“National Air Quality Standards for Ozone” Before the U.S. Environmental Protection Agency Thursday, January 29, 2015 Public Hearing Statement Paul N. Cicio President Industrial Energy Consumers of America My name is Paul Cicio, and I am the President of the Industrial Energy Consumers of America (IECA), a non-profit trade association whose member companies have over $1.0 trillion in annual sales and with more than 1.4 million employees. I am here today to express serious concerns about the excessive costs and limited effectiveness of the Environmental Protection Agency’s proposal to tighten the National Ambient Air Quality Standard for ozone from 75 parts per billion to between 70 and 65 parts per billion. For these companies, relatively small increases in costs can have relatively large impacts to global competitiveness and their ability to create jobs, make capital investments, and exports. These industries consume about 73 percent of the entire manufacturing sector’s use of electricity (26% of U.S.) and 75 percent of the natural gas (29% of U.S.). While in fact they do use a lot of energy, EIA data shows that they are extremely energy efficient and have a consistent track record of reducing energy and GHG intensity that surpasses any other sector of the economy. Unfortunately, the proposed ozone standards are projected to substantially increase the cost of natural gas and electricity directly impacting these companies. Examples include chemical, plastics, nitrogen fertilizer, iron and steel, aluminum, glass products, paper, food processing and cement. These products are the raw materials necessary to produce everything that U.S. consumers require in daily life. IECA companies support responsible cost-effective action to address ozone. The proposed lower ozone standards however, provide a substantial economic and technical challenge because the proposed ozone levels are so low that they may not be distinguishable from natural ground level ozone. As you know, ozone is created by a complex chemical reaction that is impacted by nature, the weather, and temperature. Due to limited cost-effective ozone reduction options, manufacturers will be unable to consistently meet these lower ozone levels. It is important to note that if the cost of operating facilities in the U.S. becomes too high, and they can no longer compete, companies will move their operations to other countries. This is called emission leakage and moves both the emissions and jobs offshore. Imports will also increase, further aggravating the trade deficit. Approximately a third of the country is in regions that do not meet the current ground-level ozone standard. We believe that EPA should focus on achieving the existing standard before it is lowered. The inability for these regions to meet the current standard speaks loudly to the challenge of meeting lower standards and should give the EPA pause. The costs would grow exponentially because each increment of reduction would be more costly than the last, with diminishing options for companies to reduce either inside their facility or to buy offsets outside-their-fence line. As a result, the new standard is likely to be the most costly environmental regulation ever proposed, slowing job growth and eroding America’s manufacturing base that is just now beginning to recovery. According to EPA data, if the current standard were tightened to 65 parts per billion, an estimated 59 percent of the U.S. population would live in regions of the country that would not be in compliance. Even a less stringent tightening to 70 parts per billion would mean that 48 percent of Americans would live in areas that do not meet the standard. IECA has consistently advocated for cost-effective environmental regulations that address societal concerns, without imposing undue costs on the economy and job creation. In this instance, leaving the current ozone standard in place and focusing on meeting that standard across the entire United States is the appropriate EPA position. According to the EPA, the annual costs of the ozone rule would be $3.9 billion for a standard of 70 parts per billion, and $15 billion for a standard of 65 parts per billion. And, a study by the National Association of Manufacturers stated that industrial natural gas costs could increase by an average of 52 percent, and industrial electricity costs by an average of 23 percent. Regardless of which study is correct, good jobs and economic growth will be impacted. Thank you for your consideration.