Clear Skies and the Clean Air Act: What's the Difference?

Congressional research reportFeb 25, 2005

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Order Code RL32782

CRS Report for Congress

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Clear Skies and the Clean Air Act:

What’s the Difference?

February 25, 2005

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Specialist in Energy Policy

Resources, Science, and Industry Division

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Specialist in Environmental Policy

Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

Clear Skies and the Clean Air Act:

What’s the Difference?

Summary

The 109th Congress, like the two before it, is expected to consider proposals to

control emissions of multiple pollutants from electric power plants. The bills include

an Administration-based proposal, the Clear Skies Act (S. 131), which would control

emissions of sulfur dioxide (SO2), nitrogen oxides (NOx), and mercury, and other

bills that would control the three pollutants plus the greenhouse gas carbon dioxide.

Much of the debate surrounding the Administration’s Clear Skies proposal has

focused on its cap-and-trade implementation scheme. But in some ways, the

proposal’s cap-and-trade provisions are its least significant aspects in terms of the

proposal’s interaction with the structure of the Clean Air Act. EPA has already

promulgated regulations using a regional cap-and-trade program to control NOx

emissions over the eastern United States (the “NOx SIP Call”) under existing Clean

Air Act authority, and has proposed other cap-and-trade regulations to achieve Clear

Skies’ level of reductions over 28 eastern states and the District of Columbia for both

SO2 and NOx (in the Clean Air Interstate Rule). In addition, EPA has proposed capand-trade regulations to achieve mercury reductions similar to those in Clear Skies,

although the legality of these regulations is more questionable.

Critical to the fabric of the Clean Air Act are the various provisions in Clear

Skies to alter or to delete existing sections of the Act with respect to both electric

generating units (EGUs) and industrial sources that choose to opt into the program.

The Administration has made it clear that with Clear Skies’ comprehensive approach

to EGUs and opt-ins, it believes certain CAA provisions need no longer apply to

them, in some cases permanently, in others for as long as 20 years or under certain

conditions. These include most statutory requirements for Prevention of Significant

Deterioration and attainment of National Ambient Air Quality Standards under Title

I of the Act, as well as most controls on hazardous air pollutants as they apply to

EGUs and opt-ins. These changes would diminish the suite of options states currently

have to achieve compliance with air quality standards.

In July 2001 testimony, then-EPA Administrator Whitman identified the central

issue in Clear Skies’ interaction with current law: Are the emission reduction targets

stringent enough to permit the relaxing or removal of current provisions of the Clean

Air Act designed to achieve the same thing with respect to electric utilities? EPA’s

analysis indicates that Clear Skies will not achieve either the 8-hour ozone or the fine

particulate ambient air quality standards that the agency recently implemented within

current CAA compliance deadlines. Some nonattainment areas will need additional

controls and time to reach attainment. Clear Skies addresses these issues in part by

providing 5 to 15 years of additional time, while effectively removing additional

electric utility control from the suite of options available to states to achieve the

standards. Similarly, with mercury, Clear Skies proposes relatively modest controls

on electric utilities, and, as currently drafted, would effectively remove additional

electric utility controls from the suite of options available to the states. The ability

of industrial sources to opt into Clear Skies could further reduce state control options

for both mercury and criteria pollutants. This report will not be updated.

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Title I of the Clean Air Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Background: Regulating Criteria Air Pollutants Under Title I . . . . . . . . . . . 3

National Ambient Air Quality Standards / New Source Performance

Standards / Lowest Achievable Emissions Rate . . . . . . . . . . . . . . 3

Prevention of Significant Deterioration / New Source Review /

Best Available Control Technology . . . . . . . . . . . . . . . . . . . . . . . . 4

Background: Regulating Mercury Under Title I . . . . . . . . . . . . . . . . . . . . . . 5

Changes Proposed by Clear Skies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

New Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

1. Cap and Trade Program for SO2, NOx, and Mercury . . . . . . . . . . . . 8

2. National Emission Standards for SO2, NOx, and Hg Emissions

from New and Reconstructed EGUs . . . . . . . . . . . . . . . . . . . . . . . 9

3. Authority for Non-Utility Sources to Opt into the

Cap-and-Trade Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

4. Establishment of an Optional “Transitional Area” Category

in Place of Nonattainment Designations . . . . . . . . . . . . . . . . . . . 10

Authorities Removed or Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

1. Exemption from Major Source Requirements Under

Parts C and D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

2. Changes to the Hazardous Air Pollutant Provisions of

Section 112 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

3. Changes to Section 126 Petitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

4. Change in Noncompliance Penalties Under Title IV . . . . . . . . . . . . 12

5. Preemption of State Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 12

6. Elimination of New Source Review for Modifications of EGUs . . 12

7. Elimination of Best Available Retrofit Technology (BART)

Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

8. Class I PSD Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

9. Class II PSD Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

10. Extension of Deadlines for the Ozone and PM2.5 NAAQS . . . . . . 13

11. Elimination of the Provisions of Subpart 2 for

Ozone Nonattainment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

12. Elimination of the Conformity Requirements . . . . . . . . . . . . . . . . 14

Impact of Clear Skies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Impact on Regulating Criteria Air Pollutants . . . . . . . . . . . . . . . . . . . . . . . 14

Impact of Clear Skies on Mercury Regulation . . . . . . . . . . . . . . . . . . . . . . . 17

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

List of Tables

Table 1. Implementing Title I: Simplified Structure for

Electric Generating Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Table 2. Implementing Section 112 for Mercury and Other HAPs from

Electric Generating Units and Other Sources . . . . . . . . . . . . . . . . . . . . . . . . 7

Table 3. Summary of EGU Requirements under Title I

If Clear Skies Is Enacted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Table 4. Control of Mercury and Other HAPs from Electric Generating Units

(and Opt-Ins) If Clear Skies Is Enacted . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Clear Skies and the Clean Air Act:

What’s the Difference?

