INTERVIEW TRANSCRIPT

C-SPAN’S “NEWSMAKERS”

Guest: Stephen Johnson, Administrator, Environmental Protection Agency

Reporters: John Fialka of the Wall Street Journal and John Heilprin of the Associated Press

Moderator: C-SPAN

TAPE DATE: Thursday, May 17, 2007

AIR DATE/TIME: SUNDAY, May 20, 2007 at 10 a.m. and 6 p.m. ET

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PEDRO ECHEVARRIA, HOST: Joining us on the Newsmakers is the administrator of the Environmental Protection Agency, Stephen Johnson and two reporters that will pose questions to him. They are John Fialka of the Wall Street Journal, who writes on energy and environmental issues. Also joining us, John Heilprin of the Associated Press, he's their national environmental writer. Mr. Fialka, you have the first question.

JOHN FIALKA, WALL STREET JOURNAL: Mr. Administrator, you have been given the task of leading an intergovernmental task force to figure out how to make a regulation that reduces our gasoline consumption by 20% in 10 years. And as I understand it, one of the goals there is to combat climate change, to reduce CO2 emissions and the other is to reduce our dependence on imported oil. Do you see any tension between these two goals?

STEPHEN JOHNSON, EPA ADMINISTRATOR: No, actually they're very consistent. In fact, with the President's leadership in announcing on Monday, directing us to move forward with a first step at regulating greenhouse gases from automobiles, there's really two ways to do that. One is through the fuel that you put in the automobile and then the second is improving the efficiency of the automobile and of course as I'm sure many of our viewers are aware, the President, in the State of the Union Address this past January, announced a "20 in 10 Program." And so, with the Supreme Court decision, the President has directed us to move forward with using that as a guide for regulating greenhouse gas emissions.

JOHN HEILPRIN, ASSOCIATED PRESS: In December 2005, California asked to waive the Clean Air Act -

JOHNSON: Yes.

HEILPRIN: - requirement that would allow them to implement -

JOHNSON: Yes.

HEILPRIN: - the nation's first tailpipe standards for global warming solutions. Will EPA approve the California request?

JOHNSON: Well, the waiver petition is before the agency. We're in the midst of a public comment period. There's going to be a public hearing on May the 22nd, here in Washington and on May the 30th in Sacramento, California. And then we'll await all the public comments, as well as the comments from the hearings before we make any decision. So, no decision's been made.

HEILPRIN: Will you definitely act before the Governor of California sues the Bush Administration as it has threatened to do?

JOHNSON: Well, certainly he has a letter alerting me to the fact that he wants an expeditious decision. Again, we - I want to wait and see what the comments are before making any determination of when and what the decision might be. So, again, we're proceeding with the process, it's actually described in statute by having a notice and comment hearing process and that's what we're proceeding with.

FIALKA: There are some 11 states that want to side with California and have their -

JOHNSON: Yes.

FIALKA: - own emission standards, as I understand it. And does the fact that the Federal government is now working on its standard, change the nature of that decision for you?

JOHNSON: Well, that's certainly a question that was - we raised in our - in our notice on the petition and certainly it's a question that we are evaluating as part of our petition process. So, again, no decision's been made on the petition, but in the meantime, we are moving forward with drafting a regulation for controlling greenhouse gas emissions from automobiles.

FIALKA: Am I correct that you've never refused such a waiver before?

JOHNSON: There are in the history of the agency - there virtually been denials of waivers. In some cases there has been an agreement to amend their waiver petition to accommodate concerns by the agency. So, it's a - it's a mix of both of those.

HEILPRIN: How much thought has been given to the EPA implementing the program alternative to what California would do? And how do you think such a program would measure up to the California program?

JOHNSON: Well, we haven't made any decisions as to what our - what our regulation - what our proposal will look like or what ultimately the final regulation of the - of dealing with automobiles and greenhouse gas emissions. What we do have is the President's 20 in 10 - 20% in 10 years - as a blueprint, as a guide, as a starting point as we prepare and draft regulations, but our staff now are busily beginning that effort since the President has directed us to have a regulation in place by the end of 2008.

FIALKA: Some of the elements of the President's plan would allow the use of liquid fuels from coal -

JOHNSON: Yes.

