1. Multi-Pollutant Proposals in the 108th Congress
Presented at OTC Annual Meeting
By Marika Tatsutani, NESCAUM
Philadelphia, PA
June 22, 2003

2. Overview of the Proposals

3. Sulfur Dioxide - SO2 What’s on the table: What’s at stake:
million ton interim cap
million ton final cap
Dates:
What’s at stake:
PMfine attainment, acid rain recovery, regional haze progress, SO2 NAAQS attainment (in some areas), public health.
‘Status quo’ alternative:
Rely on PM attainment needs, future 126 petitions, cont’d acid rain concerns and regional haze SIPs to drive further reductions.
Other considerations:
Interaction of existing CAA programs with current Title IV cap of 8.9 million tons.

4. Nitrogen Oxides - NOx What’s on the table: What’s at stake:
million ton interim cap
million ton final cap
Dates:
What’s at stake:
Water quality & nitrogen deposition, acid rain recovery, PMfine attainment, ozone attainment (to the extent tighter caps provide additional summertime reductions), public health.
‘Status quo’ alternative:
Rely on water quality/acid rain concerns and PM/regional haze SIPs to drive annual controls. Rely on all of the above, plus ozone attainment needs to drive add’tl overall cuts.
Other considerations:
1st phase reductions in all proposals essentially annualize NOx SIP call, hence little further ozone attainment benefit in eastern states. Question about inclusion of industrial boilers now in SIP call.

5. Mercury What’s on the table: What’s at stake:
24-26 ton interim cap
5-15 ton final cap
Dates:
Full trading (CSI), no trading (Jeffords), minimum plant-by-plant requirement (Carper)
What’s at stake:
Public health concerns (esp. for fetus and young children); impacts on wildlife.
‘Status quo’ alternative:
Rely on mercury MACT process to yield rulemaking by end of 2004 and implementation of plant-specific control requirements by end of 2007.
Other considerations:
Current Clean Air Act requires controls at level of “Maximum Achievable Control Technology”

6. Carbon Dioxide – CO2 What’s on the table: What’s at stake:
No action (CSI)
2006 levels by 2009 and 2001 levels by 2013 (Carper)
1990 levels by 2009 (Jeffords)
What’s at stake:
Climate change; meeting state/regional commitments; future resource investments, new technologies and jobs.
‘Status quo’ alternative:
Possibility of separate action in Congress (e.g. McCain/Lieberman “whole economy” bill); meanwhile move forward with state/regional initiatives.
Other considerations:
Carper and (to a lesser extent) Jeffords bills contain lots of ‘flexibility mechanisms’; issue has high symbolic/political visibility.

7. Plant Performance Standards
What’s on the table:
Apply to new and reconstructed units only. (CSI)
By 2020, all pre-1971 plants must meet 4.5 lb/MWh SO2 emissions limit; 2.5 lb/MWh NOx emissions limit. (Carper)
BACT applies to all units by their 40th birthday. (Jeffords)
What’s at stake:
Assurance that all major emitters will eventually apply controls (i.e. end ‘grandfathering’); local impacts; competitiveness and equity.
‘Status quo’ alternative:
Rely on state initiatives, 126 petitions, NSR & BART enforcement and PM/ozone attainment SIPs to address grandfathered plants.
Other considerations:
Stringency of final caps will directly affect how many large facilities can continue to avoid controls.

8. New Source Review (NSR) for New Units
What’s on the table:
NSR for new units replaced by national performance standards. (CSI)
No change to current law. (Carper, Jeffords)
What’s at stake:
Assurance that new facilities apply state-of-the-art controls; technology driver; local impacts.
‘Status quo’ alternative:
Preserve current program.
Other considerations:
Carper also includes provision limiting LAER to two times the cost of BACT.