Introduction

In February 2002, the Bush Administration announced two air quality proposals

to address the control of emissions of sulfur dioxide (SO2), nitrogen oxides (NOx),

mercury (Hg), and carbon dioxide (CO2).1 The first proposal, called “Clear Skies,”

would amend the Clean Air Act (CAA) to place emission caps on electric utility

emissions of SO2, NOx, and Hg. Implemented through a tradeable allowance

program, the emissions caps would be imposed in two phases: 2010 (2008 in the case

of NOx) and 2018. As part of a complete rewrite of Title IV of the Clean Air Act,

Clear Skies was introduced in the 108th Congress on February 27, 2003, as H.R. 999

and S. 485.2 In the 109th Congress, a modified version of Clear Skies (S. 131) has

been introduced by Senator Inhofe and has become the focus of congressional

hearings and potential markup.3

Much of the debate surrounding the Administration’s Clear Skies proposal has

focused on its cap-and-trade implementation scheme. For example, EPA states: “The

Clear Skies approach would deliver guaranteed emissions reductions of SO2, NOx,

and mercury at a fraction of command and control costs, increasing certainty for

Papers outlining the Administration’s proposals are available from the White House

website: [http://www.whitehouse.gov/news/releases/2002/02/clearskies.html] for the threepollutant proposal, and [http://www.whitehouse.gov/news/releases/2002/02/climatechange.

html] for the climate change initiative.

The second proposal (for which no legislation has been introduced) initiates a new

voluntary greenhouse gas reduction program, similar to ones introduced by the earlier

George H. W. Bush and Clinton Administrations. Developed in response to the U.S.

ratification of the 1992 UNFCCC, these previous plans projected U.S. compliance, or near

compliance, with the UNFCCC goal of stabilizing greenhouse gas emissions at their 1990

levels by the year 2000 through voluntary measures. The new proposal introduced by the

Bush Administration does not make that claim, only projecting a 100 million metric ton

reduction in emissions from what would occur otherwise in the year 2012. Instead, the plan

focuses on improving the carbon efficiency of the economy, reducing current emissions of

183 metric tons per million dollars of GDP to 151 metric tons per million dollars of GDP

in 2012. It proposes several voluntary initiatives, along with increased spending and tax

incentives, to achieve this goal. The Administration notes that the new initiatives would

achieve about one-quarter of the objective, while three-quarters of the projected reduction

would occur through already existing efforts underway.

For more specifics, see CRS Report RL32755, Air Quality: Multi-Pollutant Legislation

in the 109th Congress, by (name redacted).

CRS-2

industry, regulators, consumers and citizens.”4 In some ways, the proposal’s capand-trade provisions are its least significant aspects in terms of the proposal’s

interaction with the structure of the Clean Air Act. EPA has already promulgated

regulations using a regional cap-and-trade program to control NOx emissions over

the eastern United States (called the NOx SIP Call) under existing Clean Air Act

authority, and has proposed other cap-and-trade regulations to achieve Clear Skies’

level of reductions over 28 eastern states and the District of Columbia for both SO2

and NOx.5 In addition, EPA has proposed other cap-and-trade regulations to achieve

similar Clear Skies mercury reductions, although their legality has been subject to

some question.6

Far more important to the fabric of the Clean Air Act are the various provisions

in Clear Skies to alter, delete, or hold in abeyance for some time existing sections of

the Clean Air Act with respect to affected electric generating units and industrial

sources that choose to opt into the program. The Administration has made it clear

that with Clear Skies, it believes certain CAA provisions are no longer necessary.

As stated by then-EPA Administrator Whitman before the Senate Environment and

Public Works Committee, as EPA was developing Clear Skies legislation:

Well, it is our feeling that right now that depending on where you set the targets,

that New Source Review is certainly one of those regulatory aspects that would

no longer be necessary — the regional haze, the BART, as I mentioned before,

the MACT standards, the NOx SIP Call, the 126 Rule, acid rain — all of those

could be eliminated and combined into one regulatory process under a new piece

of legislation that would be vastly simplified. It depends where they go on those

for utilities — we are talking for utilities now — as far as most of those are

concerned. But where you go depends on what level is set in the final

legislation, how far you can go to eliminate the additional regulations that we

have in place now.7

This report examines the potential impact Clear Skies legislation would have

on the structure of the Clean Air Act with respect to electric generating units and

other industrial sources that choose to opt into the program.

Title I of the Clean Air Act

Many of the changes in the Clean Air Act proposed by Clear Skies would occur

with respect to Title I. Within its general regulatory structure, several distinctions

arise that affect utility planning and operations — for example, whether the facility

From EPA’s Clear Skies website: [http://epa.gov/air/clearskies/basic.html].

See CRS Report RL32273, Air Quality: EPA’s Proposed Interstate Air Quality Rule, by

(name redacted) and (name redacted).

For a discussion, see CRS Report RL32203, Legal Analysis and Background on the EPA’s

Proposed Rules for Regulating Mercury Emissions from Electric Utilities.

Administrator Whitman in response to question from Senator Voinovich, in U.S. Senate,

Committee on Environment and Public Works, Subcommittee on Clean Air, Wetlands, and

Climate Change, Clean Power Act, hearings, July 26, 2001, S.Hrg. 107-570, p. 36.

CRS-3

is located in clean or dirty air areas, whether a facility is existing or new, and what

fuel it burns. And while the underlying regulatory structure generally applies to SO2,

NOx, and particulate matter (PM), the specific requirements for each differ. Despite

changes made in the 1990 Clean Air Act Amendments, specifically the addition of

a cap-and-trade program to control SO2 emissions (Title IV), the basic structure

designed in 1970 and expanded in 1977 remains the backbone of the Act. The

addition of Title IV in 1990 did not change any of the basic requirements of the Act;

Title IV was a supplemental provision, not a substitute for existing provisions.

Background: Regulating Criteria Air Pollutants

Under Title I

National Ambient Air Quality Standards / New Source Performance

Standards / Lowest Achievable Emissions Rate. As enacted in 1970, the

CAA established a two-pronged approach to protect and enhance the quality of the

nation’s air. First, the Act established National Ambient Air Quality Standards

(NAAQS), which set limits on the level of specified air pollutants in ambient air.

Second, the Act required national emission limits to be set for major new polluting

facilities; these are called New Source Performance Standards (NSPS).

NAAQS have been established for six “criteria” pollutants, including SO2, NOx,

and PM.8 Under the law, EPA sets primary NAAQS9 to protect the public health

with an “adequate margin of safety.”10 EPA periodically reviews NAAQS to take

into account the most recent health data. NAAQS are federally enforceable with

specific deadlines for compliance, but states are primarily responsible for actually

implementing the standards, through development and enforcement of State

Implementation Plans (SIPs). In general, these plans focus on reducing emissions

from existing facilities to the extent necessary to ensure that ambient levels of

pollution do not exceed the NAAQS.

