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Cross-State Air Pollution Rule (CSAPR)

FULL GUIDE

  1. What is Cross-State Air Pollution Rule (CSAPR)? 
  2. States Affected
  3. Affected Industries
  4. Cross-State Air Pollution Rule (CSAPR) Framework
  5. How the Rule Works
  1. What is the Good Neighbor Plan (GNP)?
  2. When did the GNP take affect?
  3. Good Neighbor States
  4. NOx Trading

What is Cross-State Air Pollution Rule (CSAPR)? 

The Cross-State Air Pollution Rule (CSAPR), a program run by the United States Environmental Protection Agency (EPA), mandates specific states to lower power plant emissions that cause ozone and/or fine particle pollution, which drift across state borders. The release of these emissions can lead to the formation of soot and smog, which can impact air quality and public health not only locally but also in regions located hundreds of miles downwind.
CSAPR sets new standards for power plants emitting nitrogen oxides (NOx) and sulfur dioxide (SO2). The reaction between sulfur dioxide (SO2) and oxides of nitrogen (NOX) in the atmosphere results in the creation of fine particle (soot) pollution. Additionally, NOX is a contributor to the formation of ground-level ozone (smog). Certain states in the eastern region of the United States are obligated to enhance air quality by decreasing power plant emissions that spread across state borders and cause smog and soot pollution in nearby states.

Which states are subject to the rule?

Fossil fuel-fired electric generating units in coal, gas, and oil-fired facilities located in 27 states are required to decrease their emissions under CSAPR. The purpose of this is to assist areas located downwind in achieving fine particle and/or ozone NAAQS.
Subjected States: Alabama, Arkansas, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennslyvania, South Carolina, Tennessee, Texas, Virgina, West Virgina, Wisconsin

EPA's Table of States 

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When did CSAPR take effect?

Following a court decision in 2008 that mandated the EPA to introduce a replacement regulation, CSAPR took the place of EPA's 2005 Clean Air Interstate Rule (CAIR).
After a few years of litigation, CSAPR became effective on January 1, 2015, for SO2 and NOx pollutants. The EPA regards this regulation as one that safeguards the well-being of millions of Americans by aiding states in reducing air pollution and achieving clean air standards.

CSAPR Framework

CSAPR (Cross-State Air Pollution Rule) provides a four-step process to address the interstate transport of certain air pollutants, specifically sulfur dioxide (SO2) and nitrogen oxides (NOx) from power plants in the United States.
  • Identify states that significantly contribute to nonattainment or interfere with maintenance of the National Ambient Air Quality Standards (NAAQS) for SO2 and NOx in downwind states;
  • Determine the contributions of the upwind states and the amount of emissions reductions needed to address the downwind air quality problems;
  • Allocate emissions budgets to each identified upwind state based on its contribution to the downwind air quality problem and the cost of controlling emissions; and
  • Implement reduction in upwind emissions via permanent and enforceable requirements, such as emissions trading programs for SO2 and NOx that allow upwind states to trade emissions allowances among themselves and with downwind states.
Overall, the four-step CSAPR framework is designed to ensure that downwind states are able to meet the NAAQS for SO2 and NOx. The program uses market-based mechanisms, such as emissions trading, to incentivize emissions reductions in the most cost-effective way possible.

How the CSAPR Trading Programs Works

The CSAPR Trading Program limits the amount of SO2 and NOx emissions by power plants in each participating state. Each state is given an emissions budget by the Environmental Protection Agency (EPA), and each plant is allocated emissions allowances for a given year.
Power plants have the flexibility to trade these allowances or save (bank) allowances for future use as long as they hold enough to account for their own emissions by the end of the compliance period. Although, the final Good Neighbor Rule will limit program-wide banking to 21% from 2024-2029 and 10.5% from 2030 forward.
Compliance with emissions limits is ensured through the EPA Allowance Tracking System (EATS).
Overall, the CSAPR Trading Program encourages emissions reductions by creating a market-based mechanism that allows power plants to trade emissions allowances, incentivizing them to reduce their emissions in the most cost-effective way possible.
 

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What is the Good Neighbor Plan?

The EPA’s final Good Neighbor Plan requires emissions reductions from power plants and industrial sources that pollute across state lines to align with the Clean Air Act deadlines for states to achieve the 2015 Ozone National Ambient Air Quality Standards (NAAQS).
The Good Neighbor Plan ensures that 22 states will meet the Clean Air Act’s “Good Neighbor” requirements by reducing pollution that significantly contributes to problems attaining and maintaining EPA’s health-based air quality standard for ground-level ozone in downwind states.

