EPA Proposes New "CAIR" Rule

July 14, 2010
MGKF News Flash

EPA has approved proposed regulations to replace the Clean Air Interstate Rule ("CAIR") struck down by the DC Circuit Court of Appeals. In 2005, EPA had promulgated a CAIR regulation consisting of an expansive cap-and-trade program for SO2 and NOx emissions from electric generating units in the eastern half of the country. Numerous industry sectors and some states challenged these CAIR regulations on multiple grounds, principally contending that the CAIR standards were not consistent with the federal Clean Air Act. The Court agreed with many of these challenges, and concluded in 2008 that the regulation as promulgated by EPA had numerous "fatal flaws." Although the Court initially vacated CAIR, the Court determined, upon motion by EPA, to allow the unlawful rules to remain in place pending promulgation of a substitute regulation.

EPA has now proposed a substitute regulation which would provide for even greater reductions of NOx and SO2 emissions from affected sources. In response to the Court rulings, the proposal also provides for much more limited emission trading opportunities as compliance options. Under one scenario proposed by EPA, no trading would be allowed among affected sources, while under a second scenario, trading would be limited to affected sources within the same state. EPA proposes to implement the rules as soon as 2012.

Following publication of the proposed rules in the Federal Register, EPA will commence a 60 day public comment period.