Copyright © 2015 Albuquerque Journal
New Mexico is caught front and center in a roaring national debate over new anti-smog standards that the U.S. Environmental Protection Agency is expected to finalize Thursday.
State officials and business leaders say the new regulations, which would reduce permissible ozone-producing emissions nationwide, could cost New Mexico billions of dollars in lost economic growth and compliance expenses and thousands of jobs.
Most states will face huge challenges to comply. But New Mexico will be especially affected because the majority of smog-causing ozone here comes from things beyond state control, such as pollution floating in from neighboring states and Mexico, said New Mexico Environment Secretary Ryan Flynn.
The Environment Department estimates that at least one half, and potentially up to two-thirds, of New Mexico’s 33 counties would be out of compliance with the new standards, depending on how strictly the final rule is set. In response, local officials would be forced to curtail a huge range of business and community activities, from transportation to manufacturing, making it difficult for new businesses to get permits to operate here or for existing businesses to expand.
And if New Mexico can’t comply with the federal standards on its own, it would be subject to penalties and strict compliance measures imposed by the EPA.
“Businesses already operating here would probably stay, but many may decrease their footprints because of the new standards,” Flynn said. “It would make us a very unattractive place for new businesses.”
Rather than impose a “one size fits all” standard nationwide, New Mexico is asking the EPA to consider the special circumstances it faces as a border state and high-elevation zone, and adjust the rules accordingly.
“It’s a big, big issue,” Flynn told the Journal . “As federal regulators, it’s wrong for them to subject people to standards that we can’t meet. It’s like asking someone to go out and run a two-minute mile.”
Environmental organizations dispute those claims, arguing that local industry, particularly oil and gas production in the state’s northwestern and southeastern regions, plus manufacturing and transportation issues in New Mexico’s cities are largely to blame. They also dispute the cost estimates by industry groups and say that by reducing smog, New Mexicans’ health will improve, saving lives and substantially cutting medical bills.
The issue has gained national prominence in recent months as the date for EPA to finalize new rules draws near.
Under the Clean Air Act, the EPA is required to review National Ambient Air Quality Standards every five years, setting acceptable limits on pollutants such as ozone.
Ground-level ozone and smog are caused when nitrogen oxide and volatile compounds – emitted by everything from smokestacks and electric utilities to car tailpipes and chemical solvents – combine with sunlight. It often becomes acute on hot summer days, and breathing it can cause a variety of health problems, particularly for children, the elderly and people with lung diseases such as asthma.
The EPA last set ozone limits in 2008 under former President George W. Bush, when emissions were lowered nationwide from 85 parts to 75 parts per billion.
The government was required to re-evaluate those limits in 2012, but facing re-election that year, President Barack Obama postponed the review, prompting environmental groups to sue the federal government in early 2014. As a result, under court order, the EPA proposed new standards last fall of between 65 parts and 70 parts per billion, with a final rule scheduled to take effect this October after nearly a year of public comment.
Most environmental groups are pushing for an even stricter standard of 60 parts per billion, based on the public health recommendations of the EPA’s scientific advisory board. But industry and many state governments are pushing for the EPA to leave the rule unchanged at 75 parts per billion. Setting it lower would generate immense compliance costs for industry, according to business groups such as the U.S. Chamber of Commerce and American Fuel and Petrochemical Manufacturers.
An industry-backed study by NERA Economic Consulting says EPA’s proposal would constitute the most expensive regulation ever promulgated, costing U.S. businesses and consumers nationwide about $140 billion annually and eliminating 1.4 million jobs.
New Mexico would be hit especially hard, given the state’s slow recovery from the Great Recession. The new standards could cost the state $6 billion in lost GDP by 2040, $7 billion in total compliance costs, and the equivalent loss of more than 11,000 jobs per year, according to the National Association of Manufacturers, which launched a broad ad campaign this month against the new standards in New Mexico and other states.
“It’s a critical issue,” said Carla Sonntag, president of the New Mexico Business Coalition, in a Sept. 15 conference call with reporters and businesspeople. “Our manufacturers are producing jobs and we need them, but these regulations are so onerous it will mean lost jobs and increased poverty in New Mexico.”
