Mr. Chairman. Thank you for the opportunity to testify today on the President's proposal for the next generation of cleaner cars and cleaner gasoline.

Simply put, over the next decade this proposal will phase in both cleaner burning engines and cleaner burning fuels -- and that means cleaner air and healthier families. We're doing this with a market-based approach that is flexible and fair to industry. And the costs to the consumer are modest, while preserving their choice in vehicles.

We propose these new standards in recognition of some simple facts. Americans are driving more than ever. We are in our cars almost 60 percent more than in 1980. That's just a reality we have to deal with. We live further and further from work and mass transit is not always an option. Also, higher polluting SUVs, minivans and light trucks now make up 50 percent of the automotive market -- and sales are expected to steadily increase.

.Since the Clean Air Act was passed almost 30 years ago, we have made tremendous progress. Working together -- industry, government, and environmental and health experts -- we are now preventing about 70 million tons of harmful emissions from getting into our air.

But we estimate that these gains will begin to erode in just 10 to 12 years if we don't do something about increased vehicle emissions. Together we have come too far to let all our hard work drift away on clouds of auto-induced soot and smog.

So the President has proposed the following:

First, we are proposing to hold sport utility vehicles and light-duty trucks to the same national pollution standard as cars.

Second, for the first time ever we are treating tailpipe emissions and gasoline as a single system. Not only will manufacturers build cleaner cars, but refiners will be producing cleaner fuels that contain less sulfur.

We worked with both the automotive and refining sectors in developing these proposals. We also consulted with states, engine manufacturers, environmental groups, and air quality and health experts.

After months of collaboration with all the interested parties, we determined that a tailpipe standard of .07 grams per mile of nitrogen oxides was technically feasible, cost effective and gave us the necessary pollution reductions we needed. This represents a 77 to 86 percent reduction for cars and 92 to 95 percent for SUVs and trucks.

To make the fuel our vehicles burn cleaner, we will also phase in a 90-percent reduction of sulfur in gasoline beginning in 2004. Sulfur not only pollutes our air but also poisons the performance of the catalytic converters that are supposed to scrub tailpipe emissions.

A great deal of flexibility is built into the proposal, including giving the automotive and refining sectors needed time to phase in the technologies that will bring about these reductions. The proposal also includes market mechanisms that reward manufacturers and refiners who meet these targets ahead of schedule.

For cars and other vehicles under 6,000 pounds, the new standard will be phased in over four years -- beginning in 2004 -- in 25 percent increments, with 100 percent compliance by 2007.

Because trucks and SUVs have a longer way to go, the phase-in period for these vehicles is between 2004 and 2009.

Most of the nation's refiners will have to phase in and meet a sulfur standard of 30 parts per million by 2006. But small refiners will have until 2008 to comply. And if they can prove an extreme economic hardship, they can have until 2010.

To ensure both the automobile and refining industries can meet these goals in the most cost-effective way, the proposal contains innovative and flexible incentives. Besides the phase in period, there is fleet averaging. This allows manufacturers to build a range of vehicles as long as the average of the entire fleet remains at .07.

We also encourage early compliance by including a credit system that rewards manufacturers and refiners who meet their goals faster than required. For instance, beginning in the year 2001, auto manufacturers can obtain credits for later use for vehicles produced at or below the .07 standard. Refiners and oil importers would also be able to bank and trade sulfur credits that they could use in a later year or sell to another refiner.

We estimate that when fully implemented these new standards will keep 3 million tons of pollutants out of our air and every year help prevent thousands of premature deaths and the onset of respiratory illnesses.

The result of these standards would be to cut emissions from cars and trucks by about 80 percent of what they are today. The affect is the same as if 166 million cars pulled off the road.

These proposals will not limit a consumer's choice in vehicles. In almost all cases, the manufacturing and refinery sectors will be able to meet the standards by building upon and perfecting technologies that already exist today.

And the cost to consumers? Minimal! We estimate that the price of gas will rise one to two cents per gallon. That means the average motorist will pay an extra $12 to $24 a year. We expect the price of vehicles to rise $100 to $200.

With this new standard, we will maintain the nation's progress in meeting our clean air goals and allow Americans to breathe easier into the next century.

We will now enter a period of public comment and we are looking forward to hearing from business, public health officials, our state and local government leaders and the consumer about this proposal.

Before I conclude, I feel I must talk to you about a recent federal appeals court decision that would seem to call into question, on constitutional grounds, EPA's ability to tighten health standards for soot and smog under the Clean Air Act.

The decision surprised us. We regard it as extreme, illogical and bizarre.

It is extreme in that it seems to fly in the face of more than a half a century of U.S. Supreme Court rulings. It ignores the fact that for the past 64 years Congress has passed laws and then relied on executive agencies to set the particular rules to carry out those broader legislative goals -- rules that ultimately have protected the health, safety and security of all Americans.

The decision is illogical. It would have you believe that in 1990, Congress and the Bush Administration broke their sacred trust with the American people and perpetrated a cruel hoax by -- one the one hand -- directing EPA to strengthen air quality standards -- and then -- with the other hand -- gutting EPAs powers to enforce these standards.

In one of the most bizarre sections of the decision, the court seems to conclude that more pollution could even be good for public health -- that skies dark with pollution will help prevent skin cancer.

Let me tell you what the court did not say -- although some imply that it did. The court did not say that the air standards were based on bad science. Nor did the court find that the process that produced the standards were insufficient. In fact, the court explicitly recognized the strong scientific and public health rationale for tougher air quality protections.

These proposals were based on a total of more than 250 of the best and most current scientific studies on ozone and PM -- comprising thousands of pages -- all of them published, peer-reviewed, fully-debated and thoroughly analyzed by the independent scientific committee, CASAC. We're talking literally peer review of peer review of peer review.

We stand by these standards. We stand by the science. We stand by the process.

By finding this section of the Clean Air Act unconstitutional, the court has struck at the heart and soul of this legislation that is so critical to the health of our families. Three times Congress has looked at the Clean Air Act including during its original passage and have never questioned the constitutionality of setting these standards.

To lose the ability to implement the new health standards for smog and soot would mean 125 million Americans including 35 million children are going to be placed at risk.

We are pursuing all options available to us to overturn this decision. And in the interim we will take whatever steps, consistent with the court's decision, so that we can secure these protections for all Americans.