Environmental Permitting

Money Chatter: What Industry Says Are the Real Costs of EPA’s Proposed Ozone Standard

Note: The current health-based ozone standard is 75 parts per billion (ppb). The groups discussed in this article all recommend that the EPA retain the current ozone standard.

National Association of Manufacturers (NAM)

NAM commissioned a study concerning the costs of EPA’s proposed ozone standards.  The initial (July 2014) and updated (February 2015) study was conducted by National Economic Research Associates (NERA). The initial study considered an alternate 60-ppb standard, which the EPA is not seriously considering (65 ppb and 70 ppb are the targeted standard considerations).  NERA’s updated study looked at the 65-ppb proposal.

According to the study, the stricter 65 ppb ozone standard proposed by the EPA could reduce gross domestic product (GDP) by $140 billion per year with a compliance cost of $1.1 trillion. According to NAM, the proposed 65-ppb standard could be the most expensive regulation in U.S. history.

The NERA study found that revising the ozone standard from 75 ppb to 65 ppb could:

  • Reduce U.S. GDP by $140 billion per year and $1.7 trillion from 2017 to 2040;
  • Result in 1.4 million fewer job equivalents (i.e., total labor income change divided by the average annual income per job) per year on average through 2040; and
  • Cost the average U.S. household $830 per year in the form of lost consumption.

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American Farm Bureau

In comments to the EPA concerning the proposed ozone standards, the American Farm Bureau (Farm Bureau) contends that further restrictions on air quality would significantly damage agriculture and rural communities without any guaranteed benefit to the public.

According to the Farm Bureau, if the proposed standards (the Farm Bureau appears, in its comments, not to distinguish between the effects of the 65-ppb and 70-ppb alternatives) are implemented, basic farming activities such as animal feeding, pesticide application, and waste management would be further restricted even as proposed limits are at or near naturally occurring levels in some areas. Higher costs to meet special requirements for vehicles and fuel would be passed on to farmers and ranchers who depend on affordable energy to stay competitive in the global economy.

American Petroleum Institute

The American Petroleum Institute (API) cites the NERA study in many of its comments concerning the proposed ozone standards. However, in comments during public hearings, Howard Feldman, API’s senior director of Regulatory Compliance, and Ted Steichen, senior policy advisor for API, warned that the “negative economic effects of lower ozone standards could have such a catastrophic effect on businesses and families that the EPA would do more harm than good by adopting them.”

Feldman and Steichen went on to say that decreasing the ozone standard could put almost the entire country out of compliance—specifically, that a 65-ppb standard could lead to nonattainment areas in 45 of the lower 48 states. The economy would nose-dive, and people would lose their jobs. According to Feldman, the EPA and states would impose additional emissions reduction requirements that would have a trickle-down effect on small businesses.


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American Coalition for Clean Coal Electricity

The American Coalition for Clean Coal Electricity (ACCCE) also chimed in about the “catastrophic” price tag a tightened ozone standard on communities and accused the EPA of continuing to “brush off the opinions of experts…” in the “pursuit of a reckless strategy to phase out the use of coal at the risk of American jobs and economic strength.”

In its comments to the EPA, the ACCCE said, in part:

  • The ozone proposal is part of the Administration’s strategy to phase out the use of fossil fuels.
  • An additional 30,000 megawatts (MW) to 60,000 MW of coal-fired capacity are at risk of retirement if EPA tightens the ozone standard.
  • Many states might never be in compliance, no matter what they do, because background ozone levels can exceed EPA’s proposal.
  • The costs of the proposed standard outweigh its benefits.

 

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