Federal Court Rejects CAIR Rule

14 July 2008 Publication
Author(s): Richard G. Stoll Mark A. Thimke

Legal News Alert: Environmental

The United States Court for the District of Columbia Circuit (Court) has rejected the U.S. Environmental Protection Agency’s (EPA) Clean Air Interstate Rule (CAIR), which was the agency’s regional multistate approach to regulating SO2 and NOx.

In North Carolina v. EPA, No. 05-1244 (D.C. Cir. Jul. 11, 2008), the Court found CAIR’s regional multistate approach to be inconsistent with the Clean Air Act (CAA). The CAA, as developed in the 1970s and amended in 1990, is based upon a state-by-state approach to regulating regional emission issues. Under the CAA, if emissions from one state adversely affect downwind state(s), then the upwind state is required to impose additional controls to address the pollution problem. According to the Court, the multistate cap and trade program incorporated into CAIR is contrary to the state-based approach mandated by the CAA.

The practical effects of the Court’s ruling are:

  • The NOx/SO2 regional cap and trade program that was being implemented in 28 states in the eastern half of the United States, is invalid and will not proceed.
  • The earlier NOx State Implementation Plan (SIP) call program that was supplanted by CAIR is reinstated for the states involved in that program. Sources that were in the NOx SIP call program, but then dropped because of CAIR, will find themselves back in and potentially subject to more stringent NOx controls, especially given the recently implemented change in the ozone national ambient air quality standard.
  • The acid rain SO2 trading program remains “as is.” No allowances will be reduced as was to occur under the CAIR program.
  • Some Midwestern states relied on CAIR as a substitute for implementing a Best Available Retrofit Technology (BART) (regional haze) program. These states will need to reevaluate the BART program, which may result in new emission reduction requirements for facilities implicated in causing regional haze problems in sensitive environmental areas such as national parks or wildlife areas.
  • To the extent draft and/or current air permits incorporate CAIR-based requirements, sources will have to evaluate whether any revisions are necessary.

The decision also raises significant implications for future particulate matter 2.5 micrometers or smaller (PM2.5) controls, which may include emission reductions for PM2.5 precursors that include NOx and SO2. As PM2.5 is only beginning to be subject to regulation, the effect of the decision on future PM2.5 regulation is uncertain.

Based upon past experience, the EPA is not likely to issue clarifying guidance in the near future. Thus, facilities likely will need to discuss specific issues arising from the Court’s decision with individual state regulators.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information to our environmental clients and colleagues. If you have any questions about or would like to discuss this topic further, please contact your Foley attorney or any of the following individuals:

Mark A. Thimke
Milwaukee, Wisconsin

Richard G. Stoll
Washington, D.C.

Leah M. Krider
Milwaukee, Wisconsin