	Introduction

On July 11, 2008, in North Carolina v. EPA , the U.S. Court of Appeals for the D.C. CAIR, promulgated by EPA under the Clean Air Act (CAA) in May 2005, established a regional cap-and-trade program for sulfur dioxide (SO 2 ) and nitrogen oxide (NOx) emissions from electric generating units (EGUs) in 28 eastern states and the District of Columbia. Subsequently, on December 23, 2008, the court modified its decision to allow CAIR to remain in effect while EPA fashions a replacement rule. Importance of the CAIR Decision

From a policy standpoint, the court's decision seriously undermined EPA's approach to clean air under the Bush Administration. CAIR was the lynchpin that held together EPA's strategy for attainment of the ozone and fine particulate National Ambient Air Quality Standards (NAAQS), for achieving reductions in mercury emissions from coal-fired powerplants, for addressing regional haze impacts from powerplants, and for responding to state petitions to control upwind sources of ozone and fine particulate pollution under Section 126 of the Clean Air Act. As discussed in this report, the potential impact of vacating CAIR on communities attempting to achieve NAAQS and the impact on mercury emissions would be substantial, and prompted some (including EPA, state environmental agencies, electric utilities, and environmental organizations) to appeal the decision. On July 11, 2008, the D.C. The agency has, since then, begun development of a Clean Air Transport Rule to replace CAIR. The replacement rule was proposed in July 2010, and EPA has indicated that it will finalize the rule by summer 2011. Circuit's ruling. As of May 2011, similar legislation has not been introduced in the 112 th Congress. That decision strongly suggests that there is no simple "fix" that would make CAIR acceptable to the court. This left EPA with three clear options: (1) starting over with a new strategy to mitigate transported air pollutants based on the decision; (2) allowing the states to sort out the issue through Section 126 petitions; or (3) seeking new legislation providing EPA with the statutory authority to either implement CAIR in some form, or an alternative. EPA is proceeding with the first of these options and expects to propose a new Clean Air Transport Rule in April 2010. For Congress, the decision raises several issues:
Should Congress consider providing EPA with the authority to implement CAIR or other cost-based, market-oriented approaches to address NAAQS? Should Congress consider multi-pollutant legislation as a supplement or substitute for the current regulatory regime, at least for electric generating units? Should Congress consider a more comprehensive revision to the Clean Air Act to address not only ozone and PM 2.5 NAAQS non-attainment, but also mercury emissions from coal-fired powerplants, and emerging environmental issues such as climate change?
On August 2, 2010, the Environmental Protection Agency (EPA) proposed a new Clean Air Transport Rule to control powerplant emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx). When finalized, this rule will replace the Clean Air Interstate Rule (CAIR); CAIR, which was promulgated in May 2005, established a regional cap-and-trade program for SO2 and NOx emissions from electric generating units (EGUs) in 28 eastern states and the District of Columbia. On July 11, 2008, in North Carolina v. EPA, the U.S. Court of Appeals for the D.C. Circuit vacated CAIR, saying that it had "more than several fatal flaws." The court subsequently modified its decision on December 23, 2008, however, reversing itself by allowing CAIR to remain in effect until a new rule is promulgated by EPA.
From a policy standpoint, the court's July 2008 decision seriously undermined EPA's approach to clean air over the previous eight years. CAIR was the lynchpin that held together the Bush Administration's strategy for attainment of the ozone and fine particulate National Ambient Air Quality Standards (NAAQS), for achieving reductions in mercury emissions from coal-fired powerplants, for addressing regional haze impacts from powerplants, and for responding to state petitions to control upwind sources of ozone and fine particulates under Section 126 of the Clean Air Act. As discussed in this report, the potential impact on communities attempting to achieve NAAQS and the impact on mercury emissions without CAIR or a similar rule would be substantial; this has prompted some to call for congressional action to address the issue. On February 4, 2010, Senator Carper and 11 bipartisan cosponsors introduced S. 2995, a multipollutant bill that would have replaced the CAIR requirements, and required standards for powerplant emissions of mercury. The bill was not acted on. As of May 2011, legislation addressing CAIR replacement has not been introduced in the 112th Congress.
The D.C. Circuit's July 2008 decision strongly suggested that there is no simple "fix" that will make CAIR acceptable to the court. This left EPA with three clear long-term options: (1) starting anew with a new strategy with respect to mitigating transported air pollution based on the decision; (2) allowing the states to sort out the issue through Section 126 petitions; and (3) seeking new legislation providing EPA with the statutory authority to implement either CAIR in some form, or an alternative. The agency is proceeding with the first of these options with its proposed transport rule, but has indicated that it views congressional efforts to address the issue as "mutually reinforcing."
For Congress, the court decision raises several issues:
Should Congress consider providing EPA with the authority to implement CAIR or other cost-based, market-oriented approaches to address NAAQS? Should Congress consider multi-pollutant legislation as a supplement or substitute for the current regulatory regime, at least for electric generating units? Should Congress consider a more comprehensive revision to the Clean Air Act to address the full scope of ozone and PM2.5 NAAQS non-attainment and related issues, as well as mercury emissions from coal-fired powerplants, and emerging environmental issues such as climate change?