II 

108TH CONGRESS 

1ST SESSION S. 1844

To amend the Clean Air Act to reduce air pollution through expansion 

of cap and trade programs, to provide an alternative regulatory classification for units subject to the cap and trade program, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 10, 2003

Mr. INHOFE introduced the following bill; which was read twice and referred 

to the Committee on Environment and Public Works 

A BILL

To amend the Clean Air Act to reduce air pollution through 

expansion of cap and trade programs, to provide an 

alternative regulatory classification for units subject to 

the cap and trade program, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Clear Skies Act of 2003’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 this Act is as follows:

Sec. 1. Short title; table of contents. 
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Sec. 2. Emission reduction programs. 

‘‘TITLE IV—EMISSION REDUCTION PROGRAMS 

‘‘PART A—GENERAL PROVISIONS

‘‘Sec. 401. (Reserved) 

‘‘Sec. 402. Definitions. 

‘‘Sec. 403. Allowance system. 

‘‘Sec. 404. Permits and compliance plans. 

‘‘Sec. 405. Monitoring, reporting, and recordkeeping requirements. 

‘‘Sec. 406. Excess emissions penalty; general compliance with other provisions; enforcement. 

‘‘Sec. 407. Election for additional units. 

‘‘Sec. 408. Clean coal technology regulatory incentives. 

‘‘Sec. 409. Electricity reliability. 

‘‘PART B—SULFUR DIOXIDE EMISSION REDUCTIONS

‘‘Sec. 411. Definitions. 

‘‘Sec. 412. Allowance allocation. 

‘‘Sec. 413. Phase I sulfur dioxide requirements. 

‘‘Sec. 414. Phase II sulfur dioxide requirements. 

‘‘Sec. 415. Allowances for States with emissions rates at or below 0.80 lbs/

mmBtu. 

‘‘Sec. 416. Election for additional sources. 

‘‘Sec. 417. Auctions, reserve. 

‘‘Sec. 418. Industrial sulfur dioxide emissions. 

‘‘Sec. 419. Termination. 

‘‘Sec. 421. Definitions. 

‘‘Sec. 422. Applicability. 

‘‘Sec. 423. Limitations on total emissions. 

‘‘Sec. 424. EGU allocations. 

‘‘Sec. 425. Sulfur dioxide early action reduction credits. 

‘‘Sec. 426. Disposition of sulfur dioxide allowances allocated under subpart 

1. 

‘‘Sec. 427. Incentives for sulfur dioxide emission control technology. 

‘‘Sec. 431. Definitions. 

‘‘Sec. 432. Applicability. 

‘‘Sec. 433. Limitations on total emissions. 

‘‘Sec. 434. EGU allocations. 

‘‘Sec. 435. WRAP early action reduction credits. 

‘‘PART C—NITROGEN OXIDES CLEAR SKIES EMISSION REDUCTIONS

‘‘Sec. 441. Nitrogen oxides emission reduction program. 

‘‘Sec. 442. Termination. 

‘‘Sec. 451. Definitions. 

‘‘Sec. 452. Applicability. 

‘‘Sec. 453. Limitations on total emissions. 

‘‘Sec. 454. EGU allocations. 

‘‘Sec. 455. Nitrogen oxides early action reduction credits. 

‘‘Sec. 461. Definitions. 

‘‘Sec. 462. General provisions. 

‘‘Sec. 463. Applicable implementation plan. 

‘‘Sec. 464. Termination of Federal administration of NOX trading program for EGUs. 
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‘‘Sec. 465. Carryforward of pre-2008 nitrogen oxides allowances. 

‘‘Sec. 466. Non-ozone season voluntary action credits. 

‘‘PART D—MERCURY EMISSIONS REDUCTIONS

‘‘Sec. 471. Definitions. 

‘‘Sec. 472. Applicability. 

‘‘Sec. 473. Limitations on total emissions. 

‘‘Sec. 474. EGU allocations. 

‘‘Sec. 475. Mercury early action reduction credits. 

‘‘PART E—NATIONAL EMISSION STANDARDS; RESEARCH; ENVIRONMENTAL

ACCOUNTABILITY; MAJOR SOURCE PRECONSTRUCTION REVIEW AND BEST

AVAILABLE RETROFIT CONTROL TECHNOLOGY REQUIREMENTS

‘‘Sec. 481. National emission standards for affected units. 

‘‘Sec. 482. Research, environmental monitoring, and assessment. 

‘‘Sec. 483. Major source preconstruction review requirements and best 

available retrofit control technology requirements; applicability to affected units. 

Sec. 3. Other amendments.

1 SEC. 2. EMISSION REDUCTION PROGRAMS. 

2 Title IV of the Clean Air Act (relating to acid deposi3 tion control) (42 U.S.C. 7651, et seq.) is amended to read 

4 as follows: 

5 ‘‘TITLE IV—EMISSION 

6 REDUCTION PROGRAMS 

7 ‘‘PART A—GENERAL PROVISIONS 

8 ‘‘SEC. 401. (Reserved) 

9 ‘‘SEC. 402. DEFINITIONS. 

10 ‘‘As used in this title: 

11 ‘‘(1) The term ‘affected EGU’ shall have the 

12 meaning set forth in section 421, 431, 451, or 471, 

13 as appropriate. 

14 ‘‘(2) The term ‘affected facility’ or ‘affected 

15 source’ means a facility or source that includes one 

16 or more affected units. 
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1 ‘‘(3) The term ‘affected unit’ means— 

2 ‘‘(A) under this part, a unit that is subject 

3 to emission reduction requirements or limita4 tions under part B, C, or D or, if applicable, 

5 under a specified part or subpart; or 

6 ‘‘(B) under subpart 1 of part B or subpart 

7 1 of part C, a unit that is subject to emission 

8 reduction requirements or limitations under 

9 that subpart. 

10 ‘‘(4) The term ‘allowance’ means— 

11 ‘‘(A) an authorization, by the Adminis12 trator under this title, to emit one ton of sulfur 

13 dioxide, one ton of nitrogen oxides, or one 

14 ounce of mercury; or 

15 ‘‘(B) under subpart 1 of part B, an au16 thorization by the Administrator under this 

17 title, to emit one ton of sulfur dioxide. 

18 ‘‘(5)(A) The term ‘baseline heat input’ means, 

19 except under subpart 1 of part B and section 407, 

20 the average annual heat input used by a unit during 

21 the three years in which the unit had the highest 

22 heat input for the period 1998 through 2002. 

