- WEB EXCLUSIVE
- PE COFFEEHAUS
It's back to square one for the Bush administration and industry in trying to implement a workable air emissions regulation for power plants. And according to Business & Legal Reports, it’s likely that nothing will happen on the issue until the next administration.
Surprising industry, the federal government and environmental groups, the U.S. Court of Appeals for the D.C. Circuit, citing "several fatal flaws," vacated the entire Clean Air Interstate Rule (CAIR)
Deciding the landmark case of the State of North Carolina v. EPA, the court said “no amount of tinkering with the rule or revising of the explanations will transform CAIR, as written, into an acceptable rule."
The court ruled on July 11 that the EPA overstepped its authority by instituting the cap-and-trade rule for SO2 and NOX. It said the Clean Air Act did not give the EPA the authority to change pollution standards the way it did. Citing "more than several fatal flaws," the court told the agency it must re-write the entire regulation.
The basic flaw in CAIR, according to court documents, was that the EPA did not assess each state's significant contribution on a state-by-state basis to the impacts of emissions on downwind states. The rule relied instead on regionwide caps with no state-specific quantitative contribution determinations or emissions requirements.
The court also told the agency it must consider earlier target dates for achieving emissions reductions and figure out exactly which states are included in rule, since as-written, CAIR did not take into account the Clean Air Act's requirement that a state's emissions may not interfere with another state's maintenance efforts.
The court also said that CAIR's trading program is unlawful because it does not connect states' emissions reductions to their own significant contributions. It related them, instead, to their allowances under the acid rain program, thus "unlawfully tampering with the Title IV trading program."
All of the above points to an eventual rule that is both tighter and more specific, and one that includes both Florida and West Texas. However, there was some good news for industry: the court agreed with gas-fired utilities that coal-fired utilities received an unfair credit advantage through the rule's fuel adjustment formula for heat input as it relates to NOX emissions. Consequently, states with primarily coal-fired power plants got more trading credits than states with primarily gas- or oil-fired plants. The EPA's reasoning was that it costs more for coal-fired plants to control emissions, but that reasoning, according to the court, unfairly penalizes a state that can control emissions more cheaply.
CAIR, issued in 2005, was concerned with pollutant transport in 28 eastern states. Over a 10-year period, states were required to devise and implement rules to achieve a 73 percent reduction in SO2 emissions and a 61 percent reduction in NOX emissions. To meet these targets, states had the option of participating in a federally managed cap-and-trade program or meet individual state caps through measures of their own choosing.
CAIR was developed by the EPA with substantial input from the power industry and also received the unusual support of Environmental Defense, an environmentalist group that is a strong proponent of market-based environmental solutions such as cap-and-trade.
The primary mechanism of the rule was a cap and trade program that would have allowed a major source of NOX and/or SO2 to trade excess allowances when its emissions of a specific pollutant fall below its cap for that pollutant.
While many environmentalists originally considered CAIR far too lax in 2005, many were sad to see it go, considering the decision will likely mean a delay long into the term of the next administration before the effects of the new controls will be felt. "This is without a doubt the worst news of the year when it comes to air pollution," said Frank O'Donnell, president of the environmental group Clean Air Watch in a press release. O'Donnell and other environmental groups said they will pressure the EPA to re-write the rule as soon as possible.