Posted by: Steven M. Taber | July 7, 2010

EPA Proposes “New and Improved” Clean Air Interstate Rule – Now Called “Transport Rule”

Everything old is new again. On Tuesday, July 6, 2010, the EPA proposed regulations to “cut air pollution that impairs air quality and harms the health of people downwind.”  These regulations will replace the “Clean Air Interstate Rule” which contained a controversial cap-and-trade provision for power plants.

Largely because of that provision, the U.S. Court of Appeals for the D.C. Circuit ruled in 2008 that the EPA had exceeded its authority and vacated the entire rule.  However, in December, 2008, at the EPA’s request the Court allowed the EPA to keep CAIR while it worked to come up with a replacement rule. See, “D.C Circuit Reinstates CAIR Pending EPA Review,” December 30, 2008.

However, since EPA is still reworking Bush-era ozone rules and closing in on tougher standards for emissions controls, the proposed rule, EPA Assistant Administrator Gina McCarthy said is a “work in progress” and “not the final answer.”  McCarthy went on to state that EPA plans to revisit the Transport Rule once it finalizes the tougher ozone standards, with a goal of final rule in 2012.

According to the EPA the Transport Rule would reduce power plant emissions of sulfur dioxide and nitrogen oxides to meet state-by-state emission reductions.  By 2014, the rule and other state and EPA actions would reduce SO2 emissions by 71 percent over 2005 levels.  NOx emissions would drop by 52 percent.

The EPA’s proposed Transport Rule scales back but does not entirely eliminate the CAIR’s  cap-and-trade system.  The Transport Rule limits acceptable circumstances for interstate trades while barring utilities from carrying over credits from the agency’s acid rain programs.

Sen. Tom Carper, (D-Del) said in a statement, reacting to the proposed Transport Rule, that his and Sen. Lamar Alexander (R- Tenn) legislation is a better way to go since it have a much better chance to survive legal scrutiny than the EPA’s Transport Rule:

Legislation that I have sponsored with my Republican colleague Sen. Lamar Alexander (R-TN), the Clean Air Act Amendments of 2010, would effectively accomplish many of the goals of this new rule — cutting mercury emissions by 90 percent from coal-fired power plants and tightening national limits on emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx).  My bill, which has broad bipartisan support with 15 cosponsors, would set even greater reductions that what EPA has put forth today, while at the same time giving flexibility to businesses and states to meet those targets.   Just as important, my legislation provides certainty for the business community and the public.  To me, the path forward is clear — Congress must pass legislation to address the serious threat posed by air pollution this year.


  1. What this story doesn’t tell you is that emission allowances prices actually declined when the EPA released the news. This occurred because the EPAs proposal contemplates creating a new program to run concurrently with the existing program. This essentially guarantees that the cost of power plant pollution in the U.S. will be essentially zero until 2012 when the new program starts. The market was looking for the EPA to link the old program to the new program to prevent the value of pollution from declining in the transition period. The 1,300 page EPA proposed rule and thousands of pages of supporting documentation clearly indicate that the EPA knew that the price of allowances would decline when they released this proposal. The EPA essentially traded “now benefits” for the possibility of “future benefits”. And since the nearly 19-year old Clean Air Act is so complex and outdated there is a decent (50%) probability that this rule – like Bush’s CAIR rule – will be struck down in judicial review.

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