House Subjects EPA Ozone Rule to Twofold Probe

The Environmental Protection Agency's (EPA's) proposed ozone rule came under scrutiny in two U.S. House of Representatives hearings held during the past week.

The House Committee on Energy and Commerce's subcommittee on energy and power on June 12 heard testimony on the rule from Janet McCabe, the EPA's acting assistant administrator for the Office of Air and Radiation. On June 16, that subcommittee banded with the commerce, manufacturing, and trade subcommittee to query stakeholders from the manufacturing sector about the rule's impact.

A Costly Proposal

The EPA has proposed revising the national ambient air quality standards (NAAQS) for ground-level ozone to a range of 65 ppb to 70 ppb and sought comments on a level as strict as 60 ppb. The agency must issue a final rule by Oct. 1, 2015, under a court order.

The proposed level applies to primary (health-based) and secondary (welfare-based) ozone standards, but it is not as stringent as anticipated. Annual costs are estimated at $3.9 billion in 2025 for a standard of 70 ppb and $15 billion for a standard of 65 ppb nationwide, except for California. Estimated costs in California post-2025 are $800 million for a standard of 70 ppb and $1.6 billion for a standard of 65 ppb. The agency's Regulatory Impact Analysis for the rule meanwhile suggests that the alternative standard level could cost up to $39 billion nationwide annually.

According to the National Association of Manufacturers (NAM), however, the EPA's proposed revisions will likely be the "most expensive regulation ever," costing as much as $140 billion per year. That figure was in part due to uncertainties, noted NAM Vice President Ross Eisenberg.

"A substantial portion of the compliance with a new standard will come from controls that are unknown even to the EPA, and if these controls are not invented in time, manufacturers will be forced to consider scrapping existing plants and equipment," he testified.

Changing the Game?

As was expected, the vast majority of concerns about the rule at both hearings came from Republicans. One concern stemmed from the EPA's own projections that under the 70 ppb standard, 358 U.S. counties would not meet the standard, while 558 counties would violate the 65 ppb standard. Rep. John Shimkus (R-Ill.) pointed out that some counties were still in nonattainment of the 2008 75 ppb standard.

Shimkus also said the revision wasn't fair to manufacturers, who were already dealing with several other rules. At both hearings, he likened the rules to a softball game: "Had we started the game, and then halfway through the game, the number of strikes changed or in the second inning, the number of outs changed " that would make for a very frustrating, impossible game, don't you agree?" he asked McCabe at the first hearing.

"Ozone isn't about rules, it's about science," McCabe replied without hesitation.

"This is about utility MACT, boiler MACT, the cement rule, cross-state pollution rule, 111(d), 111(b), ozone-different standards-particulate matter, tier 3," Shimkus continued, listing rules affecting the sector. "We're changing the rules on the fly, and the people creating jobs in this country cannot manage it," he said.

Implementation Headaches

NAM's Eisenberg on June 16, meanwhile, told the Congressional panel that the nation's highest emitters of ozone-grouped into four main categories: mobile sources, industrial processes, commercial products, and the power sector-had already taken major steps to reduce nitrogen oxides and volatile organic compounds over the past few decades by complying with existing rules.

Power generation facilities must currently comply with the Clean Air Interstate Rule and its successor, the Cross-State Air Pollution Rule; new source performance standards, prevention of significant deterioration or nonattainment new source review requirements; the Mercury and Air Toxics Standards rule; and regional haze best available retrofit technology determinations.

At the June 12 hearing, Rep. Billy Long (R-Mo.) asked McCabe how the EPA would manage implementation of the new rule while the agency was coordinating with states on its Clean Power Plan. "That's going to take a lot of money and a lot of people," he remarked.

McCabe replied: "These are important programs that the Clean Air Act expects us to implement, so we're expected to use our resources to work with the states to get this work done." She later explained that some of the technical work, including air quality modeling, overlaps. That would make the process more efficient, she said.

Some lawmakers called on witnesses to comment on "background ozone levels," including from natural and international sources. In it's proposed rule, the EPA acknowledges that background ozone levels can be significant, and can, in some cases, even put some areas at or over the proposed concentration levels of 65 ppb to 70 ppb.

Rep. Morgan Griffith (R-Va.) noted at the first hearing that the Great Smoky Mountains and Blue Ridge Mountains were so named because some trees in the regions (black gum, poplar, oak, and willow, among others cited) produced haze-causing volatile organic compounds.

Asked by Griffith whether the rule requires cutting down those trees, McCabe told the panel that the Clean Air Act "does not hold states responsible for ozone they can't control."

Debating the Economics

The rule's economic impact was another much-expressed concern. "A nonattainment designation is like a self-imposed recession," said Rep. Ed Whitfield (R-Ky.). "In such counties it becomes extremely difficult to obtain a new permit, build a factory or power plant, and even permits for expansions at existing facilities are impacted. Just this week, in a survey of manufacturers, over half said they were not likely to continue with a new plant or expansion if it was located in a nonattainment area."

Robert Glicksman, a law professor at the George Washington University Law School, argued that the EPA's proposed revision to the ozone standard could actually provide economic benefits. Economic benefits of regulation are too often overlooked, he said. "First and foremost, businesses receive a significant productivity dividend when their workers and their workers' families are healthy and safe." Then, rules can help create new markets and opportunities for entrepreneurs, he added.

Glicksman, moreover, claimed that the recent much-cited study released by NAM that purports hefty compliance costs for a 65 ppb standard is flawed. "Its results are so unreliable that they detract from, rather than promote, a meaningful understanding of the proposed ozone rule's potential impacts," he said.

"The failure to provide an assessment of the benefits of a new ozone standard makes the [NAM] studies inherently incomplete and their results fundamentally misleading," he concluded.

-Sonal Patel, associate editor(@POWERmagazine, @sonalcpatel)

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