On June 2, 2010, the Environmental Protection Agency adopted a final rule which significantly lowers the primary National Ambient Air Quality Standard (“NAAQS”) for sulfur dioxide (“SO2 ”). EPA is phasing out both the annual standard (0.03 parts per million or ppm) and the existing 24-hour standard set at 0.14 ppm, and phasing in a new 1-hour standard set at 75 parts per billion (“ppb”). The new 1-hour standard is met when the 3-year average of the 99th percentile of daily maximum 1-hour averages at each monitor does not exceed 75 ppb. EPA will transition to the new standard with overlap of the existing standards. In areas that are in compliance with the current standards (all of Louisiana), the existing 24-hour and annual standards will be revoked one year after the designations of new nonattainment areas. Designations are to be final in June 2012, so the existing standards will no longer remain effective as of June 2013.

The immediate impact of the new rule will be realized when the new 1-hour standard becomes effective, 60 days after publication of the Federal Register notice of the final rule. This is expected to be published in the 3rd or 4th week of June. After that time, any applicant for a Prevention of Significant Deterioration (“PSD”) permit will be required to demonstrate that the project will not cause or contribute to an exceedance of the new 1-hour SO2 NAAQS. Generally, this requires a comprehensive modeling demonstration; however, past EPA policy has been to establish a “significant impact level” (“SIL”), below which modeling is not required as impacts are unlikely. EPA has not yet established a new SIL under the PSD program for the 1-hr standard. EPA has indicated that it expects to issue guidance on a SIL in the near future to serve until it amends the PSD rules, but believes that, in the mean time, the current SILs for the 24-hr and annual standards can be used for permitting purposes for the 1-hour NAAQS. Permitting agencies could also require existing sources of SO2 emissions to model their potential impact as part of any Title V modification or renewal application.

The implementation schedule calls for states to submit recommendations as to the classification of all areas within the state as nonattainment, attainment or unclassifiable by June 2, 2011. In Louisiana, two parishes have monitored nonattainment based on 2007-2009 data: West Baton Rouge and St. Bernard. The parishes of Bossier, Calcasieu, East Baton Rouge, and Ouachita have monitored data showing attainment with the new standard. However, EPA stated in the final Preamble that an area cannot be designated as attainment unless it has both monitor data demonstrating attainment and modeling of each large source shows that it meets the standard at the fence-line. EPA indicated that a large source includes, at a minimum, those with a potential to emit over 100 TPY SO2, and that the threshold may be smaller. All areas that do not meet both of these criteria are to be classified as “unclassifiable.” In a controversial move, EPA has indicated that modeled nonattainment will cause an area (likely a parish) to be classified as nonattainment even where no ambient monitor shows nonattainment.

The types of sources that typically have a potential to emit over 100 TPY include: carbon black plants, coke calciners, coal or fuel-oil fired combustion units, sulfuric acid plants, petroleum refineries, and pulp and paper mills. Thus, Louisiana will be required to model these sources, or will request the sources to model, prior to the date the recommended designations are due. The alternative will be to classify such areas as unclassifiable rather than attainment.

The new rule also requires Louisiana and other states to install additional new ambient monitors for SO2. The new requirements require that monitors will be placed where SO2 emissions impact populated areas. Any new monitors required by this rule must begin operating no later than January 1, 2013. It is likely that there will be a minimum of one additional monitor in the Orleans area, one in the Baton Rouge area, and potentially others around the state. The rule gives EPA Region 6 great discretion to require additional ambient monitors in populated areas.

As noted, Louisiana must propose the recommended parish/area classifications by June 2, 2011. If EPA disagrees with these classifications, it must notify the state by February 2012 that it intends to modify the classifications or boundaries. EPA will make final classification decisions by June 2, 2012. The deadline for attainment with the new standard is 5 years after the effective date – which will likely be in August 2017 as the effective date is 60 days after the Federal Register publication in 2010. The Louisiana Department of Environmental Quality will be required to submit a State Implementation Plan for areas in attainment or unclassifiable by June 2, 2013. It must submit a State Implementation Plan for areas in nonattainment by February 2014.

For more information on the new SO2 NAAQS rule, see the EPA press release.