Environmental

CRS: Compliance Costs for EPA’s Revised Ozone Standard Are Unknown

Compliance cost estimates for a revised ozone national ambient air quality standard (NAAQS) soon to be proposed by the Environmental Protection Agency (EPA) “will be little better than guesses,” the Congressional Research Service (CRS) says in a recent document. 

The NAAQS does not directly impose emission controls on industry, “but it sets in motion a process under which nonattainment areas are identified and states submit implementation plans to EPA to demonstrate how they will bring the areas into compliance,” notes CRS environmental policy specialist James McCarthy in an Oct. 15 analysis.

“At the moment, no one knows what a revised NAAQS would cost, because EPA hasn’t proposed one and we don’t know what areas will be designated nonattainment. But even after a proposal is signed, cost estimates will be little better than guesses.”

McCarthy says one reason for that is the NAAQS has a longer implementation schedule than almost any other air pollution standard, taking between four and seven years for states and the EPA to identify areas to be designated as “nonattainment.” Other reasons for why compliance cost estimates cannot be pinned down is the “unpredictable pace” of technology improvements and “the decentralized nature of compliance decisions.” States, not the EPA, decide what sources will be regulated and how stringent the controls will be,” he explains.

As ordered by a California federal judge, the EPA must revise its primary and secondary NAAQS for ozone by Dec. 1, 2014, and finalize them by October 2015.

The EPA is apparently working to propose stricter primary and secondary NAAQS for ozone: An August 2014–released EPA final policy assessmentprovides “strong support” for revising the standard within the range of 60 ppb to 70 ppb.

The last revision of the NAAQS for ozone in 2008 set the health-based (primary) standard at 75 parts per billion (ppb), averaged over an eight-hour period. Before the EPA could finalize a rule proposed in 2010 to set a primary and secondary NAAQS of between 60 ppb and 70 ppb, President Obama in 2011 scuttled the rule to reduce regulatory burdens and uncertainty.

In an Oct. 3 report prepared for Congressional members and committees, McCarthy suggests that 40% of the U.S. population live in areas classified “nonattainment” for the primary ozone NAAQS. In 2011, the EPA concluded that the annual cost of emission controls necessary to attain a “more stringent” primary NAAQS of 70 ppb would be at least $11 billion in 2020.

However, estimates vary widely. According to a July 2014 study prepared for the National Association of Manufacturers, a new standard could reduce the U.S. gross domestic product by up to $270 billion per year on average over the period from 2017 through 2040. “If that turns out to be the case, the rule will be the most expensive EPA rule in history, by far,” McCarthy says.

See how industry cost estimates for various EPA air and water rules stack up against the agency’s estimates in POWER‘s January 2014 Big Picture infographic.

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)

 

 

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