Study: Proposed Ozone Rule Costliest in Nation’s History

Published April 6, 2015

The Obama administration’s Environmental Protection Agency’s (EPA) proposed ozone rule would be “the costliest regulation in U.S. history,” a study commissioned by the National Association of Manufacturers has found.

Using an updated analysis by NERA Economic Consulting, the National Association of Manufacturers study (NAM) estimates reducing the current ozone standard of 75 parts per billion to 65 ppb could carry a compliance price tag of $1.1 trillion between 2017 and 2040. The study projects the proposed rule would reduce annual U.S. gross domestic product (GDP) by $140 billion and result in a loss of the equivalent of 1.4 million jobs per year through 2040.

If the ozone standard is lowered to 60 ppb, the rules could cost $270 billion per year on average from 2017 through 2040, or $3 trillion cumulatively by 2040 in present-value terms, with an annual loss of 2.9 million job equivalents.

Zero-Sum Game

John Eick, director of the American Legislative Exchange Council’s (ALEC) Energy, Environment, and Agriculture Task Force, says NAM’s study confirms the EPA’s plan to revise the ground-level ozone standard will cause substantial economic harm for minimal demonstrated health benefits.

“Regions unable to comply with this especially onerous standard will see their industrial development jeopardized because emissions from each new stationary source would have to be ‘offset’ by emission reductions elsewhere in the nonattainment area,” Eick said.

“In practice, this means industrial development becomes a zero-sum game whereby every new business requires the closure of existing businesses. As the economy continues to recover from the Great Recession, the last thing it needs is a regulation that will do away with many of the gains made to date,” Eick said.

Going for Broke

Daniel Simmons, vice president for policy at the Institute for Energy Research, says the new ozone regulations could arrive before EPA’s last ozone regulations have even been fully implemented.

“Instead of waiting to see how the previous regulations worked, EPA is rushing to implement new and incredibly expensive regulations,” Simmons said. “If EPA goes ahead, as it looks like they will, more and more areas of the country will be in non-attainment. That means EPA will have great regulatory control over local decisions, and it means it will be harder to grow the economy in these areas.

“There are serious questions about the necessity of these regulations,” Simmons continued. “Hopefully the administration will decide, like it did before the 2012 election, that these new ozone regulations are too costly. But it appears now that President Obama cannot run for reelection again, there is nothing stopping EPA from imposing massive costs on the American people.”

Kenneth Artz ([email protected]) writes from Dallas, Texas.


NERA Economic Consulting, “Assessing Economic Impacts of a Stricter National Ambient Air Quality Standard for Ozone,” (July 31, 2014).