OTAG Makes Recommendations to EPA

Does cleaner air mean lighter pockets?

The Ozone Transport Advisory Group has recommended that the EPA should let states adopt a range of emissions levels to help meet ozone standards, which could tap into utilities' profits. The proposal comes two years after OTAG was formed to study region-to-region airborne movements of smog, a byproduct of ozone.

Coal-fired power plants and vehicle exhaust are the biggest contributors to ozone, due to emissions of nitrogen oxides and volatile organic compounds.

Where NOx control costs shake out, however, still depends on how the Environmental Protection Agency works the OTAG recommendations into its pollution rules on ozone and particulates, or soot. The EPA had proposed revisions to ozone and particulate standards on Nov. 27. See, National Ambient Air Quality Standards for Ozone: Proposed Decision, EPA Dkt. No. A-95-58, 61 Fed.Reg. 65716 (Dec. 13, 1996); National Ambient Air Quality Standards for Particulate Matter: Prop. Decision, EPA Dkt. No. A-95-54, 61 Fed.Reg. 65638, (Dec. 13, 1996).

President Clinton came out in support of tougher regulations in late June, however, and his version varies only slightly from the set the EPA unveiled last fall. Clinton's support was expected to make it easier to adopt new rules, though Congress could try to throw up a roadblock. One leading voice against the EPA's revisions is Rep. John D. Dingell (D-Mich.), ranking minority member of the House Commerce Committee.

EPA's proposal would replace the one-hour primary ozone standard of 0.12 parts per million (ppm) with an eight-hour standard of 0.08 ppm. EPA also proposed to revise the current particulates standard by adding two new standards for "PM sub2.5" particles or those with an aerodyamic diameter less than or equal to a nominal 2.5 micrometers: 1) an annual mean of 15 mg per cubic meter (m3), and 2) a 24-hour average of 50 mg/m3.

A July 19 court deadline required that EPA tighten air-quality rules. Prior to then, some argued for a political solution, as White House environmental and economic advisors were at odds on the costs/benefits of increased regulation. Even allowing for emissions trading, the EPA has estimated the cost of NOx compliance at more than $2 billion per year in the 37-state OTAG region.

OTAG was wrapping up meetings at press time (em before its June 30 disbanding (em to discuss emissions caps and trading schemes.

After EPA issues a rulemaking on the new standards, and hears public comment, it will issue state implementation plans.

The Price Tag

According to Armond Cohen, director of the Clean Air Task Force, an environmental group, EPA's $2-billion estimate for mitigating NOx does not include the cost of controlling acid rain or sulphur dioxide emissions. If it did, the figure would climb as high as $7 billion a year. The figure also only includes fossil fuel power plants larger than 15 megawatts, he adds.

"We believe that the total package to get the U.S. fossil fuel fleet up to the standard of new plants would be in the range of $5 to $8 billion a year," he says.

Any number of experts, however, would dispute those early numbers, says David Doniger, counsel to the EPA, assistant administrator for air and radiation. Doniger cites a study published by Resources for the Future that tackles another oft-heard figure of $150 billion annually for all environmental protection measures. It finds companies overstate expenses. "They're only spending 13 cents when they say they're spending a dollar," Doniger says.

Doniger also cites the acid rain program projections back in the 1990s: $1,000 to $1,600 a ton. "You can buy tons [now] for a shade over $100," he says. "Last year, the price was $67."

Of course, others might look to developments that caused the lower costs: the improved market for low-sulphur coal, lower transportation costs because of deregulated railroads, lower scrubber technology costs and more companies banking credits to build allowances for the future.

The Recommendation

While some have questioned how much OTAG has actually achieved, Chair Mary A. Gade of the Illinois Environmental Agency insists OTAG did its job. It compiled the best scientific and technical work on ozone transport. It logged the best emissions inventory, using "state-of-the-art" modeling. And it did air-quality analysis to understand which regions affect others and how to address that.

