EPA Proposes Cap-and-Trade Requirements For CAIR States

To ensure emissions reductions required under the landmark Clean Air Interstate Rule (CAIR) are achieved, the U.S. Environmental Protection Agency (EPA) is proposing a federal implementation plan (FIP) to require power plants in CAIR states to participate in one or more of three separate cap-and-trade programs. As part of this action, EPA is also responding to North Carolina's March 2004 petition under section 126 of the Clean Air Act.

"We are another step closer to cutting and capping power plant pollution in the eastern United States by almost 70 percent below today's levels," said Jeff Holmstead, EPA's assistant administrator for air and radiation. "North Carolina is reducing pollution already, and our action will make the state's air cleaner still, ensuring that it meets federal air quality standards on time."

The proposed FIP would require power plants in the 28 CAIR states and the District of Columbia to participate in cap-and-trade programs to reduce annual sulfur dioxide (SO2) emissions, annual nitrogen oxides (NOx) emissions, and ozone season NOx emissions. EPA is also proposing the FIP for New Jersey and Delaware, based on a proposal to include those states in CAIR for fine particle pollution.

The FIP would not limit states' flexibility in meeting their CAIR requirements. EPA would withdraw the federal plan for any state once that state's own plan for meeting CAIR requirements is in place.

CAIR will permanently cap SO2 and NOx in the Eastern United States. When fully implemented, CAIR will reduce SO2 emissions in 28 Eastern states and the District of Columbia by more than 70 percent and NOx emissions by more than 60 percent from 2003 levels, resulting in more than $100 billion in health and visibility benefits per year by 2015.

The emission reductions under CAIR will satisfy the portion of a North Carolina petition seeking reductions in fine particle-forming emissions from upwind states. As part of the proposal, EPA is finding that emissions from 10 states significantly contribute to fine-particle pollution in North Carolina. The agency is proposing to address that portion of the petition through the proposed FIP.

EPA's analyses also show that upwind states do not contribute to ozone problems in North Carolina, which is expected to meet the 8-hour ozone standard by 2010. Based on those analyses, EPA is proposing to deny the portion of North Carolina's petition related to ozone.

North Carolina filed the petition under Section 126 of the Clean Air Act, which authorizes states to ask EPA to set emission controls for major emissions sources in upwind states if EPA finds that the sources significantly contribute to non-attainment problems in downwind states. Under a consent agreement, EPA must issue a final response to the petition by March 15, 2006.

The agency will accept written public comment for 60 days after the rule is published in the Federal Register. To learn more about this action, visit: http://epa.gov/cair/rule.html.

This article originally appeared in the 09/01/2005 issue of Environmental Protection.

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