Order Code RL32755
CRS Report for Congress
Received through the CRS Web
Air Quality: Multi-Pollutant Legislation
in the 109th Congress
Updated March 25, 2005
Larry Parker
Specialist in Energy Policy
Resources, Science, and Industry Division
John Blodgett
Specialist in Environmental Policy
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

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Air Quality: Multi-Pollutant Legislation
in the 109th Congress
Summary
With the prospect of new layers of complexity being added to air pollution
controls and with electricity restructuring putting a premium on economic efficiency,
interest is being expressed in finding mechanisms to achieve health and
environmental goals in simpler, more cost-effective ways. The electric utility
industry is a major source of air pollution, particularly sulfur dioxide (SO ), nitrogen
2
oxides (NOx), and mercury (Hg), as well as suspected greenhouse gases, particularly
carbon dioxide (CO ). At issue is whether a new approach to environmental
2
protection could achieve the nation’s air quality goals more cost-effectively than the
current system.
One approach being proposed is a “multi-pollutant” strategy — a framework
based on a consistent set of emissions caps, implemented through emissions trading.
Just how the proposed approach would fit with the current (and proposed) diverse
regulatory regimes remains to be worked out; they might be replaced to the greatest
extent feasible, or they might be overlaid by the framework of emissions caps.
In February 2002, the Bush Administration announced two air quality initiatives.
The first, “Clear Skies,” would amend the Clean Air Act to place emission caps on
electric utility emissions of SO , NOx, and Hg. Implemented through a tradeable
2
allowance program, the emissions caps would generally be imposed in two phases:
2008 and 2018. The second initiative begins a voluntary greenhouse gas reduction
program. This plan, rather than capping CO emissions, focuses on improving the
2
carbon efficiency of the economy, reducing current emissions of 183 metric tons per
million dollars of GDP to 151 metric tons per million dollars of GDP in 2012.
In the 109th Congress, four bills have been introduced that would impose multi-
pollutant controls on utilities. Two of the bills, H.R. 227 and S. 131, are modified
versions of the Administration’s three-pollutant proposal. The other two bills, S. 150
and H.R. 1451, are four-pollutant proposals that include carbon dioxide. S. 150 is
similar to a bill reported by the Senate Environment and Public Works Committee
in the 107th Congress. Likewise, H.R. 1451 is similar to H.R. 1256 introduced in the
107th Congress. All of these bills involve some form of emission caps, typically
beginning in 2010; and most include a tradeable credit program to implement that
cap. The provisions concerning SO , NOx, and Hg in S. 150 and H.R. 1451 are
2
generally more stringent and take full effect earlier than the comparable provisions
of S. 131. S. 150 and H.R. 1451 would cap utility emissions of CO . It is difficult
2
to compare those CO caps to the Administration’s proposal concerning CO — both
2
2
because the Administration’s proposal is voluntary rather than mandatory and
because it is broader (covering all greenhouse gas emissions rather than just utility
CO emissions). However, it appears that actual U.S. greenhouse gas emissions
2
would be higher under the Administration’s proposal than those allowed by S. 150
and H.R. 1451.
This report will be updated as warranted.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Bush Administration’s Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Proposed Legislation and Legislative Action in the 109th Congress . . . . . . . 3
SO , NOx, and Hg Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2
Related Regulatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
CO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2
List of Tables
Table 1. Emissions from U.S. Fossil-Fuel Electric Generating Plants . . . . . . . . . 1
Table 2. Comparison of Administration’s Voluntary Program with
Proposed Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Appendix. Comparison of Multi-Pollutant Control Proposals . . . . . . . . . . . . . . . 6

