Leah Weiss OTC Annual Meeting July 22, 2003 Technical Provisions of the Proposed Clear Skies Act that Alter States’ Authorities and Protections in the Clean Air Act Leah Weiss OTC Annual Meeting July 22, 2003

Several Technical Concerns, But This List is Not Exhaustive… Creates a New “Transitional” Designation Changes the Scientific Basis for Designations Creates an Unlevel Playing Field Regarding Designations Extends Attainment Deadlines for “Transitional” Areas Removes Federal Enforceability and “Backstops” in “Transitional” Areas Limits How and When Section 126 Can Be Used Radically Changes the Section 126 Criteria Weakens Protections Concerning HAPs Prevents Local Benefits from State Cap-&-Trade Programs Erodes Full Benefits of the NOx SIP Call Invites a Future Congress to Weaken Emissions Caps CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

CSI Creates a New “Transitional” Designation Category Current CAA designations: “attainment,” “nonattainment” and “unclassifiable” New “transitional” areas are nonattainment areas; have measured unhealthful air quality (i.e., violate 8-hour O3 or PM-2.5 standards) Definition: EPA modeling shows will attain by 12/31/15 (with federal measures) SIPs must be approved by EPA by 12/31/04 if local controls also needed, state must model measures and SIP must include adopted measures CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

CSI Changes Section 107 Eliminates requirement that upwind areas that contribute to unhealthy air quality in nearby areas be classified as “nonattainment” Dismantles legal recourse for downwind areas under s. 107 CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

CSI Changes the Scientific Basis on Which Areas are Designated Current CAA designations based on monitored air quality concentrations CSI “transitional” designations based on anticipated air quality improvements (via modeling) and an early SIP submittal CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

CSI Creates an Unlevel Playing Field Regarding Designations By sidestepping “nonattainment” label, CSI excuses “transitional” areas from adopting key CAA emission reduction requirements that would otherwise be in force For many areas: excused from measures aimed at controlling growth in emissions from power and mobile source sector For others: excused from significant emission reduction measures Areas with identical air quality have differing requirements Attainment areas in OTR must do more than “transitional” areas CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

CSI Drastically Extends Attainment Deadlines for “Transitional” Areas For ozone: allows at least 8 and up to 15-20 additional years to attain (CAA: marginal 4/07, moderate 4/10, serious 4/13) (CSI: “transitional” 12/15) For PM2.5: allows at least 6 and up to 12-17 additional years to attain (CAA: 12/09) What about impacts to downwind areas? to citizens who live in “transitional” areas? CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

CSI Removes Federal Enforceability and “Backstop” Provisions for “Transitional” Areas No transport accountability requirements (CAA: all areas subject to 110(a)(2)(D) provisions) No contingencies (CAA: moderate and above subject) New “maintenance requirement” in place Planning exercise due in 2010 No EPA enforcement authority if problems arise CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

Section 126 CAA: States may petition EPA and receive expeditious relief if EPA finds that certain stationary sources “contribute significantly to nonattainment in, or interference with maintenance by, and other State with respect to any such national primary or secondary ambient air quality standard” CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

CSI Limits How and When Section 126 Can Be Used EPA cannot make findings on any 126 petition for CSI sources prior to 1/1/09 (now, EPA must act within 60 days) EPA must make findings by 1/31/09 for petitions filed prior to 1/07 (now, EPA must act within 60 days) EPA must extend the compliance dates for all 126 findings to ensure that no CSI sources are subject to any deadline prior to 1/1/12 (now, EPA must require emission limits within 3 years of findings) CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

CSI Radically Changes the Section 126 Findings Criteria Prohibits EPA from making a finding unless the petitioning state shows upwind emissions reductions are at least as cost effective as emission controls on other source types that could be implemented locally or in the upwind area Must be based on a consideration of other enacted or pending emission reduction programs – even if they are not yet implemented CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

A Closer Look at CSI’s Section 126 Cost Effectiveness Test Cost side includes the full cost Benefit side of limits the benefits to air quality improvements in the petitioning state’s nonattainment area only Significantly biases the cost effectiveness test against the petitioning state CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

A Closer Look at CSI’s Section 126 Cost Effectiveness Test States must compare cost effectiveness to other all programs, including federal programs that states are precluded from adopting on their own States have little current capacity to conduct these economic analyses Net effect: states in a Catch-22; renders 126 an ineffective tool for states CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

CSI and Hazardous Air Pollutants CSI eliminates a proven plant-by-plant toxic emission control mechanism (MACT) for mercury, and replaces it with a relatively loose mercury cap Hg control technologies (e.g., activated carbon injection) shown to achieve control effectiveness greater than 90% CSI Hg cap not fully implemented until a decade later (2018) than the MACT requirement; represents at best 70% control effectiveness, on average CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

CSI and Hazardous Air Pollutants CSI removes EPA’s current statutory authority to regulate non-mercury HAP emissions from power plants. Shifts to a discretionary program that would not take effect until 2018 All non-mercury HAPs regulated under the new and unproven residual risk program, not the MACT program CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

CSI Prevents Local Benefits from State Cap-and-Trade Programs CSI prohibits any states from “restricting” or “interfering” with the “transfer, sale or purchase” of allowances States with own programs could not retire or withhold the allowances that accrue from the setting their more protective caps Allowances could be used in upwind area CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

CSI Erodes Full Benefits of the NOx SIP Call NOx SIP Call sources: electric generating units (EGUs) and other large industrial sources CSI sources: only EGUs CSI modified this year to establish separate non-EGU program Lacks economies of scale of NOx SIP Call Much less efficient and more costly program CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

CSI Invites a Future Congress to Weaken its Final Emissions Caps Midcourse review provision requires EPA to review costs and benefits of CSI power sector caps and recommend changes to Congress Analysis features a heavy emphasis on cost considerations Review completed by 2009 (before 1st phase of reductions) Opens door to weakening of caps CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

Impacts of Midcourse Review Business uncertainty for sources; may be unwilling to make capital outlays until review completed State regulators can’t rely on the power sector emissions reductions that are now being used to sell CSI’s regulatory relief provisions CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

Summary CSI changes fundamental designation and attainment provisions of the CAA Creates an unlevel playing field by providing regulatory relief for new upwind nonattainment areas (O3 and PM-2.5) CSI materially alters and restricts CAA provisions that allow states to achieve relief from interstate pollution (s. 126, s.110, s.107) CSI makes changes to CAA that affects several other rights, privileges, protections, and responsibilities currently held by the states under the CAA CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

Observations Federal acid rain cap and trade program didn’t need regulatory relief provisions to succeed Extent and timing of power sector emissions reductions don’t justify public health risks created by regulatory relief provisions (also - no direct timing linkage between the two) Changes being sought to ease requirements for newly designated NAAs (relief until at least 2015) CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

Impacts Limits states from seeking relief from upwind pollution Limits states from adopting or achieving environmental benefits of state emission control measures more stringent than federal requirements Limits states’ ability to attain health-based NAAQS CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03

What’s at Stake? Citizens’ health States’ economies CSI and States Authorities/Protections: NESCAUM Presentation at OTC Annual Meeting, 7/22/03