As the market awaits the DC Circuit Court of Appeal decision on the Cross State Air Pollution Rule (CSAPR), Environmental Protection Agency (EPA) assistant administrator Gina McCarthy expressed during a July 10th Washington, D.C. conference that the Rule will be upheld.  McCarthy also predicted the Court decision will be announced shortly, and market participants are hoping that the decision will be released this Friday.

If the Rule is upheld, the EPA has stated that it hopes to reinstate CSAPR failry quickly.  The big question, however, is how the EPA would implement CSAPR if it prevails, and how quickly the Rule can take affect.  The EPA is hoping the court addresses these issues in its decision to avoid any new rulemaking processes.

CSAPR is designed to protect downwind wind states from emissions that cross state lines and contribute to ozone and fine particle pollution from upwind states.   The rule was to start effective January 1, 2012, however on December 30, 2011 The US Court of Appeals for the DC Circuit Court acting on numerous motions filed by multiple State and utility parties, issued a rare judicial stay of CSAPR.  The Court ordered EPA to continue with CAIR and indicated that it would move quickly to resolve the merits of the case.  The Court heard oral arguments on April 13, 2012.

On June 12, 2012, The EPA issued their final revisions to the Cross State Air Pollution Rule.  The revisions increase the 2012 and 2014 state budgets for 13 States and would be effective on August 13, 2012.  The Revisions also make associated changes to the State’s variability limits.  In total, the Revision adds 27,229 Allowances (increase of approx 2%) to the SO2 Group 1 2014 Budget, 102,426 Allowances (increase of approx 11.5%) to the SO2 Group 2 2014 Budget, 42,047 Allowances (increase of approx 3.5%) to the Annual NOx 2014 Budget, and 19,797 (increase of approx 3.4%) Allowances to the Seasonal NOx 2014 Budget.  Tables with the revised budgets by State can be found HERE.

After the final Transport Rule was published on July 6, 2011, EPA identified discrepancies in certain data assumptions that affected some State budgets.  EPA had also received numerous comments since the Rule had been published and the June 12 revision reflects EPA’s final revision to the Rule.

For current pricing and more information on the market impacts of the Court ruling on U.S. emissions trading markets, please contact our Emissions Markets Team at: +1 914.323.0255.