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Air Quality: Multi-Pollutant Legislation
in the 109th Congress
Introduction
Electric utility generating facilities are a major source of air pollution. The
combustion of fossil fuels (petroleum, natural gas, and coal), which accounts for
about two-thirds of U.S. electricity generation, results in the emission of a stream of
gases. These gases include several pollutants that directly pose risks to human health
and welfare, including particulate matter (PM),1 sulfur dioxide (SO ), nitrogen oxides
2
(NOx), and mercury (Hg). Particulate matter, SO , and NOx are currently regulated
2
under the Clean Air Act (CAA), and the Environmental Protection Agency (EPA) has
proposed rules to regulate mercury. Other gases may pose indirect risks, notably
carbon dioxide (CO ), which may contribute to global warming.2 Table 1 provides
2
estimates of SO , NOx, and CO emissions from electric generating facilities.
2
2
Annual emissions of Hg from utility facilities are more uncertain; current estimates
indicate about 48 tons. Utilities are subject to an array of environmental regulations,
which affect in different ways both the cost of operating existing generating facilities
and the cost of constructing new ones.
Table 1. Emissions from U.S. Fossil-Fuel Electric Generating Plants
(thousands of metric tons)
Emissions
1998
1999
2000
2001
2002
2003
SO
12,509
12,445
11,297
10,966
10,515
10,594
2
NOx
6,235
5,732
5,380
5,045
4,802
4,396
CO
2,313,013
2,326,558
2,429,394
2,379,603
2,397,937
2,408,961
2
Source: Energy Information Administration. Includes emissions from combined-heat-and-power plants.
The evolution of air pollution controls over time and as a result of growing
scientific understanding of health and environmental impacts has led to a
multilayered and interlocking patchwork of controls. Moreover, additional controls
are in the process of development, particularly with respect to NOx as a precursor to
ozone, to both NOx and SO as contributors to PM , and to Hg as a toxic air
2
2.5
1 Particulate matter is regulated depending on the particle size; current regulations address
particles less than 10 microns in diameter (PM ); EPA has promulgated regulations for
10
particles less than 2.5 microns in diameter (PM ) that are in the process of being
2.5
implemented. SO and NOx emissions could be affected by regulations of PM . Current
2
2.5
concerns about emissions from fossil-fuel electric generating plants do not explicitly address
PM, but could indirectly do so through attention to SO and NOx.
2
2 Steam-electric utilities produce minor amounts of volatile organic compounds (VOCs),
carbon monoxide (CO), and lead — on the order of 2% or less of all sources.

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CRS-2
pollutant. Also, under the United Nations Framework Convention on Climate
Change (UNFCCC), the United States agreed to voluntary limits on CO emissions.
2
The current Bush Administration has rejected the Kyoto Protocol, which would
impose mandatory limits, in favor of a voluntary reduction program. Thus,
mandatory federal CO controls in the United States appear unlikely in the near term.
2
For many years the complexity of the air quality control regime has caused some
observers to call for a simplified approach. Now, with the potential both for
additional control programs on SO and NOx and for new controls directed at Hg and
2
CO intersecting with the technological and policy changes affecting the electric
2
utility industry, such calls for simplification have become more numerous and
insistent. One focus of this effort is the “multi-pollutant” or “four-pollutant”
approach. This approach involves a mix of regulatory and economic mechanisms
that would apply to utility emissions of up to four pollutants in various proposals —
SO , NOx, Hg, and CO . The objective would be to balance the environmental goal
2
2
of effective controls across the pollutants covered with the industry goal of a stable
regulatory regime for a period of years.3
The Bush Administration’s Proposals
In February 2002, the Bush Administration announced two air quality proposals
to address the control of emissions of SO , NOx, Hg, and CO .4 The first proposal,
2
2
called “Clear Skies,” would amend the Clean Air Act to place emission caps on
electric utility emissions of SO , NOx, and Hg. Implemented through a tradeable
2
allowance program, the emissions caps would be imposed in two phases: 2010 (2008
in the case of NOx) and 2018. As part of a complete rewrite of Title IV of the Clean
Air Act, the Administration’s proposal was introduced in the 108th Congress as H.R.
999 and S. 485. Revised versions of Clear Skies legislation have been introduced in
the 109th Congress as H.R. 227 and S. 131.
The second proposal (for which no legislation has been introduced) initiates a
new voluntary greenhouse gas reduction program, similar to ones introduced by the
earlier George H. W. Bush and Clinton Administrations.5 Developed in response to
the U.S. ratification of the 1992 UNFCCC, these previous plans projected U.S.
compliance, or near compliance, with the UNFCCC goal of stabilizing greenhouse
gas emissions at their 1990 levels by the year 2000 through voluntary measures. The
Bush Administration proposal does not make that claim, only projecting a 100
million metric ton reduction in emissions from what would occur otherwise in the
year 2012. Instead, the plan focuses on improving the carbon efficiency of the
3 CRS Report RL30878, Electricity Generation and Air Quality: Multi-Pollutant Strategies,
by Larry Parker and John Blodgett.
4 Papers outlining the Administration’s proposals are available from the White House
website: [http://www.whitehouse.gov/news/releases/2002/02/clearskies.html] for the three
pollutant proposal, and [http://www.whitehouse.gov/news/releases/2002/02/climatechange.
html] for the climate change initiative.
5 For a discussion of those previous plans, see CRS Report 94-404 ENR, Climate Change
Action Plans, by Larry Parker and John Blodgett, May 9, 1994 (archived, available from the
authors).

