	Overview

On March 10, 2005, the Environmental Protection Agency (EPA) issued its final rule toaddress the effects of interstate transport of air pollutants on nonattainment of the National AmbientAir Quality Standards (NAAQS) for fine particulates (PM 2.5 ) and ozone (specifically, the eight-hourstandard). (1) The Clean AirInterstate Rule (CAIR) was first proposed as the Interstate Air Quality (IAQ) rule and appeared inthe Federal Register January 30, 2004. (2) For PM 2.5 , CAIR finds that the interstate transport of sulfur dioxide(SO 2 ) and nitrogen oxides (NOx) from 23 states and the District of Columbia contributessignificantly to downwind nonattainment; for ozone, CAIR finds that interstate transport of NOxfrom 25 states and the District of Columbia contributes significantly to downwind nonattainment ofthe eight-hour standard. With CAIR, EPA creates regional emissions caps for NOx and SO 2 to be implemented in twophases -- 2010 (2009 for NOx) and 2015. The Rule

As noted above, EPA decided in its final rule to create three emissions caps: Two are annualemissions caps that address the interstate contribution of SO 2 and NOx to PM 2.5 nonattainment; thethird is a seasonal cap to address interstate NOx contribution to ozone nonattainment. (47)

	Conclusion

The final CAIR rule reflects several changes from the proposed IAQ resulting from improvedmodeling and other considerations. Inclusion of a fuel-type adjustment factor to the NOx allocation formula thatprovides more NOx allowances to states that burn coal for electricitygeneration. Although these changes may be important in specific cases, they do not represent a majorshift in the thrust and scope of CAIR. That the rule has not had the visibility of the Hg rule should not be interpreted to mean thatthe underlying issue of PM 2.5 and eight-hour ozone compliance has been solved. In particular, EPAis currently reviewing the stringency of the PM 2.5 NAAQS, a process that could result in a morestringent standard and more counties out of compliance. Likewise, CAIR does not address the most potent environmental issue surroundingfossil-fuel-fired electric generating facilities -- global warming and the possibility of carbon dioxidereductions. Movement on that issue over the next decade could result in a modification of CAIR,or a new multipollutant control regime. Bills have been introduced in Congress to impose such asystem. (49) 
Finally, the promulgation of CAIR may raise questions about the future of the BushAdministration's legislative initiative -- Clear Skies. Clear Skies represents a complete rewrite ofTitle IV of the Clean Air Act and would impose a comprehensive cap-and-trade system on utilitySO 2 , NOx, and Hg emissions. In addition, it would have altered, deleted, or held in abeyance forsome time existing sections of the Clean Air Act with respect to affected electric generating unitsand industrial sources that chose to opt into the program. (50) With the promulgation of CAIR that achieves NOx and SO 2 emissions reductions from most of the country's electricity generating facilities, and of the final Hgrule, it is unclear what impetus remains for Clear Skies.
On March 10, 2005, the Environmental Protection Agency (EPA) issued its final rule toaddress the effects of interstate transport of air pollutants on nonattainment of the National AmbientAir Quality Standards (NAAQS) for fine particulates (PM 2.5 ) and ozone (specifically, the eight-hourstandard). The Clean Air Interstate Rule (CAIR) was first proposed as the Interstate Air Quality(IAQ) rule and appeared in the Federal Register January 30, 2004. For PM 2.5 , CAIR finds that theinterstate transport of sulfur dioxide (SO 2 ) and nitrogen oxides (NOx) from 23 states and the Districtof Columbia contributes significantly to downwind nonattainment; for ozone, CAIR finds thatinterstate transport of NOx from 25 states and the District of Columbia contributes significantly todownwind nonattainment of the eight-hour standard. This result differs some from the proposed rulebecause of improved modeling.
EPA decided in CAIR to create three emissions caps: Two are annual emissions caps thataddress the interstate contribution of SO 2 and NOx to PM 2.5 nonattainment; the third cap is a seasonalcap to address interstate contribution of NOx to ozone nonattainment. The three caps areimplemented in two phases: Phase 1 begins in 2009 for the NOx caps and 2010 for the SO 2 cap. Improved modeling and other considerations resulted in some changes in the final rule from theproposed IAQ. For example, in CAIR, EPA added a fuel-type adjustment factor to the NOxallocation formula that provides significantly more NOx allowances to states that have coal-firedelectric generation compared with those with natural gas-fired generation.
Although changes to the proposed rule may be important in specific cases, they do notrepresent a major shift in the thrust and scope of CAIR. That CAIR has not had the visibility of thecontemporaneous mercury (Hg) rule should not be interpreted to mean that the underlying issue ofPM 2.5 and eight-hour ozone compliance has been solved. EPA is currently reviewing the stringencyof the PM 2.5 NAAQS, a process that may result in a more stringent standard. Given CAIR's lengthyschedule, it seems likely that if the PM 2.5 NAAQS is strengthened, efforts to revise CAIR wouldoccur.
Likewise, CAIR does not address the most potent environmental issue surroundingfossil-fuel-fired electric generating facilities -- global warming and the possibility of carbon dioxidereductions. Movement on that issue over the next decade could result in a modification of CAIR,or a new multi-pollutant control regime. Bills have been introduced in Congress to create such asystem.
Finally, CAIR raises questions about the future of the Bush Administration's legislativeinitiative -- Clear Skies. Clear Skies represents a complete rewrite of Title IV of the Clean Air Actand would impose a comprehensive cap-and-trade system on utility SO 2 , NOx, and Hg emissions. In addition, Clear Skies would alter, delete, or hold in abeyance for some time existing sections ofthe CAA with respect to affected electric facilities and industrial sources that chose to opt into theprogram. With the promulgation of CAIR that achieves NOx and SO 2 emissions reductions frommost of the country's electricity generating facilities, and of the final Hg rule, it is unclear whatimpetus remains for Clear Skies. This report will not be updated.