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Trading of CAIR Allowances

EPA has received questions about the status of CAIR allowances allocated for 2009 and subsequent years.

Summary of Court actions

The U.S. Court of Appeals for the D.C. Circuit has ruled on petitions for review of the Clean Air Interstate Rule (CAIR) and CAIR Federal Implementation Plans (FIPs), including their provisions establishing the CAIR NOX annual and ozone season and SO2 trading programs. On July 11, 2008, the Court issued an opinion vacating and remanding these rules; however, parties to the litigation requested rehearing of aspects of the Court's decision, including the vacatur of the rules. On December 23, 2008, the Court granted rehearing only to the extent that it remanded the rules to EPA without vacating them.

Current status of CAIR programs

The December 23, 2008 ruling leaves CAIR and the CAIR FIPs -- including the CAIR trading programs -- in place until EPA issues a new rule to replace CAIR in accordance with the July 11, 2008 decision. EPA informed the Court that development and finalization of a replacement rule could take about two years.

Future year allowances

EPA is continuing to record allowance allocations under the CAIR NOX trading programs, in some cases for years beyond the estimated two-year period for promulgation of a replacement rule. EPA is taking these actions consistent with the State or federal rule that applies. When making any decisions on, and arrangements for, purchasing or selling CAIR NOX allowances, prospective buyers and sellers should keep in mind the potential impact that the status of CAIR and any replacement rule may have on the value of the allowances, particularly those allocated for years after the expected finalization of a replacement rule. EPA's continued recording of CAIR NOX allowances does not guarantee or imply that any allowances will continue to be usable for compliance after a replacement rule is finalized or that they will continue to have value in the future.


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