Last week, the U.S. Court of Appeals for the D.C. Circuit decided a case that brought a breath of fresh air to the idea of cleaning up some of America's most polluted cities.
By way of context, in an area that is not meeting federal air quality standards, a new facility that will emit air pollution has to obtain pollution credits from another entity that has, for example, shut down. The idea is that air quality in the area will net out as even (or better, depending on the ratio of credits needed for new pollution), even given the pollution from the new facility.
One persistent problem with this kind of "offset" trading is that it can be harmful to people who live near polluters that buy emission credits from far away. Those people are exposed to more pollution than they should be, even though air quality in the larger region in general purportedly remains unchanged.
Another problem is detecting and preventing cheating. The D.C. Circuit case involved credits for ozone, known to us in Los Angeles as "smog." NRDC and others sued the U.S. EPA over a rule that allowed new, polluting facilities to meet the federal offset requirement "using credits from sources that shut down or curtailed operations as long ago as 1977." The EPA used to say that it was OK so long as the local air quality regulators had an "approved attainment plan" - in plain English, a plan showing EPA how the particular region intended to bring their area into compliance with federal clean air laws. If there were no approved attainment plan, then offset credits could only be used if "the proposed source is a replacement for the productive capacity represented by the proposed offset" - in plain English, if a new, cleaner facility was replacing an old, dirty one.
But EPA changed the rule to eliminate the requirement that there be an "approved attainment plan" before old offset credits could be used. Not so, said the court - that violated the Clean Air Act because, without an approved plan, there was no assurance that emissions reductions would be achieved "by the time the new source begins operation," rather than sometime later. That means that emissions may be higher right after the new source began operation, not lower - just the opposite of what the Clean Air Act requires.
This decision shows a healthy skepticism about emission trading programs that attempt to create current credits from long-past shutdowns. As Margot Roosevelt noted in the L.A. Times, the D.C. Circuit's decision is a stumbling block for the South Coast Air Quality Management District's attempt to do exactly this. NRDC and other groups are in litigation with the SCAQMD about its internal bank of emission credits. NRDC does not object to emission credit trading per se - but we do object to making up credits from events that happened long ago to allow current polluters to poison their neighbors.