For areas not in attainment with one or more of these NAAQS, the 1970 CAA

mandates states to require new sources to install Lowest Achievable Emissions Rate

(LAER) technology. Along with “offset” rules,11 LAER ensures that overall

emissions do not increase as a result of a new plant’s operation. LAER is based on

the most stringent emission rate of any state implementation plan or achieved in

Criteria pollutants, defined in Section 108 of the Act, are pollutants in ambient air that

endanger public health or welfare and are emitted from numerous or diverse mobile or

stationary sources. The term “criteria” refers to the Section’s requirement that the EPA

Administrator issue criteria for such pollutants within 12 months of listing them.

“Secondary” NAAQS, also nationwide standards, protect “welfare” values, such as

visibility and agricultural productivity. There is no specific deadline for achieving

secondary NAAQS.

For a further discussion of NAAQS standard-setting, see CRS Report 97-722 ENR, Air

Quality Standards: The Decisionmaking Process, by (name redacted), (name redacted), and James

McCarthy.

“Offset” rules require that new major sources of pollution reduce emissions from existing

facilities in a nonattainment area by more than the emissions they will generate.

CRS-4

practice without regard to cost or energy use.12 Existing sources in a nonattainment

area are required to install less stringent Reasonably Available Control Technology

(RACT), a state determination based on federal guidelines.

The 1970 CAA also established New Source Performance Standards (NSPS),

which are emission limitations imposed on designated categories of major new (or

substantially modified) stationary sources of air pollution. For fossil fuel-fired

electric generating facilities, EPA has set NSPS for SO2, NOx, and PM10 (particles

smaller than 10 microns), and is required by the Act to review the standards every

eight years. A new source is subject to NSPS regardless of its location or ambient

air conditions.

Recognizing that pollutants are no respecters of state boundaries, the CAA has

established several mechanisms for addressing interstate pollution that may

contribute to noncompliance with a NAAQS. These mechanisms include regional

commissions, such as the Ozone Transport Commission, state petitions under Section

126, and other provisions for regional groups. The largest of these interstate

regulatory regimes is the NOx SIP Call, which controls NOx emissions from 20

states and the District of Columbia. Under the NOx SIP Call, the affected states are

given emission budgets that they can achieve in whatever manner they choose.

Noting the regional nature of the ozone problem in the eastern United States, EPA

successfully encouraged states to implement the rule through an EPA-coordinated

cap-and-trade program.

In summary, under this overall regulatory regimen, existing sources in

nonattainment areas are subject to controls determined by the state as necessary to

meet NAAQS; existing sources in attainment areas are essentially free from controls.

And major new sources, including fossil fuel-fired electric generating facilities, are

subject to NSPS as the minimum requirement, anywhere.13

Prevention of Significant Deterioration / New Source Review / Best

Available Control Technology. The 1977 CAA broadened the air quality

control regimen with the addition of the Prevention of Significant Deterioration

(PSD) and visibility impairment provisions. The PSD program (Part C of Title I of

the CAA) focuses on ambient concentrations of SO2, NOx, and PM in “clean” air

areas of the country (i.e., areas where air quality is better than the NAAQS). The

provision allows some increase in clean areas’ pollution concentrations depending

on their classification. In general, historic or recreation areas (e.g., national parks)

are classified Class I with very little degradation allowed, while most other areas are

classified Class II with moderate degradation allowed. States are allowed to

LAER may not be less stringent than NSPS, described below.

The federal focus on new facilities arose from several factors. First, it is generally less

expensive to design into new construction necessary control features than to retrofit those

features on existing facilities not designed to incorporate them. Second, uniform standards

for new construction ensures that individual states will not be tempted to slacken

environmental control requirements to compete for new industry.

CRS-5

reclassify Class II areas to Class III areas, which would be permitted to degrade up

to the NAAQS.14

New sources in PSD areas must undergo preconstruction review (called New

Source Review or NSR) and must install Best Available Control Technology (BACT)

as the minimum level of control. State permitting agencies determine BACT on a

case-by-case basis, taking into account energy, environmental, and economic

impacts. BACT cannot be less stringent than the federal NSPS, but it can be more

so. More stringent controls can be required if modeling indicates that BACT is

insufficient to avoid violating PSD emission limitations, or the NAAQS itself.

A complement to the PSD program for existing sources is the regional haze

program (Section 169A of the Act), which focuses on “prevention of any future, and

the remedying of any existing, impairment of visibility” resulting from manmade air

pollution in national parks and wilderness areas.15 Among the pollutants that impair

visibility are sulfates, organic matter, and nitrates. Sources built between 1962 and

1977 are required to install Best Available Retrofit Technology (BART). In 1999,

the EPA promulgated a regional haze program, which would entail more stringent

controls on NOx and SO2.

Table 1 summarizes the current air quality control requirements imposed on

fossil fuel-fired electric generating facilities by Title I.

Background: Regulating Mercury Under Title I

Separate from the Title I requirements for criteria pollutants, Section 112 of the

Act establishes a two-phase federal regulatory program for 188 hazardous air

pollutants (HAPs) listed in the Act. Among the HAPs is mercury.

In the first phase, Maximum Achievable Control Technology (MACT) standards

are to be promulgated for all major sources of the pollutants. MACT is determined

by the EPA Administrator, but it must be at least as stringent as the best controlled

similar source for new sources or (with some exceptions) the average of the best

performing 12% for existing sources. In the second phase, eight years after

promulgation of MACT, additional regulations may be promulgated to address any

“residual risks” from HAPs after the implementation of MACT.

Electric utilities were given special treatment under Section 112. In Section

112(n), the Act required that EPA report to Congress on the hazards to public health

from electric generating units’ emissions of HAPs and make an affirmative finding

that regulation under Section 112 is “appropriate and necessary” for such units before

proceeding to issue MACT standards. EPA made this finding in December 2000; but

in January 2004, it proposed to rescind its conclusion that the MACT standard was

necessary, instead proposing a cap-and-trade program under Section 111 as its

preferred approach.

None have been reclassified to Class III, however.

See CRS Report RL32483, Visibility, Regional Haze, and the Clean Air Act: Status of

Implementation, by (name redacted) and (name redacted).

