March 11, 2022Client Alert

EPA Proposes Significant Expansion of its Rules to Mitigate Interstate Ozone Transport

On March 11, 2022, EPA released its long-awaited proposed rule designed to further reduce the interstate transport of nitrogen oxide (NOx) pollution, a precursor to the formation of ozone.  If finalized, the proposed rule would establish a federal implementation plan that would significantly expand the EPA’s Cross State Air Pollution Rule (CSAPR) emissions trading program.  The rule would be used by the covered states to demonstrate compliance with their respective “good neighbor” obligations to prevent significant contribution to downwind ozone nonattainment areas.

The proposal is notable for several reasons:

  • The proposal would expand the number of states subject to CSAPR to 25.
  • Twenty-five states would be subject to new NOx emissions budgets for their fossil fuel-fired power plants. For the first time CSAPR would impose NOx budgets on power plant emissions in Delaware, Nevada, Utah and Wyoming. These budgets would be effective in 2023.
  • Coal fired EGUs would be subject to daily NOx emission limits to ensure their pollution control equipment is being utilized during days of high energy demand.
  • The size of the emissions allowance bank would be limited to maintain strong long-term incentives to reduce NOx emissions.
  • State emission budgets would be updated annually starting in 2025 to account for new retirements, new units, and changing operations.
  • For the first time CSAPR would regulate NOx emissions from certain large industrial sources located in 23 states. These regulations would be effective in 2026 and the reductions would largely track EPA’s RACT program. The industrial sectors include cement kilns, boilers and furnaces at iron and steel mills, reciprocating internal combustion engines used to move natural gas through pipelines, furnaces located at glass and glass-product manufacturing facilities, and large non-EGU boilers (greater than 100 million BTU/hr) located at basic chemical manufacturing, petroleum and coal products manufacturing, and pulp, paper, and paperboard facilities. A summary of the proposed NOx emission limits for industrial sources can he found here.

The following map details the states subject to the proposal.

The ostensible purpose of this proposal is to reduce ozone levels in areas of the country that do not meet the 2015 ozone standard.  This is accomplished by forcing NOx emission reductions in upwind states to mitigate their significant contribution to ozone exceedances in downwind states. The technical support documents in the rulemaking docket demonstrate that many states will experience lower ozone concentrations under this proposal.  However, several areas will remain burdened by significant upwind ozone contributions even after implementing the proposed controls.  For example, Illinois will continue to contribute significant levels of ozone to counties in the State of Wisconsin after implementing this proposal. 

Power plants located in Wisconsin and many eastern states have long been subject to the CSAPR rule.  For years these states have resisted expanding the CSPAR program to non-utility boilers. This proposal is the first time CSAPR would regulate emissions from large non-EGU industrial sources. Roughly half of the additional emission reductions under this proposal will come from power plants, the other half from industrial sources. 

This proposal will be published in the Federal Register.  EPA currently plans to take comments on the proposal for 60 days after publication. Additional information can be found here: CSAPR for the 2015 Ozone NAAQS | US EPA.



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