US EPA Administrator Lisa Jackson had stated earlier this year that the new CAIR rule -- modified in response to the DC Circuit Court's 2008 vacating then remanding of the original rule -- would be announced in April. But while April's showers may have brought spring flowers, there has still been no word on the revised rule. 
  
In fact, the EPA has asked congress for help, given the difficult issues involved in fixing the legal deficiencies of the original rule. While the EPA is reportedly still working feverishly to craft a revised rule that passes legal muster, they are apparently not in a position to make any official announcement.

Meanwhile Tom Carper (D-Delaware) and Lamar Alexander (R-Tennessee) have responded to the EPA's request with S. 2995 that requires an 80% reduction in SO2 by 2018 and a 50% NOx reduction by 2015. This bill also requires Hg reductions of 90% with three years to comply and the possibility to petition for an additional year, which would in effect replace the CAMR rule (also previously struck down by the US Circuit court). This bill was planned to be marked up in April, but I have not heard any updates since the proposed bill itself was first announced in late March. 

The bill's primary two sponsors are still hoping to attach it to Kerry-Lieberman-Graham (which appears to now be Kerry-Lieberman), but say they will push it through as a stand-alone if the latter continues to be mired. S. 2995 also has 11 co-sponsors on both sides of the aisle.

The EPA may yet come out with a modified rule. Most observers believe to address DC Circuit Court's finding in striking down the first version, the modified rule must require both a lower overall cap and mandate NOx reduction in all up-wind states).

In the instance of the proposed legislation that would supersede CAIR, it is difficult to even picture the scurrying and massive investment it will take to reduce NOx nation-wide by 50% in the next 4.5 years, particularly given that so many of the larger coal-fired units have already been retrofit with SCRs and many of the smaller and medium sized units with SNCRs.  And unlike CO2, natural gas produces nearly as much NOx as PRB, and most plants that can burn PRB already do, so fuel switching is not anywhere near the viable option it was for previous rounds of NOx regulation.

Bottom line is that either with the revised CAIR regulations or the Carper legislative alternative, NOx reduction is going to be a BIG DEAL and must happen fast.  Part of the time urgency is that almost all US cities near coal-fired plants are already out of compliance with both current NAAQs and PM.2.5, and that a one-hour Ozone standard has been added to the existing 8-hour one, and that the 8-hour one is being lowered significantly (itself requiring $16-$90 billion incremental capital investment). We have not just a storm but a full-blown tsunami!

To summarize, we don't know whether what replaces the original CAIR bill will be a new version that addresses the legal grounds for the trading provisions and need for up-wind reductions in the original; or congressional legislation designed to supersede it and help ensure against another court challenge. We also don't know whether the Carper-Alexander bill will be combined with what is now the Kerry-Lieberman bill for power generation CO2, or even whether Kerry-Lieberman has a chance to pass given the loss of Lindsay Graham as a Republican sponsor.

We do know some things, however.  We know that whether it is an administratively-modified rule or new legislation, the NOx requirements are going to be significantly more stringent than the original CAIR rule but will adhere to the original CAIR timeframe or even accelerate it. We know that in the absence of federal cap and trade legislation, the new EPA rule developed in response to the two US Supreme Court findings in the US vs. California and the US vs. Massachusetts and the Endangerment Finding based on it, will take effect as early as January of next year. And we also know that energy efficiency at affected facilities (estimated to be approximately 400 plants per year) will be required as a primary component of the Best Available Control Technology (BACT) regulations that apply to affected plants.

The key question in my mind is to what extent will the required reductions in NOx, SO2, and CO2 benefit from the economic efficiency inherent in allowance trading vs. subject to onerous command and control regulations that pre-dated the Clean Air Amendments and resulted in so many perverse outcomes for New Source Review litigation?

I plan to update you on all of these fronts as soon as more information becomes available.  Meanwhile try and enjoy the spring and take time a few moments to stop and smell the flowers.  

PS: If you happen to be at Electric Power next week, stop by our booth; #1840. I’m traveling all next week so I won’t be able to make it, but my colleagues Ray Johnson, Peter Kirk, Jennifer Hutchings and Robin Levy, will be so stop by and say hello.

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