23 ‘‘(B) Notwithstanding subparagraph (A), if a 

24 unit commenced or commences operation after Janu25 ary 1, 2001, then ‘baseline heat input’ means the 
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1 manufacturer’s design heat input capacity for the 

2 unit multiplied by 80 percent for coal-fired units, 50 

3 percent for boilers that are not coal-fired, 80 percent 

4 for combustion turbine cogeneration units elected 

5 under section 407, 50 percent for combustion tur6 bines other than simple cycle turbines, and 5 percent 

7 for simple cycle combustion turbines. 

8 ‘‘(C) A unit’s heat input for a year shall be the 

9 heat input— 

10 ‘‘(i) required to be reported under section 

11 405 for the unit, if the unit was required to re12 port heat input during the year under that sec13 tion; 

14 ‘‘(ii) reported to the Energy Information 

15 Administration for the unit, if the unit was not 

16 required to report heat input under section 405; 

17 ‘‘(iii) based on data for the unit reported 

18 to the State where the unit is located as re19 quired by State law, if the unit was not re20 quired to report heat input during the year 

21 under section 405 and did not report to the En22 ergy Information Administration; or 

23 ‘‘(iv) based on fuel use and fuel heat con24 tent data for the unit from fuel purchase or use 

25 records, if the unit was not required to report 
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1 heat input during the year under section 405 

2 and did not report to the Energy Information 

3 Administration and the State. 

4 ‘‘(D) Not later than three months after the en5 actment of the Clear Skies Act of 2003, the Admin6 istrator shall promulgate regulations, without notice 

7 and opportunity for comment, specifying the format 

8 in which the information under subparagraphs 

9 (B)(ii) and (C)(ii), (iii), or (iv) shall be submitted. 

10 Not later than nine months after the enactment of 

11 the Clear Skies Act of 2003, the owner or operator 

12 of any unit under subparagraph (B)(ii) or (C)(ii), 

13 (iii), or (iv) to which allowances may be allocated 

14 under section 424, 434, 454, or 474 shall submit to 

15 the Administrator such information. The Adminis16 trator is not required to allocate allowances under 

17 such sections to a unit for which the owner or oper18 ator fails to submit information in accordance with 

19 the regulations promulgated under this subpara20 graph. 

21 ‘‘(6) The term ‘coal’ means any solid fuel classi22 fied as anthracite, bituminous, subbituminous, or 

23 lignite. 

24 ‘‘(7) The term ‘coal-derived fuel’ means any 

25 fuel (whether in a solid, liquid, or gaseous state) 
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1 produced by the mechanical, thermal, or chemical 

2 processing of coal. 

3 ‘‘(8) The term ‘coal-fired’ with regard to a unit 

4 means, except under subpart 1 of part B, subpart 1 

5 of part C, and sections 424 and 434, combusting 

6 coal or any coal-derived fuel alone or in combination 

7 with any amount of any other fuel in any year. 

8 ‘‘(9) The term ‘cogeneration unit’ means, ex9 cept under subpart 1 of part B and subpart 1 of 

10 part C, a unit that produces through the sequential 

11 use of energy— 

12 ‘‘(A) electricity; and 

13 ‘‘(B) useful thermal energy (such as heat 

14 or steam) for industrial, commercial, heating, or 

15 cooling purposes. 

16 ‘‘(10) The term ‘combustion turbine’ means any 

17 combustion turbine that is not self-propelled. The 

18 term includes, but is not limited to, a simple cycle 

19 combustion turbine, a combined cycle combustion 

20 turbine and any duct burner or heat recovery device 

21 used to extract heat from the combustion turbine ex22 haust, and a regenerative combustion turbine. The 

23 term does not include a combined turbine in an inte24 grated gasification combined cycle plant. 
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1 ‘‘(11) The term ‘commence commercial oper2 ation’ with regard to a unit means the start up of 

3 the unit’s combustion chamber and the commence4 ment of the generation of electricity for sale. 

5 ‘‘(12) The term ‘compliance plan’ means ei6 ther— 

7 ‘‘(A) a statement that the facility will com8 ply with all applicable requirements under this 

9 title; or 

10 ‘‘(B) under subpart 1 of part B or subpart 

11 1 of part C, where applicable, a schedule and 

12 description of the method or methods for com13 pliance and certification by the owner or oper14 ator that the facility is in compliance with the 

15 requirements of that subpart. 

16 ‘‘(13) The term ‘continuous emission moni17 toring system’ (CEMS) means the equipment as re18 quired by section 405, used to sample, analyze, 

19 measure, and provide on a continuous basis a per20 manent record of emissions and flow (expressed in 

21 pounds per million British thermal units (lbs/

22 mmBtu), pounds per hour (lbs/hr) or such other 

23 form as the Administrator may prescribe by regula24 tions under section 405. 
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1 ‘‘(14) The term ‘designated representative’ 

2 means a responsible person or official authorized by 

3 the owner or operator of a unit and the facility that 

4 includes the unit to represent the owner or operator 

5 in matters pertaining to the holding, transfer, or dis6 position of allowances, and the submission of and 

7 compliance with permits, permit applications, and 

8 compliance plans. 

9 ‘‘(15) The term ‘duct burner’ means a combus10 tion device that uses the exhaust from a combustion 

11 turbine to burn fuel for heat recovery. 

12 ‘‘(16) The term ‘fossil fuel’ means natural gas, 

13 petroleum, coal, or any form of solid, liquid, or gas14 eous fuel derived from such material. 

15 ‘‘(17) The term ‘fossil fuel-fired’ with regard to 

16 a unit means combusting fossil fuel, alone or in com17 bination with no more than 10 percent of other fuel. 

18 ‘‘(18) The term ‘fuel oil’ means a petroleum19 based fuel, including diesel fuel or petroleum deriva20 tives. 

21 ‘‘(19) The term ‘gas-fired’ with regard to a unit 

22 means, except under subpart 1 of part B and sub23 part 1 of part C, combusting only natural gas or 

24 fuel oil, with natural gas comprising at least 90 per-
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1 cent, and fuel oil comprising no more than 10 per2 cent, of the unit’s total heat input in any year. 

3 ‘‘(20) The term ‘gasify’ means to convert car4 bon-containing material into a gas consisting pri5 marily of carbon monoxide and hydrogen. 

6 ‘‘(21) The term ‘generator’ means a device that 

7 produces electricity and, under subpart 1 of part B 

8 and subpart 1 of part C, that is reported as a gener9 ating unit pursuant to Department of Energy Form 

10 860. 

11 ‘‘(22) The term ‘heat input’ with regard to a 

12 specific period of time means the product (in 

13 mmBtu/time) of the gross calorific value of the fuel 

14 (in mmBtu/lb) and the fuel feed rate into a unit (in 

15 lb of fuel/time) and does not include the heat derived 

16 from preheated combustion air, recirculated flue 

17 gases, or exhaust. 

