Obama withdraws EPA Air-Quality Ruling

President Barack Obama, citing the struggling economy, asked the Environmental Protection Agency on Friday to withdraw an air-quality rule that Republicans and business groups said would cost millions of jobs.

The surprise move—coming on the same day as a dismal unemployment report—reflected the energy industry's importance as a rare bright spot in adding U.S. jobs. The tighter standards for smog-forming ozone could have forced states and cities to limit some oil-and-gas projects.

In making the move, the White House clearly judged that it had more to lose from industry and Republican criticism than it had to gain from environmental groups who support the rule.

Mr. Obama said in a statement that he remains committed to public health and clean air, but he added, "I have continued to underscore the importance of reducing regulatory burdens and regulatory uncertainty, particularly as our economy continues to recover."

Jack Gerard, president of the American Petroleum Institute, said the move suggests the White House "is becoming more sensitive to the uncertainty created by their heavy regulatory hand.…They are beginning to understand that the regulatory burden does more to chill job creation than just about anything else out there."

Oil-and-gas extraction added 1,700 jobs in August, according to the Labor Department. Halliburton Co., which services the oil-and-gas industry, said recently it planned to add 11,000 jobs in the U.S. this year.

Manufacturing, another sector that would have been affected by the rule, lost 3,000 jobs in August but had been adding an average 14,000 jobs a month.

The White House left open the possibility that the standard could be tightened in 2013, when the rule will be reconsidered as part of a five-year review required by the Clean Air Act.

The ozone standard is one of several EPA regulations that have been criticized, prompting some to question whether the White House might delay or withdraw others. This week, House Majority Leader Eric Cantor sent a letter to GOP members listing "the 10 most harmful job-destroying regulations," which included seven EPA rules.

"We hope not but fear the worst," Bill Becker, executive director of the National Association of Clean Air Agencies, said of the potential for regulatory backtracking. The association has advocated tighter standards.

The EPA had proposed that ozone standards be tightened to a range of 60 to 70 parts per billion, down from the 75 parts per billion adopted under President George W. Bush. Ms. Jackson, in choosing to propose a tighter standard, didn't implement the Bush standard, and most states are now adhering to a level set in 1997 of 84 parts per billion.

The White House didn't say whether it would implement the 75-parts-per-billion standard, but people on both sides said it was unlikely given the 2013 review now under way.

The EPA had estimated the tighter standard would save 12,000 lives each year but could cost the economy as much as $90 billion annually. Ozone, created by emissions from cars, power plants, drilling and factories, can irritate the respiratory system and make it harder to breathe. It has been linked to respiratory problems, such as asthma and other illnesses.

Business groups have said the tighter standard would choke off economic growth by making it harder for industry to expand, because new oil-and-gas projects and manufacturing facilities would increase the emissions that cause ozone. Many states would be unable to issue permits unless they could find other ways to lower emissions.

"We support any decisions by the administration to recognize the enormous burden its regulations can place on jobs, the economy and low-cost electricity," said Vic Svec, a senior vice president at Peabody Energy Corp., the U.S.'s biggest coal producer.

Environmental groups accused the president of caving to corporate pressure.

"The White House is siding with corporate polluters over the American people," said Frances Beinecke, president of the Natural Resources Defense Council. "The Clean Air Act clearly requires the Environmental Protection Agency to set protective standards against smog—based on science and the law. The White House now has polluted that process with politics."

White House officials, who said the president made the decision Thursday, rejected that criticism. "This is not a product of industry pressure. This is a judgment on the merits," said one official.

But on a call with environmental groups and other supporters of the rule, a White House official said the EPA is "under unprecedented assault right now" and said Republicans have made the EPA "the focus of their efforts." The official also referred to Mr. Cantor's letter earlier in the week.

Jason Grumet, president of the Bipartisan Policy Center, said the decision isn't surprising because it would have put the onus on states. "It is important to distinguish between rules that require pollution reductions from specific industries and rules that obligate states to undertake planning processes with uncertain outcomes," Mr. Grumet said.