Impact of Ozone NAAQS
Program on Urban Areas
Gale Lea Rubrecht
In South Coast Air Quality Management District v. EPA, 472
F.3d 882 (2006), clarified, 489 F.3d 1245 (D.C. Cir. 2007), cert.
denied, 76 U.S.L.W. 3095 (U.S. Jan. 14, 2008), the D.C. Circuit
vacated and remanded the Phase I 8-Hour Ozone Implementation Rule (the Rule) (69 Fed. Reg. 23,951; Apr. 30, 2004) to the
U.S. Environmental Protection Agency (EPA). The implications
of the decision will be felt in urban areas as states implement the
8-hour ozone national ambient air-quality standard (NAAQS).
On remand, areas could be reclassified in a way that would mean
sooner attainment dates and more stringent controls for sources
of emissions in those areas. The decision will also result in significant emission fees for some sources and additional emission offset
and control technology requirements for new sources in some
areas unless EPA provides relief in its rule-makings on remand.
The decision resolved questions concerning the transition
from the 1-hour standard to the 8-hour standard that was promulgated more than a decade ago. For example, the court held
that EPA need not wait to impose new standards until existing
standards had been achieved. The court established EPA’s
authority to revoke a standard as long as adequate antibacksliding measures are introduced. The court held that 1-hour
requirements may be retained, even if the controls are not already incorporated into state implementation plans (SIPs). In
the court’s words: “The [Clean Air] Act [CAA] placed states
onto a one-way street whose only outlet is attainment.”
The court also agreed with state and environmental petitioners that 1-hour new source review (NSR) requirements,
penalties for “severe” and “extreme” 1-hour areas under
§ 185(a) of the CAA, contingency plans for failure to attain
the 1-hour standard, and 1-hour transportation conformity determinations were all “controls” that could not be withdrawn
without constituting impermissible backsliding in violation
of the antibacksliding provision found in CAA § 172(e). The
court’s conclusions that each of these measures is a “control”
and that withdrawing any of them would constitute impermissible backsliding became the subject of a petition for a writ of
certiorari filed by industry groups in the U.S. Supreme Court.
Although the D.C. Circuit rendered its decision in December 2006, the decision did not take effect until more than
eight months later when the mandate issued in August 2007.
Meanwhile, EPA and those affected by the decision analyzed its implications. Three months after the decision, EPA
addressed some of the implications in a memorandum dated
March 19, 2007, and a supplemental notice on proposed rulemaking (SNPR) published on March 22. Nearly ten months
after the decision, EPA addressed NSR aspects of the decision
in an October 3, 2007, memorandum.
In the March 19, 2007, memorandum, William L. Wehrum,
then Acting Administrator for Air, ended speculation as to
whether the decision would delay the June 15, 2007, deadline
for the submission of 8-hour ozone SIPs. Notwithstanding SIP
obligations that may change when the court decision is final,
EPA “strongly encourage[d]” states to continue to develop and
submit 8-hour ozone SIPs by the deadline.
With respect to NSR requirements, EPA stated that new
NSR permits must, at a minimum, meet current applicable
8-hour requirements. In the October 3, 2007, memorandum,
Robert J. Meyers, Principal Deputy Assistant Administrator, found that the court’s ruling “restore[d] NSR applicability thresholds and emission offsets pursuant to classifications
previously in effect for areas designated non-attainment for the
1-hour ozone standards.” EPA promised rulemaking to address
long-term applicability of 1-hour NSR requirements. NSR
requirements are important for any company contemplating
building a new or modifying an existing major stationary source.
EPA also addressed redesignations in the March 19, 2007,
memorandum and asked the Regional Offices to take final action
on pending redesignation proposals. EPA stated that for many
areas that have 8-hour attainment air quality based on 2004–2006
data, it planned to use its Clean Data Policy to suspend certain SIP
requirements as long as areas now meeting the standard remain in
attainment for the 8-hour standard. These SIP requirements that
EPA has suspended include attainment demonstrations, reasonable
further progress plans, and contingency measures.
EPA addressed pending redesignation requests again in a
March 22, 2007, SNPR (72 Fed. Reg. 13,452). EPA proposed
to find that the court decision imposed no impediment to
moving forward with pending proposed rules to redesignate
areas to attainment, and EPA has in fact moved forward with
finalizing redesignations.
In the March 22, 2007, SNPR, EPA also cautioned that “it
is possible that [areas classified under Subpart 1] could, during
a remand to EPA, be reclassified under Subpart 2.” Classification is important for determining attainment dates and control
requirements. Areas classified under Subpart 1 are required to
achieve attainment of the primary NAAQS “as expeditiously
as practicable,” but no later than five years from the date such
areas were designated nonattainment, except that EPA may
extend the attainment date for a period no greater than ten
years from the nonattainment designation date. Attainment
deadlines for areas classified under Subpart 2 are set forth in
Table 1 of CAA § 181 and range from three to twenty years
from the date of designation, depending upon the severity of the
nonattainment. EPA may grant up to two one-year extensions
if certain statutory requirements are met. The 8-hour ozone
designations took effect June 15, 2004 (69 Fed. Reg. 23,858;
Apr. 30, 2004). Thus, for areas subject to Subpart 1, the attainment deadline would be June 15, 2009, unless EPA extends
the attainment date, whereas for areas subject to Subpart 2,
the attainment deadline would be as early as June 15, 2007, for
“marginal” areas and June 15, 2010, for “moderate” areas.