CRS-6

Table 1. Implementing Title I: Simplified Structure for Electric Generating Units

Minimum Level of

Control for all

Sources

Everywhere

New Source

Existing Source

NSPS as set by EPA

under Section 111

(also covers

modified existing

sources)

none, unless modified

or covered by

visibility rules (i.e.,

built between 1962

and 1977)

Nonattainment Area

Attainment Area

New Source

Existing Source

New Source

Existing Source

LAER as

determined by

individual states;

can not be less

stringent than the

federal NSPS

RACT as

determined by

individual states

under federal

guidelines

BACT as

determined by

individual states;

can not be less

stringent than

federal NSPS

BART required

in areas affected

by visibility

provisions

Limits on Ambient

Impact

NAAQS for SO2, NO2, O3, PM10, and PM2.5

Offset Requirements (OSR)

PSD for SO2, NO2, and PM

— Increments

— Visibility

Local/State

Responsibility

SIP

NSPS-NSR

Section 126 Petitions (for transboundary

pollution)

SIP

Nonattainment NSR

Section 126 Petitions (for affecting

nonattainment)

SIP

PSD-NSR

Section 126 Petitions (for affecting PSD

and visibility)

Source: CRS, modified from Electric Power Research Institute, NOx Regulatory Changes and the Electric Utility (September 1981), pp. 2-3.

CRS-7

Table 2. Implementing Section 112 for Mercury and Other HAPs

from Electric Generating Units and Other Sources

Everywhere

Maximum Achievable

Control Technology

(MACT)

Residual Risk

New Sources

Existing Sources

Applicable at each source

Not less stringent than the

best controlled similar

source

Not less stringent than the

average of the best

performing 12% (best 5

sources, if fewer than 30

sources)

If required to provide an ample margin of safety to

protect public health

8 years after promulgation of MACT

Applicable at each source

10-6 standard (1 in 1 million risk) for carcinogens

Could be used to address hot spots

State/Local Authority

Allows more stringent state and local standards

Source: CRS.

Under current law, states are allowed to implement standards for HAPs that are

more stringent than the federal ones, and several (including Massachusetts,

Connecticut, New Jersey, and Wisconsin) have already done so.

Table 2 summarizes the current requirements imposed on fossil fuel-fired

electric generating facilities by Section 112.

Changes Proposed by Clear Skies16

Clear Skies would change numerous provisions of current law. Some of these

changes add new authorities or programs — for example, the establishment of

national cap-and-trade programs for utility emissions of NOx and mercury, and the

extension and revision of the Title IV cap-and-trade program for SO2. Other changes

remove existing authority (e.g., the hazardous air pollutant provisions of Section 112,

as they relate to mercury emissions from utilities and from opt-in facilities in other

industries). And other changes modify and/or hold in abeyance certain provisions for

several years (e.g., BART, Section 126, conformity).

The reader should note that modifications to specific Clear Skies proposals, such as S.

131, are likely as the bill moves through the legislative process. This report focuses on

provisions that were in S. 131 as introduced.

CRS-8

A list of the additional authorities would include (1) the cap-and-trade programs

for SO2, NOx, and Hg; (2) statutory national emission standards for new and

reconstructed electric generating units (EGUs); (3) authority for sources in other

industries to opt into the cap-and-trade program; and (4) establishment of an optional

“transitional area” category in place of the traditional nonattainment area

designations under Sections 107 and 110.

A list of the authorities removed (or limited in new ways) would include (1)

provisions for major sources (i.e., affected EGUs and opt-in units would no longer

be considered major sources); (2) changes to the hazardous air pollutant provisions

of Section 112, removing utilities and opt-in units from the sources whose mercury

emissions can be controlled under Maximum Achievable Control Technology

(MACT) and residual risk provisions; (3) changes to Section 126, establishing a

moratorium on the use of petitions to control interstate air pollution, and establishing

substantially more stringent requirements for acceptance of such petitions after the

moratorium; (4) reduction of the noncompliance penalties under the new SO2 capand-trade program; (5) effective preemption of more stringent state requirements for

NOx and mercury; (6) elimination of New Source Review (NSR) for modifications

of major sources; (7) elimination of Best Available Retrofit Technology (BART)

requirements under Section 169A (which concerns visibility protection); (8)

establishment of a statutory 50 km zone around Class I areas for imposition of the

Prevention of Significant Deterioration (PSD) requirements (replacing a current

regulatory 100 km zone); (9) exempting affected units located in PSD Class II areas

from Class II limitations on pollution increments; (10) extension of deadlines for

meeting the ozone and PM2.5 NAAQS; (11) a de facto moratorium on the provisions

of Subpart 2 dealing with ozone nonattainment in most areas; and (12) a de facto

moratorium on the conformity requirements (for highways and other projects) under

Section 176 in most ozone and PM2.5 nonattainment areas.

New Authorities

1. Cap and Trade Program for SO2, NOx, and Mercury. Much of Clear

Skies consists of detailed provisions that would replace Title IV of the Clean Air Act,

the acid precipitation title, with a revised and expanded version establishing a multipollutant cap-and-trade program. The proposal would place caps on emissions of

SO2, NOx, and Hg in two phases, and would set up trading programs to provide

flexibility in meeting the three caps.

For the version introduced as S. 131, Phase 1 would establish caps for EGUs

of:

2.19 million tons of NOx in 2008;

4.5 million tons of SO2 in 2010; and

34 tons of mercury in 2010.

The S. 131 Phase 2 caps, which would take effect in 2018, are set at:

1.79 million tons of NOx;

3.0 million tons of SO2; and

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15 tons of mercury.17

The allowance trading program provisions are generally similar to those of the

existing Title IV program. As specified under S. 131, allowances would be allocated

free to EGUs based on historic fuel usage. For the new NOx and Hg programs, the

allocation would be adjusted by factors specified in the bill (e.g., EGUs fueled by

lignite would receive three times as many Hg allowances as would comparable EGUs

fueled by bituminous coal). Unlike the existing program, a small pool (7% of the

SO2 and 5% of the NOx and Hg allowances) would be set aside for new units.

2. National Emission Standards for SO2, NOx, and Hg Emissions

from New and Reconstructed EGUs. Clear Skies would establish statutory

standards for emissions of SO2, NOx, and Hg from new and reconstructed EGUs.