18 ‘‘(23) The term ‘integrated gasification com19 bined cycle plant’ means any combination of equip20 ment used to gasify fossil fuels (with or without 

21 other material) and then burn the gas in a combined 

22 cycle combustion turbine. 

23 ‘‘(24) The term ‘oil-fired’ with regard to a unit 

24 means, except under sections 424 and 434, com25 busting fuel oil for 10 percent or more of the unit’s 
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1 total heat input, and combusting no coal or coal-de2 rived fuel, in any year. 

3 ‘‘(25) The term ‘owner or operator’ with regard 

4 to a unit or facility means, except for subpart 1 of 

5 part B and subpart 1 of part C, any person who 

6 owns, leases, operates, controls, or supervises the 

7 unit or the facility.

8 ‘‘(26) The term ‘permitting authority’ means 

9 the Administrator, or the State or local air pollution 

10 control agency, with an approved permitting pro11 gram under title V of the Act. 

12 ‘‘(27) The term ‘potential electrical output’ with 

13 regard to a generator means the nameplate capacity 

14 of the generator multiplied by 8,760 hours. 

15 ‘‘(28) The term ‘simple cycle combustion tur16 bine’ means a combustion turbine that does not ex17 tract heat from the combustion turbine exhaust 

18 gases. 

19 ‘‘(29) The term ‘stationary source’ means any 

20 building, structure, facility, or installation located on 

21 one or more contiguous or adjacent properties under 

22 common control or ownership of the same person or 

23 persons which emits or may emit any air pollutant 

24 subject to regulations under the Clear Skies Act of 

25 2003. 
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1 ‘‘(30) The term ‘State’ means— 

2 ‘‘(A) one of the forty-eight contiguous 

3 States, Alaska, Hawaii, the District of Colum4 bia, the Commonwealth of Puerto Rico, the Vir5 gin Islands, Guam, American Samoa, or the 

6 Commonwealth of the Northern Mariana Is7 lands; or 

8 ‘‘(B) under subpart 1 of part B and sub9 part 1 of part C, one of the forty-eight contig10 uous States or the District of Columbia. 

11 ‘‘(31) The term ‘unit’ means— 

12 ‘‘(A) a fossil fuel-fired boiler, combustion 

13 turbine, or integrated gasification combined 

14 cycle plant; or 

15 ‘‘(B) under subpart 1 of part B and sub16 part 1 of part C, a fossil fuel-fired combustion 

17 device. 

18 ‘‘(32) The term ‘utility unit’ shall have the 

19 meaning set forth in section 411. 

20 ‘‘(33) The term ‘year’ means calendar year. 

21 ‘‘SEC. 403. ALLOWANCE SYSTEM. 

22 ‘‘(a) ALLOCATIONS IN GENERAL.—

23 ‘‘(1) For the emission limitation programs 

24 under this title, the Administrator shall allocate an25 nual allowances for an affected unit, to be held or 
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1 distributed by the designated representative of the 

2 owner or operator in accordance with this title as 

3 follows—

4 ‘‘(A) sulfur dioxide allowances in an 

5 amount equal to the annual tonnage emission 

6 limitation calculated under section 413, 414, 

7 415, or 416, except as otherwise specifically 

8 provided elsewhere in subpart 1 of part B, or 

9 in an amount calculated under section 424 or 

10 434; 

11 ‘‘(B) nitrogen oxides allowances in an 

12 amount calculated under section 454; and 

13 ‘‘(C) mercury allowances in an amount cal14 culated under section 474. 

15 ‘‘(2) Notwithstanding any other provision of 

16 law to the contrary, the allocation of any allowances 

17 for any unit or facility under sections 424, 434, 454, 

18 and 474 shall not be enjoined. 

19 ‘‘(3) Allowances shall be allocated by the Ad20 ministrator without cost to the recipient, in accord21 ance with this title. 

22 ‘‘(b) ALLOWANCE TRANSFER SYSTEM.—Allowances 

23 allocated or sold by the Administrator under this title may 

24 be transferred among designated representatives of the 

25 owners or operators of affected facilities under this title 
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1 and any other person, as provided by the allowance system 

2 regulations promulgated by the Administrator. With re3 gard to sulfur dioxide allowances, the Administrator shall 

4 implement this subsection under 40 CFR part 73 (2002), 

5 amended as appropriate by the Administrator. With re6 gard to nitrogen oxides allowances and mercury allow7 ances, the Administrator shall implement this subsection 

8 by promulgating regulations not later than twenty-four 

9 months after the date of enactment of the Clear Skies Act 

10 of 2003. The regulations under this subsection shall estab11 lish the allowance system prescribed under this section, 

12 including, but not limited to, requirements for the alloca13 tion, transfer, and use of allowances under this title. Such 

14 regulations shall prohibit the use of any allowance prior 

15 to the calendar year for which the allowance was allocated 

16 and shall provide, consistent with the purposes of this 

17 title, for the identification of unused allowances, and for 

18 such unused allowances to be carried forward and added 

19 to allowances allocated in subsequent years, except as oth20 erwise provided in section 425. Such regulations shall pro21 vide, or shall be amended to provide, that transfers of al22 lowances shall not be effective until certification of the 

23 transfer, signed by a responsible official of the transferor, 

24 is received and recorded by the Administrator. 
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1 ‘‘(c) ALLOWANCE TRACKING SYSTEM.—The Admin2 istrator shall promulgate regulations establishing a system 

3 for issuing, recording, and tracking allowances, which 

4 shall specify all necessary procedures and requirements for 

5 an orderly and competitive functioning of the allowance 

6 system. Such system shall provide, by twenty-four months 

7 prior to the compliance year, for one or more facility-wide 

8 accounts for holding sulfur dioxide allowances, nitrogen 

9 oxides allowances, and, if applicable, mercury allowances 

10 for all affected units at an affected facility. With regard 

11 to sulfur dioxide allowances, the Administrator shall im12 plement this subsection under 40 CFR part 73 (2002), 

13 amended as appropriate by the Administrator. With re14 gard to nitrogen oxides allowances and mercury allow15 ances, the Administrator shall implement this subsection 

16 by promulgating regulations not later than twenty-four 

17 months after the date of enactment of the Clear Skies Act 

18 of 2003. All allowance allocations and transfers shall, 

19 upon recording by the Administrator, be deemed a part 

20 of each unit’s or facility’s permit requirements pursuant 

21 to section 404, without any further permit review and revi22 sion. 

