Recent EPA Decisions Impacting Business Opportunities

The National Ambient Air Quality Standards (NAAQS) are air quality standards that are set for pollutants, such as ozone and sulfur dioxide (SO2), at levels necessary to protect the public from adverse effects from that pollutant.  If an area exceeds the level, controls and restrictions are placed on emission sources within the area until the standard is achieved.

However, while these controls and restrictions may serve to reduce the level of pollutants over time, they also serve to make growth and expansion more expensive and difficult.  A company seeking to construct or expand a facility in a non-attainment area generally must spend additional money to install the mandated air pollution control equipment.  These added costs, along with additional permitting costs, may make the project too expensive.  In turn, suppliers, contractors, and others who might be involved in the project do not realize that opportunity.  Anyone doing business in the Houston or Baton Rouge areas know the limitations imposed by a failure to attain the NAAQS for ozone.

The Ozone Standard

In March, 2008, EPA issued a final rule lowering the ozone standard to 0.075 parts per million (ppm) with an eight-hour average.  At the time, it rejected an even lower standard of 0.060 ppm.  Of course, EPA was promptly sued and among the complaints was that EPA did not accept the lower standard.  Nevertheless, the states were required to recommend areas for designation as areas of non-attainment.  Texas, for example, designated seven areas as non-attainment, with a total of 27 counties included in those areas.

In January, 2009, the new EPA Administrator reviewed the 2008 Rule along with a number of previously issued rules.  The pending lawsuit against the 2008 Rule was put on hold.  In January, 2010, EPA issued a proposed rule suggesting that the standard should be lowered to between 0.060 and 0.070 ppm.  It seemed the EPA was poised to finalize the proposed rule, until the President himself issued a statement on September 2, 2011 requesting that EPA “withdraw the draft [standards] at this time.”  The standard are to be reviewed in 2013.

Obviously, areas that did not meet the 0.070 ppm standard welcome the withdrawal.  However, even with the withdrawal, there is some degree of uncertainty about the future.  Upon formal withdrawal of the reconsideration by EPA, the 2008 Rule should be reinstated.  Additionally, the litigation, which was stayed in 2009 due to the reconsideration, will, in all likelihood, proceed.  Thus, a lower standard (to 0.075 ppm) could be imposed, with the possibility of a lower standard depending on the outcome of the litigation.

The SO2 Standard

Another NAAQS was revised downward in June, 2010, making it more stringent by almost half.  EPA established a new 1-hour SO2 standard at a level of 75 parts per billion (ppb).  The prior standard was 140 ppb evaluated over 24-hours.  EPA intends to complete the designation of areas as attainment or non-attainment by June, 2012.  Any non-attainment area must achieve attainment five years from the designation as non-attainment, or by 2017.

While ozone levels are measured at designated monitors located throughout an area, EPA plans a hybrid approach for SO2 by combining monitoring and modeling to determine compliance with the standard.  EPA believes that it is more appropriate to use modeling for medium and larger sources as the principal means of assessing compliance for the short-term 1-hour standard.  The reason provided by EPA is that the harmful effects of SO2 are more acute and localized around larger emitters who may not be in the vicinity of a monitor.

The lowering of these NAAQS may be required to protect public health.  However, they will also almost certainly hinder growth and expansion in areas that do not meet the standards.

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