FIALKA: - as an alternative to gasoline - or is blended in gasoline. And in California, there are some studies that show that there are more carbon emissions from liquid fuels derived from coal, then there are from gasoline. Would that factor in to your decision?

JOHNSON: Well, it will factor into our decision because the President's legislative proposal was for an alternative fuel standard achieving 35 billion gallons of alternative fuel ranging from cellulosic ethanol to bio-diesel to electric automobiles to coal liquid. With the Supreme Court decision and moving forward with the regulation, we'll not only be addressing the energy efficiency or energy intensity aspect of it, but also the contribution of greenhouse gas emissions. So, we'll - we will take that into consideration as we move forward with the regulation on fuel.

HEILPRIN: The EPA found in 2003 that carbon dioxide is not a global warming pollutant. It has now been almost four years since that argument was made, the Supreme Court has now decided that the EPA was wrong to make that argument. Do you regret the loss of almost four years in progress the agency could have made?

JOHNSON: Well, I certainly accept the Supreme Court decision that CO2 is a pollutant. I think it would be - it's very informative when you read the Supreme Court decision and they do an excellent job of tracing history, in fact, back to 1978. And the issue of whether it is or isn't a pollutant has been an issue that has been debated for some period of time and - but, we now a Supreme Court decision, it is a pollutant. The President has decided we are going to move - take that first step toward regulating and that's what we're going to do.

HEILPRIN: What exactly are you prepared to do?

JOHNSON: Well, as I said, we are moving forward with regulating greenhouse gas - emissions from new automobiles. There again, as I mentioned, there are really two ways of reducing greenhouse gas emissions. Unfortunately, there's not a catalytic converter that you can just put on an automobile and so what are the ways to control it? Well, one is the type of fuel that you're using and it turns out that renewable fuels have a much better profile for greenhouse gas emissions than do petroleum products. And then the second is improving the efficiency of the engine of the automobile. In other words, more miles per gallon. And so those are the two fundamental areas that we're going to be pursuing, our regulation and of course, that's very consistent with and in fact, that is the framework that the President laid out in the State of the Union Address, which he said, "I want to achieve a 20% reduction in fuel consumption in the United States over the next 10 years." So, it's a great framework for us to proceed with - with the regulatory approach.

FIALKA: What you've really got is a two track process with the Congress preparing to enact climate change legislation and perhaps fuel standards. And you've said that you prefer the legislative approach, but you're going the regulatory approach anyway. Is this annullity (ph)? I mean will the regulatory approach serve a purpose if Congress decides to preempt it at the end of the year?

JOHNSON: Well, it's a - it's a - you're correct in pointing out it really is a dual approach, a legislative approach at the same time, a regulatory approach. First, that's not an unusual thing that we have done. We have a number of examples in the history of the EPA. We started out with an administrative approach for having brown fields, these old abandoned sites to be renewed. That - very time consuming, subject to litigation and so legislation - we sought legislation. And there's now legislation. The President - we felt it was necessary to regulate SO2 and NOx, these are air pollutants that cause problems - a lot of public health problems and so we decided to go with the regulatory approach at the same time the President asked Congress to pass these Clear Skies legislation. Unfortunately, that didn't pass. But in the meantime, I issued regulations to control those. So, here we are today with - dealing with greenhouse gas emissions from automobiles. We now have the - through the Supreme Court - it's clear we have the regulatory authority, so we're going to pursue that at the same time, the President said he would prefer and certainly I would prefer a legislation approach.

FIALKA: Why would you prefer that?

JOHNSON: Well, legislation - one is that it provides certainty for everyone, whether you are EPA or the regulated industry or the public. And second and probably the most important, it's not subject to litigation. As I've often said, the air doesn't get any cleaner when you're sitting in a courtroom. And unfortunately, we seem to have a litigious society and certainly on environmental regulations and so having legislation in place - it cuts that litigation off. And so, we can get on about the business of controlling greenhouse gas and improving energy efficiency at the same time.

ECHEVARRIA: You're watching Newsmakers. Our guest is Stephen Johnson of the Environmental Protection Agency. He's the administrator. We're also joined by John Fialka of the Wall Street Journal and John Heilprin of the Associated Press. Mr. Heilprin.

HEILPRIN: Speaking of litigation, the EPA has also been challenged on its declining to regulate global warming pollution from coal-fired power plants. The Energy Department has identified 150 plants on the books ready to be put on line. What will be your response now that the Supreme Court has decided that carbon dioxide is a global warming pollutant?

