While many Americans were already on the road toward their Thanksgiving destination on November 26, driving cars emitting hydrocarbons and nitrogen oxides that form ozone in the atmosphere, the United States Environmental Protection Agency issued a proposal to lower the ozone (O3) national ambient air quality standard (NAAQS). [1] Under the Clean Air Act, EPA must set NAAQS to protect public health with an "adequate margin of safety." [2] The proposed rule would lower the O3 standard from its current 75 parts per billion (ppb) to a point between 65 and 70 ppb.

Although the Agency estimated benefits from the proposed rule in the range of $6 to $38 billion, most of the commentary erupting on the heels of the proposal focused more on the costs, including:

  • EPA itself - $3.9 - $15 billion, depending on the standard ultimately finalized. [3]  
  • The Wall Street Journal – noting an earlier EPA estimate of $90 billion. [4]  
  • Texas Council on Environmental Quality – citing a study by NERA Consulting that estimate costs for a 60 ppb standard at $270 billion. [5]  
  • The New York Times and Washington Post – quoting a statement from the National Association of Manufacturers that the rule will be "the most expensive regulation ever." [6]

These comments and others like them are not surprising, given the dramatic change in compliance and operating costs that a lower standard would compel for businesses, transportation users, and states. Under the current standard (promulgated in 2008), fewer than a quarter of counties have failed to reach attainment. Lowering the standard to 70 ppb would increase nonattainment areas to nearly half the counties in the U.S., and a 65 ppb standard would throw more than two out of three counties into nonattainment. [7] More businesses will require permits, and more permits will require more stringent controls.

While it may be unclear what discrete number the Agency will eventually choose, it is quite clear that the standard will trigger challenges from all directions. Environmental advocacy groups and certain states wanted the standard lowered to 60 ppb, arguing that any higher standard does not adequately protect public health. In contrast, a range of business groups and other states sought to keep the current standard of 75 ppb, asserting that the science does not show that a lower standard will achieve more public health benefits than the current standard, particularly given other recent regulations that will have ozone-reducing outcomes. Perhaps in a nod to those pleas, EPA has also requested comment on both 60 and 75 ppb, and many will undoubtedly respond to the Agency's request. However, a barrage of commentary on these "bookends" likely will not result in selection of either as the standard. Rather, they are more likely to make any choice in the proposed 65 to 70 ppb range seem more reasonable to the judicial panels who will review the final standard after it is issued – a shrewd move on EPA's part, and something to keep in mind when filing comments. 

Given the uncertainty surrounding the level of the final standard, project proponents in particular may wish to focus on a more fruitful area for comment - EPA's proposal to "grandfather" certain air permit applications that are pending when the Agency issues the final standard. Starting on page 517 of the more than 600-page proposal, EPA offers a carrot:

Recognizing that some PSD applications may have already been submitted and could be in the review process when a revised O3 NAAQS becomes effective, the EPA is proposing a transition plan that would enable certain PSD applications to make the demonstration that the proposed project will not cause or contribute to a violation of any NAAQS with respect to the O3 NAAQS that were in effect on the date the reviewing authority determines the permit application complete or the date the public notice on the draft permit or preliminary determination is first published (depending on which grandfathering provision applies), rather than the revised O3 NAAQS.

The EPA is proposing and taking comment on adding a grandfathering provision to EPA's regulations at 40 CFR 51.166 and 52.21 that would apply specifically to two categories of PSD permit applications that are pending when the EPA issues the revised O3 NAAQS: (1) applications for which the reviewing authority has formally determined that the application is complete on or before the signature date of the revised NAAQS; and (2) applications for which the reviewing authority has first published a public notice of a draft permit or preliminary determination before the effective date of the revised NAAQS. These two categories are proposed because some states do not do completeness determinations as part of their permit process. [8]

EPA plans to issue the final standard by October 2015, giving project proponents less than a year to submit applications eligible for this proposed provision. And they will have to do so without knowing whether the provision will make it into the final rule, thus suggesting that strong comments to increase support for the grandfathering provision is an investment worth considering. The Agency will take public comment for 90 days after publication of the proposed rule in the Federal Register.