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CRS-3
economy, reducing current emissions of 183 metric tons per million dollars of GDP
to 151 metric tons per million dollars of GDP in 2012. It proposes several voluntary
initiatives, along with increased spending and tax incentives, to achieve this goal.
The Administration notes that the new initiatives would achieve about one-quarter
of the objective, while three-quarters of the projected reduction would occur through
already existing efforts.
Proposed Legislation and Legislative Action
in the 109th Congress
In the 109th Congress, four bills have been introduced that would impose multi-
pollutant controls on utilities. Two of the bills, H.R. 227, introduced by
Representative Sweeney, and S. 131, introduced by Senator Inhofe, are modified
versions of the Administration’s three-pollutant proposal. The other two bills are
four-pollutant proposals that include carbon dioxide. S. 150, introduced by Senator
Jeffords, is similar to a bill reported by the Senate Environment and Public Works
Committee in the 107th Congress. Likewise, H.R. 1451, introduced by Representative
Waxman, is similar to H.R. 1256 introduced in the 107th Congress. All of these bills
involve some form of emission caps, typically being in 2010; and most include a
tradeable credit program to implement that cap. The provisions concerning SO ,
2
NOx, and Hg in S. 150, H.R. 227, and H.R. 1451, are generally more stringent and
take full effect earlier than the comparable provisions of S. 131. S. 150, and H.R.
1451 would cap emissions of CO .
2
The four bills are summarized in the Appendix. Each of these bills builds on
the SO allowance trading scheme contained in Title IV of the 1990 Clean Air Act
2
Amendments (CAAA).6 Under this program utilities are given a specific allocation
of permitted emissions (called allowances) and may choose to use those allowances
at their own facilities, or, if they do not use their full quota, to bank them for future
use or to sell them to other utilities needing additional allowances.
SO , NOx, and Hg Controls.
As indicated in the Appendix, the caps for
2
SO and NOx in S. 131 are less stringent for 2010 than in S. 150 and H.R. 1451, and
2
remain less stringent than S. 150 even through the second phase beginning in 2018.
H.R. 227 would require full compliance with its SO and NOx provisions by 2014,
2
in effect accelerating S. 131’s proposed phase 2 emission caps by four years.
However, S. 131 phase 1 NOx reduction would begin two years earlier (2008) than
S. 150, H.R. 227, or H.R. 1451.
Allowance allocation schemes for the bills also differ, with S. 150 containing
detailed provisions for allocating SO , NOx, and CO allowances to various
2
2
economic sectors and interests. In most cases, these interests (or their trustees in the
case of households and dislocated workers and communities) would auction off (or
otherwise sell) their allowances to the affected utilities, and use the collected funds
for their own purposes. In contrast, S. 131 would base its allowance formulas on fuel
usage adjusted by factors specified in the bill, while H.R. 227 and H.R. 1451 would
leave the allocation issue to EPA.
6 P.L. 101-549.

