On November 26, 2014, the Environmental Protection Agency (EPA) released a proposed rule that would reduce the level of the national ambient air quality standard (NAAQS) for ozone. NAAQS must be established at levels that are requisite to protect public health and welfare with an adequate margin of safety; EPA cannot consider costs in setting the NAAQS. EPA is required to review, and if necessary revise, NAAQS every five years. EPA last revised the ozone NAAQS in 2008 when it lowered the primary standard to 75 parts per billion (ppb). Due to litigation-based delays, States are still in the process of implementing the 2008 standard. Pursuant to a court order, EPA must finalize this rulemaking by October 1, 2015. Ozone is formed through chemical reactions involving a range of ozone precursors, including volatile organic compounds (VOCs), nitrogen oxides (NOx), methane, and carbon monoxide. At sufficiently high concentrations, ozone can contribute to a number of human health impacts, including respiratory and cardiovascular effects.
Revising the existing ozone NAAQS is a top tier priority for EPA during the remainder of the Obama Administration and, given the significant impacts that a lower standard would have on a wide range of industrial facilities, is one of the most impactful rulemakings affecting the economy across the nation. This proposal is the culmination of a multi-year review process that included both recommendations from EPA’s staff and peer review by EPA’s Clean Air Scientific Advisory Committee (CASAC). Once EPA issues a final revision, States will have the primary responsibility for implementing the revisions. States will have one year to propose designation of areas as attainment, unclassifiable, or nonattainment. Designations must be approved by EPA. States must then prepare State Implementation Plans (SIPs) that explain how the state will maintain air quality in attainment areas or, alternatively, attain the NAAQS in nonattainment areas.
Below are five key highlights from EPA’s proposal:
- Reduction in primary and secondary ozone standards. EPA is proposing to reduce the primary (health-based) ozone NAAQS from its current level of 75 ppb as an 8-hour average to a level between 65 and 70 ppb. EPA asserts that, in light of new studies on ozone effects and updated exposure/risk analyses and air quality modeling prepared since the 2008 revision, a lower standard is necessary to provide increased health protection, particularly for “at-risk” populations, including children, older adults, and persons with existing respiratory diseases. Although EPA includes some new studies and analyses in the record, the Agency does not appear to incorporate any major new substantive information on the health effects of ozone since its prior decision in 2008 to set the standard at 75 ppb; the difference is largely in interpretation. EPA is also proposing to reduce the secondary ozone standard, which is intended to protect public welfare, to a level between 65 and 70 ppb (also as an 8-hour average). In this case, the secondary ozone standard is based on seasonal effects on vegetation. As described below, these reduced standards would have substantial adverse impacts on many industries throughout the country.
- Solicitation of comment on a wider range of potential standards. In addition to its proposed standard of 65 to 70 ppb, EPA is accepting comment on a wider range of potential standards. First, consistent with the recommendations of EPA staff and CASAC, EPA is soliciting comments on an alternative primary standard as low as 60 ppb. However, EPA notes that such a low standard would “inappropriately” place too little weight on the uncertainties related to health risks posed by ozone. Second, EPA is soliciting comments on an alternative, separate secondary standard using a different (seasonal) form which may be more stringent than the proposed standard. Finally, EPA requests comment on the option of retaining the current primary and secondary standard of 75 ppb, although it does not suggest that it is likely to follow that approach.
- Effect on other Clean Air Act requirements. The proposed revisions to the ozone NAAQS will have significant effects on the Clean Air Act New Source Review (NSR) program. As the graphic below demonstrates, reducing the primary standard from 75 ppb to 65 ppb would significantly increase the number of areas designated as nonattainment for ozone. If an area is in attainment for a given NAAQS, a major source that commences construction or undergoes a major modification must obtain a Prevention of Significant Deterioration (PSD) permit based on Best Available Control Technology (BACT) and must demonstrate that its emissions will not cause any area to exceed the NAAQS. In contrast, if an area is in nonattainment, a major source must obtain a nonattainment new source review (NNSR) permit based on a more stringent Lowest Achievable Emission Rate (LAER). In addition, a source in a nonattainment area must obtain emissions reductions from other sources to offset its own emissions. Further, in order to achieve or maintain attainment with the revised NAAQS, States, in their implementation plans, may impose additional requirements to reduce emission of ozone precursors on existing industrial sources and potentially on motor vehicles, construction equipment, and small businesses.
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- EPA action to mitigate PSD impacts. In the proposed rule, EPA also includes a number of provisions in an effort to minimize the effect of the proposed rule on sources seeking PSD permits. As a general rule, EPA requires sources to demonstrate that they will not contribute to nonattainment of any NAAQS in effect at the time the PSD permit is issued. In the proposed rule, however, EPA is proposing a grandfathering provision that will allow sources to make the PSD demonstration based on the ozone standard that was in effect (1) when the reviewing authority deemed the PSD permit application complete or (2) when public notice of the draft PSD permit was first published. In addition, EPA announced plans to propose a new rulemaking in the spring of 2015 in which it will consider whether to update existing regulations that describe how a source seeking a PSD permit must demonstrate that it will not cause or contribute to a violation of any NAAQS or PSD increment. These proposals, could provide additional guidance to sources in the PSD permitting process that are impacted by the revised NAAQS.
- Political scrutiny and action on ozone NAAQS. Republican leaders in Congress quickly denounced the proposal, emphasizing its impact on jobs and the American economy. Stakeholders should anticipate rigorous oversight on the proposal in the new Congress in the House and Senate. New legislative proposals to limit EPA’s authority to revise the ozone NAAQS are also anticipated. Based on prior legislation by Sen. John Thune (R-SD) and Rep. Pete Olson (R-22-TX), key provisions could include (1) a prohibition on lowering the existing standard until 85% of current nonattainment counties achieve compliance with the current standard, (2) a requirement that EPA consider the costs and feasibility of lowering the standard, and (3) a prohibition on using unreliable modeling to expand nonattainment areas to hundreds of rural counties that lack ozone monitors. A bill that restricts, but does not eliminate, EPA’s authority to revise the ozone NAAQS may also garner some Democratic support. Further, a revision of the ozone NAAQS would be a potential candidate for a Congressional Review Act (CRA) resolution of disapproval. Because CRA resolutions apply only to final agency rules, efforts to pass a CRA resolution would likely occur during the latter part of the 114th Congress and in the midst of the 2016 election. While passage of a CRA resolution only requires a majority vote in both chambers, a two-thirds majority would be needed to override a certain Presidential veto. As a result, the decision to pursue a CRA resolution will likely depend, in part, on the value it will have to at-risk Republican candidates in the 2016 election cycle.
EPA will accept public comment on the proposed revisions for 90 days after the proposed rule is published in the Federal Register. EPA also plans to hold three public hearings on the proposed rule in January 2015. The dates and locations of the hearings have not yet been released.