JOHNSON: Well, two points. The first is that we are involved in litigation, so really I can't get into specifics of each of the lawsuits that may be before the agency. But the second is, is that we are taking a very close look at - given what the Supreme Court said, dealing with motor vehicles - how that may or may not apply to other sources, particularly stationary sources that emit greenhouse gases.

HEILPRIN: But doesn't the ruling essentially force you to reverse course on that?

JOHNSON: Well, again, the Supreme Court was very clear in its - in its decision that for the motor vehicles we needed to make a decision - with regard to motor vehicles, but it did not presume what the outcome of that decision. In fact, it said, well, if you find that it causes and contributes and causes endangerment to public and the environment, then you must regulate for motor vehicles. If you find that it doesn't then you don't have to regulate or then third, if there's some other reason that you don't feel and this hasn't been explained to the court up to now, then that's an option. So, that was in the context of motor vehicles. Again, we're now looking at that and what does that mean and how does that apply? Does it apply for other stationary sources and other aspects of the Clean Air Act.

FIALKA: You're agency has had some interchange with China over the years on air pollution matters. Does the fact that the Bush Administration is finally working on CO2 regulations give you some more currency with them or some more leverage with China?

JOHNSON: Well, I think it's important to point out that as a nation and certainly under President Bush's leadership, from 2001 to today, we as a nation have spent $37 billion investing in science and technology and even providing some tax incentives for people. That is unparalleled. There's no other country in the world that has invested that amount of money, time and energy to address climate change. So, we are in fact, the world's leader in investment in trying to address this.

With regard to China and India and some of the developing - rapidly developing countries, we are actively working with them in a number of ways. One of them is a program we call Asia Pacific Partnership, where we've identified eight sectors such as coal-fired power plants, such as cement, such as aluminum, which are high emitters of greenhouse gas emissions. And we're working in a collaborative cooperative way and sharing technologies to help us address, not only in the United States, but literally around the world, particularly with the developing countries - to address greenhouse gas emissions.

FIALKA: The folklore is that China will not move until they see us do something substantive. Do you think this will help them move?

JOHNSON: Well, we are in active discussions with them this next week. There will be a Chinese delegation coming in to meet with a number of us as part of the President's strategic economic dialog. And we've had great discussions, there's great progress. One of - one of our success stories that occurred is that another program we have called Methane to Market. Methane is a potent greenhouse gas, it's 20 times more potent than carbon dioxide and we can - we have the technology to actually capture that from coal mines, from agricultural operations, from landfills. The other good thing about not only capturing it - from stopping it as a greenhouse gas - it's also an energy source. And so, the world's largest coal, bed methane recovery is now going to be built in China and it's going to power an American plant. And so, those are the kinds of opportunities we see not only in China and India, but around the world, that we're trying to promote. Because it's - what we're finding is, is that things that are good for the environment are also good for the economy and we want to - want to try to deliver that for not only the people of America, but literally around the world. Including China.

ECHEVARRIA: Mr. Heilprin.

HEILPRIN: The EPA has now lost a number of high-profile cases, the Global Warming case, the New Source Review case - regulating coal-fired power plants, the Air Toxics case. Why in your opinion, does the EPA under the Bush Administration seem so hasty to reinterpret the law in a way that fails in the courts.

JOHNSON: Well, I as a - as administrator and I think as you know, I'm a 26-year veteran of the Environmental Protection Agency and that the environmental laws is - are complicated, but certainly under the President's leadership and certainly my term as administrator, we've had great achievements. Look at the fact that we are now regulating diesel exhaust - diesel emissions. And so whether you're on-road or off-road and now we've proposed to go with locomotive and marine. Those provide - when those - when those regulations, which I signed, go into - go into full effect, we're talking about $150 billion of health benefits every single year.

Or, I mentioned earlier, the regulations put in place for dealing with SO2 and NOx and mercury. Those regulations account for about a $50 billion impact on our coal-fired power industry. That's a lot, that's unprecedented in agency history. The benefits are enormous. Or the fact that window sticker and everybody should be paying attention to that window sticker in a car for fuel economy, that was 20-something years out of date, using old methodology.

