton, I know he would like to be able to do that. He's obviously got other things to worry about, but I think with an indication that the Senate can move, that he would move a bill forward too. So I learned a long time ago you don't want to make too many hard and fast predictions, but I think everybody is pretty optimistic that that can still happen.
Darren Samuelsohn: On the climate change front, just recently the president announced a big six nation pact that is going to be developing and deploying technologies to developing countries. One of which you're going to be off visiting and living in in India --
Jeff Holmstead: Right.
Darren Samuelsohn: For a couple of months. But it doesn't go to the next step. It's not caps. It's not Kyoto targets. It's nothing like that and a lot of people say, well, you know you can develop all the technologies you want, unless you actually have a regulatory hard number in there these technologies are going to be developed, but it's going to be -- it's not going to be quite legitimate and not real. How do you respond to the questions like that that are being raised about this new proposal?
Jeff Holmstead: One of the things I like to think about -- people talk about technology forcing regulations and they say, well, you know EPA sets regulations and people develop the technology. Well that's not quite true. The agency, just in the normal regulatory process, doesn't set a standard until we have a good idea that there is technology that can meet that standard. So in the diesel arena those regulations that have happened just in the last couple of years wouldn't have been possible. We couldn't have justified those without a lot of R&D work, without a lot of advance work. So I think it's kind of backwards to set the standard without knowing what the technology would be. I think in the climate change area one of the differences is some of these technologies have the opportunity to actually save costs, to be less costly than existing technologies, especially as some of the natural resources become more expensive. So if that's the case you don't necessarily need a standard and if there is a need for a standard at some point in the future you've got to have technologies that you know will allow you as a society to meet those standards.
Darren Samuelsohn: The Europeans are saying within a couple of months of the implementation of the Kyoto Protocol that they're already spurring a $40 billion investment, I believe, in climate technologies, just in the first four or five months of trading carbon dioxide credits in the European Union. Over here, I mean wouldn't it work out the same way if we set something up in the United States the same way?
Jeff Holmstead: I don't know that number, but I'm a little skeptical. I mean I know that there are CO2 trades being done, but in terms of a $40 billion investment in technology, I'm skeptical of that. Standards certainly can be used to encourage technology development, but there's a lot of other ways to do it too. And I don't think you want to put your economy at risk without some sense that you really have technologies that are feasible out there. As I said before in dealing with climate change we're talking about fundamentally changing the way we produce power, the way we power our transportation sector. And I think the president and the United States is committed to that kind of investment, as you've seen in the last four or five years.
Darren Samuelsohn: I want to give you a chance just to clear up a statement that you made a couple of -- I think it was about a year ago now, in Kentucky and I brought it up the last time you came on the show and you said, no, you're quoting me wrong. Can you just tell me what did you say or what did you mean when you were talking about eventually at some point in time, in the future, it's going to be a carbon constrained world? What exactly were you trying to tell me, tell us, tell the --
Jeff Holmstead: No, no, no, the only thing that I disagreed with was your implication, I think, in a story you wrote that somehow that was a big new statement. I don't think it is. I think the government wouldn't be investing billions and billions of dollars in these transformational technologies if we didn't think that at some point in the future there would be a reason to worry about CO2, about carbon. And so I continue to believe that at some point, in the future, we'll be living in a world where there are carbon constraints. And whether those are achieved through a mandatory program or whether they're achieved by incentive programs or other things, clearly, most everyone believes that it's worth investing in those technologies.
Darren Samuelsohn: And just one more time, why not now?
Jeff Holmstead: Because we don't -- we are investing in those technologies and I don't have the numbers at my fingertips, but it's billions of dollars that the United States government is putting into R&D, into tax incentives, in order to do this. And I don't think there's another country in the world that's investing nearly as much of its public money in those efforts. So the answer is we are doing it now.
Darren Samuelsohn: Let's come back to the air pollution side of things. You mentioned the Clean Air Interstate Rule, the final plan now for 29 Eastern states to reduce their smog and their soot forming emissions.
Jeff Holmstead: Right.
Darren Samuelsohn: The litigation has all been filed on this and it kind of came in some of the areas that, I guess, were maybe less minor areas, I guess is one way to look at it. It's litigation yes, but it's questioning the allocation system on one end. Some of the states are saying they don't want to be a part of CAIR and the environmental groups are suing over some language in the rule that they say shouldn't have been there. But there's no hard and fast actual challenge to the legality of CAIR. Were you expecting a lawsuit to the legality of CAIR and are you surprised that you didn't get one?
