House science panel hears arguments about EPA’s new NAAQS limit

The House Science, Space, and Technology Committee held an Oct. 22 hearing to examine concerns over the science that the U.S. Environmental Protection Agency used for its final and of course controversial National Ambient Air Quality Standards (NAAQS) for ozone.

EPA recently announced that it will tighten its ozone standard from the current 75 parts per billion (ppb) to 70 ppb.

Committee Chairman Lamar Smith, R-Texas, said: “The EPA’s ozone standards are impossible to meet in some places where the ozone level that occurs naturally would be above the standard set by the agency. Many communities would be responsible for ozone that they do not have the ability to control. A non-attainment designation under the Clean Air Act has serious consequences.  It could cause new employers to not move into the state. Businesses would be forced to deal with additional burdensome permitting and compliance obligations, which slow expansion and economic development. Ultimately, good jobs will be lost in these areas.’

Smith added: “I am also concerned that the EPA’s justification for this rule is not based on good science. Good science should dictate policy. However, it appears that the EPA conveniently cherry-picks the science that supports its extreme agenda. This is not sound science; it is science fiction.”

Witnesses discussed impacts of the ozone regulations on local communities and addressed concerns over the technical feasibility and costs to meet these standards. States must individually develop a plan to comply with the new standard and bring nonattainment areas into attainment.

Industry attorney says the new rule puts a lot of new areas into nonattainment

One of the witnesses was Jeff Holmstead, a partner in the law firm of Bracewell & Giuliani. He said, however, that his testimony was not on behalf of his firm or any of its clients. “Rather, I am sharing my views as a former government official and an attorney in private practice who has spent more than 25 years working on issues arising under the Clean Air Act,” he noted. “I have worked on Clean Air Act issues since 1989, when I joined the White House Staff of President George H.W. Bush. In that capacity, I worked closely with the Environmental Protection Agency (EPA) and a number of other stakeholders on the implementation of the 1990 Amendments to the Clean Air Act. I served at the White House until 1993 and then, from 1993 until 2001, I worked as attorney in private practice, where I represented companies and trade associations in a number of different industries on Clean Air Act issues. Beginning in 2001, I had the opportunity to serve for more than four years as the head of the EPA Air Office – the office in charge of implementing the Clean Air Act.”

Holmstead noted that the new ozone standard has not yet been published in the Federal Register, but this is expected fairly soon. “The new standard will not go into effect, as a legal matter, until 60 days after it is published in the Federal Register, but it is has already created a effective prohibition against building or expanding industrial facilities in many parts of the country,” he added. “Under the previous ozone standard of 75 ppb, with few exceptions not relevant here, every area of the country is designated as either ‘attainment’ (meaning that it meets the standard) or ‘nonattainment’ (meaning that it does not).

“Within the next few years, EPA and states will go through the process of re-designating every part of the country as either attainment or nonattainment with the new ozone standard of 70 ppb. The number of nonattainment areas will increase substantially, and all these new nonattainment areas will face major new regulatory burdens. But even now – before the final standard is even published in the Federal Register – the new ozone standard has effectively created a ban on industrial development in many parts of the country because of the permitting requirements of the Clean Air Act.

“Under the Act, any company that wants to build a new industrial facility or expand an existing facility must obtain a ‘new source review’ (NSR) permit before it can begin any type of construction. To obtain an NSR permit for a facility in a current ‘attainment area’ – one that meets the previous ozone standard – a company must first make a showing that the potential emissions from the new or expanded facility will not ’cause or contribute’ to a violation of any national ambient air quality standard, including the new ozone standard. But here’s the problem. Now that the standard has been lowered from 75 to 70 ppb, many areas of the country suddenly do not meet the new standard. In such areas, it will be impossible to show that a new facility will not ‘contribute to’ a violation of the new standard because the area is already in violation of the standard. And if a company cannot make this showing, it will not be able to get a permit build or expand any new industrial facility in the area, even if the facility would use state-of-the-art technology to control its emissions as much as possible, and even if the local community desperately wants it to be built.

“To be fair, EPA has said that a company may be able to get around this problem by paying the owners of another facility in the area to reduce their emissions enough to offset emissions from the new plant or plant expansion. This is called getting ‘offsets.’ But in many cases, this will simply not be possible. As EPA’s analysis has shown, many areas that exceed the new 70 ppb standard are rural areas, where there is little or no industrial activity. They exceed the standard not because of local emissions, but because of background ozone and emissions in other areas. In these cases, there are no offsets to be purchased. A company won’t have the option of paying someone else to reduce current emissions in the area because, with no existing sources of emissions in the area, there is no one to pay.

“A related problem will occur in areas that are currently designated as nonattainment areas under the previous standard of 75 ppb. Because these areas have already been designated as nonattainment, someone who wants to build or expand a facility in such an area does not need to show that the new facility will not cause or contribute to a violation of the standard. However, the new facility may only be built if the permit applicant is able to obtain offsets to cover emissions from the new facility. In other words, it must pay someone else to reduce emissions in an amount that exceeds the emissions that will come from the new facility. In fact, depending on the area, it must obtain offsets that are between 10 and 50 percent greater than the emissions from the new facility.”

Environmental group representative says the new rule is probably not that costly

Another witness at the Oct. 22 hearing was Elena Craft, a senior scientist at the Environmental Defense Fund.

“Some claim that adopting strong ozone standards will cause economic harm,” said Craft. “Unfortunately, these ‘sky is falling’ prognostications are not new. In 1997, during another debate over strengthened national public health standards, Senator Spencer Abraham (R-MI) was among those who claimed that the new standards would have serious economic impacts: ‘Dry cleaning establishments, hair salons, and other small businesses will not be able to absorb the increased costs imposed by these regulations,’ the Senator said. In fact, our nation made enormous strides in protecting public health from air pollution through commonsense cost-effective solutions. This is consistent with the time tested history of the Clean Air Act.

“Between 1990 and 2020, a recent EPA report projects that the benefits of the Clean Air Act will outweigh costs by 30 to 1. In recent years, similar ‘sky is falling’ claims have been made about clean air standards to control acid rain, cut mercury and other air toxics, reduce soot, and lower tailpipe emissions. These ‘sky is falling’ claims were recently prominent in the debate over EPA’s landmark mercury and air toxics standards for power plants. EPA Administrator Lisa Jackson signed the final Mercury and Air Toxics Standards in December 2011 at Children’s Hospital in Washington, D.C. Within months, major power companies that had been making ‘sky is falling’ claims about the compliance costs during EPA’s development of these standards were touting to investors that compliance costs were plummeting.” She cited statements from officials at American Electric Power (NYSE: AEP), Southern Co. (NYSE: SO) and FirstEnergy (NYSE: FE).

Craft said that initial projections are often higher than actual costs. EDF has evaluated industry cost projections for several past EPA rulemakings where projections were several times higher than actual costs. Moreover, since 1970, the nation has reduced the six pollutants regulated under the national ambient air quality standards program by almost 70% while GDP has grown by nearly 240%.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.