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CRS-4
On mercury, S. 131’s emissions goal would allow about three times more
emissions and eight additional years for compliance than allowed by S. 150 and H.R.
1451, which also would mandate plant-by-plant controls; H.R. 227 would require
EPA to promulgate Hg regulations by March 15, 2005. (It is difficult to compare the
Hg controls of S. 131, S. 150, or H.R. 1451 to H.R. 227, which does not specify an
Hg emissions goal, leaving regulation up to EPA.)
Related Regulatory Provisions. In addition to the emissions caps, S. 131
would substantially modify or eliminate several provisions in the Clean Air Act with
respect to electric generating facilities. The bill would eliminate New Source
Performance Standards (NSPS) (Section 111) and replace them with statutory
standards for SO , NOx, particulate matter, and Hg for new sources. Modified
2
sources could also opt to comply with these new statutory standards and be exempted
from the applicable Best Available Control Technology (BACT) determinations
under Prevention of Significant Deterioration (PSD) provisions (CAA, Part C) or
Lowest Achievable Emissions Rate (LAER) determinations under non-attainment
provisions (CAA, Part D). Compliance with these provisions exempts such facilities
from New Source Review (NSR), PSD-BACT requirements, visibility Best Available
Retrofit Technology (BART) requirements, Maximum Achievable Control
Technology (MACT) requirements for Hg, and non-attainment LAER and offset
requirements. The exemption does not apply to PSD-BACT requirements if facilities
are within 50 km of a PSD Class 1 area. Existing sources can also receive these
exemptions if they agree to meet a particulate matter standard specified in the bill
along with good combustion practices to minimize carbon monoxide emissions
within three years of enactment. In addition, S. 131 would provide these exemptions
for industrial sources that choose to opt into the Clear Skies program.
S. 150 would require all powerplants 40 years or older to meet emission
limitations based on current best available control technology for a new source. In
a similar vein, H.R. 1451 would require all powerplants 30 years or older to meet
current New Source Performance Standards (NSPS) requirements.
S. 131 also would include an exemption for steam electric generating facilities
from Hg regulation under Section 112 of the CAA (including the residual risk
provisions), and relief from enforcement of any Section 126 petition (with respect to
reducing interstate transportation of pollution) before December 31, 2014.
Neither H.R. 227, S. 150, nor H.R. 1451 would provide such regulatory relief
provisions.
CO . Of the four bills, S. 150 and H.R. 1451 would specify CO reductions.
2
2
In contrast, the Administration’s CO proposal relies on various voluntary programs
2
and incentives to encourage reductions in greenhouse gases from diverse sources,
including CO emissions from electric generation.
2
Based on the estimate provided by the Administration’s climate change
proposal, and using the 2002 Climate Action Report7 (CAR) for projections to 2010,
7 Climate Action Report — 2002, at [http://www.epa.gov/globalwarming/publications/car/
index.html]. This is the U.S. report to the UNFCCC Secretariat on U.S. emissions and
(continued...)

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CRS-5
Table 2 presents estimates of U.S. greenhouse gas emissions in 2010, assuming the
Administration’s voluntary program reaches its goals.8 This should not be taken as
a given, as neither the George H. W. Bush Administration’s program nor the Clinton
Administration’s program achieved their stated goals. Thus, in one sense, comparing
a mandatory reduction program such as that proposed by S. 150 or H.R. 1451 with
the Administration’s voluntary program is comparing apples to oranges. The first is
legally binding, the second is an exhortation.
While S. 150 and H.R. 1451 focus on electric utility emissions, the mandated
reductions would result in lower total greenhouse gas emissions in 2010 than those
projected to occur under the Administration’s initiative that includes all sources of
all greenhouse gases.9 However, neither S. 150, H.R. 1451, nor the Administration’s
initiative would be sufficient to bring U.S. emissions near the level committed to in
the 1992 UNFCCC.
Discussion in the CAR observes that the pace of economic growth would affect
emissions. A high economic growth scenario would increase energy use and related
carbon emissions, compared to the reference case of “business as usual”; likewise,
lower economic growth would decrease emissions. For example, under a high
economic growth scenario, greenhouse emissions in 2010 would increase 37.7%
above those in 1990, based on energy growth alone. This increase would represent
an additional 53 million metric tons of emissions.10 However, S. 150 would cap
emissions from increased electricity generation at 1990 levels, which would reduce
the 53 million metric tons by 16 million metric tons, or 30% of the high growth
increase. The Administration’s initiative is voluntary and addresses carbon intensity,
not absolute emission levels; it does not cap emissions growth.
Table 2. Comparison of Administration’s Voluntary Program
with Proposed Legislation
Percentage Change v.
Percentage Change v.
Business as Usual (2010)
1990 levels per UNFCCC
S. 150
-7.5%
+24.2%
H.R. 1451
-9.5%
+21.7%
Administration’s
-4.4 to -4.5%
+28.3%
Voluntary Program*
Business as Usual
0
+34.4%
Source: CRS calculations based on projections contained in 2002 CAR.
*Assumes goal of the Administration’s voluntary program is achieved in 2010, rather than 2012.
7 (...continued)
measures taken to reduce them.
8 For a discussion of emission projections and trends, see CRS Report 98-235 ENR, Global
Climate Change: U.S. Greenhouse Gas Emissions — Status, Trends, and Projections, by
John Blodgett and Larry Parker.
9 The assessment assumes that the Administration’s proposal actually achieves its goal in
2010, rather than 2012.
10 Energy Information Administration, Annual Energy Outlook 2000, DOE/EIA-0383
(Washington, DC, 2002), December 2001, p. 177.