Beginning in the 2023 ozone season, the EPA will include power plants in 22 states in a revised Group 3 Cross-State Air Pollution Rule (CSAPR) ozone season trading program and tighten their future emissions budgets starting in 2024.
Beginning in the 2026 ozone season, the EPA is setting enforceable NOx emissions control requirements for existing and new emissions sources in order to achieve a ~15% reduction in NOx emissions from 2019 ozone season, point source emission.

When did the Good Neighbor Plan go into effect?

On March 15, 2023, the U.S. Environmental Protection Agency (EPA) issued its final Good Neighbor Plan, securing significant reductions in ozone-forming emissions of nitrogen oxides (NOx) from power plants and industrial facilities. This final rule requires emissions reductions from power plants and industrial sources that pollute across state lines to align with the Clean Air Act deadlines for states to achieve the 2015 Ozone National Ambient Air Quality Standards (NAAQS):
  • The initial phase of NOx emissions reductions takes effect as soon as possible prior to the August 3, 2024 attainment date for Moderate non-attainment areas. The new rule will become effective 60 days after being published in the Federal Register, August 4, 2023. 
  • Further emissions reductions will phase in at the beginning of the 2026 ozone season, coinciding with the August 3, 2027 attainment date for Serious non-attainment areas.

NOx Allowance Trading Program for Fossil Fuel-Fired Power Plants in 22 States

Beginning in the 2023 ozone season, the EPA will include power plants in 22 states in a revised Group 3 Cross-State Air Pollution Rule (CSAPR) ozone season trading program.
Starting in 2024, the final rule sets emissions budgets that will decline annually based on the level of reductions achievable through phased installations of state-of-the-art emissions controls at power plants, reflecting a 50% budget reduction from 2021 ozone season NOx emissions levels in 2027.
The final rule also includes these features to promote consistent operation of emissions controls:
  • A backstop daily emissions rate in the form of a 3-for-1 allowance surrender for emissions from large coal-fired units that exceed a protective daily NOx emissions rate.1
  • Annually recalibrating the size of the emissions allowance bank to maintain strong long-term incentives to reduce NOx pollution by 2030.2
  • Annually limiting surplus allowances at a target of 21% from 2024 – 2029, then 10.5% from 2030 onward.
  • Annually updating emissions budgets starting in 2030 to account for changes in power generation, including new retirements, new units, and changes in operations.

1 This backstop would take effect in 2024 for units with existing controls and one year after installation for units installing new controls, but no later than 2030.
2 Updating budgets may start as early as 2026 if the updated budget amount is higher than the state emissions budgets established by the final rule for 2026-2029.

States affected by Good Neighbor Plan

The final Good Neighbor Plan, once effective, will now determine 10 more states in Group 3, making a total of 22 states, that must achieve additional reductions in NOx pollution to fully resolve their outstanding Good Neighbor obligations for the 2015 ozone NAAQS. The EPA plans to allow sources currently in Group 2 States to convert their banked Group 2 Allowances into Group 3 Allowances, similar to the way that the Revised CSAPR Update conversions took effect. The EPA’s updated modeling for 2023 suggests that Arizona, Iowa, Kansas, and New Mexico may be significantly contributing to nonattainment or maintenance in downwind sites. The EPA plans to undertake additional assessments for these states and will address Good Neighbor obligations for these states in the future if deemed necessary.
The EPA’s updated modeling analysis also confirms that Delaware is not significantly contributing to downwind ozone air quality problems. As a result, the Agency is withdrawing the proposed error correction and Good Neighbor Plan for Delaware.
Lastly, the EPA is deferring final action on the Agency’s proposed Good Neighbor Plans for Tennessee and Wyoming pending further review of the updated air quality and contribution modeling and analysis.

NOx Emissions Standards for Nine Large Industries in 20 States

Beginning in the 2026 ozone season, the EPA is setting enforceable NOx emissions control requirements for existing and new emissions sources in order to achieve an approximate 15% reduction in NOx emissions from 2019 ozone season, point source emissions.
The reduction in NOx emissions comes from the following types of emissions sources:

Reciprocating internal combustion engines in Pipeline Transportation of Natural Gas
Kilns in Cement and Cement Product Manufacturing
Reheat furnaces and boilers in Iron and Steel Mills and Ferroalloy Manufacturing
Furnaces in Glass and Glass Product Manufacturing
Boilers in Metal Ore Mining, Basic Chemical Manufacturing, Petroleum and Coal Products Manufacturing, and Pulp, Paper, and Paperboard Mills
Combustors and incinerators in Solid Waste Combustors or Incinerators
Individual facilities may be eligible for a one-year compliance extension with EPA approval. If specific additional criteria are met, the EPA may grant additional compliance extensions of up to two more years.

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