EnviroNotes

By Larry Kane, Partner, Environmental Law Department

On July 11, 2008, the D.C. Circuit vacated and remanded EPA's Clean Air Interstate Rule (“CAIR”) as a result of litigation brought by several states and other petitioners. State of North Carolina v. EPA, 531 F.3d 896 (D.C.Cir. 2008). The decision has thrown air quality planning for EPA, state air quality agencies and the electric utility industry into confusion and uncertainty, given the several statutory and regulatory obligations that were to have been met through CAIR. Even environmental advocacy organizations are seeking ways to salvage emissions reductions that would have occurred under CAIR. On September 24, the EPA filed a petition for rehearing with the federal appellate court, asking the court to reconsider its decision to vacate CAIR while it is under remand to EPA. EPA did not question the need for a remand to address certain errors in the rule found by the court.

IDEM’s Commissioner Thomas Easterly advised the State’s Air Pollution Control Board (Air Board) in early October 2008 that CAIR was critical to the following aspects of Indiana’s compliance with Clean Air Act requirements:

• CAIR satisfied the requirement for a SIP to adequately control emissions of NOx and SO2 that are transported to downwind states and may contribute to nonattainment of ozone and fine particulate (PM2.5) air quality standards;
• CAIR served as the backbone of Indiana’s strategy for attainment and maintenance of the ozone and PM2.5 standards;
• The rule provided reasonably available control technology (RACT) for electric generating units located in ozone and fine particle nonattainment areas;
• CAIR served to address best available retrofit technology (BART) controls for emissions from Indiana utility sources that may contribute to regional haze that impact visibility at Class I areas.

At the October Air Board meeting, Commissioner Easterly announced that IDEM will be proposing two Emergency rulemakings to address the CAIR decision:

• • One emergency rule would reinstate the NOx SIP Call currently under a sunset provision set by Indiana’s CAIR rule and also would repeal the CAIR ozone season program. In parallel with this action, a rulemaking would be initiated to make the NOx SIP Call reinstatement permanent.
• The second emergency rule would be crafted to establish NOx and SO2 annual allowance budgets for individual generating units at the levels set by Phase I of the vacated CAIR rule and to repeal the annual NOx and SO2 reduction programs of Indiana’s CAIR rule. This second rule would be designed to take effect upon issuance of an order by the D.C. Circuit Court of Appeals making the CAIR vacatur effective. It would also include a termination provision should a more stringent federal rule be subsequently adopted.

Concurrently with the second emergency rule, IDEM plans to propose a permanent rule to supersede the emergency rule for replacement of the CAIR rule with new Phase I and Phase II annual allowance budgets for NOx and SO2, applied to individual generating units. IDEM intends to provide compliance flexibility by allowing source-wide and intrastate system emission averaging for units operated under common ownership and control. Provision may be made for multi-year emissions averaging plans as well. A further option to be explored would be interstate emissions averaging compliance plans that may be established by agreement with air quality agencies of other states.

Interested persons will need to monitor further developments on this issue.

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