23 ‘‘(d) NATURE OF ALLOWANCES.—A sulfur dioxide al24 lowance, nitrogen oxides allowance, or mercury allowance 

25 allocated or sold by the Administrator under this title is 
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1 a limited authorization to emit one ton of sulfur dioxide, 

2 one ton of nitrogen oxides, or one ounce of mercury, as 

3 the case may be, in accordance with the provisions of this 

4 title. Such allowance does not constitute a property right. 

5 Nothing in this title or in any other provision of law shall 

6 be construed to limit the authority of the United States 

7 to terminate or limit such authorization. Nothing in this 

8 section relating to allowances shall be construed as affect9 ing the application of, or compliance with, any other provi10 sion of this Act to an affected unit or facility, including 

11 the provisions related to applicable National Ambient Air 

12 Quality Standards and State implementation plans. Noth13 ing in this section shall be construed as requiring a change 

14 of any kind in any State law regulating electric utility 

15 rates and charges or affecting any State law regarding 

16 such State regulation or as limiting State regulation (in17 cluding any prudency review) under such a State law. 

18 Nothing in this section shall be construed as modifying 

19 the Federal Power Act or as affecting the authority of the 

20 Federal Energy Regulatory Commission under that Act. 

21 Nothing in this title shall be construed to interfere with 

22 or impair any program for competitive bidding for power 

23 supply in a State in which such program is established. 

24 Allowances, once allocated or sold to a person by the Ad25 ministrator, may be received, held, and temporarily or per-
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1 manently transferred in accordance with this title and the 

2 regulations of the Administrator without regard to wheth3 er or not a permit is in effect under title V of the Clean 

4 Air Act or section 404 of the Clear Skies Act of 2003 

5 with respect to the unit for which such allowance was 

6 originally allocated and recorded. 

7 ‘‘(e) PROHIBITION.—

8 ‘‘(1) It shall be unlawful for any person to hold, 

9 use, or transfer any allowance allocated or sold by 

10 the Administrator under this title, except in accord11 ance with regulations promulgated by the Adminis12 trator. 

13 ‘‘(2) It shall be unlawful for any affected unit 

14 or for the affected units at a facility to emit sulfur 

15 dioxide, nitrogen oxides, and mercury, as the case 

16 may be, during a year in excess of the number of al17 lowances held for that unit or facility for that year 

18 by the designated representative as provided in sec19 tions 412(c), 422, 432, 452, and 472. 

20 ‘‘(3) The owner or operator of a facility may 

21 purchase allowances directly from the Administrator 

22 to be used only to meet the requirements of sections 

23 422, 432, 452, and 472, as the case may be, for 

24 the year in which the purchase is made or the prior 

25 year. Not later than thirty-six months after the date 
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1 of enactment of the Clear Skies Act of 2003, the 

2 Administrator shall promulgate regulations pro3 viding for direct sales of sulfur dioxide allowances, 

4 nitrogen oxides allowances, and mercury allowances 

5 to an owner or operator of a facility. The regulations 

6 shall provide that— 

7 ‘‘(A) such allowances may be used only to 

8 meet the requirements of section 422, 432, 452, 

9 and 472, as the case may be, for such facility 

10 and for the year in which the purchase is made 

11 or the prior year; 

12 ‘‘(B) each such sulfur dioxide allowance 

13 shall be sold for $2,000, each such nitrogen ox14 ides allowance shall be sold for $4,000, and 

15 each such mercury allowance shall be sold for 

16 $2,187.50, with such prices adjusted for infla17 tion based on the Consumer Price Index on the 

18 date of enactment of the Clear Skies Act of 

19 2003 and annually thereafter; 

20 ‘‘(C) the proceeds from any sales of allow21 ances under subparagraph (B) shall be, in ac22 cordance with paragraph (j), deposited in the 

23 Compliance Assistance Account; 

24 ‘‘(D) except for allowances subject to (E), 

25 the allowances directly purchased for use for 
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1 the year specified in subparagraph (A) shall be, 

2 on a pro rata basis, taken from, and reduce, the 

3 amount of sulfur dioxide allowances, nitrogen 

4 oxides allowances, or mercury allowances, as the 

5 case may be, that would otherwise be allocated 

6 under section 423, 453, or 473 starting for the 

7 second year after the specified year and con8 tinuing for each subsequent year as necessary; 

9 and 

10 ‘‘(E) if the designated representative does 

11 not use any such allowance in accordance with 

12 paragraph (A) the designated representative 

13 shall hold the allowance for deduction by the 

14 Administrator. The Administrator shall deduct 

15 the allowance without refund or other form of 

16 recompense.

17 ‘‘(4) Allowances may not be used prior to the 

18 calendar year for which they are allocated but may 

19 be used in succeeding years. Nothing in this section 

20 or in the allowance system regulations shall relieve 

21 the Administrator of the Administrator’s permitting, 

22 monitoring and enforcement obligations under this 

23 Act, nor relieve affected facilities of their require24 ments and liabilities under the Act. 
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1 ‘‘(f) COMPETITIVE BIDDING FOR POWER SUPPLY.—

2 Nothing in this title shall be construed to interfere with 

3 or impair any program for competitive bidding for power 

4 supply in a State in which such program is established. 

5 ‘‘(g) APPLICABILITY OF THE ANTITRUST LAWS.—(1) 

6 Nothing in this section affects—

7 ‘‘(A) the applicability of the antitrust laws to 

8 the transfer, use, or sale of allowances; or 

9 ‘‘(B) the authority of the Federal Energy Regu10 latory Commission under any provision of law re11 specting unfair methods of competition or anti12 competitive acts or practices. 

13 ‘‘(2) As used in this section, ‘antitrust laws’ means 

14 those Acts set forth in section 1 of the Clayton Act (15 

15 U.S.C. 12), as amended. 

16 ‘‘(h) PUBLIC UTILITY HOLDING COMPANY ACT.—

17 The acquisition or disposition of allowances pursuant to 

18 this title including the issuance of securities or the under19 taking of any other financing transaction in connection 

20 with such allowances shall not be subject to the provisions 

21 of the Public Utility Holding Company Act of 1935. 

22 ‘‘(i) INTERPOLLUTANT TRADING.—Not later than 

23 July 1, 2009, the Administrator shall furnish to the Con24 gress a study evaluating the environmental and economic 

25 consequences of amending this title to permit trading sul-
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1 fur dioxide allowances for nitrogen oxides allowances and 

2 nitrogen oxides allowances for sulfur dioxide allowances. 

3 ‘‘(j) COMPLIANCE ASSISTANCE ACCOUNT.—An ac4 count shall be established by the Secretary of Energy in 

5 consultation with the Administrator: 

6 ‘‘(1) Payments or monies deposited in this ac7 count in accordance with this title shall be used for 

8 the purpose of developing emission control tech9 nologies through direct grants to affected units that 

10 demonstrate new control technologies regulated 

11 under this title. 

