2. AIR POLLUTION: 'Huge mess' in wake of CAIR's collapse (Greenwire, 07/14/2008)

Daniel Cusick and Darren Samuelsohn, Greenwire reporters

Seven years of Bush administration efforts to rebuild the Clean Air Act's provisions governing coal-fired power plants collapsed last week as a centerpiece of the reform, the Clean Air Interstate Rule, was struck down by a federal appeals court panel.

In the wake of CAIR's demise, the electric utility sector is left to account for billions in investments in new air pollution controls that may or may not be necessary to meet emissions requirements under the Clean Air Act.

Industry officials spent the weekend trying to hash out what they termed one of the most complicated rulings ever by the U.S. Circuit Court of Appeals for the District of Columbia Circuit, and expectations are high that some parts of the decision will be appealed.

"This is a huge mess," said Jeff Holmstead, head of environmental strategy at Bracewell & Giuliani LLP, which represents a number of large utilities. Holmstead is EPA's former assistant administrator for air, meaning he was CAIR's primary architect.

In an interview, Holmstead said it was too soon to see the full impact of last week's court ruling. But he said the decision will likely result in work stoppages at dozens of power plants where new air pollution equipment is being installed to comply with what would have been CAIR's first round of implementation next year.

While some air pollution projects that were near completion may proceed, others almost certainly will be suspended, Holmstead said. And even some finished projects may sit idle if there is no requirement that pollution levels must come down.

"These companies have a fiduciary duty to their stockholders," Holmstead said. "Let's say you're building a huge scrubber to comply with CAIR, and part of your costs were going to be offset because you were going to sell allowances. You no longer have to build a scrubber, and you also no longer have an allowance market to offset your costs."

Perhaps more worrisome for the nation's utilities, however, is the fact that as the clock ticks down on what is arguably the most industry-friendly White House in recent history, a new suite of regulations could be coming that bears little resemblance to the Bush administration's program, which relied heavily on free-market approaches to reduce air pollution.

U.S. EPA finalized the CAIR program in 2005 following the rejection on Capitol Hill of Bush's "Clear Skies" legislation, which called for a nationwide cap-and-trade program to limit electric utility emissions of nitrogen oxides, sulfur dioxide and mercury.

CAIR was designed to curb power plant emissions in 28 Eastern states and the District of Columbia. Just as important, Bush officials hailed the regulation as a backstop for virtually all other industrial air pollution programs, including a companion Clean Air Mercury Rule and sweeping reforms to the New Source Review program dealing with upgrades and maintenance at older coal plants.

Administration officials cited CAIR's expected air quality improvements in dozens of instances, whether to defend their other controversial policy proposals or to fend off calls for more aggressive action by environmentalists and Democrats in Congress. But federal appeals courts have since rejected the mercury and NSR regulations. And now the administration will not even have CAIR to hold up as a stick.

"It's a problem," said Tom Skinner, a former acting director of the U.S. EPA enforcement office under Bush. "The administration has been criticized for many things. But CAIR was a good-faith effort to solve a bunch of problems seen by everybody. It was the foundation for significant emission improvements. To have that struck down is clearly a setback."

Vickie Patton, an attorney at the Environmental Defense Fund, explained that the emission cuts promised by CAIR would have gone a long way to help states and local communities meet their federal requirements for smog, soot and haze.

"There's so much hard-wired into the protection of human health and the environment under the Clean Air Act that depended on these power plant reductions," she said. "It's inextricable they'll have to be secured."

'Daunting' task

With a little more than six months to go in office, few expect the Bush administration to have more to say on the air pollution issue. Now the question becomes whether a new president would follow Bush's course, either by resuscitating CAIR or salvaging its usable parts for a new program called by a different name.

Neither Republican Sen. John McCain of Arizona nor Democrat Sen. Barack Obama of Illinois, their parties' prospective presidential nominees, has commented on the implications of Friday's CAIR ruling.

But both candidates have pledged to take decisive action on global warming, meaning regulations of carbon dioxide emissions from power plants are likely on the horizon. It stands to reason, then, that the same get-tough approach could be applied to power sector emissions of NOx, SO2 and mercury.

Environmental groups are gearing up for a full-court press on either a McCain or Obama administration, and they will also continue to lobby Congress to enact new laws requiring more action on air emissions from the electric power sector.

"Fortunately, today's court decision makes clear that the Clean Air Act contains ample authority to achieve deep, essential reductions in smog and soot pollution from power plants," John Walke, a senior air attorney with the Natural Resources Defense Council, said after Friday's ruling. "And the moral obligation to act -- immediately and forcefully -- is beyond dispute."

One proposal sure to get a second look comes from Delaware Sen. Tom Carper (D), chairman of the Senate Clean Air and Nuclear Safety Subcommittee. Carper introduced a bill in early 2007 that would force greater cuts in smog- and soot-forming pollutants compared with the provisions in CAIR.

To date, Carper has not been able to muster support for his bill, and it was largely relegated to the sidelines of this spring's debate over global warming.

In a statement Friday, Carper noted that a legislative fix may be necessary to avoid inevitable court challenges like those that upended CAIR and the EPA's mercury rule, which sought to reduce coal-fired mercury emissions by 70 percent over the next decade through a cap-and-trade program.

"Our air isn't getting any healthier as we battle new clean air regulations in the courts and Congress continues to stall in passing strong clean air legislation," Carper said. "We need to roll up our sleeves and finally pass legislative updates to the Clean Air Act so that Americans can breathe cleaner air."

Success on Capitol Hill, however, is no guarantee.

"It may be that this entire ball of yarn gets taken up come January, everything from greenhouse gas emissions to the CAIR solution to NSR," said Skinner, now an industry attorney and partner in the Chicago offices of Mayer Brown. "You can see one scenario where they try to tackle the whole package. That seems daunting."

Back to Public index page