Business Roundtable

Background Paper on Significant EPA Regulations Pending or Proposed

Background

The Clean Air Act requires states to reach “attainment” of EPA established National Ambient Air Quality Standards (NAAQS) for criteria pollutants and to maintain compliance with those standards.  States that do not achieve compliance with NAAQS by a certain date face tighter regulations on existing and new sources and also may lose the ability to permit new sources. 

In addition, section 110 of the Clean Air Act requires each State Implementation Plan (SIP) to prohibit any source of emissions within the state from emitting any air pollutant in amounts which will contribute significantly to nonattainment, or interfere with the efforts of any other state to maintain its compliance, with respect to any NAAQS.  As an enforcement mechanism, section 126 of the Clean Air Act allows a state to sue another state for emissions reductions if upwind emissions are contributing to nonattainment in the downwind state. 

The Bush Administration promulgated the Clean Air Interstate Rule (CAIR) to respond to concerns raised by a number of states about the effects that powerplant emissions in the Midwest and South were having on the formation of fine particulates and ground-level ozone in downwind states.  SO2 and NOx emissions are contributors to the formation of fine particulates and ground-level ozone and both pollutants can travel hundreds of miles. 

CAIR was a complex rule that established new SO2 and NOx budgets for certain states and regions of the country (primarily east of the Rockies) and allowed trading of SO2 and NOx permits to help reduce the cost of compliance.  CAIR was challenged by numerous parties and ultimately the rule was remanded to EPA by the U.S. Court of Appeals for the D.C. Circuit in December, 2008. 

Overview of Rule

On July 6, 2011, EPA finalized the Cross State Air Pollution Rule (CSAPR) as a replacement for CAIR to help states meet the fine particulate matter NAAQS.  CSAPR would require 27 states and the District of Columbia to reduce power plant emissions that contribute to ozone and fine particulate pollution in other states.  Under the rule, state-by-state SO2 and NOx budgets are established and each utility generating unit is assigned a percentage of the overall state budget. In addition, EPA implemented these rules through a federal implementation plan rather than allowing states time to develop state implementation plans.    

Current Status

On December 30, 2011, the Court of Appeals for the D.C. Circuit stayed the implementation of CSAPR.  On August 21^st, 2012, the court vacated CSAPR in its entirety on the grounds that: (1) the rule impermissibly required upwind states to reduce emissions in excess of their contribution to downwind states’ air pollution; and (2) EPA’s decision to implement the rule through a federal implementation plan at the same time it issued upwind state-by-state pollution budgets violated the Clean Air Act by not allowing states adequate time to develop state implementation plans.  CAIR will remain in effect until EPA issues a final, substantially revised rule.