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The Center for Regulatory Solutions will educate the American public about the burdens and consequences of over-regulation on the economy. We will also seek to improve the rulemaking process, so that small business owners and those impacted by regulations are treated fairly. Small business owners and entrepreneurs must have a voice to ensure their needs and concerns are heard, and acted upon. This will be an essential part of our mission, because all too often, rulemakings are manipulated by certain special interests, and as a result, sound science and the rule of law give way to politics and ideology. It will be the Center’s job to expose this tendency, and make the rulemaking process more open and transparent. With your help, we will ensure regulators are held accountable for their decisions.

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States and Industries Sue EPA – Urge Court to “Vacate” Agency’s “Unachievable” Ozone Standard

By Karen Kerrigan

The Center for Regulatory Solutions (CRS), a project of the Small Business and Entrepreneurship Council (SBEC), has led an effort to point out the many flaws in the Environmental Protection Agency’s (EPA) decision to lower the National Ambient Air Quality Standard (NAAQS) for Ozone rule since EPA published a final rule lowering standards in October 2015. On April 25, 2016, a coalition of states and industry groups also spoke up to challenge the wisdom of EPA’s ozone rule.

According to court documents filed by state and industry coalitions in the U.S. Court of Appeals for the District of Columbia, EPA’s NAAQS for ground level ozone are unlawful and unattainable. The groups urge the court to “vacate” the new rule, arguing that EPA left out several important considerations when drafting its 2015 ozone standard, which lowered permissible ozone concentrations in ambient air from 75 parts per billion (ppb) to 70 ppb.

In their filings, the groups highlight EPA’s failure to consider the effect of background sources of ozone and the agency’s failure to address the adverse economic, social, and energy impacts from the adoption of the stricter standards. Moreover, they point out that EPA provided no explanation for why the agency decided to further lower the standard when there was no new evidence prompting such a decision.

Background Ozone

Ten states, including Arizona, Wisconsin and Texas, filed a brief that questions EPA’s handling of background ozone charging that “EPA’s hastily-crafted ozone NAAQS imposes an unachievable standard, divorced from the scientific realities of background ozone.” They argue that, “This model of rulemaking does not accord with the Clean Air Act, which demands that NAAQS be achievable. To abandon that expectation and instead impose standards that would require cessation of human activity across large parts of the country is either an abuse of discretion or proof that EPA’s construction of the Act does not reflect an intelligible principle.”

The states also took issue with EPA’s waiver program for “exceptional events,” stating that the system has been virtually non-existent, with few exceptions given. The state of Utah, for example, spent over 4,000 hours since 2008 authoring exceptional events claims that were ultimately rejected by the agency. Utah officials vented frustration with the agency’s underhanded tactics saying: “[EPA] cannot redeem a rule that is unlawful by pointing to statutory ‘tools’ that are cumbersome, discretionary and, in any event, cannot provide adequate relief.”

A coalition, led by the U.S. Chamber of Commerce and the National Association of Manufacturers, similarly argued that EPA failed to adequately account for background levels of ozone. Background ozone, which occurs from sources beyond local control, will make it much harder, and in some cases impossible, for states in the West to meet the stringent new standard. Regions that violate the new 70 ppb ozone standard will trigger a process that could allow EPA to severely limit economic growth and job creation.

The industry brief states:

In lowering the ozone NAAQS level, EPA did not take appropriate account of evidence that naturally-occurring or internationally-transported background ozone that cannot be controlled under the Act can, in some circumstances, prevent achievement of those NAAQS, particularly given that the Act does not require man-made U.S. emissions to be totally eliminated (which is impossible in any event). Although EPA claims that it was prohibited from considering the impacts of background levels on the achievability of the revised standards here, that claim is unsupported by the Act, the case law, or common sense and is inconsistent with EPA’s prior position. To the contrary, the Act requires such consideration.

No Consideration of Economic and Social Impacts

In addition to complaints regarding background levels of ozone, the industry representatives claim that EPA failed to consider the adverse economic, social, and energy impacts from the adoption of the stricter standards:

These contextual factors can all be influenced by the overall adverse economic, social, and energy impacts that could result from a revised NAAQS. Moreover, the separate requirement of Section 109(d)(1) that EPA is to revise the NAAQS as ‘appropriate’ encompasses consideration of such impacts. Here, EPA did not consider any of these contextual factors. That was also arbitrary, capricious, and unlawful.

