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The U.S. Supreme Court’s recent refusal to hear arguments on the air quality case South Coast Quality Management District v. U.S. EPA literally opened a potential floodgate of penalties on the Baton Rouge area.

The decision let stand a 2006 ruling by the U.S. Court of Appeals District of Columbia Circuit to require the Environmental Protection Agency to reinstate requirements associated with its old standard [maximum 124 parts per billion of ozone] in the federal Clean Air Act. The court also ruled the EPA incorrectly determined the penalty fees were not required as an “anti-backsliding” measure against companies in areas designated as “severe” that missed the agency’s one-hour compliance deadline.

The EPA indicated it would not assess fees for missing the deadline as it was transitioning to a stricter standard [85 ppb over an eight-hour period] in 2005.

At that time, the metropolitan Baton Rouge area, including East and West Baton Rouge, Livingston, Ascension and Iberville parishes, was one of these designated areas. Any companies producing two ozone-causing pollutants [volatile organic compounds and nitrogen oxide] could be subject to fees.

Steven Grissom, interim Baton Rouge Area Chamber president and CEO, estimates the five-parish area could face up to $100 million a year in penalties. But Grissom also says the impact could be more far reaching—depending on how the EPA defines noncompliance for that period—with stricter permitting that could hinder continued industrial expansion and a potential mandate to sell only “reformulated” or ethanol blend gasoline in the area that he says could cost 10 to 15 cents more a gallon. The EPA nearly required its use in 2004, but the chamber intervened.

“We take this issue extremely seriously,” Grissom says. “It’s a real threat for our region.”

Collectively, Grissom puts the potential overall economic impact in fees, lost growth and additional fuel costs to as much as $500 million a year.

“We’re hopeful that we can work with the EPA in crafting the revised rule so that it’s not so damaging to the Baton Rouge economy,” he says. “There’s a lot of work to be done before the full impact of this might be felt, and we hope we can find a solution to the issue before we reach that point.”

The metro area economy is significantly driven by the petrochemical and refining sectors. But Grissom says the fees apply to any company producing ozone-causing pollutants in the designated area.

“Our area has made substantial progress in lowering ozone emission levels under the old one-hour standard,” Grissom says. The area complied with the standard by late 2006, but the deadline was Nov. 15, 2005.

Adam Babich, who is director of Tulane Environmental Law Clinic in New Orleans, represented the Louisiana Environmental Action Network that legally challenged the EPA. He says the five-parish area, as others in noncompliance in the country, have had since the 1970s to comply with ozone standards.

“This is what happens when you don’t pay attention to the law,” Babich says. “What we want and, I think everybody else pretty much wants, is air that meets minimum health protection standards. We want people to breathe healthful air, and if we meet that goal we won’t have to worry about fines.”

Dan Borné, president of the Louisiana Chemical Association, agrees the old standard was met past the deadline. Efforts are already focusing on complying with the newer EPA standard of 85 ppb allowed over an eight-hour period, even though it may again change to 70 or 75 ppb later this year.

“We’ll certainly argue the area has made significant progress toward attainment, and to penalize industry now when the area is under a totally new standard would severely penalize the economic development of the area,” Borné says.

He estimates more than 100 area sites, including petrochemical and utility, could face the retroactive fines. Other metro areas, including Baltimore, Chicago, Houston, Philadelphia and Sacramento, Calif., are in the same situation.

Attorney Maureen Harbourt, who is representing LCA, says the EPA standard outlines the penalty fee as $5,000 per ton in 1990 dollars, but adjusting for inflation brings that figure in the range of $7,500 and $10,000. If the fees are assessed based on the 2005 baseline [lower of actual or allowable volatile organic compounds and nitrogen oxide emission levels in that calendar year], Borné estimates penalties could easily exceed $80 million a year.

While there are legal issues with collecting these fees retroactively, Harbourt says there are other questions looming, like when the fees will end and if they’ll be assessed under the old or new standard because they were dually applied in the transition.

“It’s an ongoing process that will take a fair amount of time to work through these options with the EPA,” Borné says. “The court case at least cleared up the litigated area, puts us back in the regulatory realm with the EPA and clears the way to resolve the fees and other sanctions. This has been hanging over Baton Rouge’s collective head since the appeal.”