October 05, 2015

EPA Decreases Limit for Ground-Level Ozone

In an updated rule released October 1, 2015, the Environmental Protection Agency (EPA) set tighter limits on ozone – a compound regarded as a precursor to smog. In setting the new standard at 70 parts per billion (ppb) for ground-level ozone, down from the current 75 ppb, the EPA struck a compromise between environmentalists calling for tougher standards and industry calling for no revision. In the proposed rule released in 2014, a range of 65-70 ppb was suggested.

Through its decision, the EPA appears to have upset everyone on both sides of the issue. The National Association of Manufacturers and other industry groups say significant ozone reductions may make certain manufacturing processes economically challenging or impossible. Health groups, such as the American Lung Association, believe the new rule is not stringent enough to protect public health.

The Clean Air Act requires that every five years EPA must re-examine the National Ambient Air Quality Standards (NAAQS), standards for six criteria pollutants including ozone. Most of the criteria pollutants are directly emitted from sources and arguably less controversial to address. Reducing ozone is less straightforward, however, because ozone is not directly emitted. Instead, it forms when ozone precursor emissions – nitrogen oxides (NOx) and volatile organic compound (VOCs) – react with sunlight. This makes ozone formation harder to trace directly to specific emissions from a particular source. Coupled with the fact that ozone precursors are emitted from a wide variety of sources – from automobiles to factories to entities using solvents and paints – and further complicated by the fact that in some parts of the country background ozone from wildfires and other natural events can be very high, ozone reduction sparks involved debates among lawmakers, regulators, industries, and environmental and health interest groups.

In Clean Air Act cases such as this one, EPA is actually mandated not to include cost to compliance in its calculation for new standards. The decision to regulate is a policy call by the administrator that is supposed to be dictated by the science. The EPA however, does conduct a cost-benefit analysis for the regulation and reported the compliance costs to be around $1.4 billion per year, with health benefits valued between $2.9 billion and $5.9 billion annually.

What’s Next?

Litigation over the regulation is inevitable, probably from both the regulated industry and the environmental community pushing for a tighter standard. Congressional actions will be taken to overturn the regulation, either through the appropriations process or the use of the Congressional Review Act; although it is doubtful that Congress would have a large enough vote to sustain a presidential veto through either effort.

The next major actions will take place at the state level. EPA sets the ozone standard but does not specify how the states and localities must meet it. Instead, the states address this issue through the State Implementation Plan (SIP) process. Often, states target major stationary sources, such as refineries or utilities, to meet particular emission limits or install pollution control mechanisms to reduce ozone precursor emissions as one way to meet the standard.

Once the standard is set, states, which have already been monitoring for ozone, must determine which metropolitan areas and surrounding counties are in nonattainment (noncompliance with the standard). They must submit a SIP to EPA that demonstrates how they will meet the ozone standard within three years of nonattainment designation. In any event, the lower standard will affect the ability for new major sources or existing sources seeking to make major modifications to obtain a construction permit, depending on the potential for the source’s expected emissions to contribute to an exceedance of the new standard. Nonattainment designation triggers even more stringent permitting requirements.

The hammer for the states to comply with the SIP requirement is the potential loss of their federal highway funding if the state cannot eventually meet the standard. This nexus to the Federal-Aid Highway Program does present an option for Congress to tinker with the standards since the program is currently in the process of reauthorization by Congress. In 1997, when the ozone and particulate matter NAAQS were reissued, Congress also reauthorized the highway program and included language impacting the implementation deadlines for the 1997 standards as well as providing new authorization for a national monitoring network. All eyes will be on Congress and the highway reauthorization effort before the battle shifts to the courts.

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