The Clean Air Act’s Good Neighbor Provision: Overview of Interstate Air Pollution Control

Summary

Notwithstanding air quality progress since 1970, challenges remain to reduce pollution in areas exceeding federal standards and to ensure continued compliance elsewhere. The movement of air pollutants across state lines, known as interstate transport, has made it difficult for some downwind states to attain federal ozone and fine particulate matter (PM2.5) standards, partly because states lack authority to limit emissions from other states.

The Clean Air Act’s “Good Neighbor” provision (Section 110(a)(2)(D)) seeks to address this issue and requires states to prohibit emissions that significantly contribute to another state’s air quality problems. It requires each state’s implementation plan (SIP)—a collection of air quality regulations and documents—to prohibit emissions that either “significantly contribute” to nonattainment or “interfere with maintenance” of federal air quality standards in another state. The act also authorizes states to petition EPA to issue a finding that emissions from “any major source or group of stationary sources” violate the Good Neighbor provision (Section 126(b)).

EPA and the states have implemented regional programs to address interstate ozone and PM2.5 transport and comply with the Good Neighbor provision. These programs set emission “budgets” for ozone and PM2.5 precursor emissions—specifically, sulfur dioxide (SO2) and nitrogen oxide (NOx) as PM2.5 precursors and seasonal NOx emissions as an ozone precursor. The current program—the Cross State Air Pollution Rule (CSAPR)—focuses on limiting interstate transport of power sector SO2 and NOx emissions to eastern states.

Power sector emissions in CSAPR states are below emission budgets as a result of regulatory and market factors (see figure). Annual SO2, annual NOx, and ozone season NOx emissions from CSAPR sources decreased 77%, 41%, and 15%, respectively, between 2009 and 2016.

CSAPR Emission Trends: 2009-2016

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Source: EPA Air Markets Program Data, https://ampd.epa.gov/ampd/.

Notes: The Clean Air Interstate Rule was in effect 2009 through the end of 2014 and was replaced by CSAPR on January 1, 2015.

EPA has concluded that regional SO2 and NOx programs have reduced interstate transport of PM2.5 and ozone. The Energy Information Administration’s national-scale analysis identifies market and regulatory factors contributing to emission reductions. It is unclear whether emissions will remain well below budgets, given recent prices of ozone season NOx allowances (i.e., authorization for each ton emitted) and the supply of banked allowances for future use in lieu of emission reductions.

Research indicates that ozone transport harms air quality in downwind states. However, stakeholder views vary regarding the extent to which interstate transport impacts air quality. Some note that some coal-fired power plants do not fully use already-installed pollution controls. Several states have sought additional upwind reductions in ozone precursors through Section 126(b) petitions. Others have questioned the feasibility of achieving additional reductions in ozone precursors, raising concerns about emissions from international or natural sources.

EPA recently proposed to determine that CSAPR fully addresses Good Neighbor obligations for the 2008 ozone standard but has not yet made a “Good Neighbor” determination for the more stringent 2015 ozone standard. The agency has therefore not yet determined whether and how it will update the CSAPR budgets with respect to the 2015 ozone standard.

Members of Congress may have an interest in better understanding how EPA and states implement the Clean Air Act’s Good Neighbor provision, particularly as EPA continues its assessment of Good Neighbor obligations under the 2015 ozone standard.

The following issues, among others, may inform deliberations about interstate air transport. First, the extent to which existing programs will improve air quality in areas not meeting the 2015 ozone standard is to be determined. CSAPR has not addressed NOx emissions from nonpower sector sources, such as large industrial boilers. EPA concluded that industrial sources have potential to cost-effectively reduce NOx emissions but is less certain about the structure of potential NOx control strategies. Second, some have questioned whether additional regulatory incentives are necessary to fulfill Good Neighbor obligations, particularly given current NOx allowance prices. These prices are below the marginal abatement cost, which may result in higher emissions. Third, EPA’s current air quality initiatives may indirectly affect its Good Neighbor assessments. EPA recently sought comment on potential flexibilities for the development of Good Neighbor SIPs.