Order Code RL33552
CRS Report for Congress
Received through the CRS Web
Clean Air Act Issues in the 109th Congress
Updated August 8, 2006
James E. McCarthy
Specialist in Environmental Policy
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

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Clean Air Act Issues in the 109th Congress
Summary
The courts and the executive branch are facing major decisions on clean air
issues in 2006, with Congress playing an oversight role. One focus is EPA’s January
17, 2006 proposal to strengthen air quality standards for fine particles, which,
according to EPA and the consensus of the scientific community, cause tens of
thousands of premature deaths annually. Whether EPA’s proposal is supported by
the available science and what impact its implementation would have are issues of
concern. Other issues of continuing interest are EPA’s 2005 decisions limiting
interstate transport of air pollution and establishing cap-and-trade systems for
emissions from coal-fired power plants, and the agency’s proposed changes to New
Source Review. All of these issues face court challenges.
Congress acted on several Clean Air Act (CAA) issues in legislation that it
passed and sent to the President in late July 2005. The most significant of these
issues, dealing with ethanol and reformulated gasoline (RFG), were addressed in the
Energy Policy Act of 2005, H.R. 6 (P.L. 109-58). Congress also amended the Clean
Air Act in H.R. 3 (P.L. 109-59), the transportation bill that the President signed
August 10, 2005. H.R. 3 addresses the requirement that state and local transportation
planners demonstrate conformity between their transportation plans and the timely
achievement of air quality standards. Under the act, the frequency of conformity
determinations and the time horizon over which conformity must be demonstrated
will both be reduced. Failure to demonstrate conformity can lead to a temporary
suspension of federal highway funds.
Other Clean Air Act amendments appear to have stalled. A bill that would have
established a cap-and-trade program for emissions of sulfur dioxide (SO ), nitrogen
2
oxides (NOx), and mercury from coal-fired electric power plants was among the first
items on the agenda of the 109th Congress: S. 131 (the Clear Skies Act) was
scheduled for markup by the Senate Environment and Public Works Committee
March 9, 2005. But the committee failed to approve the bill, on a 9-9 tie vote, in
large part because of complaints that the bill would weaken existing Clean Air Act
requirements. Another issue in the debate was whether to cap emissions of carbon
dioxide (CO ) in addition to the other three pollutants. With Clear Skies stalled, EPA
2
finalized the Clean Air Interstate Rule (CAIR), which will cap emissions of SO and
2
NOx from power plants in 28 eastern states and the District of Columbia and
establish a cap-and-trade system through regulation.
A deadline for mercury regulations helped drive the Clear Skies debate: EPA
faced a judicial deadline of March 15, 2005, to promulgate standards for power plant
mercury emissions. The agency met this deadline, but the specific regulations have
been widely criticized. A resolution to “disapprove” (overturn) the regulations under
the Congressional Review Act (S.J.Res. 20) was defeated on a vote of 51-47,
September 13, 2005, but the courts have yet to rule on challenges filed by 15 states
and other groups. Whether to modify other requirements of the Clean Air Act (New
Source Review, deadlines for nonattainment areas, and provisions dealing with
interstate air pollution) have also been contentious issues. This report replaces CRS
Issue Brief IB10137, Clean Air Act Issue in the 109th Congress.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Revision of the Particulate Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Clear Skies/Multi-Pollutant Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Mercury from Power Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
New Source Review (NSR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
MTBE and Ethanol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Ozone Nonattainment Area Deadlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Conformity of Transportation Plans and SIPs . . . . . . . . . . . . . . . . . . . . . . . 17

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Clean Air Act Issues in the 109th Congress
Introduction
Despite steady improvements in air quality in many of the United States’ most
polluted cities, the goal of clean air continues to elude the nation. The most
widespread problems involve ozone and fine particles. As of March 2006, 158
million people lived in areas classified “nonattainment” for the ozone National
Ambient Air Quality Standard1; 88 million lived in areas that were nonattainment for
fine particles (PM ).2
2.5
Air quality has improved substantially since the passage of the Clean Air Act
in 1970: annual emissions of the six most widespread (“criteria”) air pollutants have
declined 160 million tons (53%), despite major increases in population, motor
vehicle miles traveled, and economic activity.3
Meanwhile, however, scientific understanding of the health effects of air
pollution has caused EPA to tighten standards for ozone and fine particles. (Fine
particles, as defined by EPA, consist of particulate matter 2.5 micrometers or less in
diameter, abbreviated as PM .) The agency attributes at least 33,000 premature
2.5
deaths and millions of lost work days annually to exceedances of the PM standard.
2.5
Recent research has begun to tie ozone pollution to premature mortality as well.
Thus, there is continuing pressure to tighten air quality standards: another tightening
for fine particles was proposed January 17, 2006, with a final decision expected in
September 2006. Ozone standards are scheduled for review in 2007. And attention
has focused on major sources of ozone and particulate pollution, such as coal-fired
power plants and mobile sources.
With this background in mind, the bulk of this report provides an overview of
seven prominent air issues of interest in the 109th Congress: revision of the particulate
standards; multi-pollutant (or Clear Skies) legislation for electric power plants;
mercury from power plants; New Source Review; the gasoline additives MTBE and
ethanol; ozone nonattainment area deadlines; and the “conformity” of transportation
and clean air planning. This report (formerly an Issue Brief) provides an overview:
most of these issues are addressed at greater length in separate CRS reports, which
1 Data for ozone nonattainment areas are from the U.S. EPA “Green Book,” at
[http://www.epa.gov/oar/oaqps/greenbk/gntc.html].
2 Data for PM nonattainment areas are also from the U.S. EPA “Green Book,” at
2.5
[http://www.epa.gov/oar/oaqps/greenbk/qntc.html].
3 See U.S. EPA, “Air Emission Trends – Continued Progress Through 2005,” at
[http://www.epa.gov/airtrends/2006/econ-emissions.html].

