EXECUTIVE SUMMARY – IMPLEMENTATION OF U.S. EPA’s FAR-REACHING OZONE STANDARDS HAS BEGUN – M&A AND BUSINESS VALUATIONS MAY BE AFFECTED
In April 2018, EPA will begin enforcing its new stricter ozone standards which will make it more difficult in many areas of the Country to obtain permits to construct new sources or modify existing sources that increase emissions of volatile organic compounds (VOCs) or oxides of nitrogen (NOx). Additionally, some areas may have to begin forcing existing facilities to lower their emissions so that the areas can over time come into compliance. The main source of VOCs are solvents widely used in manufacturing. However, many paints and inks are also solvent based. Thus, companies that paint, manufacture, package or print may be affected. The main source of NOx is combustion of fossil fuels. Thus, emissions from large industrial type boilers at hotels, hospitals and manufacturing facilities may also be affected. Similarly, the petrochemical industry will be affected.
Background
In October 2015, U.S. EPA tightened the National Ambient Air Quality Standards (NAAQS) for ground-level ozone from 75 parts per billion (ppb) to 70 ppb. Under the Clean Air Act those regulations were supposed to go into effect two years after their adoption – October 1, 2017. On November 6, 2017, EPA issued a partial list of counties that are in “attainment” of the new ozone standards but delayed the more difficult decisions regarding the designation of “nonattainment” areas and the degree of non-attainment of each area because it needed additional information.
In a series of letters to individual states on December 20, 2017, EPA indicated its preliminary determinations as to which counties in each state are expected to be designated as “non-attainment” areas based on 2013-2015 data. On January 5, 2018, EPA sought comments which were due on February 5, 2018 on those preliminary designations. On March 9, 2018, EPA published in the Federal Register its final rule for determining the severity of the exceedances and final dates for compliance in each area. Areas that are within 10 ppb of the new standard will have only three years to meet the new 70 ppb standard. Areas with more severe levels will have longer to comply. Since the rule goes into effect 60 days after its publication in the Federal Register, the rule will become effective May 8, 2018. Law suits have been brought by various environmental groups contending that EPA is not moving quickly enough.
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