Effective November 7, 2022, the United States Environmental Protection Agency (EPA) reclassified the Northwest Indiana portion of the Chicago nonattainment area from “marginal” to “moderate” for the 2015 8-hour ozone standard. The affected areas in Indiana include the following townships located in Lake County: Calumet, Hobart, North, Ross, and St. John, and the following townships located in Porter County: Center, Jackson, Liberty, Pine, Portage, Union, Washington, and Westchester. The Clean Air Act (CAA) requires states with ozone nonattainment areas classified as moderate or above to include Reasonably Available Control Technology (RACT) requirements in their Sate Implementation Plan (SIP) for all major stationary sources of NOX and VOCs.
On October 17, 2023, EPA published a final rule finding that eleven states, including Indiana, failed to submit the SIP revisions required by the CAA following the redesignation of Lake and Porter counties from “marginal” to “moderate” nonattainment in 2022. EPA found that Indiana specifically failed to submit a SIP revision imposing NOX RACT for major stationary sources in Lake and Porter counties. This triggered a sanctions clock under Section 179 of the CAA. Offset sanctions would apply 18 months after the effective date of the finding if no complete SIP was submitted, requiring a 2:1 ratio of emission reductions to be achieved in the nonattainment areas to offset emissions from new or modified major facilities. If the SIP was not appropriately revised within six months of the offset sanctions, the U.S EPA would impose highway sanctions in accordance with 40 CFR 52.31(e)(2), withholding an average of $183.7 million annually in federal transportation funding from the nonattainment areas. Therefore, the Indiana Department of Environmental Management (IDEM) had until May 17, 2025 to submit a SIP to avoid offset sanctions, and until November 17, 2025 to avoid highway funding sanctions.
To address EPA’s finding, IDEM proposed a rulemaking to provide an enforceable mechanism that satisfies EPA’s SIP requirements for NOX RACT. This rulemaking was finalized on October 27, 2025, codified as 326 IAC 10-7. The rule sets expectations regarding how major stationary sources of NOX located in Lake and Porter Counties must comply with newly tightened NOX RACT requirements. It aims to provide clear timetables and regulatory clarity for both submission and enforcement.
Key Provisions Under Indiana NOX RACT Requirements
Following the reclassification of Lake and Porter Counties’ attainment status, the rules under 326 IAC 10-7 are potentially applicable to sources with the potential to emit greater than or equal to 100 tpy of NOX . The final rule establishes presumptive NOX RACT limits for large boilers, turbines, stationary internal combustion engines, process furnaces, and site-specific emission limitations. Facilities not subject to emission limitations specified in Section 4 of the rule, or that are exempt under Section 7 of the rule, shall conduct an engineering study to evaluate the technologically feasible and cost-effective controls for NOX emissions and define RACT for the facility. The information to be included in the engineering study is listed in 326 IAC 10-7-6(b)(1)-(7).
The site-specific emission limitations are outlined in 326 IAC 10-7-8. Per the final rule, 11 facilities in Lake and Porter Counties must comply with specified RACT standards for their affected emission units. Most of these facilities meet presumptive RACT standards through existing controls and operational practices; however, two facilities were identified as needing additional control measures.
Affected facilities must comply with the final rule within 120 days of becoming subject to this rule, marking a compliance deadline of February 24, 2026, for affected facilities. Facilities must certify in writing to the department that the facility is in compliance with all requirements of this rule and shall include equipment descriptions, Part 70 operating permit application numbers, and all necessary data and calculations to prove compliance. A Part 70 operating permit application or modification shall be submitted to IDEM to include a compliance program that brings the source into compliance with all the requirements of this rule no later than the dates specified in 326 IAC 10-7-9(b).
SIP Submission Status
Finalizing 326 IAC 10-7 was a necessary step in addressing EPA’s October 17, 2023 finding of failure to submit, but it does not itself satisfy EPA’s SIP requirement. Indiana must still submit a complete SIP revision incorporating 326 IAC 10-7 and supporting documentation to EPA for approval. As of now, Indiana missed the May 17, 2025 deadline, so offset sanctions began in May 2025. Since there is still not an EPA-approved SIP, highway funding sanctions are possible if an acceptable SIP is not submitted to EPA. EPA’s finding of failure to submit remains active and Indiana is still expected to submit a complete and adequate SIP. However, now that 326 IAC 10-7 has been finalized, EPA can approve a SIP based on enforceable state rules and compliance schedules even if facilities have not yet completed physical changes, so approval does not need to wait until February 2026.
Looking Ahead: Serious Nonattainment
On December 17, 2024, Lake and Porter counties were reclassified from “moderate” to “serious” nonattainment (See IN 2015 Ozone NAAQS Nonattainment Bump Up published in March 2025 for more information). The major source threshold for serious nonattainment areas is 50 tpy; therefore, IDEM will need to repeat the process of revising the SIP to include RACT measures for sources in the affected areas of Lake and Porter counties (as mentioned above) that emit between 50 and 100 tpy NOX . To avoid sanctions by the U.S EPA, Indiana shall submit its revised SIP for serious classification 18 months after the effective date of reclassification. Failure to meet this deadline would start a new sanctions clock.
