EPA's New Strategy For Ozone And PM2.5 NAAQS Creates Temporary Window For Industrial Expansion And Development

The U.S. Environmental Protection Agency (EPA) has adopted a novel approach to "defending" the tighter limits on ozone and PM_2.5 adopted by the Biden Administration. EPA is declining to oppose the temporary rollback of a challenged redesignation for ozone, while actively requesting the vacatur of the PM_2.5 National Ambient Air Quality Standards (NAAQS). While it seems unlikely that these NAAQS standards will be permanently relaxed absent Congressional action, these unconventional tactics may provide some near-term relief to entities looking to expand or develop in Wisconsin and nationally.

Ozone Redesignation—Southeastern Wisconsin

On January 16, 2025, EPA reclassified parts of southeastern Wisconsin from "moderate" to "serious" nonattainment for the 2015 ozone NAAQS. But that reclassification has been put on hold. On September 5, 2025, the U.S. Court of Appeals for the Seventh Circuit stayed EPA's reclassification of the region at the request of the State of Wisconsin, after EPA declined to take a position in response to the state's request. While the Seventh Circuit considers the arguments presented, air permitting in southeastern Wisconsin's nonattainment area will proceed under the prior, less stringent "moderate" nonattainment classification, providing some relief for expansion or building of major sources in the region for the time being.

Southeastern Wisconsin was in attainment with the ozone standards from 2012 until 2015, when EPA revised the ozone NAAQS from 75 to 70 parts per billion. As a result, portions of southeastern Wisconsin were first classified as "marginal" nonattainment and then redesignated to "moderate" nonattainment in 2021. These areas include Milwaukee County, Ozaukee County, and parts of Washington, Waukesha, Racine, Sheboygan, and Kenosha Counties. Since the ozone monitors used for designation of the region have not yet met the 70 parts per billion standard, these areas were redesignated as "serious" nonattainment areas beginning in 2025, which affects (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.

In its challenge to EPA's 2025 rulemaking before the Court of Appeals for the Seventh Circuit, the State of Wisconsin requested that the Court stay this designation, alleging that EPA committed procedural error implementing the final rule and that EPA had failed to consider the impact of out-of-state sources of ozone precursors on the region. EPA declined to punch back—taking no position on the request and presenting no argument against the State's request for a stay. In the absence of any opposition to the stay request, the stay was granted by the Seventh Circuit pending resolution of the State's case.

Requested Vacatur of PM_2.5 Standard

As noted in our earlier alert, on March 6, 2024, the EPA finalized a rule to lower the NAAQS for particulate matter 2.5 micrometers in diameter and smaller (PM_2.5) from 12.0 mg/m³ to 9.0 mg/m³. This higher standard would have resulted in more areas being designated as nonattainment for PM_2.5, potentially triggering significant new costs and control requirements for facilities with air permits located in those new nonattainment areas.

A little over one year later, on March 12, 2025, EPA stated their intent to revisit the Biden-era rule. However, rather than introducing a new rulemaking to revise the rule, the EPA has instead urged the Court of Appeals for the D.C. Circuit to vacate the rule, despite EPA's previous defense of the rule at oral argument a year ago. Going beyond the passive approach taken before the Seventh Circuit, EPA "now confesses error" to the reviewing D.C. Circuit and characterizes the revised PM_2.5 rulemaking as "an unlawful tightening of the annual standard for fine particulate matter."

Impact on New and Existing Facilities

With respect to ozone, until the State's challenge to redesignation is resolved, air permitting will proceed under the prior "moderate" nonattainment standards. This means that, at least for the time being, parties looking to expand their operations or construct new facilities in southeast Wisconsin will have a lower regulatory threshold to navigate in order to obtain or modify their air permits, and existing facilities permitted under the "moderate" designation will not be required to reevaluate their air permitting status to account for the more stringent standards that EPA had finalized in January.

With respect to PM_2.5, the Biden-era rule is set to take effect on February 7, 2026. If the rule is not vacated or repealed by the D.C. Circuit or EPA by that date, the new rule will take effect, and additional litigation is likely to follow. If vacated or repealed, the new standards will not take effect, and nonattainment areas and air permitting for PM_2.5 will remain unchanged nationally, simplifying project permitting for new development and avoiding the establishment of new PM_2.5 nonattainment areas.

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