On July 7, 2011, the EPA finalized the Cross-State Air Pollution Rule (CSAPR), which will replace the Clean Air Interstate Rule.  CSAPR requires power plants in twenty-seven states to make significant reductions in annual SO2 emissions, annual NOx emissions, and ozone-season NOx emissions.  The rule allows sources to trade emissions allowances.  The EPA believes that the rule will cause a 73% reduction in SO2 emissions and a 54% reduction in NOx emissions by 2014.  Annual reductions in SO2 emissions and NOx  emissions become effective January 1, 2012.  Ozone season  NOx  emission reductions become effective May 1, 2012.   Additional reductions in SO2 emissions will be required beginning January 1, 2014.

EPA anticipates that $800 million dollars will be spent annually on this rule in 2014.  (This figure does not include the $1.6 billion dollars per year in capital investment already being spent due to the Clean Air Interstate Rule.)  EPA believes this rule will require plants to either (1) maximize the use of already-installed control technology; (2) burn lower sulfur coal or switch fuels; or (3) install or upgrade pollution control technology including flue gas desulfurization technology and selective catalytic reduction technology.  One midwestern power company has already stated that the rule will require it to raise rates 25–30% and retire some units.
 

For more information on this new rule, please contact Scott Alexander, Jeff Stemerick, or any member of Taft’s Environmental Practice Group.