Development in Southeast Wisconsin Will Once Again be Hampered by Clean Air Rules

New U.S. Environmental Protection Agency (EPA) air quality standards and pollution migrating from upwind states will impact growth and development in southeastern Wisconsin, beginning on January 16, 2025.

Prior to 2012, southeast Wisconsin air quality was classified as severe nonattainment under the then-applicable ozone standard, requiring rigorous permitting and offset requirements that affected growth in our region. The Wisconsin Department of Natural Resources (DNR) implemented numerous restrictions, controls, and permitting requirements for industry in the area, and ozone concentrations along the Lake Michigan shoreline decreased. By 2012, this area achieved compliance with the federal standards and expansion and development in southeastern Wisconsin proceeded under less onerous requirements.

In 2015, EPA adopted a lower federal standard for ozone. Milwaukee County, Ozaukee County, and parts of Washington, Waukesha, Racine, Sheboygan, and Kenosha Counties were first classified as “marginal” nonattainment, and then redesignated to “moderate” nonattainment in 2021. Because these areas did not meet the federal standard within three years, they will be reclassified as “serious” nonattainment areas, triggering application of stricter development limitations and additional controls on existing sources beginning on January 16, 2025.

But this time is different: there may not be a path forward to achieve attainment. Businesses and DNR agree that in-state emission reductions through permitting actions and controls on new and existing sources in the state will not be sufficient to meet the newly lowered federal standard. The standard is so low, and southeastern Wisconsin’s ozone is generated largely from air emissions migrating from Illinois, Indiana, and from cars and trucks – which together mean that the area cannot meet the federal standard without addressing those other emissions. And the DNR lacks the authority to regulate those sources.

This problem will persist unless there is significant amendment of the Clean Air Act. While parties continue to pursue lobbying and litigation efforts to try to bring relief to southeastern Wisconsin, until that relief is realized, the serious nonattainment status will affect (1) construction of major expansions and new facilities that emit significant amounts of Volatile Organic Compounds (VOCs) and Nitrogen Oxides (NOx), and (2) current sources of VOCs and NOx greater than 50 tons per year.

“Major” sources subject to these restrictions will now include companies with the potential to emit 50 tons per year of VOCs or NOx – the prior threshold was 100 tons per year.

Impact on Major Expansions and New Facilities

To expand or build a new facility, major sources will be required to:

• Obtain emission offsets on a 1.2 to 1 basis.
• Meet lowest achievable emission rate (LAER) for VOCs and NOx.

Because southeastern Wisconsin met the prior ozone standard, there are few “offsets” of VOC and NOx emissions that are immediately available within the state, and some portion of the currently banked offsets may go away after the DNR completes additional rulemaking required to implement the serious designation. If and when any new offsets do become available in the region, they are likely to be expensive given the limited availability. While parties may be able to purchase credits from “upwind” Illinois or Indiana, those credits are often of limited availability and require separate approval from DNR and EPA.

Impact on Other Existing Sources

The lowering of the major source threshold from 100 to 50 tons per year will require more sources to apply for a “Title V” operating permit. Title V permits require more reporting and recordkeeping, and are enforceable by both EPA and DNR. That means that sources with the potential to emit between 50 and 100 tons per year of VOCs or NOx, which previously operated only under a DNR permit, will have 12 months to apply for a Title V air permit (unless the DNR establishes an earlier date). This requirement applies even if those facilities are not planning any expansions.

Conclusion

Effective January 16, 2025, several southeast counties will be classified as “serious nonattainment” under the new lower standard, and new industrial expansion in the region will be significantly hindered. Some existing sources in the region will also need to obtain a new federal air permit.