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CRS-6
Appendix. Comparison of Multi-Pollutant Control Proposals

S. 131
H.R. 1451
Provisions
H.R. 227 (Sweeney)
S. 150 (Jeffords)
(Inhofe)
(Waxman)
Emissions Cap on NOx
2.1 million tons in 2010,
1.51 million tons in 2010.
2.19 million tons in 2008,
Estimated at 1.5 million tons
declining to 1.7 million tons
declining to 1.79 million tons
in 2010.
in 2014.
in 2018.
Emissions Cap on SO
4.45 million tons in 2010,
2.25 million tons in 2010.
4.5 million tons in 2010,
2.23 million tons in 2010.
2
declining to 3.0 million tons
declining to 3.0 million tons
in 2014.
in 2018.
Emission Cap on CO
Not covered.
2.05 billion tons from utilities
Not covered.
Estimated at 1.937 billion
2
in 2010.
tons in 2010.
Emissions Cap on Mercury
EPA to promulgate
5 tons in 2009.
34 tons in 2010, declining to
Estimated at 4-5 tons in 2010.
regulations by March 15,
15 tons in 2018.
2005.
Scope
50 states and DC.
50 states and DC.
50 states, DC, and territories.
50 states and DC.
Affected Units
Electric generating facilities
Electric generating facilities
Existing electric generating
Electric generating facilities
25 Mw or greater; Hg
15 Mw or greater (coal-fired
facilities 25 Mw or greater
15 Mw or greater.
regulations to include
only for Hg).
(coal-fired only for Hg); co-
industrial sources.
generation sources exempted.
Penalties for non-
NOx: $6,000 per excess ton
NOx , SO and CO same as
NOx, SO , Hg: reduces the
Determined by EPA.
2
2
2
compliance
plus one-for-one offset from
CAA, title IV, except excess
excess emissions penalties
future emission allocations.
emission penalty is three
under CAA, title IV to the
times the average market
EPA auction clearing price
SO : same as CAA, title IV.
price for allowances.
for allowances plus one-for-
2
one offset from future
Hg: not specified, CAA
Hg: three times the average
emission allocations, if paid
enforcement provisions
Hg control costs per gram of
within 30 days. Otherwise,
would apply.
excess emission.
the number of excess
emissions is multiplied by 1.5
for penalty purposes.

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CRS-7

S. 131
H.R. 1451
Provisions
H.R. 227 (Sweeney)
S. 150 (Jeffords)
(Inhofe)
(Waxman)
Special Provisions
EPA to determine by 2014
Beginning in 2014, all
New performance standards
All powerplants 30 years or
whether emission reductions
powerplants 40 years or older
for new sources replace
older must meet current New
sufficient to protect sensitive
must meet emission
current NSPS for new
Source Performance Standard
regional ecosystems; if not,
limitations based on current
sources. Compliance with
(NSPS) requirements.
EPA must promulgate rules
best available control
bill’s provisions exempts
requiring additional NOx and
technology for a new major
facilities from New Source
SO reductions within two
source.
Review (NSR), PSD-BACT
2
years of such determination.
requirements, visibility
SO cap divided by region
BART requirements, and
2
(West and East) with no
non-attainment LAER and
trading permitted between
offset requirements. The
regions.
exemption does not apply to
PSD-BACT requirements if
EPA to determine by 2013
facility is within 50 Km of
whether emission reductions
Class 1 area. Existing sources
sufficient to protect sensitive
can opt in by meeting a
regional ecosystems; if not,
particulate standard.
EPA must promulgate rules
requiring additional NOx and
Exempts utility units from Hg
SO reductions within two
regulation under CAA,
2
years of such determination.
Section 112, including
residual risk provisions.
Other provisions to protect
local air quality.
Prevents EPA from enforcing
any Section 126 petition
before December 31, 2014.
NOx cap divided by region
(West and East).
Implementation Strategy
Tradeable allowance system
Tradeable allowance system
Tradeable allowance system
To be determined by EPA —
for SO and NOx.
for SO (restricted between
for SO , NOx, and Hg.
market mechanisms permitted
2
2
2
East and West regions), NOx
Allocation formulas based on
(except for Hg).
Hg compliance on a source-
and CO . Allowances
historic fuel usage adjusted
2
by- source basis.
allocated to various sectors
by factors specified in the
and interests, including
bill.
households, dislocated
workers and communities,
7% of SO and 5% of NOx
2
electricity intensive
and Hg allowances are set

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CRS-8

S. 131
H.R. 1451
Provisions
H.R. 227 (Sweeney)
S. 150 (Jeffords)
(Inhofe)
(Waxman)
industries, affected utilities,
aside for new units.
energy efficiency and
renewable energy activities,
and sequestration activities.
Hg compliance on a source-
by-source basis (plantwide
averaging explicitly allowed).
Source: Congressional Research Service.

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