Apart from costs, it’s an open question whether New Mexico is even capable of complying with the new standards. That’s because most elevated ozone levels here are caused by sources outside of local control, according to the state Environment Department.
For one thing, New Mexico shares a common problem in the Mountain West, where high elevation aggravates smog levels through increased sun and heat interacting with pollutants, Secretary Flynn said.
“That’s a big issue that states throughout the Mountain West are all grappling with,” Flynn said. “The altitude has a direct impact on ozone concentrations.”
In addition, New Mexico suffers from waves of pollutants that waft in from neighboring states, Mexico and potentially other countries.
“International emissions create elevated ozone levels here,” Flynn said. “That’s particularly true in southern New Mexico, such as Doña Ana County, which is heavily influenced by pollutants generated outside our borders.”
That means many New Mexico counties will simply be unable to meet a new standard of 65 or 70 parts per billion because the polluting sources are outside their control, Flynn said.
“It puts us in a very difficult position,” he said. “It’s not an ideological fight for us, it’s a technical issue about what is achievable as a state.”
Environmental groups dispute those claims, blaming local industrial activity for much of New Mexico’s high ozone levels.
The Environmental Defense Fund – one of the groups that sued the EPA last year to update the ozone standard – says methane and other volatile compounds released through oil and gas production in the San Juan Basin in northwest New Mexico and the Permian Basin in the southeast account for much of the pollutants contributing to smog.
Oil and gas companies released nearly 219,000 metric tons of methane into the atmosphere in 2013 just from operations on the New Mexico side of the San Juan Basin, according to the industry’s own reports to the EPA that year. And a study by the business consulting firm ICF International that reviewed wasted methane from operations on federal and tribal lands nationwide found that in 2013, New Mexico ranked as the No. 1 state in terms of waste, releasing more than $100 million worth of gas into the atmosphere that year, or the equivalent in greenhouse gas emissions of 1.8 million cars.
“Methane contributes to ozone pollution, and it’s a strong marker of volatile organic compound pollution as well,” EDF Senior Energy Policy Manager Jon Goldstein told the Journal .
“Bernalillo and Doña Ana counties reflect typical urban smog problems, like in Houston or Los Angeles,” Goldstein said.
Environmentalists say cost-efficient measures to reduce methane leakage and the release of volatile organic compounds would help New Mexico achieve EPA’s proposed ozone standards, and meeting new federal standards for car emissions will help in urban areas.
In addition, the EPA can approve waivers to states that can show that much of their emissions come from background sources beyond their control.
“If the background levels in New Mexico are as large as the state is claiming, then it should have no problem in making these demonstrations to the EPA,” Goldstein said.
Others say the health benefits from reducing ozone outweigh the costs.
“The biggest sources of ozone pollution are from vehicles, diesel engines, power plants and oil and gas operations, and reducing those emissions will help a lot,” said Christian Stumpf, the American Lung Association of the Southwest vice president for policy. “There will be challenges for many states, but that doesn’t mean we should just throw our hands in the air and say we can’t meet new air quality standards. Meeting those standards is well worth it to protect public health.”
The EPA says reducing ozone levels to 65 parts per billion could help avoid 4,300 premature deaths annually by 2025 nationwide, and 960,000 asthma attacks among children.
The agency also disputes industry estimates on cost, projecting instead that at 70 parts per billion, the standard would only require about $3.9 billion annually to achieve by 2025, and $15 billion at 65 parts per billion. That would be offset by up to $13 billion in annual health benefits at 70 parts per billion, and up to $38 billion at 65 parts.
Independent analysts say the true costs may lie in between, since industry tends to overestimate the burden of new regulations, while regulatory agencies are often too conservative with projections.
In the end, however, industry would probably find ways to live with lower standards.
“There’s a long history of industry groups and other organizations making ‘the sky is falling’ pronouncements on tightening air quality standards with a consistent pattern in the end of it not being as costly as estimated,” said Joshua Linn, senior fellow with Resources for the Future, a nonpartisan environmental and economic think tank in Washington, D.C. “But businesses generally find clever new ways with technology to reduce emissions at lower cost.”