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., i~{._ U.S. Environmental Protection 1\gency 

Washington. D.C. 

July 24. 20 IS 

MEETING WITH BUSINESS ROUNDTABLE (BRT) CEO JOHN ENGLER & AMERICAN 

ELECTRIC POWER CEO NICK AKINS 

DATE: 

LOCATION: 

MEETING TIME: 

CONTACT: 

I. Purpose: 

July 27, 20 IS 

YOU R OH"ICE 

11 :OOAM - II :45AM 

Brian Bond (202-S64-6498) 

YOU will have a meeting with former Michigan Governor John Engler. President of the Business 

Roundtable (BRT) - a leading trade association for Fortune SOO companies- to discuss the 

pending Clean Power Plan and Ozone standard rules. Governor Engler will be accompanied by 

Nick Akins. CEO of American Electric Power (AEP) and other senior executives from AEP and 

BRT. 

This meeting. will be YOUR third engagement with BRT over the last year. In June of20 14, 

YOU had a meet and greet session with Governor Engler at EPA HQ here in Washington, D.C. 

Additionally. in June 2014. YOU met with company executives from BRT" s Energy and 

Environment Committee to discuss the then-recently released Clean Power Plan proposal. 

BRT is an association ofCEOs of leading U.S. companies with $7.4 trillion in annual revenues 

and more than 16 million employees. Although the EPA and BRT disagree on some key policy 

issues. the association tends to be more pragmatic in their advocacy and outreach efforts than the 

more contentious U.S. Chamber of Commerce and Nationa l Association of Manufacturers. 

Additionally, BRT and many of its affiliate CEOs have good working relationships with the 

White House. 

In 20 13, BRT released a sustai nability report entitled. ··Create. Grow. Susta in: How Companies 

Are Doing Well by Doing Good'" that features narratives from 147 CEOs on their companies' 

sustainability efforts. As an association, BRT's top energy and environment priorities include: 

• Enhanced production of traditional energy sources such as oiL coa l and natural gas 

• Keystone XL Pipeline Extension 

• Energy Efficiency 

• Climate Change 

• Electricity Generation 

• Renewable Energy 

• Sustainability 
MEETING PARTICIPANTS 

John Engler, President, Business Roundtable (BRT) 

Engler is a former three-term governor of Michigan and assumed leadership 

of the Business Roundtable in 20 II after six years as President and CEO of 

the Nationa l Association of Manufacturers. He had previously served for 20 

years in the Michigan Legislature and in 1970 he was the youngest person 

ever elected to the Michigan State House of Representatives. Born in Mt. 

Pleasant, Michigan in 1948, Engler graduated from Michigan State 

University with a bachelor of science degree in agricultural economics. 

Later, he earned a law degree fi·om Thomas M. Cooley Law School in 

Lansing, Michigan. He and his wife, Miche lle, are parents to triplet daughters 

who are in college. Engler and his wife reside in Virginia. 

Marian Hopkins, Senior Vice President for Policy, Business 

Roundtable 

Hopkins heads up the Business Roundtable's (BRT) public policy and 

legislative outreach initiatives. Prior to joining BRT, Hopkins worked 

as a lobbyist for the U.S. Chamber of Commerce. She also served as a 

Legislative Assistant for U.S. Senator S. I. Hayakawa (R-CA). 

Hopkins has a Bachelor's of Science in Biology from the University of 

California, Irvine. 

Nicholas "Nick" Akins, Chairman, Business Roundtable's Energy 

and Environment Committee & CEO of American Electric Power 

Akins has served as CEO of American Electri c Power (AEP) since 

2010. Prior to becoming CEO, he served as AEP's Executive Vice 

President. Previously, he was President and COO for Southwestern 

Electric Power Company. Akins is an e lectrical engineer by trade and 

earned his bachelor's and master's degree in electrical engineering 

from Louisiana Tech University. He is a native of Louisiana and he 

and his wife, Donna, live in Dublin, Ohio. 
THE 2015 OZONE NAAQS REVIEW B~ Business 

Roundtable· 

TWO PERSPECTIVES, ONE LOGICAL CONCLUSION 

AN AlTERNATIVE PERSPECTIVE: REGULATING THE INEVITABLE 

According to EPA analysis, the vast majority of monitored areas are already on a glide path to achieving the EPA's air 

quality goals by 2025. However, in the meantime, many of these areas may receive a non-attainment designation 

(and bear the economic costs associated with it). 