12 ‘‘(2) The Secretary of Energy in consultation 

13 with the Administrator shall promulgate regulations 

14 with notice and opportunity for comment to estab15 lish criteria for affected units to qualify for this sub16 section. 

17 ‘‘SEC. 404. PERMITS AND COMPLIANCE PLANS. 

18 ‘‘(a) PERMIT PROGRAM.—The provisions of this title 

19 shall be implemented, subject to section 403, by permits 

20 issued to units and facilities subject to this title and en21 forced in accordance with the provisions of title V, as 

22 modified by this title. Any such permit issued by the Ad23 ministrator, or by a State with an approved permit pro24 gram, shall prohibit—
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1 ‘‘(1) annual emissions of sulfur dioxide, nitro2 gen oxides, and mercury in excess of the number of 

3 allowances required to be held in accordance with 

4 sections 412(c), 422, 432, 452, and 472; 

5 ‘‘(2) exceeding applicable emissions rates under 

6 section 441; 

7 ‘‘(3) the use of any allowance prior to the year 

8 for which it was allocated; and 

9 ‘‘(4) contravention of any other provision of the 

10 permit. 

11 No permit shall be issued that is inconsistent with the re12 quirements of this title, and title V as applicable. 

13 ‘‘(b) COMPLIANCE PLAN.—Each initial permit appli14 cation shall be accompanied by a compliance plan for the 

15 facility to comply with its requirements under this title. 

16 Where an affected facility consists of more than one af17 fected unit, such plan shall cover all such units, and such 

18 facility shall be considered a ‘facility’ under section 

19 502(c). Nothing in this section regarding compliance plans 

20 or in title V shall be construed as affecting allowances. 

21 ‘‘(1) Submission of a statement by the owner or 

22 operator, or the designated representative of the 

23 owners and operators, of a unit subject to the emis24 sions limitation requirements of sections 412(c), 

25 413, 414, and 441, that the unit will meet the appli-
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1 cable emissions limitation requirements of such sec2 tions in a timely manner or that, in the case of the 

3 emissions limitation requirements of sections 412(c), 

4 413, and 414, the owners and operators will hold 

5 sulfur dioxide allowances in the amount required by 

6 section 412(c), shall be deemed to meet the proposed 

7 and approved compliance planning requirements of 

8 this section and title V, except that, for any unit 

9 that will meet the requirements of this title by 

10 means of an alternative method of compliance au11 thorized under section 413 (b), (c), (d), or (f), sec12 tion 416, and section 441 (d) or (e), the proposed 

13 and approved compliance plan, permit application 

14 and permit shall include, pursuant to regulations 

15 promulgated by the Administrator, for each alter16 native method of compliance a comprehensive de17 scription of the schedule and means by which the 

18 unit will rely on one or more alternative methods of 

19 compliance in the manner and time authorized under 

20 subpart 1 of part B or subpart 1 of part C. 

21 ‘‘(2) Submission of a statement by the owner or 

22 operator, or the designated representative, of a facil23 ity that includes a unit subject to the emissions limi24 tation requirements of sections 422, 432, 452, and 

25 472 that the owner or operator will hold sulfur diox-
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1 ide allowances, nitrogen oxide allowances, and mer2 cury allowances, as the case may be, in the amount 

3 required by such sections shall be deemed to meet 

4 the proposed and approved compliance planning re5 quirements of this section and title V with regard to 

6 subparts A through D. 

7 ‘‘(3) Recording by the Administrator of trans8 fers of allowances shall amend automatically, and 

9 will not reopen or require reopening of, any or all 

10 applicable proposed or approved permit applications, 

11 compliance plans, and permits. 

12 ‘‘(c) PERMITS.—The owner or operator of each facil13 ity under this title that includes an affected unit subject 

14 to title V shall submit a permit application and compliance 

15 plan with regard to the applicable requirements under sec16 tions 412(c), 422, 432, 441, 452, and 472 for sulfur diox17 ide emissions, nitrogen oxide emissions, and mercury emis18 sions from such unit to the permitting authority in accord19 ance with the deadline for submission of permit applica20 tions and compliance plans under title V. The permitting 

21 authority shall issue a permit to such owner or operator, 

22 or the designated representative of such owner or oper23 ator, that satisfies the requirements of title V and this 

24 title. 
25

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1 ‘‘(d) AMENDMENT OF APPLICATION AND COMPLI2 ANCE PLAN.—At any time after the submission of an ap3 plication and compliance plan under this section, the ap4 plicant may submit a revised application and compliance 

5 plan, in accordance with the requirements of this section. 

6 ‘‘(e) PROHIBITION.—

7 ‘‘(1) It shall be unlawful for any person to oper8 ate any facility subject to this title except in compli9 ance with the terms and requirements of a permit 

10 application and compliance plan (including amend11 ments thereto) or permit issued by the Adminis12 trator or a State with an approved permit program. 

13 For purposes of this subsection, compliance, as pro14 vided in section 504(f), with a permit issued under 

15 title V which complies with this title for facilities 

16 subject to this title shall be deemed compliance with 

17 this subsection as well as section 502(a). 

18 ‘‘(2) In order to ensure reliability of electric 

19 power, nothing in this title or title V shall be con20 strued as requiring termination of operations of a 

21 unit serving a generator for failure to have an ap22 proved permit or compliance plan under this section. 

23 ‘‘(f) CERTIFICATE OF REPRESENTATION.—No per24 mit shall be issued under this section to an affected unit 

25 or facility until the designated representative of the own-
26

S 1844 IS 

1 ers or operators has filed a certificate of representation 

2 with regard to matters under this title, including the hold3 ing and distribution of allowances and the proceeds of 

4 transactions involving allowances. 

5 ‘‘(g) MULTIPLE OWNERS.—No permit shall be issued 

6 under this section to an affected unit until the designated 

7 representative of the owners or operators has filed a cer8 tificate of representation with regard to matters under this 

9 title, including the holding and distribution of allowances 

10 and the proceeds of transactions involving allowances. 

