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Houston failed to meet 30-year-old limits on smog-forming pollution, a decision that could lead to hefty fines for as many as 300 oil refineries, chemical plants and other large industrial facilities.

The Environmental Protection Agency (EPA) made the determination six months after a settlement with the Sierra Club, which had accused the federal government of skirting its obligation to enforce the rules set in 1979.

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Houston had a 2007 deadline to comply with the smog limits but fell short despite improvements in air quality. Federal law requires the state to collect fines from the eight-county region’s largest polluters until they meet the standard.

The law ”recognizes that if there was not a penalty for missing clean-air goals, there would not be clean air,” said Elena Craft, a Texas-based air quality expert for the Environmental Defense Fund, which has pushed for the fines. ”There is more we can do,” Craft said, ”and this is an opportunity to bring these critical protections to the Houston area.”

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It is unclear how the Texas Commission on Environmental Quality (TCEQ) would implement the penalty program. The state agency was about to finalize procedures, but held off on the EPA’s advice last year.

The EPA said Houston and other places still in violation of a smog standard set three decades ago would not have to pay fines if they met a newer, more stringent limit for the widespread air pollutant. The federal guidance ended up vacated last year by the U.S. Court of Appeals for the District of Columbia Circuit.

A TCEQ spokesman said the agency would re-evaluate the previously proposed penalty program before moving forward.

The state’s initial proposal would apply to industrial sites that release 25 tons or more of smog-forming pollutants each year – between 200 and 300 facilities in the region. The plan would generate as much as $125 million annually for state programs to improve air quality in Houston.

Industry groups have urged the TCEQ to allow alternatives to fines, such as paying to replace or retrofit diesel-powered school buses.

”Any fees in Houston as a result of revoked standards will need to be looked at hard against the economic impact,” said Matthew Kuryla, an attorney at the firm Baker Botts, who represents industry on regulatory matters.

The Carter-era smog standard requires that air contain less than 125 parts per billion of ozone, or smog, for any one hour.

The EPA tightened the nationwide standard in 1997 by altering how it measures ozone, from marking the peak level reached in any one hour to averaging the level over eight hours. The change reflected research showing that long-term exposure to low smog levels is a greater threat than brief exposure to high amounts.

Houston lowered its one-hour levels from 220 ppb in 1991 to 125 ppb last year. The EPA has not recommended additional pollution controls because of the rate of Houston’s progress.

Experts attribute the cleaner air to several factors, ranging from better monitoring of flares, leaks and cooling towers to a cap-and-trade program for smog pollution. The trading program allows industrial plants to exceed emissions limits by buying credits from those that make deeper emissions cuts.

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