Clean Air Interstate Rule

In March 2005, the U.S. EPA finalized the Clean Air Interstate Rule (CAIR). CAIR caps emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx) in the eastern United States. The rule includes three separate cap and trade programs, including annual SO2 and NOx reduction programs to limit fine particulate matter formation (PM2.5), and a seasonal NOx reduction program to decrease ozone formation.

Application
CAIR applies to 28 eastern states (including Texas) and the District of Columbia. Because emissions can travel across state lines, the emissions caps were created in an effort to improve state and regional air quality, particularly in "downwind" states. In these areas, the EPA expects CAIR to reduce SO2 emissions by over 70 percent and NOx emissions by over 60 percent compared to 2003 levels. The facilities affected by the regulation include fossil fuel-fired electric generating units (EGUs) larger than 25MW, and co-generation units larger than 25MW that sell more than one-third of their electric output.

Dismissal and Interim Reinstatement
On July 11, 2008, the D.C. Circuit vacated CAIR in North Carolina v. EPA, No. 05-1244 (D.C. Cir. July 11, 2008), finding that CAIR failed to meet the requirements of the Clean Air Act and that “EPA’s approach – regionwide caps with no state-specific quantitative contribution determinations or emissions requirements – is fundamentally flawed.”

In December 2008, the U.S. Court of Appeals for the D.C. Circuit reversed its July ruling vacating CAIR. In the new order, the appeals court stated that "allowing CAIR to remain in effect until it is replaced by a rule consistent with our opinion would at least temporarily preserve the environmental values covered by CAIR."

Clean Air Mercury Rule
In a related regulation, the Clean Air Mercury Rule (CAMR) was the first time the EPA required coal-fired power plants to reduce their mercury emissions. On February 8, 2008, the DC Circuit struck down CAMR in New Jersey v. EPA, No. 05-1097 (D.C. Cir. Feb. 8, 2008), as the Act removed oil and coal-fired electric utility steam generating units (EGUs) from the list of sources of hazardous air pollutants and instead regulated the emissions through a cap-and-trade program. New Jersey, and several other states, municipal governments, and environmental groups, challenged CAMR claiming that EPA had no authority to delist the EGUs without providing a “specific finding” under section 112(c)(9) of the Clean Air Act. The DC Circuit agreed with the Petitioners, vacating both the delisting rule and CAMR.

After the ruling, the EPA began developing air toxics emissions standards for power plants under the Clean Air Act (Section 112), consistent with the D.C. Circuit’s opinion regarding CAMR. EPA intends to propose air toxics standards for coal- and oil-fired electric generating units by March 10, 2011 and finalize a rule by November 16, 2011.

On December 24, 2009, EPA approved an Information Collection Request (ICR) requiring all US power plants with coal-or oil-fired electric generating units to submit emissions information for use in developing air toxics emissions standards.

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