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CRS-2
contain more information and detailed sources. The CRS reports are referenced in
the appropriate sections.
Revision of the Particulate Standards
On December 20, 2005, EPA Administrator Stephen Johnson signed a proposed
revision to the National Ambient Air Quality Standard (NAAQS) for particulate
matter. (The proposed standards appeared in the Federal Register January 17, 2006,
officially beginning a three-month public comment period.) EPA reviewed 2,000
scientific studies on particulates in developing the revision, and found associations
between particulates and numerous significant health problems, including aggravated
asthma, chronic bronchitis, reduced lung function, irregular heart beat, heart attacks,
and premature death in people with heart or lung disease.
The proposed revision would strengthen the existing standard for particulate
matter 2.5 micrometers or less in diameter (known as fine particles or PM ). The
2.5
existing standard was promulgated in 1997, but, because of the need to establish a
monitoring network and to collect three years of data to determine whether or not
areas were in attainment, is only now coming into effect. (For additional information
on implementation of the current standard, see CRS Report RL32431, Particulate
Matter (PM2.5): National Ambient Air Quality Standards (NAAQS) Implementation,
by Robert Esworthy.)
The proposed standard would cut the allowable concentration of PM in the air
2.5
averaged over 24-hour periods almost in half, from 65 micrograms per cubic meter
(µg/m3) to 35 µg/m3. EPA estimates that compliance with the proposed standard
would prevent several thousand premature deaths annually. The proposed changes
are expected to increase the number of counties in nonattainment (i.e., areas where
pollutant concentrations exceed the standard, or contribute to exceedance of the
standard in adjoining counties) from 208 under the current standard to at least 283.
These numbers may seem small compared to the approximately 3,000 counties in the
United States, but the nonattainment counties tend to have larger populations than
those in attainment: 88 million people (about 30% of the U.S. population) live in the
208 counties currently designated nonattainment.
A NAAQS does not directly limit emissions; rather, it represents the EPA
Administrator’s formal judgment regarding the level of ambient pollution that will
protect public health with an adequate margin of safety. Promulgation of a NAAQS
sets in motion a process under which the states and EPA first identify nonattainment
areas. After these areas are formally designated (a process EPA estimates will take
until April 2010 for the revised PM standard), the states have three years to submit
2.5
State Implementation Plans (SIPs) that identify specific regulations and emission
control requirements that will bring the area into attainment. Attainment of the
revised standard is to be achieved by 2015, according to EPA, with a possible
extension to 2020.
In addition to the 24-hour standard for PM , there is also an annual PM
2.5
2.5
NAAQS — the reason being that human health is affected by both short-term spikes
of fine particles and by chronic exposures to lower levels of the pollutants. In his
December 20 announcement, the Administrator proposed to leave the annual

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CRS-3
standard unchanged at 15 µg/m3. An independent scientific advisory committee that
advises the Administrator (the Clean Air Scientific Advisory Committee, CASAC)
had recommended that the annual standard be reduced, to a range of 13 to 14 µg/m3,
a step that would have added at least 44 counties to the list of those in nonattainment,
according to EPA, and might have required more stringent controls in most of the
nonattainment areas.
In the Administrator’s judgment, the science underlying this CASAC
recommendation was not sufficient, relying primarily on two studies, neither of
which “provide[s] a clear basis for selecting a level lower than the current
standard....”4 The Administrator also noted that EPA is undertaking substantial
research to clarify which aspects of PM-related pollution are responsible for elevated
risks of mortality and morbidity, including a multi-million dollar research program
whose timeline should permit the results to inform the Agency’s next periodic
reevaluation of the PM standard, required by statute within five years. Thus, he
2.5
concluded, “...it would be wiser to consider modification of the annual standard with
a fuller body of information in hand than initiate a change in the annual standard at
this time.”5
The scientific advisory committee, CASAC, strongly disagrees with the
Administrator, and took the unprecedented step of urging him to reconsider the
proposal.6 Since the committee was established in the 1970s, this is the first time that
it has ever challenged an Administrator’s decision. The Chief of Air Pollution
Epidemiology at California EPA is reported to have alleged that research he and
others conducted was misrepresented in EPA’s proposal and to have charged that the
proposal incorporates last-minute opinions and edits by the President’s Office of
Management and Budget that circumvented the peer review process.7
The proposal also addresses slightly larger, but still inhalable particles, in the
range of 10 to 2.5 micrometers (referred to as thoracic coarse particles, or PM
).
10-2.5
In its 1997 review of the particulate standards, EPA had regulated these as particles
10 microns or smaller (PM ), a category that overlapped the PM category.
10
2.5
Challenged in the D.C. Circuit Court of Appeals, the PM standard was remanded
10
to EPA, the court having concluded that PM is a “poorly matched indicator” for
10
thoracic coarse particles, because it includes the smaller PM category as well as the
2.5
larger particles. As a result, EPA is now proposing a 24-hour standard for PM
.
10-2.5
The standard would be set at a level of 70 µg/m3, compared to the current 24-hour
4 U.S. EPA, National Ambient Air Quality Standards for Particulate Matter, Proposed Rule,
Preamble, 71 Federal Register 2651, January 17, 2006.
5 Ibid., p. 2652.
6 Letter of Dr. Rogene Henderson, Chair, Clean Air Scientific Advisory Committee, to Hon.
Stephen Johnson, Administrator, U.S. EPA, March 21, 2006, available at
[http://www.epa.gov/sab/pdf/casac-ltr-06-002.pdf].
7 “EPA Panel Advises Agency Chief to Think Again,” Los Angeles Times, February 4,
2006. Also see Bart Ostro, Ph.D., “Comments for CASAC Meeting Feb 3, 2006,” at
[http://www.epa.gov/sab/pdf/casac_pmrp_02-03-06_pub_statement_ostro_cal_epaoehha.
pdf].

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CRS-4
PM standard of 150 µg/m3. The Administrator proposes to focus this standard on
10
urban and industrial and construction sources, excluding any mix of particles
“dominated by rural windblown dust and soils and PM generated by agricultural and
mining sources.” He also proposes to revoke the annual PM standard.
10
Several elements of the proposed PM standards are controversial. Those who
would like to see stronger standards (including a number of states and environment
and health groups) are expected to focus on the exclusion of rural sources from the
coarse particle standard and the disregard of CASAC’s recommendation that the
annual PM standard be strengthened. Some industrial interests, on the other hand,
2.5
are expected to question the agency’s strengthening of the standard for all fine
particles, without distinguishing their source or chemical composition. The Clean
Air Subcommittee of the Senate Environment and Public Works Committee held
oversight hearings on the proposal, July 13 and July 19, 2006.
The complete PM and PM
proposal appeared in the Federal Register
2.5
10-2.5
January 17, beginning a 90-day public comment period. In addition to taking written
comments, the agency held public hearings March 8 in Philadelphia, Chicago, and
San Francisco. The Administrator is under a court order to promulgate final
revisions to the standards by September 27, 2006. (For additional information, see
CRS Report RL33254, Air Quality: EPA’s Proposed Changes to the Particulate
Matter (PM) Standard, by Robert Esworthy and James McCarthy.)
Clear Skies/Multi-Pollutant Legislation
A major focus of congressional attention in the first session was whether to take
action on the Clear Skies Act, a bill that would regulate multiple pollutants from
coal-fired electric power plants. A tie vote in the Senate Environment and Public
Works Committee blocked a Senate version of the bill, S. 131, from advancing to the
Senate floor, March 9, 2005. The committee’s 9-9 vote brought to an end, probably
for the remainder of the Congress, further attempts to find a compromise on Clear
Skies amendments. Earlier markups of Clear Skies, scheduled for February 16,
March 2, and March 3, 2005, had been postponed so that Senators could undertake
discussions aimed at crafting a compromise. The bill would have significantly
amended the Clean Air Act to establish a cap-and-trade system for emissions from
electric power plants and other sources of air pollution, while eliminating or deferring
numerous existing regulations affecting those sources.
Coal-fired power plants are among the largest sources of air pollution in the
United States. Under the Clean Air Act, they are not necessarily subject to stringent
requirements. Emissions and the required control equipment can vary depending on
the location of the plant, when it was constructed, whether it has undergone major
modifications, the specific type of coal it burns, and, to some extent, the vagaries of
EPA enforcement policies. More than half a dozen separate Clean Air Act programs
could potentially be used to control emissions, which makes compliance strategy
complicated for utilities and difficult for regulators. And, since the cost of the most
stringent available controls, for the entire industry, could range into the tens of
billions of dollars, utilities have fought hard and rather successfully to limit or delay
regulation.

