This morning the U.S. District Court of Appeals handed down their decision on a lawsuit challenging the U.S. Environmental Protection Agency’s (EPA) Cross-State Air Pollution Rule (CSAPR).

In its decision, the Court vacated CSAPR and remanded the program back to EPA for further revision. The EPA must continue to administer the legacy clean air program called the Clean Air Interstate Rule (CAIR).

The District Court initially suspended CSAPR on December 30th, 2011, citing arguments from petitioners challenging the rule’s implementation. At that time, the Court ordered the EPA to continue implementation of CSAPR’s predecessor program, CAIR, which itself was vacated by a court ruling.

With the Court decision today, EPA must go back to work creating a program to address changes to the emissions trading program to address cross-state transport of emissions. Affected sources must instead comply with the CAIR program, and trading will continue in these markets.

We will continue to review the rule and provide updates on the market impact. If you have any questions regarding the decision or trading in emissions markets, please contact our Emissions Markets desk at: +1 914.323.0255 or emissionsdesk@evomarkets.com.