The standards are generally more stringent than current NSPS (e.g., for NOx, the

standard would be 1.0 lb/MWh for coal-fired EGUs versus the current NSPS of 1.6

lb/Mwh18; for particulate matter, the standard would be 0.20 lb/MWh, about onethird less than the current NSPS). The Hg standard (0.015 lb/GWh) is more stringent

than the proposed MACT for subbituminous, lignite, and IGCC units — especially

the lignite units — but it would allow two and a half times as much emissions as the

proposed MACT for bituminous-fired EGUs.

Compared to the current NSPS, the National Emission Standards would apply

to fewer units (as discussed further in item 6 under “Authorities Removed or

Limited,” below). The National Emission Standards would be reviewed and, if

appropriate, revised at least every eight years following their promulgation, the same

as the requirement for existing NSPS.

3. Authority for Non-Utility Sources to Opt into the Cap-and-Trade

Program. S. 131 would allow units that are not affected EGUs and whose

emissions of SO2, NOx, and Hg are vented only through a stack or duct to opt into

the cap-and-trade program. The proposal establishes alternative methods of

determining allowances for these units based on a unit’s heat input or product output

and its emissions during one of several optional base periods. In the case of S. 131,

The extent to which these caps would reduce emissions is difficult to estimate. Some

estimates compare the caps to actual emission levels, generally using as a baseline 2000 data

for SO2 and NOx and 1999 (latest data available) for mercury. Emissions of all three

pollutants are likely to be lower at present than they were in 1999 or 2000, particularly NOx,

for which a major new regulatory program (the NOx SIP call) took effect in 2004. With

SO2, there is the further question of whether the bill’s caps should be compared to actual

emissions (11.4 million tons in 2000) or the existing SO2 cap under the current Title IV

(8.95 million tons in 2000). Emissions in 2000 and subsequent years have exceeded the cap

as utilities used up prior year (banked) allowances. Mercury reduction estimates are

complicated by the fact that units emitting 50 pounds or less annually would be exempt from

the cap in S. 131, as introduced. While detailed monitoring data are unavailable, about half

the EGUs would be exempt from the cap under this provision. Thus, a comparison of S.

131’s caps to 1999 emissions from all EGUs overstates the percentage reduction that would

be achieved.

EPA proposed a 1.0 lb/Mwh standard (the same as that in Clear Skies) under current

authority on February 22, 2005.

CRS-10

a unit would receive allocations equal to 70% of its baseline SO2 and NOx emissions

beginning in 2010, and 50% beginning in 2018. Mercury allocations, beginning in

2010, would be equal to the emissions allowed under federal or state hazardous air

pollutant standards (generally, the standards for industrial boilers and process heaters

promulgated by EPA in September 2004).

In return for opting into the cap-and-trade program, units would be exempt from

compliance deadlines for all hazardous air pollutants under four broad categories of

regulations (industrial boilers, process heaters, combustion engines and turbines, and

plywood) as soon as they apply for acceptance,19 and would be permanently exempt

from the regulations if EPA accepts their application to opt in.

In addition, units that opt in would no longer be considered a major source or

a major emitting facility or major stationary source for purposes of Part C (PSD) and

Part D (nonattainment) of the Act for 20 years. As discussed later (see item 1 under

“Authorities Removed or Limited,” below), this would exempt opt-in units from

several requirements provided the owner/operator properly operated, maintained, and

repaired the unit’s pollution control equipment to limit particulate emissions and

used good combustion practices to minimize carbon monoxide emissions.

4. Establishment of an Optional “Transitional Area” Category in

Place of Nonattainment Designations. Clear Skies would amend Section 107

of the Clean Air Act to allow areas to be designated “transitional” rather than

“nonattainment” for the new 8-hour ozone and PM2.5 standards, if EPA or state

modeling demonstrate that the area will attain the new standards by December 31,

2015. EPA modeling demonstrates that 88% of the ozone and about two-thirds of

the PM2.5 nonattainment counties would qualify for this transitional status;20 other

areas could qualify by adopting additional local controls. The effects of this change

(as discussed in more detail in items 10, 11, and 12 under “Authorities Removed or

Limited”) are to extend the deadlines for reaching attainment and remove numerous

statutory requirements for nonattainment areas under Part D until after 2017.

Authorities Removed or Limited

1. Exemption from Major Source Requirements Under Parts C and

D. Clear Skies would provide that affected units (including both EGUs and facilities

in other industries that opt into the cap-and-trade program) would not be considered

major emitting facilities or major stationary sources of air pollution for purposes of

Parts C (PSD provisions) and D (nonattainment provisions) of Title I of the Clean

Air Act for a period of 20 years after the date of enactment. For the PSD program,

this would exempt them from the requirements of NSR and BART, as well as BACT.

Unless an affected unit was located within 50 km of Class I areas (158 designated

national parks and wilderness areas), it would not be subject to the ambient air

protections (i.e., increments) of the PSD program. If the unit is located within 50 km

The deadline for compliance would otherwise generally be 2007 - 2010.

See CRS Report RL32345, Implementation of EPA’s 8-Hour Ozone Standard, p. 6, and

CRS Report RL32431, Particulate Matter (PM2.5): National Ambient Air Quality

Standards (NAAQS) Implementation, pp. 10-11.

CRS-11

of a Class I area , however, it would remain subject to the PSD requirements in Part

C of Title I.21 (See further discussion under items 7, 8, and 9, below.)

For nonattainment areas, Clear Skies would exempt affected units from

nonattainment NSR, LAER, and offset requirements. This would limit the ability of

nonattainment areas to impose additional controls on existing EGUs and opt-in

facilities under their State Implementation Plans.

To qualify for the exemptions, an existing affected unit (or opt-in unit as noted

above) must show that it “operates, maintains and repairs pollution control

equipment to limit emissions of particulate matter” and “uses good combustion

practices to minimize emissions of carbon monoxide” within three years of the date

of enactment.

2. Changes to the Hazardous Air Pollutant Provisions of Section

112. Clear Skies would revise Section 112 of the Clean Air Act to preclude

regulation of any hazardous air pollutants emitted by electric utility steam generating

units through either MACT or residual risk standards, with the following exception.

