On October 6, the U.S. Environmental Protection Agency (“EPA”) issued a proposed amendment to its Cross-State Air Pollution Rule (CSAPR), which would increase state-wide limitations on emissions of sulfur dioxide and nitrogen oxide in nine states.

Finalized only three months earlier, CSAPR establishes an interstate emissions trading system that caps emissions of sulfur dioxide and nitrogen oxide from electric generating units in 27 Eastern states. The goal is to reduce interstate transport of pollution to help downwind states in their efforts to attain and maintain the National Ambient Air Quality Standards.

The states affected by EPA’s October 6 proposed increases to state-wide emission budgets include Texas, Florida, Louisiana, Michigan, Mississippi, New Jersey, New York, Nebraska, and Wisconsin.  The proposed rule would provide newly constructed electric generating units in Texas and Arkansas a larger share of emission allowances relative to existing facilities.  No changes are otherwise being proposed or contemplated to the core elements of the program.

CSAPR trading programs begin in January 2012, however companies have until the end of 2012 and early 2013 to demonstrate compliance.