Testimony of Jason Grumet
Executive Director, Northeast States for Coordinated Air Use Management
concerning the Impact of New National Ambient Air Quality Standards
Before the Committee on Environment and Public Works
Clean Air, Wetlands, Private Property and Nuclear Safety Subcommittee
October 22, 1997

Good morning. My name is Jason Grumet. I am Executive Director of the Northeast States for Coordinated Air Use Management or NESCAUM, a regional association of state air pollution control agencies representing the six New England states, New York and New Jersey. Since 1967, NESCAUM has provided technical assistance and policy guidance to its member states on regional air pollution issues of concern in the Northeast. On behalf of my colleagues who work every day to achieve compliance with the national air quality standards, I appreciate the opportunity to present our views regarding S. 1084 and the revised National Ambient Air Quality Standards (NAAQS) for ozone and particulate matter.

As most of you are undoubtedly aware, the Northeast states support the revised ozone and PM standards. We support them because they make more sense, because they will do a better job of protecting and informing the public, and because they will drive more rational air quality management decisions. For the same reasons, we oppose S. 1084 which would effectively rescind the new standards and lead to another five years of unnecessary delay when we could be moving in the right direction.

I would like to try and provide some insight into the thinking that has led us to this position. It begins with a fundamental premise: that certainty and perfection are always goals, but never options. Over the last thirty years we have made incredible progress reducing the public health threat from polluted air while the economy has prospered and grown. Still, in the field of air pollution control I am not aware of a single instance when we were able to make a decision with the benefit of scientific consensus. Rather, our decisions have been relative choices between imperfect options. Examined in this context, sound decisions have been made which have substantially improved our quality of life. The new standards represent another such decision. When facing the question of supporting or opposing the new NAAQS, we asked ourselves two basic questions:

1) Will the new standards provide the public with better information about the risks associated with air pollution than the old standards?

2) Will the new standards result in more rational, cost-effective, and equitable pollution control strategies than the old standards?

To both these questions, the answer is yes. I submit to the Subcommittee that we do know enough right now to be certain that the new standards based on 1990's science do a better job in both these respects than the old standards that were based on 1970's science. Because the new standards better reflect the physical reality of the pollution problems they address, they will more accurately inform the public, thereby empowering people to better protect their health, and they will inspire more effective and less costly pollution control efforts.

Overview of Old & New Ozone Standards

The old standards are based on twenty year old science. Much of it conducted in the geological and meteorological oddity we refer to as the Los Angeles Air Basin. These standards, that S. 1084 would perpetuate, provide at best a partial diagnosis of our air quality problems. As such, they inspire a regulatory framework that at times drives inefficient and inequitable results. Our physical understanding of ozone in the 1970's was that it was primarily an urban problem driven by volatile organic compounds (VOCs). Believing that ozone was formed locally each day and destroyed each night, we designed a standard to protect against one hour spikes in peak ozone levels.

We now know that ozone pollution is a regional problem which adversely effects large areas for several days at a time. In the last twenty years, we also have learned that regionwide controls on nitrogen oxides (NOx) are by far the most effective approach to bringing down these chronically high ozone levels in both urban and rural areas. While VOC controls have reduced peak ozone levels in our heavily urbanized areas, a continued effort to address a regional environmental problem primarily through urban control efforts will ultimately fail. The mismatch between the old standard and the true science is demonstrated by the fact that many areas "bounce" in and out of attainment every few years. This inefficient and confusing situation results from the old standard's extreme sensitivity to a single high ozone episode and from the old standard's incorrect assumption that local air quality is determined solely by local actions.

The new eight-hour ozone standard -- because it aims at bringing down the underlying average ozone values over a several year period -- is less susceptible to meteorological variability. Removing the threat that one hot summer will bring an area into nonattainment will allow states to focus their regulatory efforts on long term strategies that will provide government and business with the certainty necessary to plan for the future.

The New Ozone Standard Provides the Public with Accurate Information

One of government's fundamental obligations is to provide the public with accurate information about the risks we face. This obligation is particularly strong in the case of ozone pollution since daily levels vary greatly and people with proper information can take steps to diminish their exposure. The present ozone standard fails to accurately inform tens of millions of people that the air in their communities presents a health risk. The old standard's focus on ozone peaks leads one to conclude that residents of the Northeast bear substantial risk from ozone pollution whereas residents throughout most of the Southeast and Midwest live in places that are ozone free.

