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Bush administration issues new standards on smog, soot

WASHINGTON—The Bush administration on Thursday finalized a regulation for the eastern United States that would cut power plant pollutants that cause smog, acid rain and soot by about two-thirds over the next decade.

The rule—which will cost about $3.6 billion a year to implement but is expected to save $85 billion in annual health benefits—"will result in the biggest health benefit of any EPA rule in more than a decade," said Jeffrey Holmstead, the Environmental Protection Agency's assistant administrator.

The EPA predicts that the rule will prevent 17,000 heart and respiratory deaths caused by pollution from coal-fired power plants. It's aimed at reducing nitrogen oxide, which causes smog, and sulfur dioxide, which causes acid rain and soot.

The new rule is part of a two-prong effort to fulfill President Bush's pledge to clean up pollution from power plants that were built before the nation's air pollution laws were enacted. A more controversial rule to reduce mercury—one criticized by environmental activists as being too slow and weak—will be finalized next week.

Because Thursday's regulation is designed to reduce pollution that travels across state lines, it applies only to 28 Eastern and Midwestern states and the District of Columbia.

Unlike most past regulatory efforts, this rule doesn't tell power plants how to reduce pollution. Instead, it puts caps on emissions and lets the utilities decide how to get below those limits.

One cap would reduce allowable nitrogen oxides emissions by 53 percent in 2009 and would cut permitted sulfur dioxide pollution by 62 percent in 2010. A more stringent cap for both would then take effect in 2015: 61 percent below current levels for nitrogen oxide and 73 percent below current levels for sulfur dioxide.

The key to the rule is that utilities are given a free-market tool that allows them to trade the right-to-pollute among power plants much like pork belly futures on the Chicago Mercantile Exchange—a method that helped cut acid rain in the 1990s. A utility that can't reduce its emissions can buy the right-to-pollute from a utility that exceeded cleanup requirements.

The concept, when first used with acid rain in 1990, turned environmental offices in utilities into valued money-makers, said Fred Krupp, the president of Environmental Defense, a moderate environmental group that worked with the EPA on the latest rule.

This is how the new system works: The EPA will allocate "allotments" for the right to pollute by state based on how much power each produces. The states will then divvy those up among power plants, but the number of allotments will be less than what's allowed for current pollution, so utilities will have to clean up or buy another utility's allotments. Right now, an allotment equivalent to a ton of sulfur dioxide pollution sells for about $650, but could easily hit $1,000, Holmstead said.

Newer power plants will likely clean up faster than others because it's cheaper for them to clean up and sell excess allotments to older power plants.

Thursday's rule drew measured praise from industry and environmental groups. But environmental groups and state and local air regulators also said it doesn't do enough quickly enough and will still leave some Northeastern cities, such as Philadelphia, with dirty air even after the toughest rules go into effect.

Angela Ledford, the director of the environmental group Clear The Air, said the new rule gives power plants more time to clean up than existing law allowed.

Bill Becker, the executive director of an association for state and local air regulators, called the rule "a good first step, but the deadlines are too long, the emissions caps are too weak."

Ed Krenik, a lobbyist for coal power plants, called the rule "a good step forward by utilizing cap-and-trade."

But Krenik and Edison Electric Institute, an industry lobbying group, said the regulation wasn't really what they wanted. They wanted Bush's more controversial rewrite of the Clean Air Act, which was killed in the Senate on Wednesday.

The president's more comprehensive proposal—killed by a tie vote in the Senate Environment and Public Works Committee—had the shrinking emission limits and cap-and-trade.

But it also would have eliminated several key aspects of the Clean Air Act that utilities said were duplicative. Environmental groups argued the aspects were crucial tools to reduce pollution. The proposal also would have applied to the entire country.

The following states are affected by the new rule: Texas, Florida, Ohio, Pennsylvania, Michigan, Missouri, Minnesota, North Carolina, South Carolina, Kentucky, Georgia, Indiana, Illinois, New Jersey, Mississippi, Alabama, Arkansas, Connecticut, Delaware, Iowa, Louisiana, Maryland, Massachusetts, New York, Tennessee, Virginia, West Virginia, Wisconsin and the District of Columbia.

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(c) 2005, Knight Ridder/Tribune Information Services.

GRAPHIC (from KRT Graphics, 202-383-6064): 20050310 CLEANAIR

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