11 Where there are multiple holders of a legal or equitable 

12 title to, or a leasehold interest in, such a unit, or where 

13 a utility or industrial customer purchases power from an 

14 affected unit (or units) under life-of-the-unit, firm power 

15 contractual arrangements, the certificate shall state— 

16 ‘‘(1) that allowances and the proceeds or trans17 actions involving allowance will be deemed to be held 

18 or distributed in proportion to each holder’s legal, 

19 equitable, leasehold, or contractual reservation or en20 titlement, or 

21 ‘‘(2) if such multiple holders have expressly pro22 vided for a different distribution of allowances by 

23 contract, that allowances and the proceeds of trans24 actions involving allowances will be deemed to be 

25 held or distributed in accordance with the contract. 
27

S 1844 IS 

1 A passive lessor, of a person who has an equitable interest 

2 through such lessor, whose rental payments are not based, 

3 either directly or indirectly, upon the revenues or income 

4 from the affected unit shall not be deemed to be a holder 

5 of a legal, equitable, leasehold, or contractual interest for 

6 the purposes of holding or distributing allowances as pro7 vided in this subsection, unless expressly provided for in 

8 the leasehold agreement. Except as otherwise provided in 

9 this subsection, where all legal or equitable title to or in10 terest in an affected unit is held by a single person, the 

11 certification shall state that all allowances received by the 

12 unit are deemed to be held for that person. 

13 ‘‘SEC. 405. MONITORING, REPORTING, AND RECORD14 KEEPING REQUIREMENTS. 

15 ‘‘(a) APPLICABILITY.— 

16 ‘‘(1)(A) The owner and operator of any facility 

17 subject to this title shall be required to install and 

18 operate CEMS on each affected unit subject to sub19 part 1 of part B or subpart 1 of part C at the facil20 ity, and to quality assure the data, for sulfur diox21 ide, nitrogen oxides, opacity, and volumetric flow at 

22 each such unit. 

23 ‘‘(B) The Administrator shall, by regulations, 

24 specify the requirements for CEMS under subpara25 graph (A), for any alternative monitoring or compli-
28

S 1844 IS 

1 ance system that is demonstrated as providing infor2 mation which is reasonably of the same precision, re3 liability, accessibility, and timeliness as that pro4 vided by CEMS, and for recordkeeping and report5 ing of information from such systems. Such regula6 tions may include limitations on the use of alter7 native compliance methods by units equipped with 

8 an alternative monitoring system as may be nec9 essary to preserve the orderly functioning of the al10 lowance system, and which will ensure to a reason11 able extent the emissions reductions contemplated by 

12 this title. Where two or more units utilize a single 

13 stack, a separate CEMS shall not be required for 

14 each unit, and for such units the regulations shall 

15 require that the owner or operator collect sufficient 

16 information to permit reliable compliance determina17 tions for each such unit. 

18 ‘‘(2)(A) The owner and operator of any facility 

19 subject to this title shall be required to install and 

20 operate CEMS to monitor the emissions from each 

21 affected unit at the facility, and to quality assure 

22 the data for—

23 ‘‘(i) sulfur dioxide, opacity, and volumetric 

24 flow for all affected units subject to subpart 2 

25 of part B at the facility, 
29

S 1844 IS 

1 ‘‘(ii) nitrogen oxides for all affected units 

2 subject to subpart 2 of part C at the facility, 

3 and 

4 ‘‘(iii) mercury for all affected units subject 

5 to part D at the facility. 

6 ‘‘(B)(i) The Administrator may specify an alter7 native monitoring or compliance system for deter8 mining mercury emissions. In specifying such alter9 native monitoring or compliance systems, the lack of 

10 commercially available appropriate and reasonable 

11 vendor guarantees shall constitute a reasonable and 

12 permissible basis for specifying alternative moni13 toring or compliance systems for mercury. 

14 ‘‘(ii) The regulations under clause (i) may in15 clude limitations on the use of alternative compli16 ance methods by units equipped with an alternative 

17 monitoring system as may be necessary to preserve 

18 the orderly functioning of the allowance system, and 

19 which will ensure to a reasonable extent the emis20 sions reductions contemplated by this title. 

21 ‘‘(iii) The regulations under clause (i) shall not 

22 require a separate CEMS or other monitoring sys23 tem for each unit where two or more units utilize a 

24 single stack and shall require that the owner or op-
30

S 1844 IS 

1 erator collect sufficient information to permit reli2 able compliance determinations for such units. 

3 ‘‘(b) DEADLINES.—

4 ‘‘(1) NEW UTILITY UNITS.—Upon commence5 ment of commercial operation of each new utility 

6 unit under subpart I of part B, the unit shall comply 

7 with the requirements of subsection (a)(1). 

8 ‘‘(2) DEADLINE FOR AFFECTED UNITS UNDER

9 SUBPART 2 OF PART B FOR INSTALLATION AND OP10 ERATION OF CEMS.—By the later of the date 12 

11 months before the commencement date of the sulfur 

12 dioxide allowance requirement of section 422, or the 

13 date on which the unit commences operation, the 

14 owner or operator of each affected unit under sub15 part 2 of part B shall install and operate CEMS, 

16 quality assure the data, and keep records and re17 ports in accordance with the regulations issued 

18 under paragraph (a)(2) with regard to sulfur diox19 ide, opacity, and volumetric flow. 

20 ‘‘(3) DEADLINE FOR AFFECTED UNITS UNDER

21 SUBPART 3 OF PART B FOR INSTALLATION AND OP22 ERATION OF CEMS.—By the first covered year or the 

23 date on which the unit commences commercial oper24 ation, the owner or operator of each affected unit 

25 under subpart 3 of part B shall install and operate 
31

S 1844 IS 

1 CEMS, quality assure the data, and keep records 

2 and reports in accordance with the regulations 

3 issued under paragraph (a)(2) with regard to sulfur 

4 dioxide and volumetric flow. 

5 ‘‘(4) DEADLINE FOR AFFECTED UNITS UNDER

6 SUBPART 2 OF PART C FOR INSTALLATION AND OP7 ERATION OF CEMS.—By the later of the date the ni8 trogen oxides allowance requirement under section 

9 452, or the date on which the unit commences oper10 ation, the owner or operator of each affected unit 

11 under subpart 2 of part C shall install and operate 

12 CEMS, quality assure the data, and keep records 

13 and reports in accordance with the regulations 

14 issued under paragraph (a)(2) with regard to nitro15 gen oxides. 

16 ‘‘(5) DEADLINE FOR AFFECTED UNITS UNDER

17 PART D FOR INSTALLATION AND OPERATION OF

18 CEMS.—By the later of the date 12 months before 

19 the commencement date of the mercury allowance 

20 requirement of section 472 applies to such unit and 

21 commences commercial operation, or the date on 

22 which the unit commences operation, the owner or 

23 operator of each affected unit under part D shall in24 stall and operate CEMS, quality assure the data, 

25 and keep records and reports in accordance with the 
32

S 1844 IS 

1 regulations issued under paragraph (a)(2) with re2 gard to mercury. 