The Administrator would retain the authority to address any non-mercury hazardous

air pollutants from EGUs provided that any determination to do so is based on public

health concerns and, on an individual source basis, considers the effects of emission

controls installed or anticipated in order to meet 2018 emission requirements under

the cap-and-trade program. A determination to impose such controls would also

need to be based on a peer-reviewed study with notice and opportunity to comment,

to be completed not before January 2015. Any such standards could not take effect

before January 1, 2018.

As noted earlier, S. 131 as introduced also exempts units that opt into the capand-trade program from compliance deadlines under four sets of hazardous air

pollutant regulations already promulgated under Section 112 once the units apply to

opt in; it would permanently exempt them from compliance with the four MACT

standards if EPA accepts their application.

3. Changes to Section 126 Petitions. Clear Skies would add a new

Section 110(q) to the Clean Air Act, establishing a moratorium on the use of petitions

to control interstate air pollution from affected units (under Section 126 of the Act)

and establishing more stringent requirements for acceptance of such petitions after

the moratorium. Under current law, Section 126 authorizes downwind states or

political subdivisions to petition the Administrator to find that certain upwind

In addition, Clear Skies would require State Implementation Plans (SIPs) to include

requirements that prior to the commencement of construction of an affected unit in an

attainment or unclassifiable area (e.g., a PSD Class II area), the owner or operator must

demonstrate that the emissions increase from construction or operation will not cause or

contribute to air pollution in excess of any national ambient air quality standard (NAAQS),

a less stringent requirement than current law. In areas designated nonattainment, the state

must determine that construction or operation will not interfere with any program to assure

that the NAAQS are achieved. Interference will be deemed not to occur if, for three years

prior to the date a complete permit application is submitted, the area was in full compliance

with all requirements of the Clean Air Act, including the requirements for SIPs.

CRS-12

sources emit air pollutants in amounts that contribute significantly to the petitioner’s

nonattainment. If the Administrator grants the finding, the upwind sources must

either shut down or implement controls that the Administrator may mandate, within

a specified period, but no later than three years from the date of the finding. The

amendment would provide that the Administrator may not require submission of SIPs

subjecting affected units to Section 126 requirements with an effective date prior to

December 31, 2014.

In reviewing a petition under Section 126, the Administrator would have to

consider, among other factors, any emissions reductions required to occur by the

applicable attainment dates of any relevant nonattainment areas. In addition, as

conditions for making a finding concerning affected units, the Administrator would

have to determine that the required emission reductions from the affected units (1)

are at least as cost-effective as emission reductions from each other principal

category of sources in areas upwind of the petitioner (including on-road and off-road

mobile sources), and (2) will improve air quality in the petitioner’s nonattainment

areas at least as cost-effectively as other emission reductions, if a methodology is

reasonably available to make such determinations.

4. Change in Noncompliance Penalties Under Title IV. Clear Skies

would replace the Clean Air Act’s existing Section 411 beginning in 2008,

effectively reducing the penalties for noncompliance with the sulfur dioxide cap-andtrade program provided in current law. Under current law, noncompliance penalties

were set at $2,000 per ton of excess emissions in 1990. The amount is adjusted for

inflation: in 2004, the adjusted amount would have been $2,890.59, according to the

Bureau of Labor Statistics. Section 406 of the bill would set the penalties at $2,000,

with no further inflation adjustments, thus cutting the penalty by about one-third

initially, and more in subsequent years.

5. Preemption of State Requirements. Like current law, Clear Skies

states that it does not preempt the right of any state or political subdivision thereof

to adopt or enforce limits more stringent than those provided in the bill. Under the

cap-and-trade programs, however, “notwithstanding any other provision of this Act,”

states and their political subdivisions would be prohibited from interfering with the

transfer, sale, or purchase of allowances. The net effect of these provisions would

be to allow increased emissions in another jurisdiction by an amount equal to any

reduction achieved in a more stringent state for each of the three covered pollutants.

Since the bill also limits the ability to file Section 126 petitions to control out-of-state

pollution, a more stringent standard enacted by a state might have no effect on

national levels of a pollutant, but would burden a state’s economy with additional

control costs.

6. Elimination of New Source Review for Modifications of EGUs. As

noted earlier, Clear Skies would exempt EGUs and opt-in facilities from NSR for a

period of 20 years. The bill does, however, establish National Emission Standards

for new EGUs (also described above). These new standards would not apply to

“modified” units, but would apply to “reconstructed” units. Reconstruction is

defined as the replacement of components to such an extent that the fixed capital cost

of the new components exceeds 50% of the fixed capital cost to construct a

comparable new unit. Also, the standards would not apply to reconstructed units

unless it is technologically and economically feasible to meet the standards.

CRS-13

Under current law and subsequent regulation, there is no specific cost criterion

for what qualifies as a modification requiring an affected source to undergo NSR, but

it is considered to be well below a 50% threshold. EPA’s October 2003 attempt to

establish a 20% threshold was criticized as exempting virtually every plant

modification from the existing requirement, and was stayed by the U.S. Court of

Appeals for the D.C. Circuit on December 24, 2003.22

7. Elimination of Best Available Retrofit Technology (BART)

Requirements. Under Section 169A of Part C of the Clean Air Act, major sources

that were in operation between 1962 and 1977 are subject to BART. BART is

intended to assure reasonable progress toward the goal of visibility protection in

Class I national park and wilderness areas. Clear Skies would exempt EGUs and optin facilities from BART for a period of 20 years after enactment.

8. Class I PSD Areas. As noted above, S. 131 as introduced provides that

an affected unit to be located within 50 km of a Class I area on which construction

or reconstruction begins after the date of enactment would remain subject to PSD

requirements. PSD currently requires that all major new and modified sources with

the potential to affect air quality in a Class I area obtain a new source permit that

assures no adverse impact on the area’s visibility. The statute does not specify a

specific distance limit, but the regulations require permit applicants to identify Class

I areas within 100 km of the unit’s location.23

9. Class II PSD Areas. Under the PSD program, areas classified as Class II

are permitted to increase moderately ambient concentrations of SO2, NOx, and PM

by a statutorily determined increment (regulatorily determined in the case of NOx).

Clear Skies would exempt affected units located in Class II areas from having to

offset or otherwise further control their emissions in order to maintain ambient air

quality within the Class II increments.

