TESTIMONY OF MICHAEL J. ROGGE USEPA PM2.

5 Public Hearing Sacramento, CA July 19, 2012

Good afternoon. My name is Mike Rogge, and I am the Policy Director for Environmental Quality at the California Manufacturers & Technology Association (CMTA). CMTA is a trade association with the mission to improve and preserve a strong business climate for California's 25,000 small and large manufacturers, processors and technology-based companies. California manufacturers employ 1.5 million Californians. CMTA membership includes over 750 businesses representing chemical, aerospace, food processors, high-tech, biotech, pulp and paper, glass, oil, steel and others.

We appreciate the opportunity to provide comments at this public hearing.

CMTA strongly supports efforts to improve air quality and protect public health. However, our members are deeply concerned about the Environmental Protection Agencys recently proposed rule to make fine particulate matter air standards more stringent. This proposal will unnecessarily burden the economy at a time when the country and

California, in particular, are struggling to overcome the recession. These proposed standards will inhibit commercial and industrial activity not only vital to creating jobs, but also necessary to providing tax revenue that will support important local services like public safety and education.

In the proposed rule itself, EPA acknowledges "important uncertainties" regarding the science behind PM2.5 health effects. Such uncertainties have grown since PM2.5 standards were first established, raising questions about the impact of socio-economic factors on public health in urban areas. Indeed, stringent PM2.5 standards may have severe unintended consequences for public health. Studies show that by increasing the costs of goods and services such as energy, and decreasing disposable incomes, regulation can inadvertently harm the socio-economic status of individuals and, thereby, contribute to poor heath and premature death. CMTA believes these scientific uncertainties should be better explored in order to best allocate resources in a manner that strengthens both the economy and the environment.

The Clean Air Act imposes serious and immediate consequences for areas that do not attain PM2.5 air quality standards that are established by EPA. These non-attainment areas make it difficult to attract and develop business

in and around a non-attainment area. Furthermore, EPA is proposing to lower PM2.5 standards to near natural background levels in some counties and within many forecasting models conservative margins of error. This will make it difficult for businesses to comply with EPAs prevention of significant deterioration (PSD) permitting program even for areas in attainment. Thus, stringent PM2.5 standards can have a far reaching and severe effect on California manufacturers.

A non-attainment designation gives EPA the authority under the Clean Air Act to intervene in and revise any Clean Air Act permitting decision by the state affecting the non-attainment area. Increased costs associated with restrictive and expensive permit requirements will discourage and potentially prevent altogether companies interested in building new facilities or expanding their operations in a non-attainment area or an area at risk of being designated non-attainment.

Companies building new facilities or performing major modifications to certain existing facilities in, or near, a non-attainment area will be required to install the most effective emission reduction technology regardless of cost. Moreover, California and other states are mandated to offset PM2.5

emissions from new projects or increased PM2.5 emissions from expansions in a non-attainment area. Such new projects or expansions must find offsets by reducing PM2.5 emissions from other existing local sources. If no offsets can be found or purchased, then the project cannot go forward.

Non-attainment designation also has profound impact on infrastructure development vital to the business community. Beginning one year from the date of non-attainment designation, federally supported highway and transit projects cannot proceed in a non-attainment area unless the state can demonstrate that the project will cause no increase in PM2.5 emissions.

Non-attainment designations can have long-term negative effects on the cost of doing business in an area, even long after the area goes through the difficult and expensive process of coming into attainment with a lowered standard. If a non-attainment area does manage to eventually achieve attainment, the communities in that area still face long-term EPA regulatory oversight. Before a non-attainment area can be redesignated to attainment, the EPA must receive and approve an enforceable maintenance plan for the area that specifies measures providing continued maintenance of the PM2.5

standard and contingency measures to be implemented promptly if a PM2.5 standard is violated.

Finally, we believe EPA is improperly seeking to rush through the process of setting new standards, and is doing so in a manner that does not allow enough time for affected businesses, communities and other stakeholders to fully understand and evaluate the impact of the new proposed standards, or for EPA to fairly consider arguments and data showing that the new more stringent standard should not be adopted. EPA has entered into a consent decree with environmental groups to finalize the proposed PM2.5 standards by December 14, 2012. This is half the time officials currently in charge at EPA had previously said they needed in order to adequately consider the evidence and release a final PM2.5 standards rule.

In light of this unfairly abbreviated rulemaking timeline, and the economic hardship, reduction in funding for crucial civic services, and uncertain benefits all related to the proposed new PM2.5 standards, the CMTA calls on the EPA to retain current PM2.5 standards in the final rule.

Thank you for your attention.