D.C. Circuit Stays EPA Cross-State Air Pollution Rule (CSAPR)

January 2, 2012

On December 30, 2011, the D.C. Circuit Court of Appeals issued a stay against implementation of the Cross-State Air Pollution Rule (CSAPR).  The CSAPR sets emissions budgets for 28 states whose emissions of SO2, NOx, and/or ozone currently represent a significant impediment to another state’s National Ambient Air Quality Standards (NAAQS) attainment in an average year.  The rule was finalized by EPA on August 8, 2011, with technical revisions proposed on October 6, 2011, and was scheduled to take effect on January 1, 2012.

The case in which the stay was issued, EME Homer City Generation LP v. U.S. Environmental Protection Agency, 11-1302, is one of more than three dozen lawsuits challenging the CSAPR.   Oral argument has not been scheduled, but the order indicates that the parties should prepare briefs for an April hearing.  The stay order does not address the underlying merits of the case, only the issue of irreparable harm.  Although the court did not spell out its reasoning, the plaintiffs had argued that the EPA’s six-month compliance timeline imposes a substantial and imminent injury. 

The CSAPR replaces the 2005 Clean Air Interstate Rule (CAIR), which was struck down in North Carolina v. EPA on the grounds that CAIR’s region-wide cap-and-trade structure did not address the effects of emissions from each particular state on downwind states. (531 F.3d 896 (D.C. Cir. 2008)).  CSAPR seeks to address the defect in CAIR by placing strict limits on interstate trading of emissions allowances, along with other safeguards to ensure that upwind state emissions of SO2, NOx, and ozone do not significantly contribute to nonattainment of the NAAQS in a downwind state.

Under the August 8 CSAPR, Tradable emissions allowances are initially allocated under Federal Implementation Plans (FIPs) to existing units in proportion to their historical heat input values, with a small portion set aside for new units.  States can replace these FIP allocations with State Implementation Plans (SIPs) beginning in 2013. 

EPA estimates that the CSAPR will reduce emissions of CO2 from electric generating units (EGUs) by about 25 million metric tons (about 1.1% of total domestic electricity sector emissions) annually once fully implemented in 2014, mostly via accelerating retirement of inefficient EGUs.  

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