NOx language in Senate Appropriations Legislation

Yesterday, the Senate Appropriations Committee approved VA/HUD/Independent
Agencies appropriations bill (which funds EPA) and included legislative
language stating that EPA should harmonize the NOx SIP and 126 deadlines for
SIP submission and compliance. As you may recall, under the NOx SIP Call
the courts have required states to submit SIPs to EPA by October 31, 2000,
and recently moved the deadline for sources to comply with the state plans to
May 2004. While the Section 126 rule will be litigated this fall, the
courts have not moved the deadline for sources to comply with this federal
NOx regulation from May of 2003.

Industry supporters of this language are optimistic that this legislative
language increases the chances that the SIP Call and 126 rules will be
harmonized. If the language passes, it will have the force of law --
depending on how forceful the final language is, EPA may be compelled to
harmonize the laws. On the other hand, this also increases the visibility of
the language and could increase opposition to its inclusion in the
appropriations bill as the House/Senate Conference Committee considers the
bill. The language was not in the House version of the bill, and the
Administration could weigh in with a veto threat that could scare off Senate
negotiators in the end.

This would be a significant development in NOx regulation, in that if this
language becomes law, we would have more certainty that generation sources
would not likely need to comply with NOx regulations until May 2004. Right
now, industry still faces a May 2003 deadline for compliance with the 126
petitions, unless the litigation or this legislation changes things.

We will keep you posted as developments occur.