As U.S. EPA prepares to release its proposed replacement for a President George W. Bush-era air-pollution rule, Eastern states are pushing for legislation that would impose a tighter cap on smog-forming nitrogen oxide (NOx) pollution from power plants.

The Clean Air Interstate Rule (CAIR), which created a cap-and-trade program for NOx and sulfur dioxide (SO2) emissions in the eastern United States, was tossed out by a federal appeals court in 2008. With a proposed replacement expected within days, the Senate Environment and Public Works Committee could soon mark up a bill that aims to make emissions limits stick.

The bill, S. 2995 -- introduced by Sens. Tom Carper (D-Del.) and Lamar Alexander (R-Tenn.) -- seeks an 80 percent reduction in power plants' S02 emissions by 2018, a 50 percent reduction in NOx emissions by 2015 and a 90 percent cut in mercury emissions by 2015.

EPA plans to release a proposed rule by the end of June, according to an online database that tracks agency rulemaking. The proposal will be accompanied by a report modeling the Carper-Alexander bill, which was promised a markup by Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) earlier this year (E&ENews PM, April 20).

Seeking an amendment to the Carper-Alexander bill, state environmental officials are pushing committee members for a tighter NOx cap, arguing that states will not otherwise be able to meet stricter ground-level ozone standards slated to be finalized by EPA this summer.

Stricter limits would require additional efforts by coal plants, sparing states from cracking down on other sources that are "far less able to reach those emissions reductions," said Bill Becker, executive director of the National Association of Clean Air Agencies.

"If we don't meet our ozone standard, not only do people continue to get sick, but states get punished. That's why we are seeking the most cost-effective emissions reductions first," Becker said.

The CAIR replacement under consideration by EPA, known as the "transport" rule, is largely intended to address pollution problems created when emissions from Midwestern coal plants are carried by air currents to the Northeast.

Carper, chairman of EPW's Clean Air Subcommittee and a longtime proponent of multipollutant legislation, has said he crafted his legislation with the intention of avoiding the sort of court battles that followed the creation of the Bush-era CAIR program.

Challenged in court by North Carolina and several industry groups, the program was struck down by a three-judge panel of the U.S. Circuit Court of Appeals for the District of Columbia. In an unusually blunt decision, the judges described the agency's rulemaking as "fundamentally flawed," saying that "no amount of tinkering with the rule or revising of the explanations will transform CAIR, as written, into an acceptable rule."

The agency "must redo its analysis from the ground up," they wrote. "The trading program is unlawful, because it does not connect states' emissions reductions to any measure of their own significant contributions."

How far should legislation go?

The court decided later to leave CAIR in place so EPA would have time to craft a replacement. Industry groups, clean air advocates and lawmakers generally agree that congressional action will be necessary to provide a measure of certainty for the next wave of emissions reductions, but the question that divides them is how far to go.

Under the Carper-Alexander legislation, the country would be divided into two regions: Region 1, which would include 32 Eastern states and the District of Columbia, and Region 2, which would include the remaining 16 states in the continental United States.

The proposed legislation would impose a cap of 1.3 million tons of NOx per year on Region 1, starting in 2014. But states that typically bear the brunt of errant emissions, such as New York and Maryland, want that limit reduced to 900,000 tons.

With the committee rumored to be striking a tentative compromise around 1.1 million tons, "EPA's regulatory program is looking better and better," Becker said.

During a June 11 briefing, state environmental officials told committee staff that NOx emissions reductions at coal plants cost $700 per ton on average -- a fraction of the cost of reductions at other facilities.

"Based on our earlier experiences implementing regional programs to reduce NOx and SO2 from electric generating units ... there is no other program that is more important to our efforts to protect public health than the next round of large reductions at power plants," Maryland Environment Secretary Shari Wilson wrote in a recent letter to Sen. Ben Cardin (D-Md.), a member of the committee.

Pete Grannis, commissioner of the New York Department of Environmental Conservation, wrote a similar letter to Sen. Kirsten Gillibrand (D-N.Y.), another committee member.

Concerns about the bill's emissions reductions have been raised by Sen. George Voinovich (R-Ohio) and Sen. James Inhofe (R-Okla.), the ranking member of the EPW Committee. Jeff Holmstead, who crafted CAIR as EPA's air chief under Bush, said earlier this year that making the NOx limits more stringent would make compliance difficult for utilities.

"I'm just not sure that it's possible if you want to keep the lights on," said Holmstead, now an industry lobbyist at Bracewell & Giuliani LLP (E&E Daily, March 1).

Click here to read Maryland's letter and here to read New York's letter.