EPA Issues New Ozone Standard

The Environmental Protection Agency (EPA) issued a final rule establishing ground-level ozone standards under the Clean Air Act. The rule, which did not go as far as the environmental community had hoped, is likely to affect fuel retailers in a variety of ways, primarily by injecting more heterogeneity into the motor fuels market, leading to increased costs of supply and ultimately higher prices at the pump.

Stricter standards for ground-level ozone (or smog) will prompt states to implement enhanced ozone control measures, such as reformulated gasoline (RFG) in what are now conventional gasoline areas, and stricter Reid Vapor Pressure (RVP) requirements.  These measures serve to balkanize the motor fuels market, requiring different types of products to be sold in different areas within a particular region. This results in more complex supply and logistical scenarios, ultimately increasing the price consumers pay for motor fuel.  

EPA’s final rule lowered ground-level ozone standards to 70 parts per billion (ppb) from the current standard of 75 ppb.  EPA had considered lowering the standard to as few as 60 ppb, but ultimately finalized the higher 70 ppb standard. 

The ground-level ozone standards essentially define what EPA considers to be “clean air” for purposes of ozone.  Once the standard is set, the agency uses monitoring data and other information to identify areas that exceed the standards and thus must reduce pollutant concentrations.  After nonattainment areas are designated, state and local governments have up to three years to produce plans outlining how they will reduce emission levels and attain the standards.  It is through these plans that states often must impose stricter standards for motor fuel. 

The final rule will not require any immediate compliance efforts by the regulated community, but simply sets in motion a long and complicated implementation process that may ultimately have far reaching impacts.