None of the litigants was happy with the decision, and on March
22, 2007, the parties petitioned the court for panel rehearing or
rehearing en banc. The court generally denied the petitions on June
8, 2007. However, the court granted a joint request by EPA and the
Published in Natural Resources & Environment Volume 22, Number 4, Spring 2008. © 2008 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any
portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
environmental petitioners to limit the scope of the vacatur of the
Rule to the extent that the court sustained challenges to it. As a
result, implementation of the 8-hour standard may proceed in urban
areas in the Northeast and elsewhere classified under Subpart 2.
With respect to the antibacksliding provisions, the court said
EPA’s determination that CAA § 172(e) supports the introduction of antibacksliding measures was “reasonable.” The court
concluded that industry’s interpretation that antibacksliding
measures are not required when EPA strengthens, as opposed to
relaxes, a NAAQS would have “absurd results,” finding “nothing to suggest that Congress intended such a glaring loophole.”
Within one week of the court’s denial of EPA’s rehearing
petition, EPA Acting Assistant Administrator Meyers issued a
memorandum dated June 15, 2007, addressing the implications
of the court’s June 8, 2007, decision. EPA announced it would
not make findings of failure to submit SIPs before August 15,
2007. Thus, EPA in effect gave Subpart 2 areas an additional
two months to submit their 8-hour ozone SIPs. EPA also found
that because the court vacated the Subpart 1 classifications and
because SIP submission dates are based on an area’s classification, Subpart 1 areas are not currently subject to the June 15,
2007, submission date for their attainment demonstrations.
Following unsuccessful motions for a partial stay of the mandate
concerning the antibacksliding provisions, industry groups petitioned the U.S. Supreme Court for a writ of certiorari in September
2007. Issues presented in the petitions include (1) whether the
court correctly held that CAA § 172(e) applies to require retention
of measures related to a revoked NAAQS that EPA replaced with
a more stringent standard, and (2) even if § 172(e) applies, whether
the court correctly held that EPA violated its terms. The U.S.
Supreme Court denied review on January 14, 2008.
Under the Rule, 1-hour nonattainment areas (NAAs) would
be constrained only by the NSR requirements for their 8-hour
classification. For example, the Washington, DC-MD-VA
“severe” ozone NAA had not attained the 1-hour ozone standard
as of June 15, 2005, when EPA revoked the 1-hour standard, and
was classified as a “moderate” NAA for the 8-hour standard. NSR
requires “major” sources to include technology consistent with
the lowest achievable emissions rate and to offset any increased
emissions with greater reductions elsewhere. A “major” source
is defined according to its emission threshold, and the emission thresholds for defining “major” sources in areas subject to
only Subpart 1 and in “marginal” and “moderate” NAAs under
Subpart 2 are higher than in “serious,” “severe,” and “extreme”
areas under Subpart 2. For any “moderate” area, the terms “major
source” and “major stationary source” include any stationary
source that emits or has the potential to emit at least 100 tons per
year, whereas for any “serious,” “severe,” and “extreme” areas, the
terms “major source” and “major stationary source” include any
stationary source that emits or has the potential to emit, at least
50, 25, and 10 tons per year, respectively. The offset requirement
for the ratio of total emission reductions to total emission increase
under Subpart 1 is 1 to 1. The offset requirements under Subpart
2 are 1.1 to 1 in “marginal” areas, 1.15 to 1 in “moderate” areas,
1.2 to 1 in “serious” areas, 1.3 to 1 in “severe” areas, and 1.5 to 1
in “extreme” areas. Thus, the Rule would include only stationary
sources in the Washington, DC-MD-VA area that emit or have
the potential to emit at least 100 tons per year instead of 25 tons
per year and would require such stationary sources to have a ratio
of total emission reductions to total increased emissions of at least
1.15 to 1 instead of 1.3 to 1. The court rejected this interpretation of the antibacksliding provision in the CAA.
A SIP for a “severe” or “extreme” area must require major
stationary sources of volatile organic compounds (VOCs) and,
unless EPA grants an exemption, nitrogen oxides (NOx) to pay an
emission fee if the area fails to attain by its attainment date. The
fee is payable for each calendar year beginning after the attainment
date and continues until the area is redesignated as attainment.
The court determined that the fees continue to apply after revocation of the 1-hour standard. The attainment deadline for the Baton
Rouge, Louisiana “severe” 1-hour ozone NAA was November 15,
2005. Because the area did not attain the 1-hour standard by November 15, 2005, any VOC and/or NOx major stationary sources
in that area must pay § 185 fees beginning in 2006 until the area is
redesignated as attainment. Estimates of those fees for businesses in
Baton Rouge range from $65 to $100 million a year.
The court’s decision created an enormous amount of uncertainty for urban areas with air quality above the 8-hour standard.
Implementation of the standard may proceed in areas classified
under Subpart 2, while areas erroneously classified under Subpart
1 are in limbo. EPA has said it plans to issue three regulations in
2008 to address the provisions of the Rule vacated by the decision. Early in 2008 EPA plans to propose regulations to remove
the vacated provisions. By summer 2008 EPA plans to propose
two regulations to address (1) classification of Subpart 1 areas and
1-hour NSR requirements for antibacksliding and (2) § 185 fees
and contingency measures for 1-hour NAAs. Meanwhile, full
implementation is delayed while EPA completes rulemakings on
classifications, NSR requirements, and § 185 fees.
Ms. Rubrecht is a member of Jackson Kelly PLLC, in Charleston,
West Virginia, and a member of the editorial board of Natural
Resources & Environment. She may be contacted at galelea@
jacksonkelly.com.
Published in Natural Resources & Environment Volume 22, Number 4, Spring 2008. © 2008 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any
portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.