API, other groups urge EPA to shelve ozone rule

The American Petroleum Institute and other leading industry associations urged the Obama administration to set aside new ozone standards that the US Environmental Protection Agency appears poised to issue by the end of the month.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, July 19 -- The American Petroleum Institute and other leading industry associations urged the Obama administration to set aside new ozone standards that the US Environmental Protection Agency appears poised to issue by the end of the month. They said the proposals—which are entirely discretionary—would cost businesses so much that they would deal a serious blow to the fragile US economic recovery.

Officials of the Business Roundtable (BR), US Chamber of Commerce, National Association of Manufacturers, and American Chemistry Council joined API in saying that the proposed regulations place 85% of US counties with ozone monitors under nonattainment for failing to meet ozone standards, effectively constraining industrial growth.

“In some areas, new development and new jobs simply would disappear,” API Pres. Jack N. Gerard said during a July 19 BR-organized teleconference. “Businesses wanting to expand would simply shelve those plans. In many parts of the United States, it would be impossible to expand a refinery or drill for new oil and gas supplies, forcing us to import more crude oil and petroleum products.”

ACC Pres. Cal Dooley, noted: “Every economic indicator shows that we’re struggling to get our economy back on track. We are struggling to add jobs to our economy…. It’s not mutually exclusive to have regulations and economic growth, but this initiative does not recognize this. The American chemical industry is poised to take on significant competition internationally by using more of this country’s shale gas resources.”

‘The wrong moment’
The proposal also would preempt analysis now under way by an EPA-appointed scientific panel for current federal ozone regulations’ next scheduled reconsideration in 2013 under the Clean Air Act, noted BR Pres. John Engler. “Establishing new ozone standards now would be tantamount to putting ‘not open for business’ signs in counties across the country at precisely the wrong moment—when unemployment is high and on the rise,” he said.

Bruce Josten, the US Chamber’s executive vice-president for government affairs, said, “The costs of complying with this single regulation are staggering, and that is on top of growing expenses to comply with current regulations. This rule undoubtedly will be litigated, pushing its effect beyond 2013 when the scheduled review is due.” EPA also has not investigated how much ozone that is being measured is migrating from Southeast Asia as it industrializes, he added.

Aric Newhouse, NAM’s senior vice-president for policy and government relations, noted, “Manufacturers are looking for a commonsense, balanced approach to regulation policy. Unfortunately, that’s not present in this proposed EPA regulation. All things being equal, manufacturers will succeed. But the costs of nonattainment make it difficult to grow and provide more jobs.”

Serious concerns have been raised about EPA’s scientific justifications for imposing new ozone standards now, teleconference participants said. “It’s important to remember that former members of EPA’s clean air science advisory committee had serious questions about going forward with these proposed regulations,” Josten said. “They recommended that EPA revise its risk assessment and address uncertainties that produced a $14-90 billion cost range.”

Not substantiated
Gerard said some of the analysis EPA used to justify the proposed regulations came from reexaminations of studies where other scientists reached different conclusions. The agency’s own estimate of the proposals’ potential costs make them among the most expensive in history, he indicated. “Right now, it’s not entirely substantiated and supported, and we run the risk of putting nearly the entire country into nonattainment,” API’s Gerard said.

Unlike many other federal regulations, which only affect specific industries, these proposals would have impacts on most domestic manufacturers, Gerard said, adding, “These proposals cross businesses. If API’s members aren’t able to produce gas, ACC member companies have difficulty expanding or building new plants.”

Dooley stated, “Just yesterday, I was talking to a chemical manufacturer who has significant capacity worldwide. He was very clear that in the Houston area, which is nonattainment, it is a nonstarter to make new investment there. This regulation would put most of the rest of the country off-limits for similar new investment.”

Engler delared, “This isn’t over yet. EPA has sent the proposal to OMB, and OMB could send it back saying this doesn’t fit what the president is trying to do. It could recognize that the costs are so great that EPA needs to start over and use science that is more current. With the economy as fragile as it is, I can’t imagine the White House wanting to give it this kind of body blow when it doesn’t have to.”

Contact Nick Snow at nicks@pennwell.com.

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