HISTORY OF INTERSTATE POLLUTION PROBLEM

1
HISTORY OF INTERSTATE POLLUTION PROBLEM

• Georgia v. Tennessee Copper
• CLEAN AIR ACT (1970)
• 1970s Tall stacksSO2 and PM
• Section 126SO2 and NOx
• Title IV, Clean Air Act Amendments of 1990
• the Acid Rain Program

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• Economists and the Critique of Command and
  Control Environmental Regulation
• Social Efficiency vs. Cost Minimization
• How to maximize social net benefit?
• 2. How to achieve a given environmental goal in a
  least-cost manner?

How much pollution to allow? Taxes CBA Risk
Analysis Coase Theorem Marketable Permits
take set total pollution.
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To reduce SO2 emissions, why prefer a
market-based approach to the traditional CAA
approach?
TRADITIONAL APPROACH Regulators want 30TPY
emissions reduction Co. A Co. B Co.
C 10tpy 10tpy 10tpy _at_4/ton _at_3/ton
_at_1/ton TOTAL COST 40 30 10 80/yr.
4
To reduce SO2 emissions, why prefer a
market-based approach to the traditional CAA
approach?
MARKET-BASED APPROACH Regulators want 30TPY
emissions reduction Co. A Co. B Co.
C _at_4/ton _at_3/ton _at_1/ton IF Co. C can reduce by
30 tons, Co. B will be willing to pay up to 30,
and Co. A up to 40, for C to shoulder its
reduction burden. Co. C, in turn will be willing
to do so for less than those amounts (but more
than 20 total). Costs incurred 30 (plus
transfers A/B?C).
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ACID RAIN PROGRAM What pollutant(s) is/are
covered? What sources are covered? How does
the program secure a 10 million ton reduction in
SO2 emissions?
Sulfur dioxide (SO2) and nitrogen oxides (NOx)
Phase I 111 big dirties Phase II remaining
coal fired power plants
Cap and trade graduated reductions annual
allowance auctions
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ACID RAIN PROGRAM How does the program deal with
hot spots? Hint see Figure 5.9 Why are
allowances so much less expensive than
anticipated?
Permit ceilings
Technological advancements transportation
(low-sulfur coal) and scrubbers Misinformation?
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MONTHLY ACID RAIN ALLOWANCE PRICE
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ACID RAIN PROGRAM

• Alliance for Clean Coal v. Bayh (7th Cir. 1995)
• Indiana statute requires utility to submit to
  the IN PSC compliance plans for acid rain
  program
• PSC approval criteria specify that plan must
  provide either for the continued use of Indiana
  coal or justify switch to other coal based upon
  economic considerations including the effects on
  Indiana mining communities.

COURT The Indiana statute discriminates
against interstate commerce based solely upon
geographic origin, and thus violates the Commerce
Clause.
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HISTORY OF INTERSTATE POLLUTION PROBLEM

• Georgia v. Tennessee Copper
• CLEAN AIR ACT (1970)
• 1970s Tall stacksSO2 and PM
• Section 126SO2 and NOx
• Title IV, Clean Air Act Amendments of 1990
• the Acid Rain Program
• 4. Section 184 CAAA 1990 ozone transport

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CAA Sec. 184 (a)A single transport region for
ozone comprised of the States of Connecticut,
Delaware, Maine, Maryland, Massachusetts, New
Hampshire, New Jersey, New York, Pennsylvania,
Rhode Island, Vermont, and the Consolidated
Metropolitan Statistical Area that includes the
District of Columbia, is hereby established .
(b) Plan provisions for States in ozone
transport regions (1) each State
included within a transport region established
for ozone shall submit a State implementation
plan or revision thereof to the Administrator
which requires compliance with Section 110
(2) the Administrator shall complete a study
identifying control measures
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HISTORY OF INTERSTATE POLLUTION PROBLEM

• Georgia v. Tennessee Copper
• CLEAN AIR ACT (1970)
• 1970s Tall stacksSO2 and PM
• Section 126SO2 and NOx
• Title IV, Clean Air Act Amendments of 1990
• the Acid Rain Program
• Section 184 CAAA 1990 ozone transport
• 1990s
• Section 126 petitions
• NSR state litigation and citizen suits