On October 1, 2015, the U.S. Environmental Protection Agency (EPA) released its final rule lowering the ozone National Ambient Air Quality Standards (NAAQS) from 75 parts per billion (ppb) to 70 ppb nationwide (2015 Ozone NAAQS). The final rule will likely place numerous parts of Texas and the United States in an ozone "nonattainment area" for the first time and ensure that counties currently designated as nonattainment will remain designated as nonattainment for a longer period of time. States are expected to propose new area designations by October 2016, EPA will issue final area designations by October 2017, and state implementation plans (SIPs) are due in 2020-2021.

EPA claims that the 70 ppb standard will result in public health benefits of between $2.9 billion to $5.9 billion by 2025, with an EPA estimated cost of $1.4 billion. Prior state and industry analyses of the proposal projected benefits to be lower and costs to be much higher than EPA's estimates.

Regulatory History & Response of States

EPA has lowered the ozone NAAQS repeatedly over recent years, increasing the stringency each time. The primary standard was lowered from 84 ppb to 75 ppb in March 2008. Less than two years later, EPA proposed to lower the ozone NAAQS once again to a range from 60 ppb to 70 ppb; however, this rule was ultimately withdrawn in September 2011. Following a lawsuit by environmentalist groups, EPA once again returned to issuing the newly-finalized standards, with a proposal in November 2014 and this final rule released on October 1, 2015.

Throughout these years of revisions, and particularly following the November 2014 proposal, numerous states and other parties questioned the science and modeling behind EPA's rules. For instance, the Texas Commission on Environmental Quality's (TCEQ) chief toxicologist has previously highlighted EPA's own modeling conclusions correlating lowering ozone concentrations with more deaths in some cities. According to the TCEQ's toxicologist, this indicates either that a lower ozone standard does not achieve its purpose of protecting human health or EPA is interpreting its own data incorrectly. The TCEQ and others have also questioned claims of increasing rates of asthma due to ozone given that air quality is consistently improving nationwide. These factors have led state agencies, like the TCEQ, to recommend looking towards other sources of asthma and other health effects, including indoor air quality. This questioning of the scientific data and other components of the rulemaking by the states may influence how the ozone NAAQS are implemented, since implementation is significantly dependent on state actions.

Effect of Nonattainment Designation

Counties that are unable to meet the new 2015 Ozone NAAQS will be designated "nonattainment" under the Federal Clean Air Act (FCAA). Businesses operating in newly designated nonattainment counties—such as manufacturers, utilities, oil refiners, and stationary combustion sources—will face significant increased regulation. For instance, existing major emissions sources may have to install control technologies to reduce ozone causing emissions. Facilities may also need to undertake additional monitoring, recordkeeping, and reporting.

The construction of new sources of ozone contributing emissions, or modification of existing sources, also becomes significantly more challenging in a nonattainment area. These facilities would be required to install state of the art emissions control technology, with no consideration for cost. Facilities that apply for permits allowing increased emissions must also offset an equal or greater amount of emissions from the same, or other, sources in the area. SIP measures could also require individuals to face lower speed limits, additional vehicle emission testing, and other transportation restrictions.

Potential Texas Nonattainment Counties

EPA has identified 32 Texas counties as having monitored air quality data from 2012-2014. Of these counties, EPA has found that 18 would not be able to comply with the 70 ppb standards – over 56% of monitored counties. In addition, it is likely that some counties (and possibly larger areas) without monitors will nevertheless be designated nonattainment based on modeling.

The 18 counties identified by EPA as not being able to currently meet the 70 ppb standard include multiple counties in the Houston-Galveston-Brazoria and Dallas-Fort Worth regions, as well as counties that have not been designated as nonattainment under prior ozone rules, such as Bexar and El Paso Counties. At this time, EPA's current data indicates that Travis County would meet the 70 ppb standard. However, this is a moving target and, as indicated above, final designations will be based on 2014-2016 data (compared to the 2012-2014 data EPA cites above), so numerous additional counties could be impacted by nonattainment designations.

Relation to the Cross-State Air Pollution Rule

In conjunction with the release of the 2015 Ozone NAAQS, EPA released a guidance memorandum on implementing the new standards. This memorandum includes EPA's plan for addressing interstate transport of ozone, which will be done "using the framework of the Cross-State Air Pollution Rule (CSAPR)." EPA intends to undertake a new round of modeling to identify upwind states' contribution to nonattainment in downwind states, making this information available in fall 2016 through a Notice of Data Availability (NODA). This information will eventually form the basis for future limitations on upwind state emissions impacting downwind states' ability to achieve ozone attainment.

Conclusion

EPA's 70 ppb standard will be stricter than any previous ozone regulation. Industries and businesses that emit NOx and VOCs located in or around nonattainment counties, and those counties that could potentially be designated nonattainment under the new standards, should be prepared for the additional compliance costs and burdens associated with these new ozone NAAQS.