Last night the U.S. Court of Appeals of the District Columbia circuit lifted the court-imposed stay on the U.S. Environmental Protection Agency’s (EPA) implementation of the Cross-state Air Pollution Rule (CSAPR). The ruling clears the way for EPA to begin enforcing CSAPR, as the courts move forward with consideration of the original legal challenges to the rule.

CSAPR, also known as the Transport Rule, requires states to significantly improve air quality by reducing power plant emissions that contribute to ozone or fine particle pollution in other states. States can control these emissions through a cap-and-trade program using EPA-issued allowances.

Yesterday’s ruling allows the EPA to move ahead with implementation of the program, which was originally vacated by federal courts in August 2012. In April 2014, the US Supreme Court reversed the lower court’s vacature of CSAPR, setting the stage for EPA to reinstate the program.

In EPA’s arguments before the Circuit Court to lift the stay, the agency suggested compliance would begin January 01, 2015 (see page 14 of EPA’s motion). The agency also suggested converting previously allocated 2012 allowances into vintage 2015 allowances and 2013 allowances into 2016 vintage allowances. Yesterday’s court order did not directly address the timeline for implementation or a potential allowance conversion, and EPA indicated they are reviewing the rule to determine whether additional action is necessary to begin CSAPR implementation.

We will continue to monitor EPA's timing for implementation of the rule. If you have any questions regarding the implications of the court ruling or interest in CSAPR's emissions allowance trading programs, please contact our Emissions Markets desk at: +1 914.323.0255.