The Clean Air Interstate Rule (CAIR) establishes annual NOx and SO2 markets and an ozone season NOx market that runs from May-September. Electric generators in 28 Eastern states can comply with the rule by reducing emissions or purchasing allowances from other facilities. CAIR’s SO2 requirements are layered on top of the national Acid Rain Program SO2 trading program that affects all electric generators in the US. The CAIR NOx markets began in 2009 and the CAIR SO2 market began in 2010. The DC Circuit Court of Appeals in July 2008 overturned CAIR and ordered the Environmental Protection Agency (EPA) to develop a replacement. EPA adopted the Cross-State Air Pollution Rule (CSAPR) in August 2011, which was intended to replace CAIR in 2012. Due to ongoing litigation against CSAPR, the rule is not in effect and sources are still required to comply with CAIR.

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