And so people were complaining, how come I'm not getting the mileage that it says on the window sticker. Well, the science was 20-something years old and of course when we updated the science and updated the methodology, it turns out that the actual fuel economy that one gets is not what it was on the window sticker and so we've updated that. And so, there's just a number of things that we have done and certainly I have done and the agency's done during my tenure, that have accomplished what the President asked me to do and that was accelerate the pace of environmental protection while maintaining our country's economic competitiveness.

FIALKA: The Europeans and the Japanese as signatories of Kyoto, are well ahead of us in developing the kind of regulations you will be looking at. Do you plan to borrow some things from them or to study what they've done, what they've accomplished up to this point?

JOHNSON: Well, one of our - one of our first steps is moving forward with the regulation for automobiles is that we are going to be reaching out to stakeholders in the - whether it be automobile or fuel or the NGO community or international partners - to understand what they are doing, how they're doing it and learn from their experiences. Again, we can't be understated or in fact, overstated the fact that this is a very important decision that the President made of not only pursuing the 20 in 10 Program legislatively, but taking these first steps in regulation, because it will - and what our intent is to help not only energy security, but address the greenhouse gas emissions from automobiles. Which we know is a major contributor across the globe.

FIALKA: Do you have any sense of what this will do to consumer prices for fuels or for automobiles?

JOHNSON: Well, at this point we don't. That's one of the important questions that we're going to be evaluating. What we do know and certainly anything we can do to get off that treadmill of dependency on foreign oil will help the United States. And of course, in promoting renewable fuels, not only are we helping energy security, not only are we helping the environment, but it's also good for agriculture. And so, we like to say - well, I like to say it's a hat-trick and that's a good thing.

HEILPRIN: You've talked a lot about being the agency's first person with a scientific background -

JOHNSON: Yes.

HEILPRIN: - to become the head of the agency and the first career employee to attain that position. The agency has, over the years, a track record of ignoring the advice of some of its most preeminent scientists on a range of complex issues ranging from national ambient air quality standards, soot, ozone, et cetera. How do you square those two concerns between your - you know, your insistence on science and the agency's track record?

JOHNSON: Well, I'd have to beg to disagree with you because my experience is that that's not true. And in fact, my experience is, is that the agency goes to great lengths and certainly I do as administrator, go to great lengths to hear opinions from all of our staff. Now ultimately somebody has to make a decision. In this case, I have to make a decision, but one of my foundational principles as administrator is making sure that we have open and transparent process inside and outside the agency and then second, that we're using the best available science to make decisions. These are complicated issues, but providing my staff an opportunity to express their opinions is very important to me so I have the full array of the scientific opinion so then I can make an informed decision.

FIALKA: As a scientist, I know you're aware that these regulations that force technology sometimes don't produce the technology that they're intended to force. This one that you're contemplating would force cellulosic ethanol, which is not available yet commercially. There's some breakthroughs that are needed there and then the plug-in hybrid car with a battery that hasn't quite worked yet. Do you - are there ways to backstop this so you don't force the industry to do something that it can't?

JOHNSON: Well, that's a - that's a balance that we are going to be evaluating as part of our developing a draft regulation of - it's clear that we need to drive and help push technology, development and to make sure that it's cost effective and delivers the fuel or the engines that we need. At the same time, we also know that there's a limit to how much you can drive technology, so those are - those are among the issues that we're going to be evaluating - of how do we achieve the President's goal of the 20 in 10 through regulation - achieving that appropriate balance. And that's why it's so important for us to be working with people not only across the agencies - Department of Transportation and Energy and Agriculture, but also outside the agency and that's why one of our first steps is getting input from people outside the agency.

HEILPRIN: Are there any scientific uncertainties left in your mind before you make a decision on regulating greenhouse gases?

JOHNSON: Well, again, for any proposed regulation, we lay out what our rationale for the basis of our regulation, of course do the cost/benefit analysis, safety is an important feature in dealing with automobiles and so we lay all of that out so that the public will have an opportunity to comment on that before we make a final decision. So, again, directionally, we believe that we can craft a final regulation that uses the President's 20 in 10 Program as a blueprint, but it would be inappropriate for me to conclude what the final regulation will or won't look like and on what basis we make that conclusion. That's what the notice and comment scientific process is all about.

