The Ozone Two-Step

Regulatory certainty is a benefit for industry, allowing orderly design, planning, and budgeting for capital expenditures. Many environmental regulations have been in place for many years and provide a certain level of continuity. However, the national ambient air quality standard for ozone has not proven itself to be a model of stability over the years.

The Clean Air Act requires that national ambient air quality standards be set at a level that protects human health and the environment with an adequate margin of safety. For years, the standard for ozone was set at 80 parts per billion (ppb). In 2008, EPA lowered the standard to 75 ppb. However, when the Obama Administration entered office in January, 2009, EPA reviewed actions taken by the previous Bush Administration. As to ozone, EPA initiated a rule-making in 2010 to reconsider the 2008 Standard, relying on, among other things, the fact that 75 ppb was above the range recommended by EPA’s scientific advisory board and so may not be protective of human health. The reconsideration rule proposed that the standard be set between 60 and 70 ppb.

In 2015, EPA decided that the correct standard was 70 ppb and finalized a rule to that effect.  Designations of areas as attainment or non-attainment were due on October 1, 2017, or two years after the rule was signed by EPA.

Complaints about the lower standards were common. Some environmentalists claimed that EPA should have gone even lower to 60 or 65 ppb. Some in industry were perplexed that a lower standard was imposed when many areas of the country were not in attainment with the 75 ppb standard. Others pointed out that overall ozone levels were declining and requiring additional controls to achieve 70 ppb would cost up to a trillion dollars over the next twenty or so years while driving down annualized GDP and achieving only minor health benefits. Indeed, many claimed this was to be the most expensive of the Obama Administration’s rules.

However, upon entering office, the Trump Administration decided to review the 2015 Standard, much the same as the Obama Administration had reviewed the 2008 Standard. Initially, EPA decided to postpone issuing the area designations, due on October 1, 2017, for one year. EPA stated that the 2015 Standard increased regulatory burdens, increased restrictions on infrastructure investment, and increased costs to businesses. EPA sought to review several issues, such as the effect of background ozone and international transport of ozone.

Many breathed a sigh of relief when EPA decided to postpone the designations. But, in an abrupt and unexpected reversal, and after being sued by sixteen states, EPA withdrew the one year extension, leaving in place the October 1 deadline for designating areas as attainment or non-attainment. It stated that the ‘information gaps’ were not as expansive as previously thought and that some areas could be designated by the initial deadline.

For those disappointed that EPA may not roll-back the 2015 Standard, there is a possibility that Congress may do it. The House passed legislation over the summer (HR 806) that would delay the compliance date and allow EPA to review ambient air standards every ten years instead of five. But, as with most legislation these days, it faces an uncertain future in the Senate.

As of now, this Obama Administration rule is set to go into effect, plunging multiple areas into non-attainment with the 2015 Standard at great cost to industry with marginal health benefits. Even as the effective date looms, there is still a great deal of uncertainty as whether the 70 ppb will remain in place, forcing companies to expend capital to comply with a rule that may or may not be in effect in the future. Overall, not a shining example of stability.

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