Jeff Holmstead: I will tell you, we actively worked with people on both sides of the issue to say it really is time to have some certainty here. It's not in anyone's interest to have, as there was in the NOx SIP Call, with people not sure whether they should make the investments. And I think that by and large in fact, people have accepted that. Just in the last couple of weeks -- once we saw the lawsuits that were challenged, once we had a chance to actually contact the litigants, we now can basically say that CAIR is the law of the land. I mean it's unchallengeable except for sort of these issues around the edges and that fundamentally changes the way the world is going to work. And people are investing a lot of money in technologies that, again, are well understood and we've seen the price of allowances on the trade reflects those facts. So it is a real sense of accomplishment within the agency that not only did we get the rule out there, but that rule now is going to stand and everyone's planning on what they need to do to comply with the rule.
Darren Samuelsohn: And out in the West, which CAIR doesn't apply to, what can the West look forward to?
Jeff Holmstead: Well, we have another rulemaking coming up which will deal with the so-called NOx increment. But in addition to that we have, the Western states, the so-called Western Regional Air Partnership, the WRAP states, who adopted their own plan for SO2 reductions, which will issue significant SO2 reductions. Largely they deal with visibility issues. We expect that they'll do something similar on NOx and at the same time we have the BART rule, which you're familiar with, the best available retrofit technology. And what that means is in the West virtually every plant will be well controlled, either because it's subject to BART or because it went through the NSR process.
Darren Samuelsohn: I want to jump you to go over to mercury, another issue. A little bit less certainty, I guess, here because of the lawsuits that are coming and we're still waiting, obviously, to hear how this is going to play out. We've got some lawsuits challenging your decisions to delist mercury as a hazardous air pollutant and then also in the cap-and-trade program. Going forward how significant do you think that these lawsuits will be and is that where we need to be watching, going forward?
Jeff Holmstead: We had good news today in that some of the environmental challengers had asked the court to stay the delisting and the court refused that challenge today. So that's obviously a good indication. I think there's a lot of rhetoric about this, but one good thing about going to the D.C. Circuit, as we saw in the NSR litigation, is they actually look at the rulemaking record and they see what we've done. They have all of the data. They look at it in a fair way and I think we're all very confident that that will be upheld. I think there's actually little doubt of that now, especially on the 1-12 delisting rule. It's a pretty, I think it's a pretty clear-cut case.
Darren Samuelsohn: And New Source Review, which was another big accomplishment or big thing that you guys set out to take on this year, over the course of your time. And we had a decision out of the D.C. Circuit which was kind of messy, hard to figure out exactly what it said, but it upheld some pieces to your final rules, providing some flexibility.
Jeff Holmstead: Again, I want to be -- let's be fair about it, the things that were the most important the court upheld them completely. So the things that, again, the environmental community and others had blasted and said this was going to cause all sorts of problems, the court just didn't buy any of it. And they looked at the record and they said, "There's no evidence of that. These are reasoned decisions." So that was upheld by the D.C. Circuit. We expect the same thing will happen with the Equivalent Replacement Rule. There's more to do. I would like to -- as I've told you before, I've enjoyed working on these issues and I wish I could be around long enough to finish some of the other New Source Review reforms that are on track. But I think that's something else that the agency will need to continue to work on, just to harmonize all of these complicated regulatory programs.
Darren Samuelsohn: And where can we expect to see you when you land back in the United States in September of 2006 I guess it will be?
Jeff Holmstead: You know, maybe right back here. Maybe you'll have me back again and I can tell you about my --
Darren Samuelsohn: A full-time cohost on the show perhaps.
Jeff Holmstead: I haven't really thought about that. For me this experience has been the opportunity of a lifetime, to work on issues that I care about, to work on issues that are really important to a lot of people and to really work with a pretty exceptional group of folks. And in that environment it's been hard for me to really think very much about what I want to do when I come back. So I'm going to be working with my kids and trying to help them with their algebra and seeing other parts of the world and then I'll worry about that when I come back.
Darren Samuelsohn: OK. Thank you very much for coming on the show. Safe travels and we'll see you again soon.
Jeff Holmstead: Thank you very much.
Darren Samuelsohn: Until next time, this is Darren Samuelsohn for another edition of OnPoint.
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