1. State of North Carolina v. EPA

2. Introduction The Clean Air Act gives the States the primary responsibility for air quality within their borders and requires state implementation plans (SIPs)are a means to ensure that air quality. SIPs must contain adequate provisions to prohibit sources within the State from emitting air pollution that will contribute significantly to nonattainment or interfere with maintenance by any other State related to any NAAQS

3. Introduction Purpose of the Clean Air Interstate Rule (CAIR) was to reduce the impact of upwind States on out-of-state downwind nonattainment of the PM2.5 and 8-hour ozone NAAQS. Two phases for CAIR – NOx by 2009 and SO2 by 2010 – NOx and SO2 by 2015

4. Introduction State subject to CAIR for PM2.5 if – Contribute 0.2 ug/m3 or more of PM2.5 State not subject to CAIR for O3 if – <2ppb of O3 concentration – Contribution is <1 percent – But then look to Magnitude Frequency Amount

5. Introduction NOx budgets were determined according to each states proportion of oil-, gas-, and coal-fired facilities using heat input data for EGUs from 1999-2002. – Coal gets 100 percent of heat input value – Oil gets 60 percent of heat input value – Gas gets 40 percent of heat input value SO2 budgets budgets were determined by reducing Title IV allowances by 50 percent for 2010 and 65 percent by 2015. 28 States and the District of Columbia subject to CAIR.

6. Petitions for Review North Carolina – Trading program – Interference with maintenance – 2015 compliance date Utilities – SO2 Budgets – Authority to limit Title IV allowances Entergy – Authority to set NOx allowance on fuel type

7. North Carolina Trading Program – North Carolina Program doesnt eliminate significant contribution – EPA Program is regional – Court Title I specifically requires the elimination of emissions from sources that contribute significantly and interfere with maintenance in downwind areas.

8. North Carolina Interfere with Maintenance – North Carolina EPA has ignored the interfere with maintenance language under Title I for areas required to attain by 2010 – EPA Interference with maintenance provisions justifies controls in 2015 – Court Under EPAs interpretation states with areas required to attain by 2010 have no recourse.

9. North Carolina 2015 Compliance Deadline – North Carolina CAA requires consistent result so if attainment is required by 2010, CAIR cannot give States that contribute significantly until 2015 to comply – EPA Consistency is procedural and not substantive – Court CAA consistency is both procedural and substantive so that attainment dates and CAIR compliance dates must coincide

10. Utilities SO2 Budgets Utilities – EPA never explained how the SO2 budgets related to mandate to prohibit significant contributions to downwind areas EPA – Title IV used as a logical starting point and budgets were based on the application of highly-cost effective controls. Court – EPA never explains how reducing Title IV allowances will adequately prohibit states from contributing significantly to downwind nonattainment for PM2.5

11. Entergy NOx Budgets Entergy – Fuel adjustment is irrational since it is made for burden-sharing alone EPA – Fairness Court – Fairness not part of Title I. EPA cannot require States with oil- and gas-fired utilities to subsidize States with coal-fired fired utilities.

12. Utilities Title IV Allowances Utilities – EPA lacks the statutory authority to terminate or limit Title IV allowances EPA – Claims that the CAA gives it authority to set up trading program and use Title IV allowances as currency. Court – EPA is a creature of statute and the CAA does not grant it the authority to says it has under the CAA.

13. Conclusion On July 11, 2008, the Court of Appeals for the D.C. Circuit vacated and remanded CAIR in its entirety finding more than several fatal flaws in the rule.