Proposed ozone standard would devastate US economy, API warns

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Sept. 21 -- A US Environmental Protection Agency proposal to reduce the national primary ozone standard to 60 ppb from 75 ppb would devastate the US economy by forcing most of the country to meet stringent standards which now are imposed of its most heavily populated areas, the American Petroleum Institute warned.

“We all know that EPA cannot consider economics in considering standards,” Howard Feldman, API’s director of regulatory and scientific affairs, said in a Sept. 21 teleconference with reporters. “But it cannot ignore them. There’s a real cost and real significance to this.”

He cited a study released Sept. 15 by the Manufacturers Alliance predicted—if EPA adopts the proposal—that US gross domestic product would be reduced by an estimated $676.8 billion in 2020, or 3.6%, and job losses would climb to 7.3 billion, or 4.3% of the projected domestic labor force that year. API and the National Association of Manufacturers cosponsored the study.

“The marginal cost of ozone standards rises rapidly as ozone standards become more stringent,” said Donald A. Norman, an economist at the Manufacturers Alliance, which was founded in 1933 as the Machinery & Allied Products Institute and still is known as MAPI. “The United States in general, and the manufacturing sector specifically, would bear the cost of a more stringent ozone standard. Production costs would be further elevated while domestic markets would grow more slowly.”

Several impacts
Feldman said the proposed standard could affect the oil and gas industry in several ways. “One is controls on stationary sources. Already, in many areas like Houston where they’re already at 80% and beyond control of nitrogen oxide emissions, they would have to go further. Other parts of the country would be pushed into having to use reformulated gasoline,” he said.

But the president of a Washington organization that supports strong air pollution laws said API and other manufacturing groups’ concern over EPA’s proposal is overblown. “Where have we heard this before? Why, from some of these very same groups that contended in 1997, when [US President Bill] Clinton’s EPA toughened smog standards, that they would cost too much and be impossible to meet,” said Frank O’Donnell of Clean Air Watch.

Concerns at that time included requirements for forced car pooling, backyard barbecue and holiday fireworks bans, and hair spray restrictions, he continued. Instead, said O’Donnell, EPA and state agencies adopted a series of tools to clean up the air including lower-sulfur gasoline and diesel fuel, cleaner cars and trucks, and seasonal power plant emissions reductions during high smog periods. “And guess what? These strategies are working,” he maintained.

He contended that EPA should move ahead with tougher ozone standards now because “we know a lot more now about the effects of smog than we did in 1997.” He said, “We know that levels which were considered okay then can actually make people sick and even take their lives. And EPA’s science advisors have unanimously urged tougher standards.”

Far-reaching plan
The latest proposal is different, however, because it potentially could force 3,000 of the 3,100 counties in the US Lower 48 to meet tougher standards, according to Feldman. “As EPA talks about moving toward 60 ppb, we’re talking about background levels,” he explained. “We estimate that it will be moving the entire country into nonattainment, not only in areas which currently are being addressed but also in parts such as national parks which aren’t being considered.”

Adopting a lower national primary ozone standard also could have adverse impacts on US upstream oil and gas activity, he indicated. “Clearly, natural gas drilling is increasing across the country, and we expect that to continue,” said Feldman. “As more of it moves into areas such as Pennsylvania which would not meet these new standards, it would require extra costs and controls. The states also would have to offset these emissions.” Resulting higher gas costs could force more businesses to move overseas, Norman added.

Feldman said EPA’s proposal is an out-of-cycle rulemaking that it normally wouldn’t need to consider until 2013. “It doesn’t really have to go ahead with tightening the standard right now. This is the wrong solution at this time,” he said.

The agency originally was supposed to submit a final proposal to a federal court hearing a lawsuit on the matter at the end of August, but EPA now says it won’t have one ready until mid-October at the earliest, the API official added. “As an informed outsider, I’d be surprised to see it come out before November’s elections,” he said.

Contact Nick Snow at nicks@pennwell.com.

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