UNPACKING EPA'S PROJECTIONS 

The EPA projects that, due to regulations already in place, the vast majority of areas will reach 70 ppb or below by 

2025 even if the current ozone standard is maintained. 

687 Counties* 

Just over half (53%) of counties have existing ozone levels equal to or below 70 ppb. 

Nearly half (43%} of counties have existing ozone levels about 70 ppb but are projected to reach 70 ppb or 

below by 2025 due to existing regulations. 

Only 28 counties (4%} are projected to fall short of70 ppb by 2025 if the ozone standard is not lowered. 

·Counties with o valid 2013 design value. less 29 monitored counties that exceed 70 ppb but do not hove o 2025 projection. 

See the followmg link foro mop lflvscrotmg the number of counties that ore on o glide path to 70 ppb by 2025: www.epo.gov/groundlevelozone/mops.html. 

THE NON-ATIAINMENT GOTCHA GAME: AN ILLUSTRATIVE EXAMPLE 

Assuming EPA's projections are accurate, many counties could receive non-attainment designations in 2017-18 

despite being on a glide path to achieving the EPA's air quality goals in 2025. 

Washtenaw County, Michigan (Ann Arbor} 

~ .. 

Designation 

nmeframe 

- - - - ~iifl!,@i@IHQ•IJ1titW1MjfiiflfflbiiihJ4i.lt§4itd5M 

lO t EPA's 

Proposed 

Range 

----

20 ll 

------------

2025 EPA Projection -- 2021 202S 

THE ECONOMIC IMPACT OF NON-ATTAINMENT ON LOCAL COMMUNITIES 

4.8% 

9.0% 

20.0% 

PRODUCTIVITY 

PENALTY 

ECONOMIC 

LEAKAGE 

LOST WORKER 

EARNINGS 

THE BOTIOM LINE 

Plants in non-attainment areas experienced a 4.8% decline in total factor productivity, equivalent 

to approximately $21 billion per year. -Greenstone eta/. {2012) 

U.S.-based multinational firms increased foreign production by 9% and foreign assets by 5% in 

response to tougher regulation under the CAA Amendments. - Hanna (2010) 

Following a non-attainment designation, the average worker in a regulated sector experienced a 

total earnings Joss equal to 20% of their pre-regulatory earnings. - Walker (2013) 

If EPA' s projections are correct, lowering the ozone standard will inflict unnecessary economic pain on many areas 

that are expected to achieve substantial ozone reductions by 2025. Maintaining the current standard would avoid 

these unnecessary designations while still achieving the EPA's air quality goals. 
B~ Business 

Roundtable'" 

Randall Stephenson 

AT&Tinr. 

Chauman 

Urs 1ta tv' Ourns 

Xerox Corporal•on 

V1ce Chatr 

Dav•d r.1 Cote 

Honeywl'll 

V1ce Chair 

Andrew N L1vens 

The Dow ChPilliCal Company 

V1ce Cha1r 

John fnqler 

Pres1dent 

Jess c.1 Bot Ianger 

Semor Vtce Prestdent 

t,1anan Hopk1ns 

Sentor Vtce Prestdent 

Wilham C M11ler Jr 

Sen1or V1ce President 

Lef,nne RediCk WIISOI1 

Semor Vtce Pres1dent 

July 27, 2015 

300 New Jersey Avenue NW 

Su11e 800 

Wash111glon DC 20001 

The Honorable Gina McCarthy 

Administrator 

U.S. Environmental Protection Agency 

1200 Pennsylvania Avenue, NW 

Washington, DC 20460 

Dear Administrator McCarthy: 

Telephone 202.872 1260 

Facsimile 202.466 3509 

Website brt org 

Thank you for meeting with us to discuss your pending decision regarding 

whether it is appropriate to lower the existing ozone National Ambient Air 

Quality Standard (NAAQS) from its current level of 75 ppb to a level 

somewhere within the range of 65-70 ppb. We appreciate fully the statutory 

and judicial constraints placed on your decision but believe that you have the 

policy discretion to maintain the standard at the current level based on the 

facts that are in the record of this proceeding. We urge you to do so. 