3 ‘‘(c) UNAVAILABILITY OF EMISSIONS DATA.—If 

4 CEMS data or data from an alternative monitoring system 

5 approved by the Administrator under subsection (a) is not 

6 available for any affected unit during any period of a cal7 endar year in which such data is required under this title, 

8 and the owner or operator cannot provide information, 

9 reasonably satisfactory to the Administrator, on emissions 

10 during that period, the Administrator in coordination with 

11 the owner shall calculate emissions for that period pursu12 ant to regulations promulgated for such purpose. The 

13 owner or operator shall be liable for excess emissions fees 

14 and offsets under section 406 in accordance with such reg15 ulations. Any fee due and payable under this subsection 

16 shall not diminish the liability of the unit’s owner or oper17 ator for any fine, penalty, fee or assessment against the 

18 unit for the same violation under any other section of this 

19 Act. 

20 ‘‘(d) IMPLEMENTATION.—With regard to sulfur diox21 ide, nitrogen oxides, opacity, and volumetric flow, the Ad22 ministrator shall implement subsections (a) and (c) under 

23 40 CFR part 75 (2002), amended, as appropriate by the 

24 Administrator. With regard to mercury, the Administrator 

25 shall implement subsections (a) and (c) by issuing pro-
33

S 1844 IS 

1 posed regulations not later than 36 months before the 

2 commencement date of the mercury allowance requirement 

3 under section 472 and final regulations not later than 24 

4 months before that commencement date. 

5 ‘‘(e) PROHIBITION.—It shall be unlawful for the 

6 owner or operator of any facility subject to this title to 

7 operate a facility without complying with the requirements 

8 of this section, and any regulations implementing this sec9 tion. 

10 ‘‘SEC. 406. EXCESS EMISSIONS PENALTY; GENERAL COMPLI11 ANCE WITH OTHER PROVISIONS; ENFORCE12 MENT. 

13 ‘‘(a) EXCESS EMISSIONS PENALTY.— 

14 ‘‘(1) AMOUNT FOR OXIDES OF NITROGEN.—The 

15 owner or operator of any unit subject to the require16 ments of section 441 that emits nitrogen oxides for 

17 any calendar year in excess of the allowances the op18 erator holds for the unit for that calendar year shall 

19 be liable for the payment of an excess emissions pen20 alty, except where such emission were authorized 

21 pursuant to section 110(f). That penalty shall be 

22 calculated on the basis of the number of tons emit23 ted in excess of the number of allowances held by 

24 the operator for the unit for that calendar year mul25 tiplied by $2,000. 
34

S 1844 IS 

1 ‘‘(2) AMOUNT FOR SULFUR DIOXIDE BEFORE

2 2008.—The owner or operator of any unit subject to 

3 the requirements of section 412(c) that emits sulfur 

4 dioxide for any calendar year before 2008 in excess 

5 of the sulfur dioxide allowances the owner or oper6 ator holds for use for the unit for that calendar year 

7 shall be liable for the payment of an excess emis8 sions penalty, except where such emissions were au9 thorized pursuant to section 110(f) or (g). That pen10 alty shall be calculated as follows: 

11 ‘‘(A) The product of the unit’s excess emis12 sions (in tons) multiplied by $2,000, if within 

13 thirty days after the date on which the owner 

14 or operator was required to hold sulfur dioxide 

15 allowances— 

16 ‘‘(i) the owner or operator offsets the 

17 excess emissions in accordance with para18 graph (b)(1); and 

19 ‘‘(ii) the Administrator receives the 

20 penalty payment required under this sub21 paragraph. 

22 ‘‘(B) If the requirements of clause (A)(i) 

23 or (A)(ii) are not met, the product of the unit’s 

24 excess emissions (in tons) multiplied by $4,000. 
35

S 1844 IS 

1 ‘‘(3) AMOUNT FOR SULFUR DIOXIDE AFTER

2 2007.—If the units at a facility that are subject to 

3 the requirements of section 412(c) emit sulfur diox4 ide for any calendar year after 2007 in excess of the 

5 sulfur dioxide allowances that the owner or operator 

6 of the facility holds for use for the facility for that 

7 calendar year, the owner or operator shall be liable 

8 for the payment of an excess emissions penalty, ex9 cept where such emissions were authorized pursuant 

10 to section 110(f). That penalty shall be calculated 

11 under paragraph (4)(A) or (4)(B). 

12 ‘‘(4) UNITS SUBJECT TO SECTIONS 422, 432, 452, 

13 OR 472.—If the units at a facility that are subject 

14 to the requirements of section 422, 432, 452, or 472 

15 emit sulfur dioxide, nitrogen oxides, or mercury for 

16 any calendar year in excess of the sulfur dioxide al17 lowances, nitrogen oxides allowances, or mercury al18 lowances, as the case may be, that the owner or op19 erator of the facility holds for use for the facility or 

20 units for that calendar year, the owner or operator 

21 shall be liable for the payment of an excess emis22 sions penalty, except where such emissions were au23 thorized pursuant to section 110(f). That penalty 

24 shall be calculated as follows: 
36

S 1844 IS 

1 ‘‘(A) The product of the units’ excess emis2 sions (in tons or, for mercury emissions, in 

3 ounces) multiplied by the annual average price 

4 of sulfur dioxide allowances, nitrogen oxides al5 lowances, or mercury allowances, as the case 

6 may be, sold between allowance holders and re7 corded in the Allowance Tracking System, if 

8 within sixty days after the date on which the 

9 owner or operator was required to hold sulfur 

10 dioxide, nitrogen oxides allowance, or mercury 

11 allowances as the case may be—

12 ‘‘(i) the owner or operator offsets the 

13 excess emissions in accordance with para14 graph (b)(2) or (b)(3), as applicable; and 

15 ‘‘(ii) the Administrator receives the 

16 penalty required under this subparagraph.

17 ‘‘(B) If the requirements of clause (A)(i) 

18 or (A)(ii) are not met, the amount of the units’ 

19 excess emissions (in tons or, for mercury emis20 sions, in ounces) multiplied by the average an21 nual price of sulfur dioxide allowances, nitrogen 

22 oxides allowances, or mercury allowances, as the 

23 case may be, sold between allowance holders 

24 and recorded in the Allowance Tracking Sys25 tem. 
37

S 1844 IS 

1 ‘‘(5) PAYMENT.—Any penalty under paragraph 

2 1, 2, 3, or 4 shall be due and payable without de3 mand to the Administrator as provided in regula4 tions issued by the Administrator. With regard to 

5 the penalty under paragraph 1, the Administrator 

6 shall implement this paragraph under 40 CFR part 

7 77 (2002), amended as appropriate by the Adminis8 trator. With regard to the penalty under paragraphs 

9 2, 3, and 4, the Administrator shall implement this 

10 paragraph by issuing regulations no later than 24 

11 months after the date of enactment of the Clear 

12 Skies Act of 2003. Any such payment shall be de13 posited in the Compliance Assistance Account. 

14 ‘‘(b) EXCESS EMISSIONS OFFSET.— 

15 ‘‘(1) The owner or operator of any unit subject 

16 to the requirements of section 412(c) that emits sul17 fur dioxide during any calendar year before 2008 in 

18 excess of the sulfur dioxide allowances held for the 

19 unit for the calendar year shall be liable to offset the 

20 excess emissions by an equal tonnage amount in the 

21 following calendar year, or such longer period as the 

22 Administrator may prescribe. The Administrator 

23 shall deduct sulfur dioxide allowances equal to the 

24 excess tonnage from those held for the facility for 

25 the calendar year, or succeeding years during which 
38

S 1844 IS 

1 offsets are required, following the year in which the 

2 excess emissions occurred. 

