Challenges to Clean Air Policy

The Implications of the Clean Air Interstate Rule Decision

This is part two of a three-part series on rebuilding clean air policy after the U.S. Court of Appeals’ Clean Air Interstate Rule decision.

The state of North Carolina and several power companies filed legal challenges to the Clean Air Interstate Rule, and the case was heard in the U.S. Court of Appeals in Washington, DC in March 2008. The petitioners’ claims were narrow in scope; they were hoping to improve the rule at the margins without bringing down its core emission reductions. The court, however, took a more sweeping approach, and last month issued a decision finding the bulk of the rule “fundamentally flawed” and setting it aside. This is an outcome that none of the parties requested or anticipated, and it deals a potentially devastating blow to U.S. air quality programs.

The court upheld limited aspects of the rule, but it faulted CAIR on four major grounds:

1. CAIR’s region-wide emission reduction and trading program is not designed to meet the statutory goal of ensuring that emissions from upwind states will not adversely affect air quality in downwind states. CAIR will lower emissions across the entire Eastern region, but the court found that EPA failed to tailor its emission limits to eliminate contributions that upwind polluting states make to elevated pollutant levels in downwind states. The court determined that North Carolina, a petitioning party, could not count on utilities in neighboring states to install the controls required to eliminate their contribution to North Carolina’s non-attainment problem because they might instead purchase emission allowances from power plants elsewhere in the CAIR region.

2. CAIR does not provide sufficient protection to downwind states that were now in attainment with the particulate matter and ozone standards but could fall into non-attainment in the future. According to the court, the act required EPA to not just reduce downwind pollution in non-attainment areas, but to assure that states now in attainment could “maintain” that status in the future. This would have required additional upwind emission reductions to prevent air quality in states now meeting the standard from degrading to levels in excess of the standards.

3. EPA lacks the authority to terminate or limit sulfur dioxide allowances granted to power plants under Title IV of the 1990 act and thus could not reduce sulfur dioxide emissions by removing these allowances from circulation or decreasing the amount of sulfur dioxide emissions they would permit. This ruling effectively prevents EPA from setting lower emission limits for sulfur dioxide than those established by Congress in the 1990 act.

4. The 2015 deadline for CAIR’s second phase of emission reductions was not in keeping with the act because it would come too late to help many downwind states meet 2010 attainment deadlines for the particulate matter and ozone national ambient air quality standards.

When reviewing courts find fault with an agency rule, they often keep the rule’s provisions in place while the agency corrects its flaws. Had the DC Circuit Court followed this approach for CAIR, its state emission budgets and regional trading program would have remained on the books and power plants would still be subject to CAIR’s deadlines for reducing emissions. But the court instead decided to vacate CAIR in its entirety because the rule was unlikely to survive “in anything approaching recognizable form,” and “EPA must redo its analysis from the ground up.” By vacating the rule, the court relieved utilities from any obligation to reduce sulfur dioxide and nitrogen oxide emissions.

Air quality improvement efforts will come to a standstill without these reductions. Many areas of the United States are currently in violation of the 1997 ozone and particulate matter standards. They are under acute pressure to improve air quality, but if they cannot bank on the sulfur dioxide and nitrogen oxide reductions mandated by CAIR, these areas will be back at square one, with little hope of meeting the standards on schedule. This will severely jeopardize the public health protections that the Clinton-era standards were intended to achieve.

EPA determined in April 2005 that 36 areas, with a total population of nearly 90 million people, contain above-standard particulate matter levels of 2.5. By April 2008, these areas were required to submit state implementation plans demonstrating how they would meet the standard, which must be achieved by April 2010 unless EPA grants an extension, which can be no more than five years.

The attainment challenge under the ozone standard is equally daunting. Starting in June 2004, EPA designated 57 areas, with a total population of nearly 132 million people, as being in non-attainment with the eight-hour standard. State implementation plans for these areas were due to be submitted to EPA by June 2007. The deadlines for implementing the standard vary depending on the severity of non-attainment, but the great majority of areas are required to comply with the standard between 2009 and 2013.

Based on air quality modeling by EPA, the CAIR emission reductions were projected to enable most non-attainment areas to meet the particulate matter and ozone standards with minimal local controls. As a result, state implementation plans for these areas heavily relied on CAIR reductions as the basis for their attainment demonstrations. In the absence of the CAIR reductions, these state implementation plans will be unacceptable and require extensive revisions. This will be a time-consuming process that will delay air quality progress well beyond the statutory deadlines for attaining the new standards.

The court decision will also undermine EPA’s Regional Haze Rule, which requires states to adopt emission reduction strategies that assure reasonable progress toward improving visibility in national parks and wilderness areas. The first regional haze state implementation plans were due to be submitted to EPA in December 2007 and many states relied heavily on the CAIR emission reductions to meet their obligations. With these reductions no longer required, the goals of the national visibility program will be seriously at risk.