On July 11, the Executive Office of the President received from the Environmental Protection Agency (EPA) a final rule that promises to be the single most expensive environmental regulation ever imposed on the U.S. economy. This rule, which would tighten existing National Ambient Air Quality Standards (NAAQS) for ozone, has been estimated by EPA to cost anywhere between $20 and $90 billion annually, depending on what level of the standard EPA has selected. Importantly, EPA’s regulatory impact analysis acknowledges that this figure may understate compliance costs because it relies heavily on technology that has yet to be developed.
If finalized, EPA’s ozone rule, which is a reconsideration of a final rule adopted in 2008, threatens to seriously impede economic expansion by classifying literally hundreds of counties across the United States as non-attainment for ozone for the first time. The impact will be felt immediately. States must submit to EPA a list of potential non-attainment counties within one year. This will trigger a controversial public state-by-state debate next summer over which counties must be designated non-attainment. Once a county is designated as non-attainment, a cascade of federal and state control measures are triggered. New and expanding businesses will be required to obtain emission offsets and install controls to avoid any emission increases. According to EPA, in many counties across the country existing businesses will have to install “all known control measures,” assuming adequate capital can be secured for no/low-return investments. This uncertainty and the difficulty of obtaining emission offsets and permits will discourage capital investment and make these counties less competitive. Instead of creating jobs, these counties risk losing jobs when businesses respond to the higher costs and uncertainty by closing marginal facilities and siting new facilities elsewhere, including outside the U.S.
These adverse outcomes are not necessary to obtain cleaner air. Ozone levels in the U.S. continue to drop based on regulations adopted pursuant to the 1997 ozone standard. EPA’s air quality data for 2008 to 2010 confirms this significant progress – all accomplished without even implementing the 2008 standard that EPA is now reconsidering. Most of the hundred or more marginal areas swept into nonattainment under EPA’s reconsideration proposal would find themselves in attainment of a lower standard if EPA waits until the next scheduled ozone standard review in 2013. Furthermore, EPA is currently finalizing a number of major regulatory actions that will assure even greater progress in the years ahead. History has shown that once an area is designated non-attainment, it takes years to reclassify it to attainment status. Forcing the designation of these counties as non-attainment will result in lasting economic damage for these communities; damage that is completely unnecessary.
No one disputes the significant improvements made in air quality over the past 30 years. However, as standards continuously get more stringent and the air cleaner, it becomes more difficult and expensive to make further progress. In particular, large portions of the U.S. manufacturing base that are exposed to international competition have been negatively impacted by investments required by the Clean Air Act. It is not unreasonable to expect these negative trends will accelerate with increasingly higher marginal cost regulatory programs that are now being proposed by EPA.
It is vitally important that the science behind EPA’s decisions be as sound as possible. Unfortunately, it appears that some of EPA’s scientific processes recently criticized by the National Academy of Sciences, including issues of study selection and evaluation and how evidence is weighed to make an informed risk-based decision, are also at issue in the scientific assessments for ozone. The ozone rule should therefore not be finalized until issues raised regarding EPA’s scientific processes are resolved and incorporated into the 2013 ozone review efforts.
Finally, EPA has acknowledged that the ozone reconsideration “is discretionary” and is not required by statute or court order. Although certain stakeholders have suggested the reconsideration is mandated by law, in fact nothing compels EPA to revise the standard outside the regular five year review. EPA sought reconsideration on its own initiative, not under court order or even in response to any formal request. Further, EPA is not bound by the recommendations of the Clean Air Scientific Advisory Committee (CASAC), as some have argued. Instead, the Clean Air Act clearly entrusts the EPA Administrator ultimately with the authority - not an advisory panel - to set the standard at a level she determines is requisite to protect the public health with an adequate margin of safety, based on a wide range of considerations.
The next scheduled statutory review of the ozone standard is in 2013, and the scientific panel convened by EPA to review the latest scientific evidence is already half way through its work. The government’s limited resources are better spent toward finalizing a strong record for the upcoming 2013 standard review rather than litigating an interim standard in the meantime. We respectfully urge the Administration to let this panel complete its work and recommend in 2013 whether the ozone standard should be changed.
Sincerely,
Andrew N. Liveris
Chairman & CEO, The Dow Chemical Company
Chair, Business Roundtable, Regulatory Reform Working Group
AL/rr C:
The Honorable Timothy Geithner, Secretary of the Treasury
The Honorable Lisa Jackson, Administrator, U.S. Environmental Protection Agency
The Honorable Gary Locke, Secretary of Commerce United States Senate United States House of Representatives