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CRS-5
As a result, emissions from power plants have not been reduced as much as
those from some other sources. Many plants built in the 1950s or 1960s (generally
referred to as “grandfathered” plants) have little emission control equipment.
Collectively, these plants are large sources of pollution. In 2003, power plants
accounted for nearly 11 million tons of sulfur dioxide (SO ) emissions (69% of the
2
U.S. total), about 45 tons of mercury emissions (more than 40% of the U.S. total),
and nearly 4.5 million tons of nitrogen oxides (22% of the U.S. total). Power plants
are also considered major sources of fine particles (PM ) and account for about 40%
2.5
of U.S. anthropogenic emissions of the greenhouse gas carbon dioxide.
An example of their importance was seen in the August 2003 Northeast
blackout. With about 100 power plants (most of them coal-fired) shut down,
researchers found that ambient levels of SO and ozone were 90% and 50% lower,
2
respectively, in blacked-out areas.
With new ambient air quality standards for ozone and fine particles taking
effect, emissions of NOx (which contributes to the formation of ozone) and SO2
(which is among the sources of fine particles) need to be reduced to meet standards.
Mercury emissions have also been a focus of concern: 44 states have issued fish
consumption advisories for mercury, covering 13 million acres of lakes, 765,000
river miles, and the coastal waters of 12 entire states. The continuing controversy
over the interpretation of New Source Review requirements for existing power plants
(discussed at greater length in a separate section below) is also exerting pressure for
a more predictable regulatory structure.
Thus, many in industry, environmental groups, Congress, and the
Administration agree that the time is ripe for legislation that addresses power plant
pollution in a comprehensive (multi-pollutant) fashion. Such legislation (the
Administration version of which is dubbed “Clear Skies”) would address the major
pollutants on a coordinated schedule, and would rely, to a large extent, on a system
like that used in the acid rain program, where national or regional caps on emissions
are implemented through a system of tradeable allowances. The key questions have
been how stringent the caps should be, and whether carbon dioxide (CO ) will be
2
among the emissions subject to a cap.
Regarding the stringency issue, Clear Skies and other bills introduced in this
Congress would require reduction of NOx emissions to somewhere between 1.5 and
1.8 million tons per year (a 70%-80% reduction from 1998 levels) and reduction of
sulfur dioxide emissions to 2.0-3.0 million tons per year (also a reduction of 70%-
80% versus 1998). Regarding mercury, the bills would either require EPA to
determine the level of reductions, or require reductions of 70%-90% from current
levels of emissions (from 45 to somewhere between 5 and 15 tons annually,
depending on the bill).
In the most stringent of the bills (Senator Jeffords’ S. 150 and Representative
Waxman’s H.R. 1451), these reductions would take place by 2009 or 2010
(depending on the pollutant). The Jeffords and Waxman bills would also set caps on
CO emissions. (For additional information and a detailed comparison of the
2
legislative proposals, see CRS Report RL32755, Air Quality: Multi-Pollutant
Legislation in the 109th Congress, by Larry Parker and John Blodgett.)

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CRS-6
The Clear Skies bill (S. 131) envisions less stringent standards than those in
most other bills, phased in over a much longer period of time. For NOx, the bill
would reduce emissions to 1.79 million tons per year, but not until 2018; an
intermediate limit of 2.19 million tons would be imposed in 2008. For sulfur
dioxide, the limit would be 3.0 million tons annually, also in 2018, with an
intermediate limit of 4.5 million tons in 2010. For mercury, the limit would be 34
tons per year in 2010, declining to 15 tons in 2018. (In negotiations over S. 131,
Senators Voinovich and Inhofe offered to change the Phase 2 deadlines under Clear
Skies to 2016, and to implement a Phase 3 SO cap of 2.5 million tons in 2018.)
2
Because the deadlines are far in the future, the Administration’s analysis of
Clear Skies shows that utilities would be likely to “overcomply” in the early years of
the program. The Administration uses this as a selling point for its approach, arguing
that it will achieve reductions sooner than would a traditional regulatory approach
with the same deadlines. But overcompliance in the early years would lead to
“banked” emission allowances; these could be used in later years to delay
achievement of required reductions. In its analysis of the bill, EPA does not expect
to see the full 70% emission reductions until 2026 or later, a point seized upon by its
opponents to support a more aggressive approach.
In return for establishing its new cap-and-trade program, Clear Skies would also
eliminate or restrict numerous existing Clean Air Act requirements with respect to
electric generating units, including New Source Review, New Source Performance
Standards, Prevention of Significant Deterioration, Lowest Achievable Emission
Rate standards, Best Available Retrofit Technology, and Maximum Achievable
Control Technology regulations for mercury. It would allow sources in other
industries to opt into the cap-and-trade program, and escape existing Clean Air Act
controls. It would remove deadlines for local areas to achieve ozone and particulate
standards under certain conditions, and make it more difficult for nonattainment areas
to challenge interstate sources of air pollution. The other bills generally would leave
these existing controls in place. (For a more thorough discussion of how Clear Skies
would change the Clean Air Act, see CRS Report RL32782, Clear Skies and the
Clean Air Act: What’s the Difference?, by Larry Parker and James McCarthy.)
Clear Skies includes no cap on CO emissions. It is a three-pollutant (SO ,
2
2
NOx, mercury) bill, whereas most competing bills have addressed four pollutants (the
three plus CO ). The Administration views controls on CO as a step toward
2
2
implementing the Kyoto Protocol to the United Nations Framework Convention on
Climate Change, which it opposes for a variety of reasons, principally the potential
economic impacts on U.S. industries.
The absence of CO from the mix leads to different strategies for achieving
2
compliance, preserving more of a market for coal, and lessening the degree to which
power producers might switch to natural gas or renewable fuels as a compliance
strategy. In its opposition to CO controls, the Administration is supported by most
2
in the utility and coal industries. Others, mostly outside these industries but
including some utilities, view CO controls as inevitable, if not desirable, and support
2
simultaneous implementation of cap-and-trade programs for CO and the other
2
pollutants.

