Nonattainment Zone in Southeast Wisconsin
Effective January 16, 2025, southeastern Wisconsin, including parts of Milwaukee, Ozaukee, Washington, Waukesha, Racine, Sheboygan, and Kenosha counties, is designated to be classified as a nonattainment area for the 2015 ozone National Ambient Air Quality Standards (NAAQS). This designation means that businesses in these areas must adhere to stricter air quality regulations to reduce emissions of volatile organic compounds (VOCs) and nitrogen oxides (NOx). I am NOT an expert on the science behind this or the necessity of these standards, but this does pose a major risk to businesses in the region as it will likely bring stricter regulation, which has shown to hinder small to medium-sized organizations disproportionately to larger organizations. Here is a crash course to what this could mean for certain organizations.
What are VOCs and NOx?
Volatile Organic Compounds (VOCs) are organic chemicals that easily vaporize at room temperature. They are commonly found in solvents, paints, adhesives, cleaning products and detergents.
Nitrogen Oxides (NOx): These are gases produced from the reaction between nitrogen and oxygen during combustion processes. NOx contributes to air pollution and the formation of smog and acid rains and contributes to ozone depletion.
Industries likely to be producing VOCs and NOx
- Chemical Manufacturing processes: Production of chemicals, pharmaceuticals, and petrochemicals. Emissions of VOCs from solvents, adhesives, and coatings
- Petroleum Refining: Refining crude oil into petroleum products can emit VOCs and NOx from storage tanks, equipment leaks, and combustion.
- Automotive Manufacturing: Vehicle production involving paints, coatings, and solvents emitting VOCs from paints and solvents; NOx from combustion engines.
- Metal Processing: Welding, cutting, and surface coating in metal fabrication, concerns around emitting VOCs and NOx from various metalworking activities.
- Food and Beverage Processing: Use of cleaning agents, solvents, and fermentation, which can emit VOCs from cleaning agents and fermentation processes
- Electronics Manufacturing: Production of electronic components and devices can emit VOCs from solvents and chemicals used in manufacturing.
- Printing and Packaging: Use of inks, adhesives, and coatings, concerns around emissions of significant amounts of VOCs from printing and packaging operations.
Permitting Requirements in Nonattainment Areas
Businesses in nonattainment areas that are considered major sources of VOCs and NOx must abide by specific permitting requirements to ensure compliance with air quality standards. Key aspects include:
1) Nonattainment New Source Review (NNSR): A business must apply for permits before major changes to operations. This program applies to new major sources or major modifications at existing sources. It requires:
- Lowest Achievable Emission Rate (LAER): The most stringent emission limitation achieved in practice or included in any state implementation plan
- Emission Offsets: New or modified sources must obtain emission reductions from existing sources to offset their emissions, ensuring a net air quality benefit
- Public Involvement: Opportunities for public comment and participation in the permitting process
2) Major Source Thresholds: The threshold for what constitutes a major source of emissions is lower in nonattainment areas. For example, in southeastern Wisconsin, the major source threshold for VOC and NOx emissions is reduced from 100 tons to 50 tons per year.
3) Emission Offsets Ratios: The offset ratio in southeastern Wisconsin is increased from 1.15:1 to 1.2:1, meaning businesses must reduce emissions by more than they emit.
Consequences of Noncompliance
Failure to comply with nonattainment area regulations can result in significant consequences for businesses, including:
- Fines and Penalties: Businesses may face substantial fines and penalties for violating air quality regulations
- Operational Restrictions: Noncompliant businesses may be subject to operational restrictions, including limitations on production or mandatory shutdowns until compliance is achieved
- Loss of Federal Funding: Nonattainment areas that fail to meet air quality standards may lose eligibility for certain federal projects or contracts.
- Reputation Damage: Noncompliance can harm a business’s reputation, leading to potential loss of customers and negative public perception
Increasing Regulation Concerns
As regulations become more stringent, businesses in nonattainment areas will face growing challenges. Compliance with these regulations often requires significant investment in new technologies and processes to reduce emissions. While many are still pushing back on this new development, if fully implemented, it is likely to increase operational costs and red tape for businesses looking to grow and expand in Wisconsin.
For existing companies in this region, it will likely take some time before they must be 100% compliant and many are still fighting this. The main argument outside of the economic concerns seems to revolve around whether the data is accurate pertaining to this problem. I am not going to weigh into that here, but this is something businesses need to be aware of in order to prevent further limitations on growth.
Article provided by Zach Kaiser, Strategic Risk Advisor at McClone Insurance
