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Address to the Edison Electric Institute, Phoenix, Arizona

          Good morning. I have been the Administrator of the U.S. Environmental Protection Agency for 64 days. It is a demanding job, but one that I am thoroughly enjoying. I have been surprised by how personally renewing this new set of problems has been for me. I enjoyed every day as governor, and felt I had a good grasp of the issues and the dynamics it required. Taking on a new set of problems has provided new energy and renewal, and I am delighted to be here in Arizona.

          Why wouldn’t I be? My last trip west was to my home in Salt Lake City where I shoveled 30 inches of snow.

          Last month I attended my first Cabinet meeting. In some ways, it is exactly as you imagine it. Cabinet members sit at a long oval table with light that streams in through the windows that face the rose garden. It gives the room a sense of optimism. Pictures of four presidents hang on the wall; Eisenhower, Washington, Jefferson and Teddy Roosevelt.

          The meetings are efficient, no words are wasted. Everyone was prepared. Colin Powell, Secretary of State reported first, then Donald Rumsfeld. When they finished, the President looked straight ahead and said, “We are still a nation at war.” Cabinet meetings are serious business.

          The President welcomed me to the Cabinet and then asked me four questions that he said he would ask at each Cabinet meeting: “Is the air cleaner? Is the water more pure? Is the land better protected? And are we doing it in a way that keeps us competitive economically?” His question defined his passion, my stewardship and the mission of the Environmental Protection Agency.

          Private conversations I have had with the President have made clear to me that he is passionately committed to not only seeing major environmental improvement, but also finding a better way to go about it.

          My first two months have been dominated by the President’s insistence that every American breathe clean air. In the first month, four significant events have occurred.

          A few days after my arrival, letters were sent to 31 governors affirming that more than 530 of their counties will fail to achieve new health-based ozone standards.

          As a former governor, I knew what those letters meant. Any community out of compliance on ozone inherently faces serious health risks. They also have considerable economic risks. Non compliance is the equivalent of a neon sign saying, “Danger! Don’t invest here.” It means businesses can’t expand. It means projects like roads and airports can’t be built without taking capacity from the existing community. It amounts to a standstill order on growth.

          Many states lack the capacity to solve the problem. The new standards are so stringent that they could close every manufacturing plant, every refinery, take all the cars off the road – but still fail to achieve compliance. Why? Because so much of the pollution measured in their communities comes from power plants in other states.

          The President has proposed Clear Skies Legislation. It would solve this problem. You have been supportive of this approach and I wish to express appreciation. Regrettably Congress has not yet acted.

          It was the need for immediate solutions that prompted the second event. I signed the Interstate Air Quality Rule on December 18th. It is a regional cap and trade system for sulfur dioxide and nitrogen oxides. The rule will reduce emissions of SOX forty percent in 2010 and seventy percent by 2018. NOX emissions would be cut by comparable percentages.

          The Interstate Air Quality Rule provides the largest reduction in air pollution in more than a decade and the largest-ever achieved for power plants outside of the successful acid rain program. It constitutes a move from command and control style regulation to a market-oriented system where the operators of the power plants find the best ways, the fastest ways, the most innovative ways and the most efficient ways to make the reductions. The rule provides incentives to do more than is required, and there are serious market-imposed sanctions for those who do less.

          Our belief is simple: people do the right things faster, and they do more of it, when they have an incentive and the latitude to do it in a way that makes sense for them. It’s the better way.

          The third event took place the same week. I signed two alternatives to regulate mercury from power plants. This will be the first time in American history that mercury from power plants has been regulated. The first alternative, known in the industry as Mercury MACT, is the traditional command and control system.

          The alternative is a better way: a cap and trade system which will go further and faster, reducing mercury by seventy percent over a 15-year period.

          I took a 250-page section of the Mercury MACT rule home for reading over the Thanksgiving holiday. It was mind numbing. It was page after page of complex mathematical formulas, scientific hypothesis, and hair-splitting definitions. Clearly, the Mercury MACT rule would fall victim to the same fate as virtually any other MACT regulation; endless litigation, constant controversy with slow inefficient and limited environmental progress in the interim. The market-based proposal is clearly superior. It is a better way.

          On December 24th, an unexpected fourth event occurred. The Washington, D.C. Appellate Court placed a stay on the final implementation of the New Source Review rule issued in October, just prior to my confirmation. The stay was a disappointment because this area so badly needs clarification and certainty. While I was governor, state air regulators would routinely speak of the five three ring binders that contained the new source review regulations as “the puzzle book.” Regulators want clarity and certainty as much as those they regulate.

          I want to acknowledge the strong feelings that exist on this matter. Utilities are ready to go to the mat because they believed they were in compliance with the rules, then had the rules changed and applied retroactively. Environmental interests feel the interpretation being enforced is the way power plants and regulators should have been applying the rules all along.

          All of the familiar uncertainties of New Source Review exist again as result of the stay. We will vigorously defend the new rule and believe it will ultimately be upheld on its merits. We are committed to make new source review work and to make it work as rapidly as possible.

          It’s important to remember that even when New Source Review is fixed, we will still need to meet the new tougher standards on ozone and fine particles. A more effective national strategy to reduce emissions from power plants and other sources is needed for that to happen. The President and I are firmly committed to finalizing the Interstate Air Quality Rule within the year.

          We will also continue our efforts to pass Clear Skies because legislation is still the better way to fix this.

          Let me get to the take-home point. No one knows how long it will take to fix the New Source Review rule. But even after the rule-making issues are resolved, the enforcement cases themselves take years and there is no certainty for anyone in the result. Time is wasting and, while the lawyers tangle and the public relation firms spin, little is done to clean up the air.

          Old power plants need to be cleaned up now, not a decade from now. And here’s the reality: the power plants that are caught up in this stalemate of New Source Review enforcement actions will have to be cleaned up under the Interstate Air Quality Rule anyway. If we clean up the offending power plants, the New Source Review issues go away.

          I know that we are proposing that the American people, your ratepayers, make the largest investment in air quality improvement in the history of this nation.

          A couple of weeks ago I met with Bill Ruckelshaus, the first Administrator of the EPA. He told me a story that illustrates an important point. It was the early seventies and as EPA Administrator he went to visit the chief executive of a major steel company. After a little small talk, the executive said, “Look, I hate the EPA and I don’t really care much for you. This environmental thing … it’s a fad and it will go away.”

          That was thirty years ago. None of us see society’s appetite for environmental improvement as a fad. You don’t feel that way; society doesn’t feel that way. This nation is unified in our commitment to clean up the air. And we are doing just that. Recent acid rain data and our annual Air Trends Report both show steady and significant air quality improvement. The nation has cleaned its air at the same time as it grew the economy by 164 percent. Vehicle miles traveled increased over 150 percent. Energy consumption increased 42 percent. Clean healthy air and a robust economy can, in fact, be synonymous.

          What we all need to maintain this progress is certainty. The Interstate Air Quality Rule provides just that. It provides certainty that the air will be cleaner. It provides certainty that America will remain competitive in the world. It provides certainty that utilities will succeed in their mission to provide reliable, affordable power and a fair return to stockholders.

          These reductions, coupled with our work to cut diesel pollution, mean that most counties in the country will have an upfront assurance that they will be able to meet the new health standards. Businesses and communities, your customers, not only will retain jobs but they will have the freedom to expand and provide greater opportunity.

          We are embarking on the most productive period of air quality improvement in our nation’s history. We have an opportunity to protect ourselves, our communities and future generations with our actions.

          Thank you for inviting me.