10. Extension of Deadlines for the Ozone and PM2.5 NAAQS. Under

current law, nonattainment areas must generally demonstrate that they will attain the

new standards for ozone and fine particles (PM2.5) by 2007, 2009, or 2010 (depending

on EPA’s classification scheme).24 As noted earlier, Clear Skies would create a new

“transitional” area classification in place of nonattainment, for areas that can

demonstrate through modeling that they will attain the standards by December 2015.

Until that date, transitional areas would not incur penalties or face additional

requirements beyond those identified in the EPA or state modeling (generally the

Clear Skies controls and already promulgated federal standards for mobile sources).

After 2015, if an area failed to achieve the standard, it would be designated

nonattainment by June 2017, and would then have to impose controls to reach

For additional discussion, see CRS Report RS21608, Clean Air and New Source Review:

Defining Routine Maintenance.

For additional information, see the National Park Service website at [http://www2.nature.

nps.gov/air/Regs/psd.htm].

For ozone deadlines, see [http://www.epa.gov/oar/oaqps/greenbk/gnc.html]. All PM2.5

areas have an initial deadline of 2010.

CRS-14

attainment by 2022. Meanwhile, until 2017, the ozone transitional areas would be

exempt from statutory requirements spelled out in Subpart 2 of Part D of the Act

(described below).

11. Elimination of the Provisions of Subpart 2 for Ozone

Nonattainment. Subpart 2 (Sections 181 and 182) of the Clean Air Act spells out

numerous specific requirements for areas that are classified in Marginal, Moderate,

Serious, Severe, or Extreme ozone nonattainment. These can include LAER

standards and offset requirements for new stationary sources, imposition of RACT

on existing stationary sources, inspection and maintenance programs for motor

vehicles, vapor recovery at gas stations, use of reformulated gasoline, and $5,000 per

ton penalties on some emissions if an area ultimately fails to meet the standard. EPA

has proposed to keep these requirements in place for areas that have failed to meet

the 1-hour ozone standard, but it would appear that such areas might be able to

qualify as “transitional” under Clear Skies.25 Transitional areas would not be

considered in nonattainment. If the areas do qualify as transitional, they would

appear to be able to roll back statutory requirements to which they are now subject,

provided that they can demonstrate attainment by 2015.

12. Elimination of the Conformity Requirements. Under Section 176 of

the Clean Air Act, ozone and PM2.5 nonattainment areas are required to demonstrate

that new federally funded projects (e.g., for highways, transit, or airports) conform

to the area’s SIP for clean air. Failure to demonstrate transportation conformity can

lead to a suspension of federal transportation funds until conformity is demonstrated.

By reclassifying most ozone and PM2.5 nonattainment areas “transitional,” Clear

Skies would eliminate the application of conformity in those areas until 2018.

Impact of Clear Skies

Impact on Regulating Criteria Air Pollutants

Proposed Clear Skies legislation would make numerous changes to the structure

of Title I with respect to electric generating units (EGUs) covered by the proposed

legislation and those industrial sources that choose to opt into the proposed program.

Table 3 attempts to provide an overview of what Title I would look like under Clear

Skies with respect to EGUs and industrial sources that chose to opt in. The most

significant structural change would be the elimination of location as a variable for

controlling EGUs (unless within 50 km of a PSD Class I area). The emission

limitations envisioned under Clear Skies are not based on whether an EGU is in an

attainment or nonattainment area. This situation extends to the allowance system,

which is allowed to operate regardless of an EGU’s location or a state or local

government’s desires to restrict trading in order to help the area come into

compliance with NAAQS. Because EGUs would no longer be major sources under

the meaning of Part C and Part D, states’ ability to set stringent LAER or offset rules

on EGUs in nonattainment areas would be eliminated.

Personal communication, Office of Air Quality Planning and Standards, February 10,

2005.

CRS-15

Table 3. Summary of EGU Requirements under Title I If Clear Skies Is Enacted

Minimum Level

of Control for all

Sources

Everywhere

New Source

Existing Source

Statutory

Standards,

compliance

with Clear

Skies

Statutory

requirements,

compliance with

Clear Skies

Nonattainment Area

New Source

Same as

everywhere

Attainment Area

Existing Source

New Source

Existing Source

Same as everywhere

unless 50 Km from

PSD Class I area

Same as everywhere

unless 50 Km from

PSD Class I area

Limits on

Ambient Impact

NAAQS for SO2, NO2, PM10, O3, and

PM2.5

Transitional NAAQS for O3, and PM2.5

NAAQS

PSD increments do not apply to EGUs unless

within 50 Km from PSD Class I area

Visibility requirements replaced with compliance

with Clear Skies

Local/State

Responsibility

SIP

— NSR eliminated for EGUs

complying with Clear Skies

— States and localities not allowed

to interfere with the free operation of

allowance system

SIP

— Sec. 126 petitions limited by Clear Skies

— NSR eliminated for EGUs complying

with Clear Skies

— States and localities not allowed to

interfere with the free operation of

allowance system

— Transitional designation eliminates

conformity requirements and Subpart 2

mandating controls

SIP

— NSR eliminated for EGUs complying with

Clear Skies

— States and localities not allowed to interfere

with the free operation of allowance system

Source: CRS.

CRS-16

Likewise, the inability to restrict trading by EGUs within nonattainment areas

would prevent state and local governments from influencing the actual emissions of

such EGUs. Finally, the state’s enforcement mechanism, NSR, is eliminated for

EGUs covered by Clear Skies.

If states chose to set stringent state standards under their own Clean Air Act or

equivalent statute, those standards would not be completely controlling. By

preventing states from restricting allowance trading, any extra reductions achieved

by state legislation designed to help achieve attainment (or protect local habitat or

scenic areas under Part C) would create additional allowances that the utility could

sell to upwind utilities not covered by the state’s legislation. The state could neither

prevent the sale nor obtain relief under a Section 126 petition forcing the neighboring

utilities to reduce emissions (until after 2014 under strict conditions).

For the 8-hour ozone and PM2.5 NAAQS, Clear Skies attempts to eliminate the

need for stronger state and local standards (at least the “need” in a regulatory sense)

in most cases by establishing a new “transitional” designation for areas that do not

currently meet ambient air quality standards. Areas would be designated transitional

if EPA or state modeling showed that Clear Skies and other measures such as the

recently promulgated controls on mobile sources would bring an area into attainment

by December 2015. Transitional areas would not be considered nonattainment in a

regulatory or legal sense, obviating the need and the statutory pretext for additional

controls.

