INSIGHT: Business, industry raise renewed alarm on ozone rule

14 August 2014 16:00 Source:ICIS News

New ozone rule from EPA looms over US industryBy Joe Kamalick

WASHINGTON (ICIS)--A growing, multi-industry coalition is raising an ever more strident alarm over seemingly unstoppable plans by the Environmental Protection Agency (EPA) to cut the ozone standard to unattainable levels, and it appears that only an act of Congress can stop it.

Before the end of this year, EPA is expected to issue a new National Ambient Air Quality Standard (NAAQS) that could lower the allowed level of ozone to 60 parts per billion (ppb) from the current mandate of 75 ppb.

In 2010 the agency floated a proposed rule saying that it would seek an NAAQS ozone standard in the range of 60-70 ppb. But there was such an outcry from across the US industrial and commercial communities that the White House ordered EPA to back off.

However, the new ozone standard is looming once again, and business and industry are very worried.

National Association of Manufacturers (NAM) president Jay Timmons has warned that if EPA presses ahead with an ozone level at or near 60 ppb, “the Obama administration will unleash the most expensive regulation in history”.

Timmons said a study commissioned by NAM indicates that an ozone mandate as low as 60 ppb “would reduce US GDP by $270bn per year on average over the period from 2017 through 2040 and by more than $3,000bn over that period in present value terms”.

In addition, said Timmons, a low ozone requirement of that level would have a knock-on effect of barring new energy development in many areas of the country.

In that case, constraints on new natural gas production in the US would considerably raise the mandate’s cost, cutting as much as $350bn annually from the nation’s GDP and more than $4,000bn over the same 25-year period, with job losses estimated at around 4.3m annually, according to NAM.

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 the 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.

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. At ground level, ozone contributes to smog, and concentrations above 110 ppb are associated with eye irritation and respiratory illnesses.

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 background ozone levels cannot be influenced or affected by regulatory action.

Energy and chemicals producers and other manufacturers have argued that many areas of the US have yet to meet the current 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.

Timmons said that a new, lower ozone mandate “couldn’t come at a worse time, just as US manufacturing is making a comeback with our new energy resources”.

He charged that many manufacturing facilities would have to shut down, a third of coal-fired power stations would have to close, a lot of farm equipment would have to be idled and many cars and trucks now on the road would have to be junked.

“This would be a self-inflicted wound that could halt the manufacturing comeback,” Timmons said.  He said the NAM study, done by NERA Economic Consulting, indicates that US households would be burdened with an average of $1,600 annually under the lower ozone standard and consumers would face higher prices for virtually every manufactured item.

Timmons also noted that the EPA itself has been able to identify only one-third of the sort of production and emissions controls that would be needed to meet a 60 ppb ozone mandate, with the remaining two-thirds of reduction systems or equipment simply identified by the EPA as “unknown controls”.

The American Petroleum Institute (API) has joined the chorus, with API director of regulatory and scientific policy Howard Feldman saying that if the agency moves forward with a drastically lower ozone standard, “nearly the entire country would be out of compliance… and this could have a chilling effect on jobs and the economy”.

“Tightened standards could impose unachievable emission reduction requirements on virtually every part of the nation, including rural and undeveloped areas,” Feldman said.

“Needless to say, operating under such stringent requirements could stifle new investment necessary to create jobs and grow our economy,” he said.

Feldman cautioned that if the EPA’s new ozone standards “approach or are even lower than peak naturally occurring levels, virtually any human activity that produces emissions could ultimately be restricted or affected.”

“In some cases," he said, “new development simply would not be feasible or permitted.”

A new EPA ozone mandate for 60 ppb, said Feldman, 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.

The American Fuel & Petrochemical Manufacturers (AFPM) echoed NAM’s views, warning that the expected EPA ozone mandate would be “a potential death blow to the American economy”.

“This is just another example of an all-cost, little-to-no benefit regulation that will have a disproportionately adverse impact on the poor and middle class,” said AFPM president Charles Drevna.

Jeff Holmstead, a former top air quality official at EPA, argues that US industry has brought ozone levels to pretty much as low as they can go. 

He 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.

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

As written and interpreted by the Supreme Court, he says, 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.

There may be sentiment in Congress to do just that.

Congressman Chris Stewart (Republican-Utah), chairman of the House Environment Subcommittee, holds that EPA is simply asking the impossible.

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,” he said, “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.”

“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… 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 suggest the real cost of this proposed regulation is closer to one trillion dollars in annual attainment costs and reduced gross domestic product,” he said.

One reason EPA is believed to be rushing its new ozone standards into rulemaking is the impending November national elections, in which Republicans are widely expected to regain control of the US Senate and retain or even expand their existing majority in the House.

That would position the 114th Congress - which will convene in January next year - to tweak the CAA in a manner that would roll back the EPA ozone rule.

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

By Joe Kamalick