PM NAAQS: Already behind schedule is perhaps the mostly widely impactful rule change EPA has proposed in many years: a lowering of the national ambient air quality standard (NAAQS) for fine particulate matter (PM_2.5). EPA has proposed to reduce the annual PM_2.5 standard from 12 micrograms per cubic meter (ug/m³) down to either 9 or 10 ug/m³, which will result in new areas across the U.S. falling into "nonattainment," triggering state planning requirements and ultimately new control requirements for sources of nitrogen oxides (NOx) and sulfur dioxide (SO₂) emissions, which serve as precursors to PM_2.5. Although the deadlines for new designations, attainment plans, and control requirements will be years away, EPA's final decision on the new standard will have an immediate impact on air permitting for major sources, and perhaps some minor sources, that must demonstrate new projects will not cause an exceedance of the newly finalized standard. EPA is now targeting the end of January for the final rule, which will almost certainly be challenged immediately in the D.C. Circuit by numerous states and industry stakeholders.

Climate Rules for Electric Utilities: In May 2023, EPA issued its third proposed rule to regulate carbon dioxide from power plants. The new rule, published this time without a fancy nickname, attempts to avoid the pitfalls of the Clean Power Plan (stayed by the Supreme Court, which ultimately rejected EPA's attempt to rely on "generation shifting" to reduce emissions) and the Affordable Clean Energy (ACE) Rule (based solely on a program of state-adopted source-specific efficiency improvements that was panned by a D.C. Circuit panel). The new rule is dressed up to look more like the standards EPA has adopted in the past for other industries and pollutants by relying heavily on specific, albeit untested, control technologies. However, it has been criticized as overly aggressive by many stakeholders, including typically quiet electric system planners and operators. For coal plants, the proposed rule requires sources to choose among carbon capture and sequestration (CCS), natural gas co-firing, or early retirement, while gas-powered facilities must adopt CCS, use low-emitting hydrogen, or accept significant operational constraints. The time allowed under the proposal for making these changes is short — state plans locking in the choices made by utilities are due in mid-2026, and compliance is required just a few years later: for coal plants in 2030 and gas plants in 2032. Due to the uncertainties associated with the proposed control options, EPA expects its rule to result in significant early retirements of dispatchable fossil fuel generation resources, and that expectation has triggered a loud chorus of concerns over electric grid reliability. As a result, EPA's final rule may look a bit different when it is released in final form, likely in April.

Methane Rules for Oil and Gas: Using the same authority underlying the climate rules for electric utilities, EPA finalized new climate rules for the oil and gas industry in 2023, seeking to reduce methane emissions. Although methane is shorter-lived in the atmosphere, it has a greater global warming potential than carbon dioxide, so EPA has made it a top priority in its fight to address climate change. The new rules for oil and gas will be more complicated and far-reaching than ever because they not only increase the regulatory burden on newly constructed facilities but also require states to impose similar requirements on existing facilities for the first time. The rules also introduce new compliance and enforcement strategies, including advanced monitoring techniques and a provision that allows members of the public to surveil facilities and report significant methane leaks. If EPA finds these strategies to be successful for oil and gas, similar provisions could soon be inserted into the rules for other industries, such as landfills, which the agency has promised to revisit.

Ozone Transport: In what EPA refers to as its Good Neighbor Rule, a group of 23 states selected by EPA faced stringent NO_x control requirements on utilities and seven other industries, including gas pipelines, cement, glass, steel, paper, and chemical manufacturing. The rule was intended to implement the Clean Air Act requirement for states to avoid "significant" contributions to downwind air quality problems in other states. Most of the 23 states had submitted state implementation plans demonstrating that regulations already on their books were sufficient to avoid contributing to downwind nonattainment areas, but EPA rejected those plans to impose a uniform, one-size-fits-all federal plan. However, the courts have upset EPA's plans by issuing judicial stays of EPA's prerequisite state plan disapprovals for 12 of the 23 states, forcing EPA to halt its federal plan in those states. The Supreme Court has now agreed to hear arguments in February from states and industry stakeholders seeking to put the rest of the plan on ice. The Supreme Court's decision, and the final decisions from the lower courts that issued the stays, could have significant implications for the balance of authority between federal and state government.

