EPA Reconsiders Southeast Wisconsin Ozone Reclassification and Seventh Circuit Continues Stay: What Manufacturers and Businesses Need to Know

Companies operating facilities in southeastern Wisconsin received important regulatory news last week. EPA agreed to reconsider its December 2024 rule that reclassified portions of southeastern Wisconsin from "Moderate" to "Serious" nonattainment for the 2015 ozone National Ambient Air Quality Standard (NAAQS), and the U.S. Court of Appeals for the Seventh Circuit placed Wisconsin’s challenge to that rule on hold while EPA conducts its review. As a result of the court’s order, businesses in the affected southeast Wisconsin counties will continue operating under the existing Moderate nonattainment requirements for the foreseeable future. This means that more stringent air permitting and regulatory requirements associated with a Serious nonattainment designation are not currently taking effect.

In a December 2024 rulemaking, EPA reclassified the southeastern Wisconsin ozone nonattainment areas from Moderate to Serious under the 2015 ozone NAAQS. The affected areas include Milwaukee and Ozaukee Counties and portions of Waukesha, Washington, Racine, Kenosha, and Sheboygan Counties.

Figure 1: Map of EPA's 2015 Ozone NAAQS Nonattainment Area Designations for Southeast Wisconsin

Source: Wisconsin Department of Natural Resources

This Serious nonattainment designation carries significant consequences for businesses in the area, including:

• More stringent nonattainment new source review (NNSR) permitting and emission control requirements;
• Lower major-source emissions thresholds for ozone precursors, NOx and VOCs;
• More restrictive emissions offset requirements for certain expansions or modifications;
• Potentially greater permitting complexity and project-timing constraints; and
• Increased regulatory scrutiny for project expansions in the affected area.

Wisconsin challenged EPA’s 2024 reclassification rule in the Seventh Circuit and successfully moved the court to stay implementation of the Serious nonattainment designation last year until the case could be decided on the merits. See Order, Wisconsin v. EPA, case no. 25-1239 (7th Cir. Sept. 5, 2025). The court’s stay meant that the burdensome requirements associated with Serious nonattainment have not yet taken effect, and the court’s recent order allows the stay to remain in place while EPA conducts a new rulemaking process.

The court’s order to hold the case in abeyance and maintain the stay of EPA’s 2024 rule came two days before the state’s opening brief was due and followed recent actions by Wisconsin and EPA to address the dispute administratively instead of through litigation.

On July 16, 2026, Wisconsin petitioned EPA to reconsider the 2024 reclassification rule, arguing that EPA should have provided notice and an opportunity for public comment before issuing the rule. Wisconsin also asserted that EPA failed to consider important technical and modeling information relevant to ozone attainment in southeastern Wisconsin.

On July 28, 2026, EPA granted Wisconsin's request for reconsideration and announced that it intends to undertake a formal notice-and-comment rulemaking to reevaluate the reclassification decision.

The following day, the Seventh Circuit granted a joint request by Wisconsin and EPA to place the litigation on hold while EPA conducts that review. The court ordered the parties to provide periodic status reports but otherwise suspended proceedings.

EPA's reconsideration process is likely to take some time. The agency has indicated that it will conduct a notice-and-comment rulemaking before deciding whether to retain, modify, or withdraw the 2024 reclassification decision. This process will give businesses, industry associations, local governments, and other stakeholders an opportunity to submit technical, economic, and policy comments regarding the proposed reclassification. While the outcome remains uncertain, companies planning capital projects, facility expansions, permitting actions, or operational changes should continue monitoring developments closely. Any future reinstatement of a Serious nonattainment designation could affect project timelines, permitting strategies, and compliance obligations.

• Nothing changes immediately. Southeastern Wisconsin remains subject to the existing Moderate ozone nonattainment requirements.
• The Serious reclassification remains stayed. The more stringent Serious nonattainment requirements associated with the 2024 rule are not currently in effect.
• EPA has agreed to reconsider its decision. The agency will undertake a new notice-and-comment rulemaking to reconsider the 2024 reclassification rule.
• Businesses will have an opportunity to participate in that rulemaking. Businesses may wish to consider submitting comments once EPA publishes its proposed rule, either directly to EPA, or through trade associations such as the Metropolitan Milwaukee Association of Commerce and/or Wisconsin Manufacturers & Commerce.
• Future project planning remains important. Companies evaluating facility expansions or permit modifications in the affected areas should continue assessing how a future Serious nonattainment designation could affect project economics and permitting strategy.

Michael Best will continue monitoring EPA's reconsideration process and the related litigation and will provide updates as developments occur.