OTAG, started by the Environmental Council of the States and EPA, went to work after Nov. 15, 1994 when all the states except Louisiana failed to meet ozone standards under the Clean Air Act. Data showed significant movement or transport of ozone around the country, making it impossible for local regulators to address the problem.

The practical way to meet EPA's proposed standards would be to increase the number of ozone "non-attainment" areas, which currently includes most major U.S. cities.

OTAG did not take a position on the EPA's proposal, but took a mid-road stance, particularly on utility NOx control limits. Some states supported it; others came out against it. OTAG recommended EPA adopt a range between current Clean Air Act controls and the less stringent of either an 85-percent reduction from 1990 emissions levels or 0.15 lb/mm/BTU.

An April letter from Mary Nichols, Doniger's boss, likely influenced OTAG. Nichols wrote to Gade and said EPA earlier had concluded that states at the far edges of the OTAG region do not make significant NOx contributions. The implications were that there was not any reason to recommend new emissions controls in the outlying areas.

OTAG's recommendation practically leaves it up to each state to adopt their own level of controls, says Dennis McMurray, a spokesperson for Gade at the Illinois EPA.

Doniger recognizes that the recommended NOx range is large. "There are states and stakeholders which by no means have signed on to even the middle, let alone the top, of the range and there are others that are by no means ready to go along with the bottom of the range. ... What they're telling us ... [is] something from that range would be 'a credible decision.'"

OTAG also came out with what have been called "generic" recommendations for autos.

Utilities make up 39 percent of NOx emissions (em 21,815 tons a day (em with cars and trucks contributing 15,626 tons, or 29.3 percent daily, according to OTAG's 1990 data. By 2007, utilities are expected to make up 32 percent and vehicles 28.9 percent.

The Fallout

While finishing its duties, OTAG seemed flummoxed on where to take new clean air standards. It is not easy finding agreement among 800 participants, Gade explains.

Danny Herrin, former chair of OTAG's Utilities Mini-Workgroup, for instance, was disappointed in how administrators handled proposals from the various work groups in OTAG, and that OTAG didn't hit the auto industry harder.

"Essentially, I think the management of OTAG browbeat

people to the point where they gave in," says Herrin, also manager of clean air compliance at Southern Company Services. "I think there was a lot of that that went on behind closed doors." He adds there was limited discussion to tougher proposals on the table.

Gade counters: "People can look at it the way they want. Many people have commended the OTAG leadership ... in terms of trying to be even-handed and in terms of trying to allow as much participation and discussion. For every person who says that, you can find somebody who says the opposite."

Herrin says on mobile controls, all OTAG did was support planned measures, such as the national low-emission vehicle program.

"The recommendations that came out are fairly generic in nature," says Marlin Gottschalk, former chair of OTAG's Mobile Options Mini-Workgroup. "They haven't really recommended a percentage reduction or targeted levels of emissions from [the auto sector]. Instead, they're kind of piggy-backing onto a lot of rulemaking that's either underway or that's being phased in."

"I don't think the mobile sources have been ignored," says Gottschalk, also a program manager at the Georgia Department of Natural Resources. "I can understand how the utilities think they're being singled out. But ... controls of mobile sources are best done at the local level because they don't contribute much on a regional basis."

Countering Herrin again, Gade says that repeating the NLEV provisions was not necessary for OTAG. The problem, she says, is there is no NLEV program. Those in the Northeast who want electric cars have held up the program. "There are states that feel very strongly about states rights and their ability to sort of push the electric car versus other states that are saying enough with that already, let's do what it takes to get it off the dime."

"We have tried to be equitable in terms of our recommendations crossing sectors," Gade says. "If [utilities] feel they're being treated disproportionately, it's also because their contribution [to NOx] is disproportionate." (Although OTAG statistics do not seem to bear this statement out.)

"I think many people believe this to be a success in terms of our mission," Gade adds.

Says Herrin: "OTAG, as bad as it was and as long as it lasted, the really contentious part is fixing to start: the finger pointing, comments on the rulemaking (em and the lawsuits." t

Joseph F. Schuler Jr. is associate editor of PUBLIC UTILITIES FORTNIGHTLY.

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