Friday, October 07, 2011

EPA Proposes Significant Changes To CSAPR Transport Rule

Oct 6: U.S. EPA signed a proposed rule, yet to be published in the Federal Register, indicating it is proposing or seeking comment on revisions to the final Transport Rule promulgated on August 8, 2011 (i.e. Cross-State Air Pollution Rule or CSAPR) [See WIMS 7/7/11]. These revisions address discrepancies in unit-specific modeling assumptions that affect the proper calculation of Transport Rule state budgets and assurance levels in Florida, Louisiana, Michigan, Mississippi, Nebraska, New Jersey, New York, Texas, and Wisconsin, as well as new unit set-asides in Arkansas and Texas. EPA is also proposing to revise allowance allocations to specific units covered by certain consent decrees that restrict the use of those allowances. These important technical fixes maintain the Transport Rule's ability to achieve the elimination of significant contribution and interference with maintenance as quantified by the proper application of these methodologies.

    EPA is also proposing to amend the assurance penalty provisions of the rule to make them effective beginning January 1, 2014, rather than in 2012, in order to promote the development of allowance market liquidity as these revisions are finalized. EPA believes that deferring the effective date of the assurance provisions would provide additional confidence and would not compromise the air quality goals of the program. In addition, we are proposing to correct typographical errors in the rule.

    On amending the assurance penalty provisions to make them effective 2 years later, EPA indicates, "EPA is also proposing in this action to amend the effective date of the Transport Rule assurance provisions to make them effective beginning on January 1, 2014. During outreach discussions with various stakeholders, the application of assurance penalties at the outset of the program has been raised as a major concern for compliance and market development in the early years of the program. Several stakeholders have expressed concern that Transport Rule allowance market development may be delayed by uncertainty over how each state will transition from 2010 and 2011 emission levels to meet the projected Transport Rule assurance levels in 2012 and 2013. . . EPA proposes to determine that amending the assurance provisions to take effect starting in 2014 is appropriate. EPA believes that a limited postponement of the effectiveness of these provisions is justified in order to smooth the transition from the existing CAIR programs to the new Transport Rule programs. . ."

    EPA also issued a brief statement saying, "On October 6, 2011, following the submission of additional data from states and companies and further review of the rule, EPA is proposing a routine rulemaking that will maintain the extensive public health benefits of the Cross State Air Pollution Rule while also making certain technical adjustments to account for the updated information the Agency recently received. These adjustments, possible because of the inherent flexibility of the Clean Air Act, will increase CSAPR emission budgets in ten states and ease limits on marketbased compliance options. While individual state adjustments vary, overall, the budget increases are slight -- about one percent -- when compared to the millions of tons of pollution reductions secured by CSAPR. Today's proposal will maintain the significant health benefits of the rule -- saving up to 34,000 lives a year -- while continuing CSAPR'S flexibility and certainty for utilities as we work together to ensure that we protect the air we all breathe and the jobs of American workers. While the CSAPR trading programs begins in January 2012, companies have until the end of 2012 and early 2013 to demonstrate compliance. As with any proposal, this rulemaking will go through a public comment period to ensure important feedback from stakeholders will inform the final standard." The Agency also released additional Technical Support Information (see link below).
    House Science, Space, and Technology Committee Chairman Ralph Hall (R-TX) issued a statement on EPA proposed corrections saying, "EPA's announcement confirms several major shortcomings with the CSAPR that were highlighted in our Committee's September 15th hearing. These problems include unreasonable timelines, failure to consult stakeholders, and the use of non-transparent models that do not seem to match up with actual pollution measurements.
    "EPA's decision to increase emission budgets and allowances for some states and facilities demonstrates the finalized rule lacked sufficient scientific analysis and economic consideration.  EPA's process is broken.  As we have seen in Texas and throughout the United States, pursuing an 'EPA-knows-best' approach to compliance will unquestionably result in increased unemployment, power plant shut-downs, and more expensive, less reliable energy.  These proposed revisions still fail to avoid usurping the States' statutory prerogative under the Clean Air Act to develop their own implementation strategies.
    "The concept of preventing emissions from significantly affecting the air quality in another state seems reasonable, and states have been making great strides to reduce their cross-state pollution.  But they need sufficient time to comply with new restrictions.  EPA has options, including continuing to apply the current effective approach under the Clean Air Interstate Rule (CAIR), while it takes a time out to finish the homework it should have completed before taking action.  Today's announcement is an ad hoc attempt to address certain deficiencies in an inherently flawed rule, but it does not do enough.  The CSAPR requires more than just a few 'technical adjustments.'  EPA needs to step back, reboot, and start over."
    Access a prepublication copy of EPA's proposal (click here). Access the statement from EPA (click here). Access additional Technical Support Information released by EPA (click here). Access the statement from Representative Hall with links to the Committee meeting and related information (click here). Access EPA's CSAPR website for complete background (click here). [#Air]