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CRS-7
Although stalled for the previous three years, Clear Skies was set for early
consideration in the 109th Congress by the Senate Environment and Public Works
Committee; but the opposing sides were not able to reach a consensus and the bill
failed on a tie vote on March 9, 2005. The House has taken no action, other than an
Energy and Commerce subcommittee hearing, May 26, 2005.
In negotiations preceding the Senate committee vote, there was some movement
toward a compromise. On the Republican side, there were offers to move the
deadlines for Phase 2 caps forward two years (from 2018 to 2016) and to add a third
phase for SO ; a mechanism for addressing mercury hot spots was added; and
2
adjustments to the provisions on interstate transport of pollution were offered. The
opponents of the bill (who included all the committee Democrats, plus Senators
Jeffords and Chafee) conceded that a bill with stringent CO caps would not pass, and
2
were willing to accept some less stringent provisions on that score. These
compromises proved insufficient to bridge the gap. Whether they might serve as a
basis for further discussions and action later in the Congress now appears doubtful.
Immediately following the vote, on March 10, 2005, EPA announced that it
would promulgate final regulations for utility emissions of SO and NOx in 28
2
eastern states and the District of Columbia through its Clean Air Interstate Rule
(CAIR).8 The cap-and-trade provisions of CAIR mimic those of Clear Skies, but
CAIR does not allow EPA to remove existing Clean Air Act requirements, as Clear
Skies would. Under CAIR, EPA projects that nationwide emissions of SO will
2
decline 53% by 2015, and NOx emissions will decline 48%. The agency also
projects that the rule will result in $85-$100 billion in health benefits annually by
2015, including the prevention of 17,000 premature deaths annually.9 CAIR’s health
and environmental benefits are more than 25 times greater than its costs, according
to EPA. (For additional information on the CAIR rule, see CRS Report RL32927,
Clean Air Interstate Rule: Review and Analysis, by Larry Parker.)
Finally, one of the issues raised by opponents of Clear Skies has been EPA’s
reluctance to conduct a cost-benefit analysis of the competing bills. On October 27,
2005, the agency responded to this criticism by producing an analysis of the costs and
benefits of Clear Skies and two Senate bills: Senator Jeffords’ S. 150, and Senator
Carper’s 108th Congress bill.10 (The Carper bill that was analyzed was S. 843 from
the 108th Congress. Subsequent to EPA’s analysis, on May 4, 2006, Senator Carper
introduced a new bill, S. 2724.)
The EPA analysis found significant benefits that exceed costs for all three bills,
but it started from a baseline that did not include three recently promulgated
8 The rule appeared in the Federal Register on May 12, 2005 (70 FR 25162).
9 U.S. EPA, Office of Air and Radiation, “Clean Air Interstate Rule – Basic Information,”
available at [http://www.epa.gov/interstateairquality/basic.html].
10 Rather than a single document, the agency actually released a group of 45 documents: an
18-page “Comparison Briefing”; a 4-page table comparing the options; separate analyses
of each of the six options; and 37 background documents. This group of 45 documents is
the agency's cost-benefit analysis. The full package is available at
[http://www.epa.gov/airmarkets/mp/].

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CRS-8
regulations — notably the CAIR rule, whose requirements and benefits are similar
to those of Clear Skies. Adjusting for the three regulations, one finds that Clear
Skies would have negligible incremental costs and added benefits of $6 billion in
2010 and $3 billion in 2020. For the same years, Senator Carper’s bill would have
annual net benefits 8 and 5 times as great as Clear Skies at annual costs of $4.2
billion in 2010 and $3 billion in 2020, and Senator Jeffords’ bill would have annual
net benefits 10 and 16 times those of Clear Skies at annual costs of $23.6 billion (in
2010) and $18.1 billion (in 2020). The analysis contains a number of assumptions
that have substantial impacts on the results; for a more complete discussion, see CRS
Report RL33165, Costs and Benefits of Clear Skies: EPA’s Analysis of
Multi-Pollutant Clean Air Bills, by James E. McCarthy and Larry B. Parker.
Mercury from Power Plants
On March 15, 2005, EPA also finalized through regulation a cap-and-trade
program for mercury emissions from electric utilities.11 The mercury regulations
(which, like CAIR, mimic the requirements of Clear Skies) rely almost entirely on
co-benefits of the CAIR rule. The agency’s analysis of the mercury rule finds that
less than 1% of coal-fired power plant capacity would install pollution control
equipment specifically designed to control mercury within 10 years as a result of the
mercury rule. By 2020, only 4% of capacity would have such equipment.
EPA reversed course several times before choosing its final approach to mercury
regulation. The agency was required by the terms of the 1990 Clean Air Act
Amendments and a 1998 consent agreement to determine whether regulation of
mercury from power plants under Section 112 of the Clean Air Act was appropriate
and necessary. It concluded that it was so, in a December 2000 regulatory finding.
The finding triggered other provisions of the consent agreement: that the agency
propose Maximum Achievable Control Technology (MACT) standards for electric
power plants by December 15, 2003, and finalize them by March 15, 2005.
The December 2003 proposal offered two alternatives. The first met the
agency’s requirement under the consent agreement by proposing MACT standards.
The standards would have applied on a facility-by-facility basis, and would have
resulted in emissions of 34 tons of mercury annually, a reduction of about 30% from
the 1999 level. The standards would have taken effect in 2008, three years after
promulgation, with possible one-year extensions.
The second mercury alternative, a variant of which the agency chose to
promulgate March 15, 2005, uses Section 111(d) of the act. To avoid having to
promulgate MACT standards, the agency proposed reversing its December 2000
regulatory finding, arguing that while MACT standards were “appropriate,” they
11 The mercury rule appeared in the Federal Register in two parts: in the first part, on
March 29, 2005 (as explained further in the text below), the agency revised its determination
that mercury emissions from electric generating units should be regulated as hazardous air
pollutants under Section 112 of the Clean Air Act (70 FR 15994); in the second part, on
May 18, 2005, the agency promulgated a cap-and-trade program under Section 111 of the
act (70 FR 28606).

