On November 25, 2014, U.S. EPA released its long-awaited proposal to tighten the 8-hr ground-level ozone standard. The impacts of this rule are difficult to overstate. Unless changed, it will push much of the country into non-attainment, forcing state regulators to pursue emissions reductions while making permitting more difficult and restricting growth.

A Smoggy Past: Background on the Ozone Standard

Ground-level ozone, commonly called “smog,” is formed by a chemical reaction between NOx and VOC in the presence of sunlight. The ozone precursors (NOx and VOC) are generated by a wide variety of sources, including industrial facilities, electric utilities, motor vehicles, construction and agricultural equipment, gasoline vapors, and chemical solvents, and many others.

The Clean Air Act requires EPA to periodically review and set primary national ambient air quality standards, or NAAQS, at a level that is protective of public health within an “adequate margin of safety.” In March 2008, EPA lowered the primary 8-hour ozone NAAQS from 80 ppb to 75 ppb. Following an immediate court challenge, EPA agreed to reconsider the 75 ppb standard (which the newly appointed Obama Administration described as “indefensible”) and proposed a primary standard between 60-70 ppb. However, in September 2011, EPA abandoned that effort and set a timetable for reconsidering the NAAQS through the Agency’s regular 5-year review of the NAAQS in 2013. Having now issued the proposed rule, a final rule will likely arrive in October 2015.

Meet the New Proposal

EPA is proposing a new primary standard of between 65-70ppb, while seeking comment on a limit as low as 60 ppb. That range is based on indications by EPA’s science advisory committee, CASAC, that available science supported a primary standard as low as 60 ppb, but “increasing uncertainty” about ozone concentrations below 65 ppb.

EPA is also proposing a secondary ozone standard that is intended to protect public welfare from any known or anticipated adverse effects. Public welfare impacts include effects on “soils, water, crops, vegetation, man-made materials, animals, wildlife, weather, visibility and climate” among other things. While EPA has proposed a secondary standard that matches the primary standard, is also seeking comment on an alternative approach that would be based on a complex seasonal index of between 13 to 17 ppm-hrs averaged over a three-year period. It is also seeking comment on an even lower “welfare” target level of 7 to 13 ppm-hrs.

These proposed standards would thrust numerous areas across of the country into non-attainment. Under the current standard, only 227 out of 3,007 counties are in whole or partial non-attainment. EPA’s proposal would change that picture dramatically.

EPA suggests that, by 2025, only 9 counties would violate a 70 ppb level and 68 counties at 65 ppb. However, those assertions optimistically rely on the implementation of recent federal power plant rules—MATS and the Clean Power Plan—as well as the new vehicle fuel standards. In reality, those programs are likely to face a wide array of legal, implementation and other challenges that will impact EPA’s projections. For example, the U.S. Supreme Court recently decided to hear three consolidated challenges to the MATS rule and the Clean Power Plan is under review by the D.C. Circuit.

Critics are Gearing Up – and for Good Reason

The consequences of non-attainment are significant and range from increased compliance and control costs for individual businesses to meet more stringent limits, to regulatory constraints on siting and development of new industry, to the cumulative impacts on the overall economy in the form of reduced GDP, household consumption and worker income. EPA itself estimates compliance costs of $3.9 billion at 70 ppb, $15 billion at 65 ppb, and $39 billion at 60 ppb through 2025. However, critics have already begun to question these numbers, which appear to significantly understate true costs. For example, EPA’s projections in part rely on control measures that are “unknown.” While it may be reasonable for the Agency to project the costs of known controls, it appears highly speculative to project the cost of using “unknown” measures to achieve the extensive remaining reductions that would be necessary to meet the new standards.

Members of Congress have also responded by introducing bills designed to either delay or bar EPA from issuing a tighter standard. For instance, in early October, Rep. Randy Weber (R-TX) introduced legislation to bar EPA from issuing a tighter ozone standard until the agency reports to Congress on the potential impacts. Similar legislation was introduced in September in both chambers to prevent EPA from issuing a tighter ozone standard until most of the country has demonstrated compliance with the current standard and to force EPA to consider costs and feasibility. Given the administration’s veto authority and the potential for filibuster in the Senate, it is unlikely that these bills will become law during the Obama administration.

States are also jumping into the fray. For example, the Texas Commission on Environmental Quality (TCEQ) is on record challenging EPA’s scientific underpinnings, declaring that EPA “does not present a clear rationale for the necessity for a lower standard [and] has not made the case that a lower standard will improve public health.” The TCEQ argues that EPA relied upon faulty data for its risk and exposure assessment, made conclusions that were rife with contradictions and cites recent EPA statements regarding the uncertainty of a causal relationship between health concerns and ozone exposure below 75 ppb.

These criticisms are likely to carry-over into public comment period and the judicial challenges which are almost certain to follow if a final rule is ultimately issued.

Opportunity to Raise Concerns

Despite these broad criticisms, we expect EPA to press forward with the new rule. Interested parties have until March 17, 2015 to submit comments, and EPA plans to hold three public hearings in January (specific dates not yet announced). Impacted companies, local governments and organizations should be taking action now to assess how the new standards will impact operations, inhibit investment opportunities and impair future permitting. Given the breadth of the rule and its impact on nonattainment designations, participation in the public comment process to ensure key concerns are raised and preserved for appeal will be critical.