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Because of a “sue and settle” court order EPA is under a December 1 deadline to propose a rule based upon its review of the current 75 parts per billion (ppb) ozone standard. EPA’s science advisors and staff have recommended that the agency lower the ozone standard to as low as 60 ppb.
If EPA lowers the ozone standard to 60 ppb, it will be one of the most expensive federal regulations in American history, costing $90 billion per year according to the agency. A NERA study found that the new ozone standard will be even costlier than EPA’s estimate: $270 billion less in GDP; 2.9 million lost job-equivalents; and nearly $1,600 less for the average household annually.
Although those are big numbers, they’re also abstract. What does $270 billion really mean and how will it impact people?
The American Chemistry Council (ACC) puts ozone regulations in the context of Houston, TX, a national hub of the petrochemical industry that’s dealing with the economic restrictions of the current 75 ppb standard [emphasis mine]:
Despite billions spent on emission controls and a dramatic reduction in air pollutants, the area is in nonattainment with the current ozone standard of 75 parts per billion. As a result, there are strict regulatory permitting requirements for building or modifying factories and other facilities. Companies wanting to build or expand must pay for emission offsets before they can secure a preconstruction permit. These offsets are scarce, and expensive – over $175,000/ton of VOc/NOx.
Even facilities that are not expanding can feel the pain of operating in a nonattainment area. When a standard is lowered, states often have to implement new regulations or more stringent ones. For example, facilities in the Houston area with combustion units, such as boilers and ethylene crackers, must install burners that emit even lower NOx emissions. The simple point is that it is not only new investment that is at risk.
If EPA lowers the standard to 60 ppb many other cities and counties will be in noncompliance and put in the same bind as Houston. In a letter to EPA’s Clean Air Scientific Advisory Committee, Mary Martin, Energy, Clean Air and Natural Resources Policy counsel for the U.S. Chamber noted that this is “often viewed as a death knell for economic and business development in an area.” Ross Eisenberg at the National Association of Manufacturers wrote in July, that to meet the lower standard, “you’d have to start shutting down, scrapping or substantially modifying everything from power plants and factories to heavy-duty trucks, trains, farm equipment, off-road vehicles and even passenger cars.”
President Obama told EPA to withdraw the proposal in 2011. With its high costs, he should do again.