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CRS-9
were not “necessary,” since the emissions could be controlled under Section 111(d)
instead. Section 111(d) has rarely been used before — and never for hazardous air
pollutants. In the final rule, the agency went a step further, concluding that MACT
regulations are neither appropriate nor necessary, and so revises its December 2000
regulatory finding.
The final regulations establish a national cap-and-trade system for power plant
emissions of mercury. As in Clear Skies, the cap will be 15 tons of emissions
nationwide in 2018 (about a 70% reduction from 1999 levels, if achieved). There
will also be an intermediate cap of 38 tons in 2010. The caps will be implemented
through an allowance system similar to that used in the acid rain program, through
which utilities can either control the pollutant directly or purchase excess allowances
from other plants that have controlled more stringently or sooner than required. As
with Clear Skies, early reductions could be banked for later use, which the agency
says would result in emissions of 31.3 tons in 2010, nearly 7 tons less than the cap.
If this happens, it would allow utilities to delay compliance with the full 70%
reduction until well beyond 2018, as they use up banked allowances rather than
installing further controls. The agency’s analysis projects actual emissions to be 24.3
tons (less than a 50% reduction) as late as 2020. Full compliance with the 70%
reduction would be delayed until after 2025.12
Besides the stretched out implementation schedule, one of the main criticisms
of the cap-and-trade proposal is that it would not address “hot spots,” areas where
mercury emissions and/or concentrations in water bodies are greater than elsewhere.
It would allow a facility to purchase allowances and avoid any emission controls, if
that compliance approach makes the most sense to the plant’s owners and operators.
If plants near hot spots do so, the cap-and-trade system may not have an impact on
mercury concentrations in the most contaminated areas. By contrast, a MACT
standard would have required reductions at all plants, and would therefore be
expected to improve conditions at hot spots.
Many argue that the mercury regulations should be more stringent or
implemented more quickly. To a large extent, these arguments and EPA’s
counterarguments rest on assumptions concerning the availability of control
technologies. Controlling SO , NOx, and mercury simultaneously, as the agency
2
prefers, would allow utilities to maximize “co-benefits” of emission controls.
Controls such as scrubbers and fabric filters, both of which are widely used today to
control SO and particulates, have the side effect of reducing mercury emissions to
2
some extent. Under EPA’s cap-and-trade regulations, both the 2010 and 2018
mercury emission standards are set to maximize use of these co-benefits. Thus, few
controls would be required to specifically address mercury emissions before the
2020s; the costs specific to controlling mercury would be minimal; and emissions
would decline to about 50% of the 1999 level in 2020.
12 U.S. EPA, Office of Air Quality Planning and Standards, Regulatory Impact Analysis of
the Clean Air Mercury Rule, March 2005, Table 7-3, p. 7-5, available at [http://www.epa.
gov/ttn/atw/utility/ria_final.pdf]. For further discussion see CRS Report RL32868, Mercury
Emissions from Electric Power Plants: An Analysis of EPA’s Cap-and-Trade Regulations,
January 13, 2006, p. 7.

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CRS-10
Besides citing the cost advantage of relying on co-benefits, EPA has claimed
that technology specifically designed to control mercury emissions (such as activated
carbon injection, ACI) would not be generally available until after 2010. This
assertion is widely disputed. ACI and fabric filters have been in use on municipal
waste and medical waste incinerators for a decade, and have been successfully
demonstrated in at least 16 full-scale tests at coal-fired power plants, for periods as
long as a year. Manufacturers of pollution controls and many others maintain that,
if the agency required the use of ACI and fabric filters at power plants, reductions in
mercury emissions as great as 90% could be achieved at reasonable cost in the near
future.
The agency can take cost into consideration under the MACT or cap-and-trade
rules, and cost to electric utilities appears to have been a determining factor in EPA’s
analysis. In its proposal, however, calculations of the overall societal costs and
benefits seemed to support the imposition of a more stringent standard. The agency
projected MACT compliance costs at $945 million per year, versus quantifiable
annual benefits (from longer lives and less illness) of more than $15 billion (a 16 to
1 advantage). The final rule completely changes this analysis. It concludes that the
benefits of mercury control are at most $43 million per year, with annual costs as
high as $896 million. The new analysis did not include several peer-reviewed studies
that indicated stricter utility mercury rules would have yielded large benefits.
In addition to the arguments over technology availability and cost, it is unclear
whether EPA has legislative authority to establish a cap-and-trade program for
mercury: many argue that the agency is required by the statute to impose MACT
standards on each individual plant once it has decided to control mercury emissions.
Questions have also arisen regarding the role of industry lobbyists in crafting portions
of the EPA proposal. For many of these reasons, 45 Senators wrote EPA
Administrator Leavitt at the beginning of April 2004 to request that he withdraw the
mercury proposal and begin over. In June, 2004, 178 House members wrote Leavitt
that they hoped further review “will lead to a stronger final rule.” On February 3,
2005, the EPA Inspector General echoed these comments, concluding that EPA
senior management instructed the staff to develop a standard that would result in
emissions of 34 tons annually, instead of basing the standard on unbiased analysis.
Nevertheless, the agency weakened the final rule rather than strengthening it.13 Thus,
opponents, including at least 15 states, have filed suit to overturn the mercury rule.14
Congress could also have played a role in reversing the rule, under the
provisions of the Congressional Review Act (5 U.S.C. Sections 801-808). On June
29, 2005, Senator Leahy and 31 cosponsors introduced S.J.Res. 20; on the same day,
a similar resolution (H.J.Res. 56) was introduced in the House by Representative
Meehan. If enacted into law, these resolutions would have disapproved the rule EPA
promulgated on March 29, 2005, in which the agency determined not to regulate
mercury from fossil-fueled electric utility units under Section 112. The net effect of
13 Office of the Inspector General, U.S. EPA, Additional Analyses of Mercury Emissions
Needed Before EPA Finalizes Rules for Coal-Fired Electric Utilities, February 3, 2005, p.
10, available at [http://www.epa.gov/oig/reports/2005/20050203-2005-P-00003.pdf].
14 New Jersey v. EPA, No. 05-1097 (D.C. Cir.) Filed Mar. 29, 2005.