Regional Haze: Alongside its many health-based protections, the Clean Air Act also authorizes states to seek additional emission reductions for an aesthetic purpose: eliminating man-made visibility impairment — referred to as "regional haze" — in national parks and wilderness areas. This program requires states to revisit their regional haze plans every 10 years and seek EPA approval of each iteration. The first round of the program, covering 2008-2018, proved highly controversial due to numerous EPA disapprovals of western state plans and the imposition of federal plans with more stringent requirements. The first round resulted in dozens of published court decisions because challenges to EPA action on each state plan approval or disapproval must go to the local federal appeals courts rather than the D.C. Circuit. Now that the second-round plans have been filed and are under EPA review, more disapprovals are expected, resulting in even more litigation. In fact, one of EPA's first actions in 2024 was to publish, on January 2, a proposal to disapprove the Kansas regional haze plan for failing to require sufficient analysis to support its decision to forego any new emission controls (notably, EPA did not immediately propose a replacement federal plan). The ultimate question for round two of regional haze will be whether EPA can force states to impose billions of dollars in new control requirements regardless of whether the controls would meaningfully improve visibility, or whether the Clean Air Act authorizes states to determine that the costs of controls outweigh the potential visibility benefits.

Mercury and Air Toxics Standards (MATS): In yet another electric utility-focused rule, EPA has proposed actions that should concern all industries subject to regulation for hazardous air pollutants (HAPs) under a "maximum achievable control technology" or "MACT" standard. MATS, EPA's MACT standard for electric utilities, has a long and tortured history, and EPA's latest move proposes to dramatically reduce PM and mercury emission limits based on two seemingly inconsistent determinations. As part of EPA's required eight-year Risk and Technology Review, EPA simultaneously determined that: (1) risks are essentially nonexistent, but (2) more stringent limits are appropriate because the controls are cheaper than expected. More specifically, EPA found through extensive modeling that a no coal-fired power plant presents a maximum excess cancer risk greater than one-in-one million, the level at which Congress directed EPA to stop regulating under the Clean Air Act. Nevertheless, EPA has proposed to drastically reduce the MATS emission limits based solely on the agency's finding that it originally underestimated compliance costs. This result appears inconsistent with Supreme Court precedent (on the MATS rule itself) that requires EPA to weigh both costs and benefits. This development also serves as a warning to other industries: more stringent limits could be coming if EPA believes controls are cheap, even if risks are well below acceptable levels.

Air Emission Reporting Rule: Lurking among the flashier rules that EPA proposed in 2023 is an overhaul of a little-known reporting program that will likely cause significant confusion if finalized as proposed. In prior years, the reporting program known as the "AERR" was limited to major Title V stationary sources and only applied directly to state agencies, requiring them to report emissions of a handful of common pollutants to EPA for inventory purposes. However, in 2023, EPA proposed to expand the AERR into uncharted territory — a comprehensive emission reporting program that will require hundreds of thousands of small sources to report nearly 200 different pollutants, regardless of whether that data is already reported under other programs or whether any data exists to estimate those emissions at all. With the proposed changes, the program will not only impose a massive burden on sources and their state agencies but will also require submission of data regardless of quality, which is particularly problematic given EPA's plans to use the data to conduct modeling and publicize the results. The unprecedented and little heralded expansion of this program could present significant challenges for facilities unaware of what might be coming their way — even facilities that may ultimately determine they are not subject to the program are likely to find the additional work required to be significant.

Hydrofluorocarbons: In 2023, EPA also continued its efforts to implement the American Innovation and Manufacturing (AIM) Act of 2020, which requires the regulation and phaseout of common refrigerants that contain hydrofluorocarbons (HFCs). Often used as a substitute for other refrigerants that deplete the stratospheric ozone layer, namely chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs), the HFCs targeted under the AIM Act are potent greenhouse gases, so eliminating them has become an EPA priority. EPA took several key steps toward this goal in 2023, including finalizing a rule in October that restricted the use of HFCs in residential, commercial, transportation, and industrial settings, and requesting further comment in December on how the rule should apply to aerosols, foams, refrigeration, air conditioning, and heat pump equipment. In 2023, EPA also identified civil and criminal enforcement of the AIM Act as one of its top enforcement priorities in upcoming years. For more details on what could be a highly impactful rule over a wide range of industries, check out our separate blog post here: EPA Revises HFC Rule for Refrigeration and Air Conditioning Products.

Chevron Deference: Last, but certainly not least, the law governing challenges to agency regulations could change completely in 2024. The Supreme Court has agreed to hear two cases — Loper Bright Enterprises v. Secretary of Commerce and Relentless, Inc. v. Department of Commerce — that could spell the end of a doctrine known as "Chevron" deference. That much-criticized legal principle gives EPA and other federal agencies the benefit of the doubt in defending rules adopted under the statutes they administer. Chevron deference requires courts to defer to any reasonable approach adopted by an agency if a statute is ambiguous (as long as it doesn't involve a "major question" on which Congress could not have remained silent). Although the doctrine has been applied in a wide variety of cases well beyond environmental law, the case on which it is based — Chevron v. Natural Resources Defense Council — was in fact a Clean Air Act case, confirming that the potential impact of its reversal on air regulations is likely to be a game-changer. Oral arguments are scheduled in just a few weeks on January 17. For more on this generational case, listen in to the podcast by Misha Tseytlin here: The Future of Chevron Deference.