An examination of the chronic ozone levels monitored over a five year period tells a very different story. Attachment A depicts the highest ozone level recorded each and every day during the summer months from 1991 through 1995. Under the old standard which determines an areas' status based on the fourth highest hour long ozone level in a three year period, the entire state of Massachusetts is designated as a "Serious" ozone nonattainment area. Yet when measuring the ozone levels experienced every day, Massachusetts residents experience considerably less exposure to ozone smog than residents in a host of states that are entirely or largely in attainment of the old standard. Most troubling from a public health standpoint is that millions of people are being misled by the old standards regime to believe that they are not being exposed to unhealthy levels of ozone smog. The new ozone standard will go a long way toward aligning chronic exposure levels with an area's attainment status. Vacating this new standard, as S. 1084 proposes to do, will knowingly perpetuate misinformation.

Such an action would also mean missing a critical opportunity to build, over the next several years, the public support needed to implement future pollution control measures. Unsurprisingly, many of the areas with the highest chronic ozone exposures happen to be the areas with the highest NOx emissions. See Attachment B. Under the old standard, political leaders and citizens from many of these areas had little motivation to reduce their emissions because they believed, incorrectly, that their air was clean. We have found that the altruistic desire to reduce the pollution transported into other states has failed to motivate upwind states to impose even the most cost effective pollution controls. Given accurate information, millions of midwesterners will quickly learn that there is a compelling new reason to support clean air efforts - - protection of their health and their children's health. In the Northeast, rational self-interest has motivated substantial reductions in utility NOx emissions. We anticipate similar behavior by our upwind neighbors once they are given accurate information by the EPA. The fact that controlling pollution from midwest power plants will also improve air quality and public health in the Northeast is simply an added benefit.

Overview of Old and New Particulate Standards

While the Northeast states have far less experience dealing with fine particle pollution, our support for the new fine particle standards reflects many of the same themes outlined in the previous discussion about ozone smog. We believe that the health science strongly supports a focus on small particles. The new standard recognizes the regional nature of the fine PM problem. And, the new standard appears relatively robust and not contingent upon sporadic meteorological events.

Under the old standard, which targeted larger particles of ten microns or less, control efforts focused on highly localized problems of windblown dust often associated with construction sites in the East and agricultural practices in the West. Under the new standards, our attention will turn to the small combustion related particles less than 2.5 microns in diameter. Far from a localized problem, elevated levels of PM 2.5 persist across most of the Eastern United States. These tiny particles are emitted directly from sources like heavy-duty diesel trucks and are formed from the gaseous emissions of sulfates, nitrates, and organic aerosols. Undoubtedly debate will persist for years over particle size, the stringency of the standards and the exact biological mechanisms that cause more people to die and get sick when fine particle levels are elevated. However, the existence of debate and disagreement does not justify interrupting progress toward implementation of the new PM standards.

EPA has created ample time for additional scientific review and extensive state based monitoring prior to the designation of PM 2.5 nonattainment areas and prior to the imposition of controls. The presence of the new PM 2.5 standard provides the certainty necessary for states and industry to begin to plan effectively. The Northeast States are moving quickly to design monitoring networks and to build a better understanding of the sources and science behind small particle pollution. If S. 1084 becomes law, these efforts will be slowed considerably and possibly stopped altogether. The fact that no one state can solve this problem independently creates an impediment to continued action without the knowledge that all states are working to achieve a federal health standard.

The New Standards are More Cost Effective than the Old Standards

I've indicated previously that the new standards will focus our control efforts where they will have the greatest environmental benefit. The new standards will also assist states in focusing controls where they're most cost-effective. While Congress was correct in instructing EPA to disregard economic considerations when setting health based air quality standards, cost has everything to do with how we go about implementing these standards. Compliance costs are a matter of great concern to our states, to those impacted by our regulatory decisions, and I'm sure, to the members of this Subcommittee.

We believe the new standards are more cost-effective than the standards they will replace. For ozone, the focus will shift to NOx controls on utilities. The good news is that very significant NOx reductions are available from utilities and heavy duty diesel engines (the largest sources of regional NOx emissions) for less than $1,000 per ton. By comparison, we have spent up to ten thousand dollars per ton for VOC controls in attempts to meet the old ozone standard. Since highly cost-effective emissions controls are available in these sectors, the costs that will be passed through to manufacturers in the form of electricity or transportation costs will be quite low. For example, a study we performed in 1995 and many similar studies indicate that utility NOx reductions on the order of 85% can be achieved for one to two tenths of a cent per kilowatt hour - - a small fraction of the savings that will be achieved through utility restructuring. For fine particles, the focus of our control efforts will shift to emissions from heavy duty diesel engines and to sulfur dioxide (SO2) emissions from utilities. Because we haven't done as much to regulate heavy duty engines in the past, further, cost-effective emissions reductions are still available from this sector. And SO2 is, as you know, a pollutant we already regulate very cost-effectively under the acid rain program.

