Has the Clean Air Interstate Rule Fulfilled Its Mission? An Assessment of Federal Rule-Making in Preventing Regional Spillover Pollution

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Abstract

The Environmental Protection Agency developed the Clean Air Interstate Rule (CAIR) to minimize sulfur dioxide and nitrogen oxide emissions from power plants and prevent pollution spillover into downwind states. While observers of CAIR claim success in the reduction of air pollution, our innovative multivariate statistical analysis based on spatial and facility-level panel data finds mixed results concerning the rule's effectiveness. On the one hand, we find that CAIR facilities are associated with increases in the reduction rate of pollution compared to non-CAIR facilities. However, the evidence suggests that sulfur dioxide levels decreased in CAIR-mandated facilities before the actual implementation of the program. Additionally, on the one hand, CAIR facilities in the interior of states are associated with slower pollution reduction rates than those on the border. However, this difference in reduction rate does not change dramatically before or after the adoption or implementation of this rule. This suggests that the CAIR program was ineffective in targeting specific facilities most likely to contribute to interstate pollution. We conclude that while CAIR spurred the electrical utility industry to reduce air pollution, some of these reductions occurred before the actual implementation of the program. More substantially, gains in interstate spillover pollution did not occur by targeting specific facilities most likely to spillover but rather through the overall reduction of air pollution in the eastern states.

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