INSIGHT: Ozone rule could create a ‘no’ zone for US industry

13 June 2013 15:19  [Source: ICIS news]

By Joe Kamalick

US EPAWASHINGTON (ICIS)--A new federal ozone rule could impose compliance costs and related economic damage of as much as $1,000bn (€750bn) annually, a House committee leader said this week, charging that the expected tougher standard “is divorced from reality”.

In a hearing before the Environment Subcommittee he chairs, Representative Chris Stewart (Republican-Utah) warned that a new ozone air quality standard under development at the Environmental Protection Agency (EPA) could have disastrous effects on the nation’s economy.

EPA is expected to issue late this year or early in 2014 a new National Ambient Air Quality Standard (NAAQS) for ozone that could lower the allowed level of ozone to 60 parts per billion (ppb) from the current mandate of 75 ppb.

In an earlier proposed rulemaking, the agency indicated in 2010 that it wanted to set the ozone standard at between 60-70 ppb, but there was such an uproar from a broad range of US industries, businesses and general commerce that in 2011 the White House ordered a delay in EPA’s ozone proposal.

The ozone standard is part of the Clean Air Act (CAA), and under that statute state, city and other local governments are required to take action to ensure that ozone levels in their jurisdictions do not exceed EPA’s standard. 

To ensure compliance with the ozone standard, state or local governments might order production facilities in their jurisdiction to install emissions scrubbers on furnaces or take other mandatory steps to reduce ozone levels.

But chemicals producers and other manufacturers pointed out that many areas of the US have yet to meet the 75 ppb standard that was set in 2008, and a further reduction of the NAAQS criteria for ozone would be far too costly and unattainable.

The only way that producers and other manufacturers could work toward a 60-70 ppb level, industry leaders argued, would be to cut back production drastically or even shut down domestic facilities and move them offshore.

The problem with EPA’s coming ozone policy, said Stewart, is that it would set a standard below the background level of ozone in many parts of the country.

Ozone is a naturally occurring substance that is present in the upper atmosphere and at ground level. In the upper atmosphere, it serves to shield Earth and its inhabitants from what otherwise would be lethal levels of ultraviolet rays. 

Those upper atmosphere ozone concentrations sometimes are plunged to the surface.

Background ozone refers to the level of ozone that would exist in a given region if there were no human activities at all in that area. By their nature, those ground level background ozone levels cannot be influenced or affected by regulatory action.

What exactly that background ozone level might be at any location is a matter of dispute. 

But Stewart said that “Recent studies suggest that EPA may be underestimating multiple sources of background ozone” and that “failure to acknowledge these uncontrollable concentrations could lead to EPA setting a new ozone standard that is at or near background levels, with catastrophic economic impacts for large swaths of the economy”.

Citing EPA’s own data, Stewart said that “areas in virtually every state would violate these standards if the agency went lower than the current limit of 75 ppb”.

“Let me be clear: if EPA lowers its standard to 60 ppb, there are places in this country that could not meet it even if they eliminated all human emissions,” he said.

“An air quality standard that cannot be met in Yellowstone, Canyonlands, Zion or the Grand Canyon is divorced from realty,” he added, citing remote wilderness parks and other areas that have seen little or no development.

“The lower ozone standard of 60 ppb, which is currently being discussed by EPA, would be incredibly expensive,” Stewart said. “In fact, even the EPA’s conservative cost estimate of $90bn/year would make this proposed rule the most expensive regulation ever considered.”

“And it’s potentially much worse, for outside analyses suggested the real cost of this proposed regulation is closer to one trillion dollars in annual attainment costs and reduced gross domestic product,” he said.

In other testimony before the subcommittee, Jeff Holmstead, a former top air quality official at EPA, said that in his talks with state and local officials and company executives across the country, “they say that there is little more that they can do to achieve further reductions” in ozone levels.

In earlier comments, regulatory affairs director Howard Feldman at the American Petroleum Institute (API) warned that a new EPA ozone mandate for 60 ppb would mean that “nearly the entire country could effectively be closed for business”.

“For ozone standards of 60 ppb, 97% of the US population would live in places out of compliance and subject to new emission reductions requirements,” he said.

“Needless to say, operating under such stringent requirements could stifle new investment necessary to create jobs. That could slow the economy or even nudge it into recession,” he added.

Holmstead, now an attorney with the Washington, DC, office of Bracewell & Giuliani, told the panel that Congress perhaps should consider amending the Clean Air Act.

As written and interpreted by the Supreme Court, he said, the CAA requires EPA to set the ozone standard and other NAAQS requirements “based purely on an assessment of health effects and without considering the cost of meeting any particular standard”.

He said that the 2001 US Supreme Court decision in Whitman v. American Trucking “most surprisingly also suggested that EPA must set air quality standards without even considering whether they are achievable”.

“As a result, the Clean Air Act appears to give rather remarkable authority to EPA - the authority to impose legal obligations that are impossible to meet.”

“To me,” he added, “this seems contrary to our long-standing notions about the rule of law.”

Holmstead noted that when the CAA was passed in 1990, “Congress did not appear to contemplate this issue - that background emissions would make it impossible for states to meet national ambient air quality standards”.

“Perhaps it is time for Congress to consider this problem,” Holmstead said.

($1 = €0.75)

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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