With respect to PSD, Clear Skies attempts to protect Class I areas by providing

for Part C requirements for facilities within 50 km of an Class I area. Whether this

is sufficient is debatable. In terms of protecting areas that states deem worthy of

protection but that do not meet Clear Skies’ Class I requirement, states and localities

are basically in the same situation as with respect to nonattainment — that is, they

are severely constrained in being able to meet requirements by the inability to impose

additional controls on EGUs and opt-ins.

The distinction that has been the source of the most substantial controversy over

the years, EGU age, is not fully resolved by Clear Skies. Both Title I and Title IV of

the CAA place the most stringent requirements on new sources, allowing existing

sources to operate with fewer controls. Clear Skies would reduce this disparity by

setting up allowance reserves for new sources. However, although all allowances

would be allocated free, the allocation formulas for existing sources would be more

generous than for new sources. In addition, the allowances for new sources are on

a first-come, first-serve basis. Once the reserve is exhausted, no further allowances

are available, and no existing allocations may be reassigned by EPA to future new

sources commencing operation. Thus, existing units would continue to have an

advantage over new facilities, which would receive either fewer allowances than

existing sources, or none at all.

CRS-17

Table 4. Control of Mercury and Other HAPs from Electric

Generating Units (and Opt-Ins) If Clear Skies Is Enacted

Everywhere

Maximum Achievable

Control Technology

(MACT)

Residual Risk

New Sources

Existing Sources

No longer applicable

Replaced by cap on

emissions from all units

Replaced by cap on

emissions from all units

Individual sources may

reduce emissions or may

purchase allowances from

overcomplying sources

Individual sources may

reduce emissions or may

purchase allowances from

overcomplying sources

No longer applicable

Administrator would retain authority to address

non-mercury HAPs from EGUs and opt-in facilities

Determination to impose such controls would need to be

based on a peer-reviewed study of public health

concerns on an individual unit basis and could not take

effect before January 1, 2018

State/Local Authority

Allows more stringent state and local standards, but

standards would not be controlling because states and

localities would not be allowed to interfere with the free

operation of the allowance system

Source: CRS.

Impact of Clear Skies on Mercury Regulation

Table 4 provides an overview of the regulation of mercury and other hazardous

air pollutants under Clear Skies. Maximum Achievable Control Technology

standards and residual risk standards would no longer be applicable to new or

existing EGUs; nor would they apply to other industrial sources that opt into the capand-trade program. The absence of such unit-specific standards would make it more

difficult to address “hot spots,” areas where concentrations of mercury are greater

than elsewhere.

As with the PSD and nonattainment provisions, if states chose to set more

stringent state standards under their own Clean Air Act or equivalent statute, those

standards would not be completely controlling. By preventing states from restricting

allowance trading, any extra reductions achieved by state legislation designed to

regulate mercury would create additional allowances the utility could sell to upwind

utilities not covered by the state’s legislation. The state could not prevent the sale.

The Administrator would retain the authority to address non-mercury HAPs

from EGUs under stringent conditions, including a requirement for a peer-reviewed

study of public health concerns on an individual unit basis with notice and

opportunity to comment. Any such standards could not be implemented before 2018.

CRS-18

Conclusion

In some ways, former Administrator Whitman has identified the central issue

in Clear Skies’ interaction with the Clean Air Act: Are the targets stringent enough

to permit the relaxing or removal of some provisions of the Clean Air Act designed

to achieve the same thing with respect to electric utilities?

In terms of utility controls designed to achieve the NAAQS, it must be stated

that Clear Skies will not achieve either the 8-hour ozone NAAQS or the fine

particulate NAAQS within the current CAA compliance deadlines, neither in terms

of the reductions necessary to achieve those standards nor the timing of the

reductions Clear Skies would achieve. EPA’s analysis indicates that some

nonattainment areas will need additional controls and time to reach attainment.26

Clear Skies, as currently drafted, would effectively remove additional electric utility

control from the suite of options available to states to achieve that additional level

of control. In addition, the opt-in provision means that the reach of Clear Skies is

unclear. In some areas, the removal of an industrial source from Part C or Part D

could greatly reduce the options state and local authorities would have to achieve

NAAQS attainment or to maintain PSD increments.

Similar problems are anticipated for Clear Skies’ mercury controls. At present,

45 states have issued fish consumption advisories because of mercury contamination.

In about half the cases, the advisories affect every water body in the state. Clear

Skies proposes relatively modest controls on mercury from electric utilities,27 and

most other sources of mercury are already subject to more stringent controls.28 As

currently drafted, Clear Skies would effectively remove additional electric utility

controls from the suite of options available to the states to further reduce mercury

emissions. The ability of industrial sources to opt into the Clear Skies program

would further reduce state mercury control options.

The response of the Administration is to argue that reductions will be achieved

sooner and less expensively under Clear Skies than under the Clean Air Act,29 even

though Clear Skies would extend compliance deadlines 5 to 15 years for states to

achieve air quality standards. The record of Title IV suggests that substantial

overcontrol may be achieved in the early years of a market-based cap-and-trade

program. However, as the program also illustrates over the past couple of years,

those early reductions can be used later to increase emissions in a given year over the

See EPA’s technical analysis, Section B: Human Health and Environmental Benefits,

available at [http://epa.gov/air/clearskies/03technical_package_sectionb.pdf].

Administration analyses indicate that because of credits for early reductions, the 29%

reduction in mercury envisioned for Clear Skies first phase will not be achieved until 2013,

and the 70% reduction for phase 2 not until after 2026.

For a list of the major sources of mercury and the degree of control required, see CRS

Report RL31881, Mercury Emissions to the Air: Regulatory and Legislative Proposals,

Table 1.

See EPA’s Clear Skies website at [http://epa.gov/air/clearskies/basic.html].

CRS-19

mandated cap.30 Thus, achieving reductions early under a cap-and-trade program

does not mean achieving more reductions over the longer term. For state and local

authorities, this additional flexibility allowing sources to use banked allowances can

further complicate compliance strategies.

For a history of emission reductions under Title IV, see:

[http://www.epa.gov/airmarkets/cmprpt/arp03/summary.html]

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