WASHINGTON – Yesterday, the U.S. Environmental Protection Agency (EPA) formally published in the Federal Register its final rule to implement more stringent air quality standards for ground-level ozone. The updated standard will be effective on December 28, 2015.
Under the final rule, which had been released in early October in pre-publication form, the ozone National Ambient Air Quality Standards (NAAQS) will be lowered to 70 parts per billion (ppb), down from the current standard of 75 ppb. With the lower standard, more areas of the country will likely be designated as “nonattainment” areas, triggering federal and state regulations that could have a negative effect on the retail motor fuels market.
Ground-level ozone, often referred to as smog, is regulated by the EPA under the Clean Air Act (CAA). To protect public health and welfare, the CAA requires the EPA to periodically review and establish NAAQS for six air pollutants, including ground-level ozone. The previous ozone NAAQS was established in 2008 and was set at 75 ppb.
Last December, the EPA proposed to lower the standard to a range between 65 and 70 ppb. The agency also solicited comments on setting the standard as low as 60 ppb. NACS submitted comments to the EPA earlier this year highlighting the potential negative consequences that would result from a more stringent ozone NAAQS.
Specifically, NACS stated that a more stringent ozone NAAQS could result in states adopting increased regulations on the retail motor fuels industry, including: the introduction of reformulated gasoline (RFG) in what are now conventional gasoline areas; more states and/or localities imposing lower Reid Vapor Pressure (RVP) requirements; and certain states retaining costly and unnecessary “Stage II” vapor recovery requirements. The combination of these actions could result in a more balkanized fuels market and higher retail fuel prices for consumers.
By October 2017, the EPA expects to designate areas of the country as either meeting or not meeting the new standard, referred to as “attainment” or “nonattainment” designations, respectively. For those parts of the country in “nonattainment” areas, states will be required to develop State Implementation Plans (SIPs) to demonstrate the regulatory steps it will take to attain the updated ozone standard. Through these SIPS, states may choose to implement new regulatory requirements on the retail motor fuels market, as described in NACS’ comments to the EPA. After the EPA’s designations, nonattainment areas will have between three and 20 years to reach attainment, depending on the severity of the nonattainment designation.
The final rule has faced significant controversy in Congress and among business and environmental groups. Business and industry groups have stated that the new standard is likely to cause substantial harm to the economy while environmental and health groups argue the final rule does not go far enough to cut down on the prevalence of ground-level ozone. While Republicans in Congress may seek to block or overturn the rule, such efforts would likely face a veto from the White House.