Much attention has been devoted to attempts to identify the costs and benefits of complying with the new air pollution standards. Some of these studies provide useful insights and can improve the quality and thoughtfulness of regulatory proposals. However, I would caution anyone relying solely on cost-benefit analysis to reach a decision on the efficacy of the new standards. The sum of uncertainties contained in any effort to project costs and benefits over a twenty year period is often greater than the insight provided. For one thing, it is very difficult to fairly express clean air benefits in monetary terms. At the same time, the costs of complying with new environmental standards tend to be are consistently overstated, thus skewing the cost-benefit analysis.

First, industry estimates are almost always overly conservative since they are based on worst-case scenarios and contain a host of negative contingencies which are often never realized. Second, once environmental requirements are clearly set, competition among bidders and vendors invariably lower compliance costs. Third, innovation in methods, processes and technologies often substantially lowers the costs of compliance. Finally, the recent regulatory trend toward market-based control strategies has succeeded in allowing companies with higher than average marginal control costs to procure credits from companies with lower than average costs.

These factors have consistently produced actual control costs far below industry predictions. Looking across a wide range of industries, predicted costs seem to be overstated by a factor of five to ten. Attachment C provides some examples to illustrate this point. In New Jersey, when opposing regulations to control the pollution emitted when marine vessels off-load gasoline, the industry estimated an increased cost of 2 cents per gallon. Actual costs were later reported by the industry to be 1/5 of a cent per gallon. Similarly, the American Petroleum Institute argued that removing lead from gasoline would add 8-10 cents to a gallon of gasoline when the actual cost turned out to be less than 2 cents per gallon. The American Automobile Manufacturers Association and its member companies testified on numerous occasions that it would cost over $1000 per car to meet the Low Emission Vehicle Tailpipe standards if it was technologically possible at all. The actual cost has been found by California to be roughly $100 per vehicle. Moreover, the automobile manufacturers are promoting a voluntary program to sell vehicles meeting these standards nationwide. When the acid rain program was under consideration in 1990, we were told by utility representatives to expect costs up to $1,000 per ton of SO2 removed. Today you can buy a one-ton SO2 allowance for about $100 under the kind of flexible, market based emissions trading approach we're bound to see more of as we implement the new standards. It seems no one is immune from overstating predicted costs, even the EPA. In its March 1994 guidance on NOx reductions from utilities, the Agency predicted that sources should be able to achieve a 30%-50% NOx reduction for under $1,300 per ton. A mere three years later, present technology can achieve a 90% NOx reduction for under $1,000 per ton.

In short, we have every reason to expect that these new standards, like all the ones that came before, will turn out to be cheaper to implement that their critics now estimate. There is only one dynamic that can interrupt the technological innovation and competition necessary to drive down the cost of additional pollution control. That dynamic is uncertainty and delay. If the standards are repealed under S. 1084 while more studies are conducted, industry will not commit the investment necessary to innovate. The result will be higher than necessary compliance costs.

My third and final point relates to regional equity. One of the reasons we in the Northeast support the new ozone and fine particle standards is because we are deeply concerned by the inequity that exists between upwind and downwind regions under the present ozone standard and EPA's traditional implementation regime. I mentioned earlier that many of the "chronic exposure attainment areas" in the industrial Midwest also happen to be the states with the highest utility NOx emissions. A comparison of Attachments A and Bdemonstrates this fact. As you will note, each of the seven states identified in Attachment B produce more utility NOx emissions than the eight northeast states combined.

We commend EPA for recognizing that the long-range windborne transport of pollutants -- especially in the case of ozone and fine particulates -- requires regional solutions and for incorporating this understanding in its plans for the implementation of the new standards. Attachment D illustrates the importance of long-range transport with respect to ozone. Analysis of five years of ozone and wind data shows that on good air quality days in the Northeast, the wind is coming from Canada and is stagnant over the Midwest. But on the highest ozone days in the Northeast, winds are blowing strongly over the Ohio River Valley which is home to many of the largest NOx sources in the nation. The new standards should at long last require these upwind areas to join the Northeast in emissions reduction strategies. By doing so, those areas won't just be doing the Northeast a favor, they'll be creating immediate public health and environmental benefits for their own citizens. When you consider that the states with the highest chronic ozone exposure and highest utility emissions are largely in compliance with the old standard, while states with lower chronic ozone exposures and lower utility emissions are largely out of compliance with the old standard, I hope you will understand why the Northeast states are opposed to S 1084 and any other efforts to slow the transition to a new ozone standard.

In short, we believe that implementation of the revised standards can result in more rational, equitable, and cost-effective emissions reduction strategies. That doesn't mean it will be easy or that there will be no regulatory impacts. It will be a challenge. But it is one that we in the Northeast are prepared to take on because we know that regional levels of both ozone and fine particulate matter must be lowered to protect the public health. We also know that we need the new standards, now, to empower us to begin to do just that. Thank you again for this opportunity to present testimony.