On July 7, 2011, the U.S. Environmental Protection Agency (“EPA”) issued new rules requiring power plants in 27 eastern, mid-western, and southern states to cut emissions of nitrogen oxide by 54% and sulfur dioxide by 73% from 2005 levels by the time the rules take full effect in 2014.  The “Cross-State Air Pollution Rule,” which was proposed a year ago as the Clean Air Transport Rule, sets state-specific emissions limits aimed at reducing wind-borne transport of ozone and fine particulate matter across state lines in the East and some state west of the Mississippi. The new transport rule was promulgated under section 110(a) of the Clean Air Act (“CAA”), which requires states to prohibit emissions that contribute significantly to nonattainment in any other state with respect to national ambient air quality standards (“NAAQS”).  The rule establishes cap-and-trade market trading within states and allows for limited interstate trading if states remain under their annual emissions limits.  EPA asserts that the rule will enable downwind states in all but a handful of areas in the eastern part of the country to attain and maintain compliance with the 1997 and 2006 fine particulate matter NAAQS and 1997 ozone NAAQS. 

The rule, however, does not apply to new, more stringent ozone NAAQS that EPA is expected to promulgate this month or new, more stringent PM2.5 NAAQS that EPA is expected t propose this summer.  EPA made clear that additional emission reductions beyond those required under the Cross-State Air Pollution Rule will be required when those new NAAQS go into effect.

The Cross-State Air Pollution Rule is stricter than its Bush-era counterpart, the Clean Air Interstate Rule (“CAIR”).  CAIR was struck down in 2008 by the U.S. Circuit Court of Appeals for the District of Columbia Circuit.  Despite the adverse court ruling, CAIR was allowed to take effect in 2009 while EPA drafted a new regulation. 

While the American Lung Association and others hailed the new regulations, industry groups and congressional Republicans called the rules job killers.  The House Appropriations subcommittee on the same day as the Cross-State Air Pollution Rule rulemaking passed a bill to withhold funding for several other EPA regulations aimed at electric generating units, including those concerning coal ash and cooling water. 

EPA described last week’s Cross-State Air Pollution Rule as “one of a series of regulatory actions to reduce the adverse health and environmental impacts of the power sector.” As a part of that rulemaking, EPA also issued a supplemental proposal requesting public comment on its conclusions that six additional states significantly affect downwind states’ ability to attain and maintain compliance with the 1997 ozone NAAQS.