The Transport Rule will replace the Clean Air Interstate Rule (CAIR) which contained a controversial cap-and-trade provision for power plants. That inclusion led to the United States Court of Appeals for the D.C. Circuit to rule in 2008 that that the EPA had exceeded its authority and vacated the entire rule. However, at the EPA’s request, the Court allowed the agency to keep CAIR while it worked to come up with a replacement rule.
Commenting on the new rule, EPA Assistant Administrator Gina McCarthy says, “We believe that today is marking a large and important step in EPA’s effort to protect public health.” However, she acknowledges that the Transport Rule is a “work in progress and not the final answer.” McCarthy also noted that that EPA plans to revisit the Transport Rule once it finalizes the tougher ozone standards, with a goal of a final ruling in 2012. Complicating the issue is that the EPA is still reworking Bush-era ozone rules to create tougher standards for emissions controls.
The Transport Rule, combined with other state regulations and EPA actions, would reduce power plant emissions of sulfur dioxide and nitrogen oxides to meet state-by-state emission reductions. By 2014, SO2 emissions would be reduced by 71 percent when compared to 2005 levels. Nitrogen oxide (NOx) emissions would drop by 52 percent. Additionally, the proposed Transport Rule scales back but does not completely 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.
Dan Riedinger, a spokesman for the Edison Electric Institute, a Washington-based trade group representing utility companies, issued a statement saying: “EPA’s new proposal would require dramatic reductions in power-sector emissions, on top of major reductions to date, on a very short timeline and ….leaves the power sector exposed to a great deal of regulatory uncertainty.”
According to Bloomberg, Concept Capital analyst K. Whitney Stanco said the new rules will probably trigger the closing of the “smallest and dirtiest coal plants” when added to the new mercury emission limits the EPA is expected to put on coal- fired generators.
Environmental groups applauded the proposed Transport Rule but acknowledged the measure is open to industry lawsuits that could cause delays in meeting public health targets. Because of those potential legal issues, Senator Tom Carper, (D-Del) sought support for legislation he co-authored with Senator. Lamar Alexander (R- Tenn) since he believes is can better survive legal challenges.
In a statement, Senator Carper said: “Legislation that I have sponsored with my Republican colleague Sen. Lamar Alexander, 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.”
It is estimated the Transport Rule would result in more than $120 billion in annual health benefits in 2014. But it will also cost utilities around $3 billion a year which will likely be footed by consumers, although the rule’s realistic effect on specific companies and on consumers was unclear.