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CRS-11
disapproval would have been that EPA would be forced to issue MACT standards for
coal- and oil-fired electric power plants. On September 13, however, the Senate
rejected S.J.Res. 20, 51-47, thus allowing the EPA rule to go forward. The Senate
action has no effect on judicial challenges, which are still pending.
In addition to judicial challenges, most of the same states and several
environmental groups petitioned EPA to reconsider the mercury rules, in part, they
said, because portions of the final rules had not been included in the proposal, and
therefore the public had been denied the opportunity to comment. EPA agreed to a
reconsideration on October 21, 2005. On May 31, 2006, the agency announced that
it had completed the reconsideration, making only minor changes to the rule. The
agency’s action means that court proceedings, which were held in abeyance while the
agency reconsidered, can now move forward.
(For additional information on the mercury rule, see CRS Report RL32868,
Mercury Emissions from Electric Power Plants: An Analysis of EPA’s Cap-and-
Trade Regulations, by James McCarthy; and CRS Report RL32744, Mercury
Emissions from Electric Generating Units: A Review of EPA Analysis and MACT
Determination, by Dana Shea, et al. For discussion of the Congressional Review Act
and how it applied to the mercury rule, see CRS Report RS22207, Congressional
Review of EPA’s Mercury Rule, by James McCarthy and Richard Beth.)
New Source Review (NSR)
A related issue that has driven some of the debate over the regulation of power
plant emissions is whether EPA has adequately enforced existing regulations, using
a process called New Source Review. The New Source Review debate has occurred
largely in the courts. EPA took a more aggressive stance on New Source Review
under the Clinton Administration, filing lawsuits against 13 utilities for violations at
51 plants in 13 states. The Bush Administration has taken action against an
additional half a dozen utilities, but has made little headway in settling the original
suits or in bringing them to trial. In the meantime, it has proposed major changes in
the NSR regulations that critics argue will gut New Source Review as it pertains to
modifications of existing plants.
The controversy over the NSR process stems from EPA’s application of New
Source Performance Standards to existing stationary sources of air pollution that have
been modified. The Clean Air Act states that new sources (subject to NSR and its
requirement to install pollution controls) include modifications of existing sources
as well as plants that are totally new. Industry has generally avoided the NSR
process, however, by claiming that changes to existing sources were “routine
maintenance” rather than modifications. In the 1990s, EPA began reviewing records
of electric utilities, petroleum refineries, and other industries to determine whether
the changes were, in fact, routine. As a result of these reviews, since late 1999, EPA
and the Department of Justice have filed suit or administrative actions against
numerous large sources of pollution, alleging that they made major modifications to
their plants, extending plant life and increasing output without undergoing required
New Source Reviews and without installing best available pollution controls.

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CRS-12
Of the utilities charged with NSR violations, 11 have settled with EPA,
generally without going to trial. Under the settlements, they have agreed to spend
about $5 billion over the next decade on pollution controls or fuel switching in order
to reduce emissions at their affected units. Combined, these companies will reduce
pollution by about 775,000 tons annually. Since July 25, 2000, the agency has also
reached 17 agreements with petroleum refiners representing three-fourths of industry
capacity. The refiners agreed to settle potential charges of NSR violations by paying
fines and installing equipment to eliminate 315,000 tons of pollution.
About half the utilities charged with NSR violations have not settled with EPA.
They and other critics of the agency’s enforcement actions claim that EPA reinvented
the rules. They also contend that a strict interpretation of what constitutes routine
maintenance will prevent them from making changes that would have previously
been allowed without a commitment of time and money for permit reviews and the
installation of expensive pollution control equipment. This provides disincentives
for power producers, refiners, and others to expand output at existing facilities, they
maintain.
The first case involving one of the nonsettling utilities went to trial in February
2003. In an August 7, 2003, decision, the U.S. District Court for the Southern
District of Ohio found that Ohio Edison had violated the Clean Air Act 11 times in
modifying its W. H. Sammis power plant. The company subsequently settled the
case, agreeing to spend $1.1 billion to install controls that are expected to reduce
pollution by 212,000 tons annually.15 In a second case, decided in April 2004 and
currently on appeal to the U.S. Supreme Court, Duke Energy was found not to have
violated the act despite undertaking modifications that increased total emissions
without undergoing New Source Review. The U.S. District Court for the Middle
District of North Carolina, in a decision upheld by the Fourth Circuit Court of
Appeals, held that since the maximum hourly emissions rate did not increase as a
result of the modifications, even if annual emissions did increase, the company was
not required to undergo NSR and install more stringent pollution controls.16
While pursuing these enforcement actions, the Bush Administration has
promulgated a number of changes to the NSR regulations that would make future
enforcement of NSR less likely. In December 2002 and October 2003, the agency
promulgated five sets of changes to the NSR rules. The most controversial were new
regulations defining what constitutes routine maintenance.17 The new regulations
would have exempted industrial facilities from undergoing NSR (and thus from
installing new emission controls) if they were replacing safety, reliability, and
efficiency-rated components with new, functionally equivalent equipment, and if the
cost of the replacement components was less than 20% of the replacement value of
the process unit. Using this benchmark, few, if any, plant modifications would
trigger new pollution controls.
15 United States v. Ohio Edison Co., No. C-2-99-1181, [S.D. Ohio].
16 United States v. Duke Energy Corp., 278 F.Supp. 2d 619 [M.D.N.C. 2003] affirmed, 411
F. 3d 539 [4th Cir., 2005], petition for cert. Filed [No. 05-848].
17 These changes appeared in the Federal Register on October 27, 2003 (68 FR 61247).

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These changes were highly controversial. The Administration and its supporters
characterized them as streamlining or improving the program; others saw them as
permanently “grandfathering” older, more polluting facilities from ever having to
meet the clean air standards required of newer plants. Fifteen states, three
municipalities, and several environmental groups filed suit to block the “equipment
replacement / routine maintenance” rule. The rule was stayed by the U.S. Court of
Appeals for the D.C. Circuit on December 24, 2003. On March 17, 2006, a three-
judge panel of the court unanimously struck the rule down. In its decision, the court
held that EPA’s attempt to change the NSR regulations was “contrary to the plain
language” of the Clean Air Act.18
EPA proposed further changes to the NSR regulations October 20, 200519; these
regulations have yet to be promulgated. Under the proposal, power plants could
modify existing facilities without triggering NSR, provided that the facility’s
“maximum hourly emissions achievable” after the changes were no greater than the
same measure at any point during the past five years. By focusing on the hourly rate,
rather than the previous measure (annual emissions), the new rule would effectively
allow increases in annual emissions any time a modification led to an increase in the
hours of operation of a facility. The agency’s proposal stated that this change would
establish a uniform national emissions test, in conformance with the Fourth Circuit’s
decision in the Duke Energy case, and it downplayed the significance of the change
in light of “substantial emissions reductions from other CAA [Clean Air Act]
requirements that are more efficient.” But internal EPA documents released by an
environmental group indicate that the proposed rule was strongly opposed by the Air
Enforcement Division, whose Director concluded that it would adversely affect the
agency’s NSR enforcement cases and is largely unenforceable as written.20
Thus, there appears to be a serious conflict between EPA’s regulatory actions
and its enforcement stance. While the agency stated in promulgating the equipment
replacement rule that “we do not intend our actions today to create retroactive
applicability for today’s rule,” continued pursuit of the enforcement actions filed
during the Clinton Administration would create a double standard for utilities, with
one set of rules applicable to those utilities unlucky enough to have been cited for
violations prior to promulgation of the new rule, and a different standard applicable
afterward. Despite earlier agency denials that the rule would affect ongoing
investigations, in early November 2003, EPA’s enforcement chief, J. P. Suarez, and
another EPA official were reported to have indicated that the agency would drop
enforcement actions against 47 facilities that had already received notices of
violation, and would drop investigations of possible violations at an additional 70
power companies. Agency staff who were involved in the enforcement actions note
that the prospect of an NSR rollback caused utilities already charged with violations
to withdraw from settlement negotiations over the pending lawsuits, delaying
18 State of New York v. EPA, No. 03-1380, 2006 Westlaw 662746 [D.C. Cir., Mar. 17,
2006].
19 70 FR 61081.
20 Memorandum of Adam M. Kushner, Director, Air Enforcement Division, U.S. EPA, to
William Harnett, Director, Information Transfer and Program Integration Division, Office
of Air Quality Planning and Standards, August 25, 2005, p. 1.