9. New Source Review (NSR) for Modifications to Existing Units
What’s on the table:
Trigger for NSR becomes increase in maximum hourly emissions rate. (CSI, Carper)
CSI also stipulates limit on CO emissions and use of good combustion practices.
No change to current law. (Jeffords)
What’s at stake:
Assurance that existing plants can’t make major modifications that increase overall emissions; technology driver; local impacts; equity & competitiveness.
‘Status quo’ alternative:
Preserve current program.
Other considerations:
Administration has adopted and is proposing significant changes to NSR independent of multi-P legislation.

10. Non-Attainment Designations & Requirements
What’s on the table:
CSI creates new “transitional” designation that suspends current non-attainment requirements if modeling shows local measures and new power sector caps achieving attainment by If not, areas have until 2020 to submit attainment SIP.
Neither Carper nor Jeffords propose to change current law.
What’s at stake:
Public health impacts of delayed attainment; control obligations for non-power plant sources in transitional areas; downwind impacts & regional equity; reliance on modeling for designations (as opposed to monitored data).
‘Status quo’ alternative:
Preserve current Clean Air Act requirements.
Other considerations:
Is any new flexibility appropriate? If so, can it be responsibly structured to provide cont’d impetus for air quality progress?

11. Section 126 & Transport What’s on the table: What’s at stake:
CSI prohibits federal action on 126 petitions for power plants before Thereafter, petitioning state must demonstrate that proposed remedy is most cost-effective option.
Neither Carper nor Jeffords propose to change current law
What’s at stake:
Ability to seek remedy for transported power plant emissions; impacts on attainment and attendant public health and economic consequences.
‘Status quo’ alternative:
Preserve current Clean Air Act provisions.
Other considerations:
Future effectiveness of 126 mechanism.

12. Hazardous Air Pollutants (besides mercury)
What’s on the table:
CSI removes EPA authority/obligation to regulate non-mercury power plant HAPs.
Neither Carper nor Jeffords propose to change current law
What’s at stake:
Public health and other environmental impacts of failure to regulate non-mercury HAPs.
‘Status quo’ alternative:
Preserve current Clean Air Act requirements.

13. BART & Visibility What’s on the table: What’s at stake:
CSI exempts all covered units from visibility-related requirements unless they are within 50 km of a Class I area.
Carper exempts all covered units for 20 yrs after enactment.
Jeffords proposes no change to current law.
What’s at stake:
Achievement of near and long-term visibility goals.
Public health co-benefits associated with PMfine reductions.
‘Status quo’ alternative:
Preserve current BART requirements.
Other considerations:
Not clear from recent court ruling how broadly EPA can define BART applicability.

14. Emissions Offsets Requirements
What’s on the table:
CSI and Carper remove the emissions offset requirement for new plants that locate in non-attainment areas.
Jeffords proposes no change to current law
What’s at stake:
Ozone and PM attainment; economic development and equity.
‘Status quo’ alternative:
Preserve current Clean Air Act requirements.

15. Timing of Regulatory Relief
What’s on the table:
CSI’s changes to NSR and other existing regulatory requirements take effect immediately upon enactment (i.e. before new caps are in place).
Under Carper’s bill, regulatory relief is delayed until new caps take effect.
What’s at stake:
Emissions trajectory between enactment of legislation and implementation of new caps; regulatory tools available to states in the interim.

16. Other Issues…
Allowance Allocation: CSI proposes input-based w. gradually phased in auction; Carper is output-based; Jeffords relies mostly on auction w. funds recycled to consumers & others. Issue is of key importance to regulated industry.
Existing SO2 Allowance Bank: Not addressed in any of the multi-P proposals, but existing bank of approximately 10 million allowances extends timeframe over which targeted reductions are actually achieved.
Review of New Cap Levels: CSI requires EPA to review caps and recommend changes by 2009 (before implementation); Carper has a review provision too, but not until 15 years after enactment (when caps have already been implemented). Issue may affect stakeholder confidence in final cap levels.
Authority to Revise Caps: Congress on EPA recommendation?, EPA on its own (but not before 20 yrs)? As above, issue impacts regulatory certainty for all stakeholders.