Keeping up with developments in the bewildering array of emissions regulations facing our industry is always challenging.  I was reminded of that last week when caught surprised by the US EPA's announcement proposing a  new lower limit for ground-level ozone, a main component of smog, of between 60 and 70 parts per million (ppm).

These rules could more than double the number of counties across the country that are in violation of clean air standards and bring NOx regulation to places such as Idaho, Nevada, Oregon, the Dakotas, Kansas, Minnesota and Iowa that have thus far avoided much of the NOx regulations implemented over the last decade east of the Mississippi.

My most recent efforts to follow developments in federal NOx regulation had focused on how EPA is going to modify the CAIR rule, the many areas across the US that will not be able to comply with the new Clean Air Act-derived PM 2.5 regulations that take effect this coming April, and the more than 300 counties — mainly in southern California, the Northeast and Gulf Coast — that already violate the current 75 ppm requirements adopted two years ago by the EPA under the Bush administration.

How Quickly We Forget!
What I had forgotten about was the debate back in 2008, when EPA scientists recommended the 60-70 ppm range which has now been formally proposed.  But President George W. Bush, in response to the enormous compliance costs cited by electric utilities and other affected industries, intervened and set the standard at 75 ppm, replacing the 84 ppm limit in place at the time. I had also forgotten that 11 states had taken the US EPA to court over this move, and that the Obama administration had gone on record early last year stating it was going to revisit this issue.

The new standard, to be specified after a 90-day public comment period, is likely to put hundreds more counties nationwide in violation, which will require state and local officials to find ways to clamp down on the pollution or else be penalized, probably by a reduction in federal highway funds.

The sensitivity of the geographic scope and severity of the required NOx reduction is evident in the EPA's cost estimates.  If it is 70 ppm, EPA estimates $19 billion in compliance costs (incremental to the 2008 reduction from 84 to 75 ppm).  But if it is 60 ppm, EPA estimates the incremental compliance costs will be $90 billion. To put this number in perspective, think about the capital costs for 900 SCRs!

So Many Questions
I have many questions about this new development. For example, how will this requirement -- whether it is 70 or 60 ppm -- affect how EPA modifies CAIR?  The 2008 reduction to 75 ppm assumed CAIR would address the issue for the affected states; so clearly a substantial reduction in the ground-level ozone level would have implications for the overall reduction needed from CAIR, and potentially the geographic scope as well.  And how will generators not in the 28 states encompassed by the current CAIR rule be affected? Will the new lower ground-level ozone limit require generators in these states to modify and re-file their BART analyses? 

And What About PM 2.5?
But as I alluded to earlier, ground-level ozone is only one of the six criteria pollutants EPA is responsible for under the National Ambient Air Quality Standards (NAAQS) as required by the Clean Air Act and its amendments. Particulate matter is another.  EPA first issued standards for particulates in 1971; and revised the standards in 1987 and 1997.  In September 2006, the Agency revised the 1997 standards to address two categories of particle pollution: fine particles (PM2.5), which are 2.5 micrometers in diameter and smaller; and inhalable coarse particles (PM10) which are smaller than 10 micrometers and larger than 2.5 micrometers.

In September 2006, EPA dramatically strengthened the fine particle standards to protect public health, tightening the 24-hour standard from 65 to 35 micrograms per cubic meter.  Subsequently, the US EPA made a decision to designate 211 counties or parts of counties throughout the U.S. as PM2.5 nonattainment areas. EPA notified 25 governors and 23 tribal leaders that certain areas in their states and tribal lands do not meet the agency’s daily standards for fine particle pollution, with a compliance deadline of April, 2010.

NOx, SO2 and soot are the primary precursors to PM2.5. What is difficult is that modeling the contributions of points sources (e.g. coal-fired power plants) to PM 2.5 levels in specific non-attainment areas has proven elusive.  One implication is that affected states may have to err on the conservative side with respect to the geographic scope and specific limits and/or require controls on individual plants in order to ensure that non-attaining counties are brought back into compliance. 

As with ground level ozone, CAIR was presumed to address non-attainment for affected counties within the 28 states included in the EPA's original rule, and a combination of BART and/or state and/or tribal regulations for affected counties outside of CAIR.  While the ways in which EPA will modify CAIR to meet the US Circuit Court's directives remains to be seen, but what is clear is that the compliance deadline for this coming April remains in place.

As Always, We Will Have to See
Hopefully this brief summary has shed a bit of light on the complex and interwoven web of current and anticipated federal regulations that have implications for NOx emissions.  As always, key questions remain. To summarize:

• How the US EPA is going to modify CAIR with respect to overall limits, geographic scope, state-specific caps, and provisions for allowance trading? 
• Will the new CAIR accommodate the proposed stricter ground-level ozone limits announced last week?  Will these require generators outside of CAIR to revise their BART filings? 
• What will states with counties currently not in compliance with PM2.5 limits do between now and the compliance deadline of April 2010?  What will the penalties be for non-compliance?

I will keep you posted as more information becomes available and as I endeavor to talk with folks within NeuCo's customer base that are closer to the problem than I am.  We sure live in interesting times!