New National Standards for Air Pollution Will Impact Individuals and Industries in Michigan

On April 15, 2004, the United States Environmental Protection Agency released a final rule designating 25 Michigan counties as non-attainment for the new national ambient air quality standard, or NAAQS, for ozone. The new standard is often referred to as the "eight-hour standard" because it sets a limit for ozone in the ambient air at 0.08 parts per million averaged over an eight-hour period. Michigan is one of 31 states with areas that do not meet the new standard.

This non-attainment designation means that 25 counties have concentrations of ozone in the ambient air that exceed this 0.08 ppm limit. EPA has determined ozone levels above this limit pose a potential public health threat. Under the federal Clean Air Act, 42 U.S.C. §§ 7401, et seq., the state must adopt and implement a program that will bring these areas into attainment in a timely fashion. Achieving this new standard will require sacrifices from both individuals and industrial sources of air pollution.

BACKGROUND

Under the CAA, EPA and individual states have developed a vast network of monitors across the U.S. that monitor ambient air quality. There are six principal pollutants measured by these monitors: sulfur dioxide (SO₂), carbon monoxide (CO), particulate matter (PM)¹, lead (Pb), nitrogen dioxide (NO₂), and volatile organic compounds (VOCs) which are precursors to ozone.

According to EPA, the concentration of these pollutants in the ambient air has dropped dramatically. Aggregate emissions of these six pollutants have dropped by 48 percent between 1970 and 2002.² These reductions are particularly significant considering the economic growth in the United States over those three decades as "gross domestic product increased 164 percent, energy consumption increased 42 percent, and vehicle miles traveled increased 155 percent."³ In short, we have sustained a growing economy and generally improved the quality of life while still reducing air pollution. Indeed, this designation of non-attainment for ozone comes as national ozone concentrations are at their lowest level since 1980.

This ground-level, or ambient ozone, is formed by a complex atmospheric reaction involving VOC, NOx, and sunlight. The reaction is so complex, it is difficult to predict what concentrations of VOC or NOx will create ozone. Since sunlight plays a key role in the formation of ground-level ozone, it tends to be at its highest levels in the summer. In southeast Michigan, the ozone levels are particularly high on hot, sunny days when the air is stagnant while a large portion of the ozone in the western part of Michigan tends to be transported by the wind from neighboring states.

Although the eight-hour ozone standard is new, it is not as though ozone has not been a pollutant of concern in the past. In 1979, EPA promulgated a one-hour ozone standard of 0.12 ppm. Michigan was one of the few industrial states that had achieved the one-hour standard - particularly in large urban areas such as Detroit.

25 COUNTIES IN MICHIGAN HAVE BEEN DESIGNATED AS NON-ATTAINMENT

In addition to designating counties as non-attainment, EPA also assigned designations related to the severity of the non-attainment problem. Table 1 lists the seven possible categories of non-attainment and the deadline for achieving attainment with the standard. In general, the less the area is polluted, the faster it is required to come into attainment with the standard.

All of the counties listed as non-attainment in Michigan fall under the categories of either Basic or Moderate non-attainment. (See Table 2.) Those classified as Basic are required to come into attainment by 2009 while those classified as moderate have until 2010.

The primary practical effects of the non-attainment designation are twofold: 1) the impact on individuals and their quality of life and 2) the impact on economic growth in the state. In reality, these issues are intertwined and difficult to separate.

EPA studies indicate that concentrations of ozone in excess of the federal standard adversely impact public health.⁴ Often referred to as smog, ground-level ozone can cause considerable irritation to the respiratory tract resulting not only in discomfort but also inflammation and damage to lung tissue. The EPA has indicated that the new ozone standard will be more protective of public health.

On the other hand, individuals may find that they will have to make personal concessions to help reduce ozone levels. For example, in areas such as southeast Michigan, the state must implement an automobile tailpipe inspection and maintenance program. There will also likely be a stronger emphasis on voluntary programs such as refraining from fueling vehicles or mowing lawns during hot, sunny summer days.