One of the most important issues relating to ozone levels that has emerged 

over the past several years has been a greater appreciation for the role of 

background levels of ozone. This issue has taken on increasing significance, 

because the standards being proposed by EPA approach background levels in 

many areas of the country, especially the western United States. Studies by 

NOAA researchers, the Western States Air Resources Council, Clark County, 

Nevada, and others have shown that background levels of ozone are very high 

in the west. In a recent article in Science, scientists associated with NOAA 

pointed out that EPA' s own research showed that the magnitude of background 

ozone in Utah, Arizona, Colorado, New Mexico, Nevada and Wyoming can 

approach that of EPA's proposed range of 65-70 ppb. 1 The authors also point 

out that to ensure the standard does not create unnecessary control 

obligations, EPA and the states must be able to quantify background ozone 

accurately, which is not the case today. To do this first requires improvement in 

measurement of baseline ozone, which can then be used to improve the 

accuracy of global models, which in turn can be used to improve the regional 

models used by EPA to model attainment efforts by states. 

Many states filing comments on the proposed ozone standard echoed our 

concern about the need to recognize and account for background levels in any 

new ozone regulation. The Western States Air Resources Council (WESTAR), 

1 Cooper, O.R., et at., "Challenges of o Lowered U.S. Ozone Stondord."Science, Vol. 348 no. 6239, at p. 

1097 (June 5, 2015); DOl: 10.1126/science.aaa5748. 
July 27, 2015 

Page 2 

representing 15 western state air quality managers, argued that "EPA downplays the ongoing 

significance of background ozone in the west and overstates the capability of the tools available 

to adequately address the regulatory requirements imposed on states." 2 

WESTAR further maintained that "[m]aking the right choices about how to improve air quality 

in ozone nonattainment areas will depend on how well we understand the science, and our 

understanding of the science needs to improve. Given the absence of industrial development 

in numerous areas of the intermountain west, nonattainment area controls simply will not work 

to achieve attainment. Neither will interstate contribution reductions be sufficient in many 

areas to reduce ozone to levels below the proposed standard."3 

The Association of Air Pollution Control Agencies (AAPCA) noted in a recent survey of 

comments on the proposed ozone standards filed by state environmental agencies that "[a] 

majority of state agency comments raised concerns about the role of background ozone, 

including both naturally-occurring and internationally-transported contributions to ground-level 

ozone, as an achievability or implementation challenge (26 states)."4 

Most of the commenting states that raised concern over the role of background ozone also 

maintained that EPA's existing policies are ill-equipped to address this issue.5 The AAPCA 

survey found that "a majority of state comments identified limitations to the Clean Air Act 

tools highlighted by U.S. EPA for regulatory relief to address background ozone (24 states)."6 

EPA has acknowledged the limitation of existing policies and suggested that modifications may 

be made after the new standard is adopted. However, it is not clear if policies can or will be 

2 Western States Air Resources Council, Comments in Docket ID No. OAR-HQ·OAR-2008-0699, filed March 16, 2015, p. 2, 

available at: http://www.westar.org/Docs/03NAAQS/WESTAR 03-final-signed.pdf. 

l id. 

4 Association of Air Pollution Control Agencies, State Environmental Agency Perspectives on Background Ozone & Regulatory 

Relief: Results of o Survey by the Association of Air Pollution Control Agencies (AAPCA), June 2015, at p. 2, available at: 

http://www.csg.org/aapca site/documents/AAPCASurveyStateEnvironmenta1AgencyPerspeqivesonBackgroundOzoneandRegulatoryRelief-June201.pdf (AAPCA Survey). 

s For example, the comments filed by the Colorado Department of Public Health and Environment, dated March 17, 2015 (see 

https://www.colorado.gov/pacific/sites/default/files/AP-PO-ColoradoCommentsOzoneNAAQS.pdf ) explained at p. 5 that EPA's 

existing exceptional events rule- the primary means identified by EPA of addressing background ozone issues - imposes a 

"huge administrative burden without a corresponding public health and environmental benefit." Similarly, the Nevada Division 

of Environmental Protection (NDEP), in its comments submitted March 12, 2015 (see 

http://www.csg.org/aapca site/news/documents/NevadaDEP.pdf) told EPA that in light of the "few implementation tools 

available to states (e.g., exceptional events exclusions, rural transport areas and international transport) .... [c]ontrol of local 

sources in western states will have little effect on lowering monitored ozone concentrations .... Local contributions are so 

minor that, if areas within Nevada's jurisdiction are in nonattainment with the new proposed standard, the NDEP will be in the 

untenable position of having no meaningful control strategies to achieve attainment with the new standard." See NDEP 