No Explanation for Revision

Finally, the industry brief accused EPA of not providing a reasoned explanation for the agency’s decision to change its conclusions drawn from the same basic underlying scientific evidence considered in the 2008 revision of NAAQS.

EPA is required to provide a reasoned explanation for a change in a prior conclusion or interpretation. Here, no new study since EPA last revised the ozone NAAQS in 2008 changed the fundamental scientific understanding of ozone effects or the exposure-response relationships. Yet EPA changed its conclusion to find that levels of risk that were judged acceptable in 2008 are no longer acceptable, and it did not provide a reasoned explanation for that change in judgment. As such, its decision was arbitrary and capricious.

Briefs Add to Growing List of Concerns

The issues addressed in these legal briefs echo the concerns raised by state air regulators, elected officials, and business groups. Indeed, CRS representatives attended an EPA workshop in Phoenix, Arizona to weigh in on the challenges posed by background ozone and called on EPA to delay implementation of the 2015 Ozone NAAQS until they better understood the science.

At the workshop, CRS presented the findings of its report, which offered a technical review of EPA’s Whitepaper on background ozone. CRS’ review concluded that EPA was not adequately informed about the actual role of background ozone, and that EPA was regulating ahead of the science. Moreover, CRS found that EPA used too narrow a scope to assess the impact of background ozone in Western states, and failed to take into consideration studies that concluded that background ozone can account for up to 93 percent of the 70 ppb NAAQS in certain states. As a result, the small business men and women in those areas will suffer and their ability to obtain operating permits will be unnecessarily complicated, while vital transportation and infrastructure projects could be sidelined.

Business leaders, bipartisan elected officials and editorial boards have also called on EPA to suspend implementation of the new standard. Colorado Governor John Hickenlooper (D) said that suspending the standard would be a “great idea” and numerous newspapers throughout the West have said that EPA should go “back to the drawing board.” Several groups, including the National Park Service, also submitted formal comments to EPA raising additional concerns with their handling of background ozone.

Congress to the Rescue?

Earlier this month, state air regulators from Arizona, California, Texas, and Utah appeared before the U.S. Energy and Power Subcommittee, testifying on the numerous challenges posed by EPA’s new ozone standard. They joined in calls to delay implementation, as proposed by “The Ozone Standards Implementation Act of 2016” (H.R. 4755), in order to better understand the science and allow for new technological innovations.

At the hearing, several of the witnesses and Members of Congress shared how background ozone is blocking states’ ability to comply with the new standard. Accordingly, communities will be unfairly punished for “air pollution they did not create and that the state cannot regulate,” according to Miseal Cabrera, Director of Arizona Department of Environmental Quality.

Cabrera explained that in Yuma County, a rural county in Arizona, 68 percent of ozone emissions are from international sources and another 20 percent come from California manmade sources. Even though the County is barely contributing to ozone levels, they will still be in violation of the new ozone standard. “We believe that the new standard is simply not achievable in many areas of our State. Although the Clean Air Act has five mechanisms to bring nonattainment areas in to compliance, these mechanisms are inadequate for Arizona and likely other Western states,” said Cabrera.

Seyed Sadredin, Executive Director/Air Pollution Control Officer for the San Joaquin Valley Air Pollution Control District in California offered forceful testimony, explaining that, “Today if we eliminate all businesses in San Joaquin Valley, small and large, we will not come anywhere near meeting this standard. If we eliminate all agriculture, we will not come close to meeting the standard. If we removed all passenger vehicles, we will not meet this standard.” Sandredin also noted that imposing a new standard when the 2008 standard is just now being implemented creates “chaos that leads to litigation, delay, and no clean-up of the air.” He stressed the H.R. 4755 is needed to “bring order into the implementation phase.”

Emerging Consensus: EPA Clueless on How to Deal with Background Ozone

There is emerging consensus in Washington and across the United States that EPA’s 2015 Ozone NAAQS went too far in mandating reductions beyond levels that are achievable. EPA simply does not have a handle on how to deal with the problem of background ozone and its current tools are inadequate to the challenge. Now it is up to Congress and the Courts to reign in the agency before the regulations starts to impose real hardship.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council (SBE Council). The Center for Regulatory Solutions is a project of the Council.

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