This alert will be relevant to any business operating sources of organic and/or nitrogen oxide emissions, particularly businesses expected to expand or construct such emissions sources.

U.S. EPA’s October 1, 2015 decision to lower air quality standards for ground-level ozone to 70 parts per billion (ppb) brings to a close a nearly five-year battle among EPA, industry and environmental groups over the appropriate National Ambient Air Quality Standards (NAAQS). Since 2010, industry has argued for the retention of the 2008 ozone standards of 75 ppb, while environmental groups have argued that a reduction in the standards is necessary to protect public health and the environment. Thus, U.S. EPA’s decision to reduce the current standard to 70 ppb is unlikely to satisfy either group and likely will be challenged.  If the new standards are implemented, they will lead to more stringent emission limits and controls on permitted ozone sources (or precursors for ozone, such as nitrogen oxides and volatile organic compounds) in the future.

Background

Under the Clean Air Act ( CAA), U.S. EPA is required to set NAAQS for criteria pollutants, including ozone. These standards include “primary” standards required to protect human health with an adequate margin of safety and “secondary” standards required to protect public welfare.  U.S. EPA is required to review these standards every five years to ensure continued protectiveness and adjust the standards as necessary based on current science. 

The ozone standards, however, have not been updated since 2008 due to various legal and administrative challenges.  Accordingly, on November 25, 2014, EPA proposed to revise the primary and secondary ozone standards to between 65 ppb and 70 ppb but sought comments on a reduction as low as 60 ppb.  Industry groups commented extensively on the proposal, citing the effectiveness of the 2008 ozone standards and the prohibitive nationwide cost of compliance for industry, estimated by EPA to be $3.9 billion to meet a 70 ppb standard and $15 billion to meet a 65 ppb standard by 2025 (California compliance cost excluded). Conversely, environmental groups argued for a 60 ppb ozone standard based on claimed additional health benefits.

U.S. EPA’s October 1 decision to reduce the primary and secondary ozone standards to 70 ppb is reportedly based on its determination that the revised primary standard is below the level shown to cause adverse health effects (72 ppb based on EPA’s determination) and will provide the requisite protection for public welfare (ecosystem).  The Agency further considered the expected health benefits from this reduction and found them to outweigh U.S. EPA’s estimated cost of compliance for industry of $1.4 billion by 2025 (reduced from prior estimates). In addition to the reduced standard, U.S. EPA plans on extending the ozone monitoring season for 32 states, which may impact their ozone attainment determinations.

Significance of Reduced Limit

U.S. EPA’s reduction of the NAAQS for ozone are significant to industry because U.S. EPA will now use these standards to determine whether areas of a state are in “attainment” or “nonattainment” for ozone under the CAA. If an area is found to be a nonattainment area, CAA major sources wishing to expand or construct new sources in such areas will be subject to nonattainment New Source Review, requiring the strictest CAA emission control requirements and emission offsets. The costs associated with these additional requirements are significant and may lead businesses to forgo facility expansions, close and/or relocate new and existing facilities to states in attainment areas or overseas. Further, designation of an area as nonattainment will require nonattainment states to submit State Implementation Plans (SIPs) to meet the ozone standards. The SIP rules will likely require stricter ozone limits and controls for all permitted sources in a state regardless of whether such sources are major or minor.

In 2014, U.S. EPA estimated that 358 counties in the United States would be in nonattainment with an ozone standard of 70 ppb based on current emissions. These counties are located throughout the United States, but a significant number are located in densely populated states in the Midwest, Northeast and Southwest. California was excluded from this estimate as U.S. EPA expects “unique air quality challenges” in many California counties, resulting in extended compliance dates. Thus, the reduced ozone standard is expected to result in reclassification of many attainment areas to nonattainment throughout the United States, subjecting emission sources within these areas to more stringent CAA requirements until attainment is achieved. 

Important Dates

Pursuant to the CAA, U.S. EPA is required to make its attainment/nonattainment designations under the new ozone standards by October 1, 2017. States with counties designated as nonattainment areas will then be required to submit SIPs to meet the ozone standards by 2020, and compliance with approved SIPS will likely be required between 2020 and 2037. 

Although compliance with the reduced standards may be several years away, we suggest careful consideration of the impact of these reduced standards on proposed major- and minor-source construction projects and for impacted businesses to stay involved in SIP revisions in nonattainment states.