Technical Comments at p. 3. The March 17, 2015 comments of the Wyoming Department of Environmental Quality, Air Quality 

Division to EPA on the proposed ozone standards (see http://www.csg.org/aapca site/news/documents/Wyoming 3-17-

15 DEQComment 20150zoneNAAQSProposedRule.pdf) questioned the usefulness of the Rural Transport Areas (RTA) 

classification as a regulatory relief method, given that the RTA classification has only been approved for two areas since the 

RTA's inception (p. 3), and expressed the view that "EPA's recognition of the influence of International Transport on ozone 

levels under Section 1798 of the Clean Air Act ... to be too limiting, with little to no effective applicability in non-border states" 

(/d.). 

6 AAPCA Survey, pp. 2, 5. 
July 27, 2015 

Page 3 

modified in time to address the background ozone issue adequately prior to the time 

nonattainment designations will be made. If fundamental changes are not made to address 

the contribution of background ozone and the ozone NAAQS is lowered, large numbers of 

areas may be cast into nonattainment status without effective tools to come into compliance 

with a lower standard. 

We also are concerned about EPA' s acknowledgment that " unknown" controls increasingly will 

be required to bring nonattainment areas into compliance. The EPA's Regulatory Impact 

Analysis (RIA) suggests that more than one-fifth of the NOx reductions needed to meet a 

70 ppb standard will need to come from unknown emissions controls.7 The share rises to more 

than one-third under a 65 ppb standard.8 

Our companies are concerned that if currently non-existent technologies fail to materialize, 

scale, and reach commercialization on the timetable that the agency has assumed, compliance 

with a lower ozone standard could be virtually impossible for many communities. 

The consequences of nonattainment designation are not to be taken lightly. Nonattainment 

brings with it retrofit requirements for existing sources, lowest achievable emissions rate 

technology (regardless of cost) for new or modified existing sources, the need to offset 

increased emissions by more than one-to-one, additional permitting burdens, and 

transportation consistency requirements. Numerous studies have catalogued the 

consequences of a nonattainment designation, including lower productivity, loss of economic 

output, and lower wages in the affected industries.9 In short, nonattainment designation acts 

as a brake on economic development. As business leaders, we are greatly concerned about 

erecting new barriers to economic growth. 

7 U.S. EPA, Regulatory Impact Analysis of the Proposed Revisions to the National Ambient Air Quality Standards for GroundLevel Ozone 2014, pp. 4-21 - 4-23. Available at: http://www.epa.gov/ttn/ecas/regdata/RIAs/20141125ria.pdf. 

8 /d. 

9 Studies have found that "more stringent environmental regulation deters new plant openings and may even cause firms to 

relocate plants to areas with more lax environmental regulations." Shadbegian, R. and Wolverton, A., "Location Decisions of 

U.S. Polluting Plants: Theory, Empirical Evidence, and Consequences," EPA National Center for Environmental Economics, 2010, 

p. 38, available at: 

http://yosemite.epa.gov/ee/epa/eed.nsf/ec2c5e0aaed27ec385256b330056025c/81d7332051b52ed88525772700744a02/SFILE 

/2010-0S.pdf. A 2012 study estimated a 4.8 percent decline in total factor productivity levels for emitting plants located in nonattainment areas, which corresponds to annual lost output in the manufacturing sector of nearly $21 billion (2010 dollars). See 

Greenstone, M., et al., "The Effects of Environmental Regulation on the Competitiveness of U.S. Manufacturing," MIT Center for 

Energy and Environmental Policy Research 2012 (Greenstone et al. 2012), pp. 2, 31-32. Available at: 

http://web.mit.edu/ceepr/www/publications/workingpapers/2012-013.pdf. US-based multinational firms are estimated to 

have increased their foreign production by 9% and their foreign assets by 5% in response to tougher regulation under the Clean 

Air Act Amendments of 1990. See Hanna, R., 2010. "US Environmental Regulation and FDI: Evidence from a Panel of US-Based 

Multinational Firms" (Hanna 2010). American Economic Journal: Applied Economics, 2(3): 158-89, p. 187. Available at: 

http://scholar.harvard.edu/files/remahanna/files/fdi ae1 JUly 2010.pdf . A 2013 analysis concluded that following a nonattainment designation, "It] he average worker in a regulated sector experienced a total earnings loss equivalent to 20% of their 

preregulatory earnings." Walker, W.R., "The Transitional Costs of Sectoral Reallocation: Evidence from the Clean Air Act and the 