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CRS-14
emission reductions that could have been achieved in the near future.21 (For
additional information, see CRS Report RS21608, Clean Air and New Source
Review: Defining Routine Maintenance, and CRS Report RL31757, Clean Air: New
Source Review Policies and Proposals, both by Larry Parker.)
At Congress’s direction, the National Academy of Sciences began a review of
the NSR program in May 2004. An interim report, released in January 2005, said the
committee had not reached final conclusions, but it also said: “In general, NSR
provides more stringent emission limits for new and modified major sources than
EPA provides in other existing programs”; and “It is ... unlikely that Clear Skies
would result in emission limits at individual sources that are tighter than those
achieved when NSR is triggered at the same sources.”22 The final report, issued July
21, 2006, found that,
More than 60% of all coal-fired electricity-generation capacity in the United
States currently lacks the kinds of controls for SO and NO emissions that have
2
x
been required under NSR. Also, the older facilities are more likely than newer
facilities to undergo maintenance, repair, and replacement of key components,
so a substantial portion of emissions from the electricity-generating sector is
potentially affected by the NSR rule changes.23
Nevertheless, the report reached ambivalent conclusions. On the one hand, the report
stated, “It is reasonable to conclude that the implementation of the ERP [the proposed
Equipment Replacement Provision] could lead to SO and NO emission increases
2
x
in some locations and decreases in others.”24 On the other hand, “the committee
concluded overall that, because of a lack of data and the limitations of current
models, it is not possible at this time to quantify with a reasonable degree of certainty
the potential effects of the NSR rule changes on emissions, human health, energy
efficiency, or on other relevant activities at facilities subject to the revised NSR
program.”25
Besides the NAS study, on April 21, 2003, the National Academy of Public
Administration released a report commissioned by Congress that made sweeping
recommendations to modify NSR. The study panel recommended that Congress end
the “grandfathering” of major air emission sources, by requiring all major sources
that have not obtained an NSR permit since 1977 to install Best Available Control
21 See, for example, “Departing EPA Official Issues Broadside at Administration Air,
Enforcement Programs,” Daily Environment Report, March 1, 2002, p. AA-1. Also,
“Second Former EPA Enforcement Official Raps Bush's New Source Review Reforms,”
Daily Environment Report, October 22, 2002, p. A-9.
22 National Research Council of the National Academies, Interim Report of the Committee
on Changes in New Source Review Programs for Stationary Sources of Air Pollutants
(Washington, D.C.: The National Academies Press, 2005), p. 27.
23 National Research Council of the National Academies, New Source Review for Stationary
Sources of Air Pollutants (Washington, D.C.: The National Academies Press, 2006),
Prepublication Copy, p. 3.
24 Ibid., p. 5.
25 Ibid., p. 2.

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CRS-15
Technology or Lowest Achievable Emissions Rate control equipment. In the interim,
the NAPA panel concluded, EPA and the Department of Justice should continue to
enforce NSR vigorously, especially for changes at existing facilities.26
MTBE and Ethanol
Congress acted on several Clean Air Act issues in H.R. 6, the comprehensive
energy bill that it passed and sent to the President July 29, 2005. The most
significant of these issues dealt with ethanol and reformulated gasoline (RFG). The
final version of the bill stripped most provisions dealing with the related issue of
MTBE, a gasoline additive that competes with ethanol and has been the subject of
much controversy.
Until recently, MTBE and ethanol were used to meet Clean Air Act
requirements that reformulated gasoline (RFG), sold in the nation’s worst ozone
nonattainment areas, contain at least 2% oxygen, to improve combustion. Under the
RFG program, areas with “severe” or “extreme” ozone pollution (124 counties with
a combined population of 73.6 million) must use reformulated gas; areas with less
severe ozone pollution may opt into the program as well, and many have. In all,
portions of 17 states and the District of Columbia use RFG, and about 30% of the
gasoline sold in the United States is RFG.
Implemented in 1995, the law required (until May of this year) that RFG contain
at least 2% oxygen by weight. Refiners could meet this requirement by adding a
number of ethers or alcohols, any of which contains oxygen and other elements. By
far the most commonly used oxygenate has been MTBE. In 1999, 87% of RFG
contained MTBE, a number reduced to 46% by 2004. MTBE has also been used
since the late 1970s in non-reformulated gasoline, as an octane enhancer, at lower
concentrations. As a result, gasoline with MTBE has been used virtually everywhere
in the United States, whether or not an area has been subject to RFG requirements.
MTBE leaks, generally from underground gasoline storage tanks, have been
implicated in numerous incidents of ground water contamination. The substance
creates taste and odor problems in water at very low concentrations, and some animal
studies indicate it may pose a potential cancer risk to humans. For these reasons, 25
states have taken steps to ban or regulate its use. The most significant of the bans (in
California, New York, and Connecticut) took effect at the end of 2003, leading many
to suggest that Congress revisit the issue to modify the oxygenate requirement and
set more uniform national requirements regarding MTBE and its potential
replacements (principally ethanol).
Support for eliminating the oxygen requirement on a nationwide basis has been
widespread among the petroleum industry, environmental groups, and states. In
general, these groups have concluded that gasoline can meet the same low emission
performance standards as RFG without the use of oxygenates. But opposition to
enacting legislation removing the oxygen requirement came from a number of
26 National Academy of Public Administration, A Breath of Fresh Air: Reviving the New
Source Review Program, Summary Report, April 2003, p. 3.

