EPA Overstates Need for U.S. Ozone Rule, API Study Finds

The Obama administration is overstating the need and benefit of rules to cut national smog pollution, according to a study released by the American Petroleum Institute, the largest U.S. oil and gas lobby group.

The Environmental Protection Agency’s statements about the proposal to cut ground-level ozone, a main ingredient of smog, “grossly misrepresent what EPA is actually estimating as the potential benefits of reducing public exposures to ozone,” according to the report released today by API and prepared by NERA Economic Consulting of New York.

The EPA’s ozone standards, which the agency has delayed adopting amid industry opposition, would tighten regulations issued under President George W. Bush in 2008. The EPA estimates that the rules would save as much as $100 billion a year in medical expenses and missed work days caused by the effect of smog, offsetting about $90 billion in annual costs.

“EPA says the benefits are about equal to the costs,” Howard Feldman, API director of science and regulatory affairs, said today on a conference call with reporters. “This conclusion is highly suspect because the assumptions the agency uses are suspect.”

API said its study found that the EPA’s analysis relies on cuts in soot pollution that may occur because of the rule. Such reductions have “nothing to do with ozone” and negate statements that tightening the Bush-era ozone standards will produce greater benefits than costs, according to the study.

Ozone is formed when chemicals from burning fossil fuels combine with sunlight near the ground.

White House Meeting

Representatives of API released the study before meeting today with White House budget officials to discuss the pending rules, according to the Washington-based lobbying group.

President Barack Obama is committed to setting standards that are based on science, not politics, a White House official said on July 26 when asked about suggestions of political interference. The president believes that the cost and effects on local communities and businesses must be weighed in crafting any new rule, according to the official, who spoke on the condition of anonymity because the regulation isn’t yet final.

The API has said most of the U.S. counties monitored by the EPA for ozone won’t be able to meet the new standards. As a result, it will be difficult for businesses with expansion plans to obtain needed air permits, according to the group.

“Fewer businesses would invest in new projects, all of which would mean fewer new jobs,” Khary Cauthen, API’s director of federal relations, said on the call.

The API last year released a study that showed ozone rules may cost as much as $10 trillion from 2020 through 2030.

‘Costliest Regulation’

“This could be EPA’s costliest regulation ever,” Feldman said. “No rules could be more detrimental to economic growth, and they could not come at a worse time as the nation struggles with an unsteady economic recovery.”

The API is among industry groups and companies calling on the Obama administration to put reconsideration of the 2008 Bush standards on hold until 2013, when a review is required by law. Under the Clean Air Act, the EPA must evaluate such rules every five years. The agency says it’s tightening the standards now because the Bush administration ignored recommendations from the EPA’s scientific advisory panel.

On July 26, the EPA said it wouldn’t meet tomorrow’s deadline, set with a federal court, for issuing the new ozone standards. The White House Office of Management and Budget is studying the rule.

To contact the reporter on this story: Kim Chipman in Washington at kchipman@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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