The U.S. Environmental Protection Agency's (EPA) Acid Rain Program is well established, with a defined and homogenous tradable instrument - the SO2 Emission Allowance. The Acid Rain Program falls under Title IV of the 1990 Clean Air Act Amendments and was established to achieve significant reductions in the emissions of sulfur dioxide (SO2) and nitrogen oxide (NOx).

On March 10, 2005, EPA issued the Clean Air Interstate Rule (CAIR), a rule that will achieve the largest reduction in air pollution in more than a decade. CAIR will ensure that Americans continue to breathe cleaner air by dramatically reducing air pollution that moves across state boundaries. In 2015, CAIR will provide health and environmental benefits valued at more than 25 times the cost of compliance.

CAIR will permanently cap emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx) in the eastern United States. CAIR achieves large reductions of SO2 and/or NOx emissions across 28 eastern states and the District of Columbia. When fully implemented, CAIR will reduce SO2 emissions in these states by over 70 percent and NOx emissions by over 60 percent from 2003 levels. This will result in $85 to $100 billion in health benefits and nearly $2 billion in visibility benefits per year by 2015 and will substantially reduce premature mortality in the eastern United States. The benefits will continue to grow each year with further implementation.

CAIR covers 28 eastern states and the District of Columbia. In this rule, EPA finds that SO2 and NOx emissions from 25 states and the District of Columbia contribute to unhealthy levels of fine particles in downwind states. In addition, NOx emissions in 25 eastern states and the District of Columbia contribute to unhealthy levels of 8-hour ozone in other downwind states (Source – DSIRE)