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CRS-16
agricultural interests. Nearly 13% of the nation’s corn crop was used to produce the
competing oxygenate, ethanol, in 2004. If MTBE use were reduced or phased out,
but the oxygen requirement remained in effect, ethanol use would soar, increasing
demand for corn. Ethanol use has already grown substantially as MTBE began to be
phased out. Conversely, if the oxygen requirement were waived by EPA or by
legislation, not only would MTBE use decline, but likely, so would demand for
ethanol. Thus, Members of Congress and Senators from corn states took a keen
interest in MTBE and RFG legislation.
As passed by the House on April 21, 2005, H.R. 6 contained numerous MTBE
and ethanol provisions. With some potential exceptions, it would have banned the
use of MTBE as a fuel additive, except in states that specifically authorized its use,
after December 31, 2014. The Clean Air Act requirement to use MTBE or other
oxygenates in RFG would have been repealed — 270 days after enactment in most
states, immediately in California. In place of this requirement, the bill substituted a
major stimulus to the use of ethanol: under a renewable fuels standard (RFS), annual
production of gasoline would have been required to contain at least 5 billion gallons
of ethanol or other renewable fuel (an increase from 3.4 billion gallons in 2004) by
2012. To prevent backsliding on air quality, the bill required that the reductions in
emissions of toxic substances achieved by RFG be maintained; it authorized $2
billion in grants to assist merchant MTBE production facilities in converting to the
production of other fuel additives. The bill also authorized funds for MTBE cleanup,
and perhaps most controversially, would have provided a “safe harbor” from
defective product liability lawsuits for producers of MTBE, ethanol, and other
renewable fuels: product liability lawsuits have been used to force petroleum and
chemical companies to pay for cleanup of ground and surface water contaminated by
releases of fuels containing MTBE.
The Senate version of H.R. 6, passed June 28, 2005, contained MTBE and
ethanol provisions as well, but they were different from the House bill in several
respects. The Senate bill would have increased the renewable fuels standard to 8
billion gallons by 2012. It would have phased out the use of MTBE sooner (within
four years of enactment, rather than at the end of 2014), and it omitted a potential
nationwide presidential exception to the MTBE ban that the House version would
have provided. The Senate version also omitted the safe harbor for MTBE producers.
In the 108th Congress, the safe harbor provision had been among the most
controversial provisions in a similar bill, cited by numerous opponents in Senate
debate on the conference report. (The opponents prevailed on a cloture motion, and
the bill died.) The 109th Congress Senate bill also differed in how much it would
authorize for cleanup of MTBE releases and for transition assistance to MTBE
producers.
In the end, unable to reach a compromise addressing MTBE, House and Senate
conferees stripped most of the MTBE provisions from the conference report on H.R.
6. The final version, approved by the House July 28, 2005 and the Senate July 29,
and signed into law (P.L. 109-58) by the President August 8, 2005, neither bans
MTBE use nor provides a safe harbor for its producers, nor does it provide transition
assistance for MTBE producers. It does, however, repeal the RFG program’s oxygen
requirement and, in place, requires that motor fuels contain 7.5 billion gallons of
ethanol or other renewable fuels by 2012 — more than double the amount of 2004

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CRS-17
consumption. When this requirement is fully implemented, as much as 30% of the
nation’s corn crop could be dedicated to ethanol production. (For additional
discussion of the House and Senate bills, see CRS Report RL32865, Renewable
Fuels and MTBE: A Comparison of Selected Provisions in the Energy Policy Act of
2005 (H.R. 6), by Brent Yacobucci, et al. For background on the MTBE issue, see
CRS Report RL32787, MTBE in Gasoline: Clean Air and Drinking Water Issues, by
James McCarthy and Mary Tiemann. For information on ethanol, see CRS Report
RL33290, Fuel Ethanol: Background and Public Policy Issues, by Brent Yacobucci.)
Ozone Nonattainment Area Deadlines
Another Clean Air Act provision that was in the House-passed version of H.R.
6 dealt with the deadlines for attaining air quality standards. Section 1443 of the bill
would have extended deadlines for areas that have not attained the ozone air quality
standard if upwind areas “significantly contribute” to their nonattainment.
Under the 1990 Clean Air Act Amendments, ozone nonattainment areas with
higher concentrations of the pollutant were given more time to reach attainment, but
in return for the additional time, they were required to implement more stringent
controls on emissions. Failure to reach attainment by the specified deadline was to
result in reclassification of an area to a higher category and the imposition of more
stringent controls. Section 1443 would have amended this system to extend deadlines
(without requiring more stringent controls) in areas affected by upwind sources of
pollution. There was no comparable provision in the Senate bill, and the conferees
did not include the House provision in the enacted law.
As enacted, the Energy Policy Act of 2005 does establish a demonstration
project, however, to address the issue of upwind pollution. In Section 996, the
enacted law requires EPA to work with state and local officials in a multi-county
Western Michigan project area to determine the extent of ozone and ozone precursor
transport, to assess alternatives to achieve compliance with the 8-hour ozone standard
apart from local controls, and to determine the timeframe in which such compliance
could take place. (Western Michigan is believed to be affected by pollution
originating in the Chicago and Milwaukee metropolitan areas.) EPA is prohibited
from imposing requirements or sanctions that might otherwise apply during the
demonstration project.
In addition, on October 7, 2005, the House passed provisions to extend
deadlines in areas affected by upwind pollution in H.R. 3893, a bill whose primary
purpose is to facilitate the construction of new petroleum refineries. The Senate has
not taken action on this bill.
Conformity of Transportation Plans and SIPs
A seventh clean air issue considered by the 109th Congress is the conformity of
metropolitan area transportation plans with the Clean Air Act. Under the act, areas
that have not attained one or more of the six National Ambient Air Quality Standards
must develop State Implementation Plans (SIPs) demonstrating how they will reach
attainment. A total of 126 areas (474 counties) with a combined population in excess

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of 159 million are subject to the SIP requirements for ozone, and 208 counties with
a combined population of 88 million are subject to SIP requirements for fine
particulates. Section 176 of the Clean Air Act prohibits federal agencies from
funding projects in these areas unless they “conform” to the SIPs. Specifically,
projects must not “cause or contribute to any new violation of any standard,”
“increase the frequency or severity of any existing violation,” or “delay timely
attainment of any standard.” Because new highways generally lead to an increase in
vehicle miles traveled and related emissions, both the statute and regulations require
that an area’s Transportation Improvement Program (TIP), which identifies major
highway and transit projects an area will undertake, demonstrate conformity each
time it is revised. Prior to enactment of H.R. 3, nonattainment areas were required
to revise their TIPs at least every two years. Highway and transit projects in most
nonattainment areas cannot receive federal funds unless they are part of a conforming
TIP.
In the 109th Congress, conformity provisions were included in H.R. 3 (P.L. 109-
59), the transportation bill that the President signed August 10, 2005. As enacted,
the law requires less frequent conformity demonstrations (at least every four years
instead of every two years), and will shorten the planning horizon over which
conformity must be demonstrated to 10 years in many cases, instead of the former
requirement of 20 years. The local air pollution control agency will need to be
consulted and public comments solicited if the planning horizon is to be shortened.
The law also establishes a 12-month grace period following a failure to demonstrate
conformity before a lapse would be declared.
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