Expected Federal Ozone Rule Threatens Economic Recovery

By October 1st, 2015, the President must decide whether or not to direct the Environmental Protection Agency to issue a new sweeping regulation to address the concentration of ground level ozone nationwide. His decision has the potential to stop America’s current economic recovery dead in its tracks and could directly affect vast swaths of the United States.

Ground level ozone is formed through a chemical reaction when nitrogen oxides and volatile organic compounds (VOCs) interact with sunlight. Emissions from utilities, automobiles, manufacturing facilities, gasoline vapors and solvents are all sources of VOCs. Natural sources, including plants and fires also contribute to ozone formation. High ozone concentrations can pose health risks, especially to vulnerable populations.

The good news is that US ozone levels have been dropping by more than one third since 1980, though many urban areas have not fully achieved the current standard set by the federal government.


ozone graph

SOURCE: http://www.epa.gov/airtrends/ozone.html

Despite this significantly positive overall progress, ozone remains present in most areas as “background” from natural sources or by migrating in from other states or, increasingly on the West Coast, from as far away as Asia.

Ozone is regulated under the federal Clean Air Act which requires the Government to review and consider revising its National Ambient Air Quality Standards (NAAQS) for ozone and other specified air pollutants every five years. The six pollutants covered by the NAAQS are carbon monoxide, lead, nitrogen dioxide, ozone, particulates, and sulfur dioxide.

The Government last revised the ozone standard in 2008 (when it lowered permissible concentrations from 84 to 75 parts per billion (ppb)). Shortly after taking office, the Obama administration signaled its desire to revisit the 2008 ozone standard in 2011. That decision set up the possibility of a new ozone standard being adopted in 2011 only to be followed with a revised one just two years later, a move that was seen by many observers – and eventually the President himself — as politically and economically unjustifiable.

Nonetheless, environmental groups sued the Government for missing the 2013 NAAQS ozone deadline and federal courts subsequently ordered that the pending rulemaking be finalized by October 2015.

When setting a revised standard for ozone pursuant to the Clean Air Act, the Government must assess scientific and technical information about exposure to this pollutant and draw conclusions about policy implications. The current standard for ozone is 75 ppb. While this standard has not yet been achieved, the Government is considering lowering that standard to the range of 60-70 ppb.

Despite the apparent direction that the federal Government is moving toward on ozone, the bureaucrats in charge of promulgating a new ozone standard have not undertaken the type of thorough analysis needed to understand the potential costs and benefits associated with the rulemaking. Alarmed by this fact, the National Association of Manufacturers commissioned a study in July which found and warned that a 65-70 ppb ozone standard would eliminate millions of US jobs and cost $1.7 trillion in new compliance costs. Interestingly, back in 2011 when the federal Government last considered a revision to the ozone standard, the proposal was estimated to cost as much as $90 billion per year by the Government itself!

Trillions and billions of dollars are big numbers. These new burdens are so big that it can be difficult to fathom just how large an undertaking they would entail. If the Government further tightens ozone standards toward the lower end of the expected range, the resulting new expenses it will force will be borne annually by all Americans from that point forward.

So, if the Government’s 2011 cost estimate were to still be correct, what is $90 billion a year comparable to?

Significantly, the examples above represent some of our Government’s public policy expenditures, which were arrived at with great deliberation, forethought, and scrutiny. The National Association of Manufacturers, organized labor, consumer and other interests are concerned that this level of study or understanding is not yet apparent in the Government’s consideration of a new, tighter, ozone standard.

Should the Government actually propose a rule along the lines of what is currently expected, the cost to American industry, governments, and families, by either the Government’s or industry’s estimates, is likely to be stunningly high. States like Utah, California, and Washington will see severe economic costs and job losses. Many other states will see similar repercussions (see http://www.api.org/policy-and-issues/policy-items/naaqs/economic-impacts-of-ozone-regulations). In fact, it will be up to the individual states to determine how they would meet a lowered standard when the technologies to do so are mostly non-existent today.

Objective and transparent cost/benefit analysis of any change to the Government’s current ozone standard is desperately needed. The current public scientific literature on ozone is dated, while more recent studies by the Government are being kept from public view. Moreover, the quality of the data being relied upon to determine whether ozone standards are in fact being met is subject to ongoing debate over air monitor placement, maintenance, and consistency of the data being obtained.

Three years ago, when the Government was pressing to tighten the ozone standard, despite receiving thousands of cautionary or negative comments from groups representing millions of Americans, the President thought the better of it.

As he prepared to stand for re-election in 2012, President Obama ordered his administration in 2011 to temporarily shelve a new ozone standard. This time, many believe that with the President no longer having to face the voters, his administration could press ahead with this rule, regardless of its eye-popping costs or questionable benefits.