Online Exclusive: Ex-Ohio EPA Director Talks About Proposed Smog Regulation

The Environmental Protection Agency (EPA) did a little recycling of its own in January by again proposing strict standards for ground-level ozone, or smog, that it first recommended in 2007.

Drafted by the Clean Air Scientific Advisory Committee (CASAC), an independent panel that provides guidance to the EPA, the standard proposed both in 2007 and in January limits the level of smog to between 0.060 and 0.070 parts per million (ppm).

Business lobbies strongly opposed the 2007 proposal. When the EPA adopted a final rule in March 2008, it went with the more lenient standard of 0.075 ppm–still tougher than the 0.080 ppm limit (which could be rounded up to 0.084) set in 1997.

Attorneys general from 14 states, as well as Washington, D.C., and numerous health and environmental groups jointly filed suit against the EPA in May 2008, challenging the ozone standard as lax. The complaint argued that the 0.075 ppm standard wasn’t low enough to protect human health. Business groups fought back by saying science didn’t support a stricter standard, which would be nearly impossible for many states to meet.

The EPA’s latest announcement also received mixed reactions from health and environmental groups, as well as big business. While some activists assert that the restrictions don’t go far enough, business lobbies say the limits put too great a burden on industry.

The agency expects the proposed standard to save between $13 billion and $100 billion in health care costs; however, it estimates the cost of executing the regulation at anywhere from $19 billion to $90 billion.

This time around, it’s unlikely the administration will dismiss CASAC’s advice, says Charles Warren, chairman of the environmental practice at Kramer Levin Naftalis & Frankel. Come August when the EPA issues its final rule, he says, the smog standard will certainly be lower, though no one yet knows where within the 0.060 to 0.070 ppm range the final standard will fall. The EPA will progressively roll out the change between 2014 and 2031.

“The EPA is going much further than anyone has ever gone,” Warren says. “It wants to send a strong message that they’re serious about health issues associated with ozone.”

Science First

The EPA’s reasons for revisiting the standards are likely manifold. For one thing, there is Rahm Emanuel’s January 2009 memo pledging a comprehensive review of recent regulations. And in his inaugural address, President Obama declared his fundamental support for science-based policy.

Most influential, however, is the D.C. Circuit’s February 2009 decision in American Farm Bureau Federation v. EPA, says Seth Jaffe, coordinator of Foley Hoag’s Environmental Practice Group. The court blasted the EPA for failing to adequately emphasize science in its policy decisions.

American Farm Bureau required the EPA to reconsider its final 2006 fine particulate standard, which, like the smog rule, was much looser than CASAC’s recommendation. The decision reinforced the EPA’s duty to prioritize human health when setting air quality standards, Warren says, regardless of the cost.

Health problems associated with smog include aggravation of asthma and an increased risk of death for people with heart and lung disease, according to the EPA. Additionally, smog can stymie tree growth, damage leaves and weaken vegetation’s resistance to disease.

Before releasing the latest proposal, the EPA reviewed CASAC’s findings, as well as more than 1,700 studies it had considered during the 2008 rulemaking process. From a business perspective, Jaffe says the reliance on science can prove troublesome when it drives policy decisions with a disregard for other factors–sometimes to the point that elements such as cost can’t be put back into the equation.

“You end up with a scientific body making policy,” Jaffe says. “The decision is far removed from Congress and the will of the people.”

Tough to Meet

The biggest concern for business is the cost associated with bringing facilities that emit smog-causing pollutants into compliance with what would arguably be a very difficult standard to meet.

Ozone is one of six pollutants considered harmful to human and environmental health regulated under the EPA’s National Ambient Air Quality Standards (NAAQS). It’s created when volatile organic compounds (VOCs) and nitrogen oxides (NOx) react with sunlight. Common sources of VOCs and NOx are industrial emissions and car exhaust, but Jaffe says even bakeries produce the compounds that contribute to smog formation.

More than 300 of the 675 counties across the country that monitor ozone are nonattainment areas, meaning they don’t meet the NAAQS. The number of counties out of compliance would skyrocket to 515 under the proposed standard. The Clean Air Act requires states to create implementation plans to bring nonattainment areas into compliance.

Those plans will likely be extensive. “Every state everywhere is going to do almost everything it can to bring bring areas into attainment,” Jaffe says. “They are going to hit people in all sorts of places.”

Though technology exists to help companies comply with the proposed standard, installing new controls can be prohibitively expensive, says Kathy Milenkovski, of counsel at Steptoe & Johnson.

Moreover, companies looking to expand into nonattainment areas must meet a standard known as the lowest achievable emission rate. That standard requires the installation of the most aggressive emission controls, regardless of the cost, and potentially the purchase of hard-to-find VOC offsets from area facilities that have either shut down or scaled back.

“It’s going to handcuff business growth,” she says. “The standard will impose a lot of costs at a time when business is already really hurting.”

Warren advises companies to begin looking at their attainment plans now with the presumption that one way or another they will soon be dealing with a lower smog standard. That can include modifying existing facilities and closely examining plans for future construction.

Stormy Weather

Just as the 2008 regulation was pummeled with litigation, experts expect lawsuits to follow the release of the final smog rule. Already, Texas Gov. Rick Perry (R) has threatened to sue the EPA, claiming research doesn’t support the need for tighter smog regulation. He said in a January statement that in the past 10 years, Texas has already slashed its ozone levels by 22 percent. Further reductions, he said, would put an undue burden on the state’s economy.

Future legal threats are likely. “I’d be very surprised if businesses don’t challenge a new rule as being arbitrary and capricious, saying the science doesn’t justify a lower standard,” Jaffe says. “The problem for a challenge like that is it’s the EPA’s job to regulate under uncertainty.”

In the mid-’70s, for example, the EPA required the removal of lead from gasoline. At the time, opposition groups argued that the science behind the decision wasn’t firm. The EPA prevailed, however, on the grounds that the research was certain enough–an argument that proved prescient as the dangers of lead became clearer. Jaffe says the EPA will likely use the same type of defense for challenges to the smog standard.

Though the D.C. Circuit stayed the litigation over the 2008 standard when the EPA announced it was reconsidering the rule, Jaffe says the agency would likely have lost for the same reason it did in American Farm Bureau, which is a telling sign for any litigation that emerges now.

“It’s really going to come down to whether [the EPA] has scientific evidence,” Warren says.