Obama Sides With Republicans, Business in Abandoning Ozone Rule

President Barack Obama, siding with Republicans and business leaders, canceled tighter rules on ozone proposed by the Environmental Protection Agency to reduce regulation in a slowing economy.

The EPA will weigh new standards on ozone, which causes smog, in two years, Obama said. The president said his drive to roll back regulations led him to drop the air proposal.

“I have continued to underscore the importance of reducing regulatory burdens and regulatory uncertainty, particularly as our economy continues to recover,” Obama said yesterday in a statement.

The EPA’s proposed regulations for ground-level ozone would have revised rules issued during President George W. Bush’s administration in 2008. EPA Administrator Lisa Jackson has said those rules wouldn’t stand up to legal scrutiny. The EPA’s proposal would have cost $19 billion to $90 billion, according to the White House.

The EPA will revisit the ozone standard in 2013 as required by law, Jackson said yesterday in a statement. Business groups, which joined Republicans to protest that environmental and other U.S. rules under consideration would further weaken the economy, applauded Obama’s decision, as health and environmental groups derided the decision.

“The Obama administration is caving to big polluters at the expense of protecting the air we breathe,” Gene Karpinski, president of the League of Conservation Voters, an environmental group, said in an e-mailedstatement. “This is a huge win for corporate polluters and a huge loss for public health.”

‘Good News’

Business group representatives had met Aug. 16 with White House Chief of Staff William Daleyto push for scrapping the ozone changes. They said the costs would be much greater than the administration estimated.

“That message is being heard” by the White House, Jack Gerard, president of the American Petroleum Institute in Washington, which represents companies such as Exxon Mobil Corp., said in an interview. “These are the kinds of signals that the economy and business needs to begin pulling money off the sidelines and start investing.”

Obama, facing re-election next year, is under political pressure on the economy, which the Labor Department said yesterday failed to add jobs last month. Unemployment remained at 9.1 percent, the department said.

The president is set to address Congress Sept. 8 to outline plans for boosting hiring and economic growth as Republicans criticize him for his policies, including rules and regulations on business.

“This action alone will prevent more job losses than any speech the president has given,” Senator Mitch McConnell of Kentucky, the top Republican in the Senate, said in a statement.

Republican Votes Planned

House Speaker John Boehner, an Ohio Republican, had asked Obama last week to detail the estimated cost of regulations proposed by the administration, and Republicans say they plan a series of votes on measures to delay or prohibit environmental or labor protections they blame for a weak economy. The EPA’s ozone proposal was the costliest of seven rules identified by the administration.

“This sudden admission by President Obama that ill- considered regulations do, in fact, have a negative impact upon our economy is a welcome breakthrough,” Representative Fred Upton, a Michigan Republican and chairman of the House Energy and Commerce Committee, said in a statement. His committee is scheduled to vote on measures to scuttle two other EPA proposals next week.

The ozone rule has triggered conflicts between the Obama administration and companies such as Chevron Corp. and Dow Chemical Co. over environmental regulation, in part because the rules affect all industries in areas that the EPA deems exceed the standards.

Ozone, Sun, Illness

Ozone is created when hydrocarbons and nitrogen oxides combine in the presence of sunlight. Fuel exhaust and vapors are major sources of the chemicals.

The resulting pollution can contribute to breathing difficulties, lung damage and reduced cardiovascular function, according to the EPA’s website.

The proposed standards would apply to states and localities, which will have to take steps to reduce pollutants if the tighter restrictions make them fall out of compliance with the federal ozone rules.

There are 242 counties now out of compliance with the ozone standard set in 1997, mostly in the Northeast from Washington to New York and in Southern California, the EPA said. The lowest standard proposed by the EPA would have more than tripled that total, according to the National Association of Manufacturers.

EPA Proposals

The EPA’s draft regulations for ground-level ozone would tighten the standard of 0.075 parts per million issued under Bush in 2008, according to an agency fact sheet. The EPA’s outside science board had recommended that the standard be lowered to 0.060 to 0.070 parts per million, and that is what the agency proposed in a preliminary proposal last year.

“No matter where they would have fallen on that scale, there’s no doubt they would have thrown large swaths of the country into non-attainment, or the penalty box,” said Ross Eisenberg, counsel for environment and energy at the U.S. Chamber of Commerce. Once that happens businesses need costly permits or technologies to comply, he said.

Environmentalists counter that there is wide leeway under the Clean Air Act to ensure that standards don’t hurt the economy. In a separate meeting with Daley last month, they handed him a study by the Center for American Progress, a Washington group that advises Democrats, showing that areas cited by the EPA in the past didn’t experience lower overall economic growth.

The EPA’s own analysis found that imposing a standard of 0.070 parts per million would have a net positive impact on the economy, as health benefits outweighed the costs to industry.

“The White House completely capitulated to an industry lobbying campaign based on lies” that it would harm the economy, said John Walke, clean-air director of the National Resources Defense Council in Washington. “They found themselves having to repeat those lies.”

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

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

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