The other impact of this non-attainment status will be on economic growth in Michigan. In general, when first adopting provisions mandating attainment of NAAQS, Congress made an important policy decision under the CAA - not to prohibit economic growth or construction of new or expanded industrial operations in areas that were non-attainment. In fact, the CAA is designed to "protect and enhance the quality of the nation's air resources so as to promote the public health and welfare and the productive capacity of its population."⁵

So, the CAA allows for industrial growth, but requires that a company proposing to install any new or modified major⁶ source of a pollutant in a non-attainment area must first undergo a permit review by a regulatory agency to insure that emissions do not exceed the "lowest achievable emission rate," or LAER, and that the company will offset any increase in new emissions by reducing, or offsetting, other emissions of that pollutant by at least 110 percent in marginal and 115 percent in moderate areas.

LAER is considered the most stringent emission control requirement because technically it does not consider economic costs of installing or implementing whatever is necessary to keep emissions below the LAER limit. In order to locate or expand an industrial operation in a non-attainment area, the company end result has to be a net reduction in emissions of the pollutant for which the area is non-attainment.

Since Michigan has been in attainment with the previously applicable standard for ozone, companies choosing to locate or expand their operations in Michigan were not required to meet LAER-based emission limits or obtain emission offsets. Although there was still a requirement to obtain a preconstruction permit from the MDEQ, the emission limitation was a slightly less stringent requirement known as best available control technology, or BACT. In theory, the BACT level of control allows for the consideration of cost when establishing what level of emission limit the source must meet.

So, in the non-attainment counties, not only will companies seeking to locate or expand large industrial sources be required to implement stringent emission rate limitations on their processes, but they will also have to offset emissions by either 110 or 115 percent.⁷ Since the state has not been required to implement this offset requirement since all Michigan counties were designated as attainment for ozone, there currently are no offset emission credits available.

CONCLUSION

Although EPA has promulgated a rule designating areas as non-attainment with the eight-hour ozone standard, there are many questions regarding the plan that the state must implement in order to achieve the standard by the deadline. For example, EPA has not formally stated which emission reductions in the past few years are eligible to be used to offset new emission increases. Lacking formal direction from EPA, MDEQ is attempting to identify emission decreases that may be available for offsets.

In addition, under the one-hour ozone standard, Michigan had a waiver for NOx emissions for purposes of ozone non-attainment areas. Only VOCs were evaluated in ozone non-attainment areas. However, since Michigan attained the one-hour ozone standard, the non-attainment provisions, including this NOx waiver, have not applied other than as set forth in the maintenance plans. So, it is unclear how EPA will treat Michigan's NOx waiver. It will be important to evaluate the effects of NOx on the status of attainment of the eight-hour standard so as to be able to avoid any potential increases in ozone concentration due to NOx reductions.

The MDEQ recognizes that there are more questions than answers regarding the implementation of programs to achieve attainment with the eight-hour ozone standard. Additional information is available on EPA's Web site at http://www.epa.gov/ozonedesignations/.

Attorneys assisting corporate clients with expansion or relocation plans should identify whether the recent designations will impact their clients' operations. Gathering appropriate information regarding applicability of the program, the availability of offsets and other related information in advance will help make any expansion or relocation plans go much smoother.

Endnotes

¹EPA currently regulates both PM-10 (particulate matter of aerodynamic diameter of 10 micrometers or less) and PM-2.5 (also known as "fine particulate"). EPA has not yet designated attainment status for PM-2.5.

²"Latest Findings on National Air Quality: 2002 Status and Trends," U.S. EPA, August 2003, EPA 454/ K-03-001, page 1. http://www.epa.gov/airtrends/2002_airtrends_final.pdf.

³"Latest Findings on National Air Quality: 2002 Status and Trends," U.S. EPA, August 2003, EPA 454/ K-03-001, page 1. http://www.epa.gov/airtrends/2002_airtrends_final.pdf.

⁴"Ozone and Your Health," U.S. EPA, September 1999, EPA-452/F-99-003. http://www.epa.gov/airnow/ozone-c.pdf.

⁵42 U.S.C. 7401(b)(1).

⁶Where "major" is defined as having the potential to emit 100 tons per year or more of the pollutant for which the area is non-attainment. 40 C.F.R. §

⁷The offset need not be achieved before submitting a permit application, but instead must be achieved before the emission source begins operation. Thus, depending on the size of the project and the construction schedule, there may be time for companies to identify and obtain sufficient offsets. Companies requiring additional information should contact the MDEQ Air Quality Division.

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Warner Norcross & Judd is a full-service law firm with offices in Grand Rapids, Holland, Metro Detroit and Muskegon. Because each business situation is different, this information is intended for general information purposes only and is not intended to provide legal advice.