FIALKA: One of your agency's big success stories has been in emissions trading and that has reduced acid rain in the United States which is caused by sulfur emissions. The difference between that and what you're doing now, this is trading done by utilities and they're good at it. What you're dealing with now is the vehicle sector, the fuel sector, you're dealing with millions of Americans. Have you thought much about whether emissions trading can apply on this problem?

JOHNSON: Well, that's another great question. It's one of the questions we're asking ourselves within the automobile sector. And we do have some experience with - because we just signed recently the renewable fuel standard, which the President worked with Congress to have passed as part of the Energy Policy Act of 2005 and we just put that regulation in place, requiring 7.5 billion gallons of renewable fuel by the year 2012. And of course, there is an accounting and accrediting system that we have set up as part of that regulation. Of course we're going to draw upon that experience as we look to expand that to the 35 billion gallon target that the President has identified. So again, very, very important question and one that we will be addressing as we move forward.

ECHEVARRIA: We're almost out of time, but quickly, why wait until the end of 2008 to come out with these regulations, just before the President leaves office?

JOHNSON: Well, it's not waiting. In fact, we - the way the rule making process works is the agency has to draft what the regulation looks like and there's a lot of complicated issues including the ones that talked about earlier today. There needs to be a public comment period and so that's important so people have an opportunity to evaluate and comment on the options and then the agency needs time to consider all those comments and then to make a final decision. Typically in the agency history, my experience with EPA, is that to move a regulation from the beginning to the end is somewhere between 18 to 24 months and that's at a very aggressive pace. And of course, meeting a 2008 deadline is a very aggressive pace and this is something that's - it's an issue, it's one that the President's very concerned about, but we're going to be moving as expeditiously, but responsibility, through the process.

ECHEVARRIA: Stephen Johnson is the Administrator of the Environmental Protection Agency. Thank you for joining us today.

JOHNSON: Thank you. Thanks.

ECHEVARRIA: We'll be right back.

(BREAK)

ECHEVARRIA: Tom Fialka, is there anything you learned new from that interview?

FIALKA: Well, not really. You can tell by the sensitivity of the issue and the sort of caution of his answers that this is the most difficult - politically difficult part of climate change regulation, because here you are dealing with the American love affair with the car. You're dealing with people who go to the gas pumps. You're dealing with ethanol which may have some advantages in the carbon emissions, but at the same time it gives you lower mileage and it may cost more and it also may drive up your food prices as people burn more corn for energy. So, it's a - he's getting into a quagmire.

ECHEVARRIA: And John Heilprin?

HEILPRIN: I'd have to agree. I didn't learn a whole lot. I was unclear about what his responses will be to the Supreme Court ruling and to the decision on the California waiver request. It seems to me that this adds a lot of pressure to the decision that he's going to make and also with the coal-fired power plants, he's got a big decision coming ahead there. And apparently he will take until June to make a decision and I'm not quite clear from his responses, what new evidence they'll be weighing in the public comment period before then.

ECHEVARRIA: Do the states hold a sway, especially California, on how this decision might be implemented?

HEILPRIN: Well, as John pointed out and the question that he asked was, have they ever turned down a California waiver request before - or any waiver request. And I don't think there is an instance of that. So, it's unclear you know, exactly what the issues are that they're weighing in this case.

ECHEVARRIA: And John Fialka, you also talked about how at the same time this is going on, there's also political effort in Congress. Could those two run into a - make it moot if both of these things play out when the Congress comes up with their plan and the EPA comes up with their plan?

FIALKA: Well, there are a bunch of ifs there. I mean, he really didn't get to the answer, you know why are they doing two things where they could just do one. Some of the benefits of having regulations in place are that you could confront China and say, look we finally did something (INAUDIBLE) become the greatest emitter of CO2 in the world, what's your response and maybe that has to be said by the State Department, but that's kind of what they're doing. So, I see at least one benefit in that. The other is that we all know Congress can get hung up on filibusters and so if it fails, this regulation's there.

ECHEVARRIA: Are guests have been John Fialka of the Wall Street Journal. He's their Energy and Environmental reporter. Has his education from Georgetown University. We've also been joined by John Heilprin of the Associated Press, their National Environmental Writer, 7th year of serving in that service and to both of you, thanks for joining us on Newsmakers.

FIALKA: Thank you.

HEILPRIN: Thank you.

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