In 2010, EPA issued revised and stricter National Ambient Air Quality Standards (NAAQS) for NO2 and SO2. Recently, the D.C. Circuit issued two decisions rejecting industry and state challenges to these standards. American Petroleum Inst. v. EPA, No. 101079 (D.C. Cir. July 17, 2012) (upholding NO2 standards); Nat'l. Env't. Development Assn. v. EPA, No. 101252 (July 20, 2012) (upholding SO2 standards). These new and extremely stringent air quality standards will significantly impact air permitting for new and modified sources. The new standards even have the potential to affect existing sources of NO2 and SO2, as states look to identify these sources and force emission reductions in their plans to achieve or maintain attainment.

Under the Clean Air Act, EPA is required to establish and periodically review air quality standards for pollutants, such as NO2 and SO2. These standards are intended to establish concentrations of pollutants in ambient air that are protective of public health. Different regions of the country are classified as being in "attainment," "nonattainment" or "unclassifiable" with these standards. Permitting requirements for new or modified "major" sources differ depending on the area's classification, with stricter standards and requirements applicable to sources in nonattainment areas. In attainment areas, new or modified major sources will need to demonstrate, through air quality modeling, that they will not cause or contribute to an exceedance of an NAAQS; in nonattainment areas, similar modeling, stricter controls and a requirement to obtain offsets from increased emissions are required.

As summarized in the table below, EPA significantly reduced the NO2 and SO2 standards in 2010, changing both the NAAQS level and reducing the averaging time (i.e., the period of time over which compliance with the standard is measured) to 1 hour. These new short term standards have the effect of greatly reducing the allowable ambient concentrations of these pollutants.

New NO2 AND SO2 NAAQS

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Last month, the D.C. Circuit upheld both the standards, and the state process for designating areas as being in attainment or not is underway. This means that businesses with expansion plans need to begin evaluating how these new standards could affect permitting options and requirements.

Concerns have been raised about the air quality models used to assess a new/modified source's impact on air quality. These models are intentionally designed to be conservative, typically overestimating pollutant concentrations resulting from a source. These models were not designed with 1hour NAAQS in mind, and preliminary modeling at several sources has revealed a tendency to show exceedances of the new NO2 and SO2 NAAQS. This, in turn, potentially triggers a demand that a source install more expensive controls to reduce its emissions. Sources which have the option to keep their emissions below "major source" thresholds would be wise to evaluate the feasibility of doing so to avoid triggering new source review requirements.

Another twist with the new NAAQS is that EPA has announced its intention to measure attainment using a combination of both modeling and monitoring data. In the past, attainment has been measured through monitoring data. Although industry and states challenged the use of modeling, the D.C. Circuit did not address the legality of this approach in its decisions. This new requirement has led to a flurry of modeling by the states to identify sources including upwind sources that may contribute to NAAQS exceedances. The results of this modeling have the potential to affect emission limitations on existing sources. Companies need to monitor these State modeling efforts closely to understand how they may affect their allowable emissions.