Workforce," The Quarterly Journal of Economics (2013) (Walker 2013), pp. 1787-1835, at pp. 1791, 1830. Available at: 

http://faculty.haas.berkeley.edu/rwalker/research/walker transitional costs CAA.pdf. 
July 27, 2015 

Page 4 

We are aware that section 109 of the Clean Air Act requires the Administrator of EPA to 

establish the NAAQS at a level "requisite to protect" the public health with an "adequate 

margin of safety." We also appreciate that the courts have determined that cost and technical 

feasibi lity are not relevant factors in setting the NAAQS. However, EPA long has recognized the 

role of background ozone and has specifically declined to establish an ozone standard at a 

lower recommended level by citing proximity to background levels. Among the factors 

Administrator Browner cited in rejecting a 70 ppb standard in 1997 was the proximity of 

background levels to such a standard. 10 The Policy Assessment associated with this rulemaking 

acknowledges that "in identifying the range of policy options supported by the evidence and 

information, staff has not considered proximity to background 0 3 concentrations. The 

Administrator, when evaluating the range of possible standards that are supported by the 

scientific evidence, could consider proximity to background 0 3 concentrations as one factor in 

selecting the appropriate standard." 11 Indeed, in issuing the 1997 ozone standard, 

Administrator Browner did just this. 

EPA' s modeling that most areas will meet lower standard by 2025 does not adequately take 

into consideration background ozone. Even if existing policies on the books would allow these 

areas to come into attainment at some point in the future, in the meantime they become 

nonattainment. 

The states are already struggling to implement requirement s associated with the 2008 

standard. Earlier this month, EPA found that some 24 states had failed to submit infrastructure 

State Implementation Plans to meet the interstate transport provisions of the 2008 ozone 

NAAQS. Setting a standard that is so low that it brings more areas into nonattainment, 

particularly if they lack the tools that allow them to reach attainment and relies on what the 

agency concedes are " unknown controls," makes little sense. 

Setting the ozone NAAQS should not be an unrealistic administrative goal. Instead, it should be 

an achievable goal that recognizes the real world consequences for those living, working and 

investing in areas that may be designated as nonattainment. Unfortunately, the rigidity of the 

Clean Air Act eliminates much needed flexibility to reduce the compliance burden on areas 

once they fall into nonattainment status. As we have noted above, the issue of background 

pollution and "unknown" controls leads us to believe many areas designated as nonattainment 

may lack any good way of coming into compliance. Accordingly, we request that you be 

10 Environmental Protection Agency, National Ambient Air Quality Standards for Ozone, Final Rule, 62 Fed. Reg. 38856 (Jul. 18, 

1997), at p. 38868 (" ... the Administrator gives significant weight to the following considerations: * * • (3} As many 

commenters have noted, based on information in the Criteria Document with regard to ambient concentrations of 0 1 from 

background sources, an 8-hour standard set at [a 70 ppb]level would be closer to peak background levels that infrequently 

occur in some areas due to nonanthropogenic sources of 0 3 precursors, and thus more likely to be inappropriately targeted in 

some areas on such sources.") 

11 U.S. Environmental Protection Agency, Policy Assessment for the Review of the Ozone Notional Ambient Air Quality Standards 

{Policy Assessment), p. 1-42 (2014), available at: http://www.epa.gov/ttn/naags/standards/ozone/data/20140829pa.pdf 

(emphasis supplied). 
July 27, 2015 

Page 5 

mindful that while the Clean Air Act requires review of the NAAQS every 5 years, it does not 

require a change in the standard. 

For these reasons, we urge you to: 

1. maintain the current standard and undertake further research into the role of 

background ozone given new science that has emerged in the last few years and the 

need for improved measurements of baseline ozone and ozone modeling; 

2. announce revisions to the exceptional events, international transport and rural 

transport policies to streamline the process for states faced with high background levels 

of ozone; and 

3. provide further flexibility for the states in implementing the ozone standards. 

Our recommended approach would give the agency time and data necessary to address the 

background ozone issue before the next scheduled review of the ozone NAAQS. 

Sincerely, 

Nicholas K. Akins 

Chairman, President and Chief Executive Officer 

American Electric Power 

Chair, Energy and Environment Committee 

Business Roundtable 

NA/mh 

John Engler 

President 

Business Roundtable