3 ‘‘(2) If the units at a facility that are subject 

4 to the requirements of section 412(c) emit sulfur di5 oxide for a year after 2007 in excess of the sulfur 

6 dioxide allowances that the owner or operator of the 

7 facility holds for use for the facility for that calendar 

8 year, the owner or operator shall be liable to offset 

9 the excess emissions by an equal amount of tons in 

10 the following calendar year, or such longer period as 

11 the Administrator may prescribe. The Administrator 

12 shall deduct sulfur dioxide allowances equal to the 

13 excess emissions in tons from those held for the fa14 cility for the year, or succeeding years during which 

15 offsets are required, following the year in which the 

16 excess emissions occurred. 

17 ‘‘(3) If the units at a facility that are subject 

18 to the requirements of section 422, 432, 452, or 472 

19 emit sulfur dioxide, nitrogen oxides, or mercury for 

20 any calendar year in excess of the sulfur dioxide al21 lowances, nitrogen oxides allowances, or mercury al22 lowances, as the case may be, that the owner or op23 erator of the facility holds for use for the facility for 

24 that calendar year, the owner or operator shall be 

25 liable to offset the excess emissions by an equal 
39

S 1844 IS 

1 amount of tons or, for mercury, ounces in the fol2 lowing calendar year, or such longer period as the 

3 Administrator may prescribe. The Administrator 

4 shall deduct sulfur dioxide allowances, nitrogen oxide 

5 allowances, or mercury allowances, as the case may 

6 be, equal to the excess emissions in tons or, for mer7 cury, ounces from those held for the facility for the 

8 year, or succeeding years during which offsets are 

9 required, following the year in which the excess 

10 emissions occurred. 

11 ‘‘(c) PENALTY ADJUSTMENT.—The Administrator 

12 shall, by regulation, adjust the penalty specified in sub13 section (a)(1) and (a)(2) for inflation, based on the Con14 sumer Price Index, on November 15, 1990, and annually 

15 thereafter. 

16 ‘‘(d) PROHIBITION.—It shall be unlawful for the 

17 owner or operator of any unit or facility liable for a pen18 alty and offset under this section to fail—

19 ‘‘(1) to pay the penalty under subsection (a); or 

20 ‘‘(2) to offset excess emissions as required by 

21 subsection (b). 

22 ‘‘(e) SAVINGS PROVISION.—Nothing in this title shall 

23 limit or otherwise affect the application of section 113, 

24 114, 120, or 304 except as otherwise explicitly provided 

25 in this title. 
40

S 1844 IS 

1 ‘‘(f) OTHER REQUIREMENTS.—Except as expressly 

2 provided, compliance with the requirements of this title 

3 shall not exempt or exclude the owner or operator of any 

4 facility subject to this title from compliance with any other 

5 applicable requirements of this Act. Notwithstanding any 

6 other provision of this Act, no State or political subdivision 

7 thereof shall restrict or interfere with the transfer, sale, 

8 or purchase of allowances under this title. 

9 ‘‘(g) VIOLATIONS.—Violation by any person subject 

10 to this title of any prohibition of, requirement of, or regu11 lation promulgated pursuant to this title shall be a viola12 tion of this Act. In addition to the other requirements and 

13 prohibitions provided for in this title, the operation of any 

14 affected unit or the affected units at a facility to emit sul15 fur dioxide, nitrogen oxides, or mercury in violation of sec16 tion 412(c), 422, 432, 452, and 472, as the case may be, 

17 shall be deemed a violation, with each ton or, in the case 

18 of mercury, each ounce emitted in excess of allowances 

19 held constituting a separate violation. 

20 ‘‘SEC. 407. ELECTION FOR ADDITIONAL UNITS. 

21 ‘‘(a) APPLICABILITY.—The owner or operator of any 

22 unit that is not an affected EGU under subpart 2 of part 

23 B and subpart 2 of part C and whose emissions of sulfur 

24 dioxide and nitrogen oxides are vented only through a 

25 stack or duct may elect to designate such unit as an af-
41

S 1844 IS 

1 fected unit under subpart 2 of part B and subpart 2 of 

2 part C. If the owner or operator elects to designate a unit 

3 that is solid fuel-fired and emits mercury vented only 

4 through a stack or duct, the owner or operator shall also 

5 designate the unit as an affected unit under part D. If 

6 elected unit fires only gaseous fuels, designation may be 

7 made under subpart 2 of part C only. 

8 ‘‘(b) APPLICATION.—The owner or operator making 

9 an election under subsection (a) shall submit an applica10 tion for the election to the Administrator for approval. 

11 ‘‘(c) APPROVAL.—If an application for an election 

12 under subsection (b) meets the requirements of subsection 

13 (a), the Administrator shall approve the designation as an 

14 affected unit under subpart 2 of part B and subpart 2 

15 of part C and, if applicable, under part D, subject to the 

16 requirements in subsections (d) through (m). 

17 ‘‘(d) ESTABLISHMENT OF BASELINE.— 

18 ‘‘(1) After approval of the designation under 

19 subsection (c), the owner or operator shall install 

20 and operate GEMS on the unit, and shall quality as21 sure the data, in accordance with the requirements 

22 of paragraph (a)(2) and subsections (c) through (e) 

23 of section 405, except that, where two or more units 

24 utilize a single stack, separate monitoring shall be 
42

S 1844 IS 

1 required for each unit unless all units utilizing the 

2 single stack are designated as affected units. 

3 ‘‘(2) The baselines for heat input and sulfur di4 oxide and nitrogen oxides emission rates, as the case 

5 may be, for the unit shall be the unit’s heat input 

6 and the emission rates of sulfur dioxide and nitrogen 

7 oxides for a year starting after approval of the des8 ignation under subsection (c). The Administrator 

9 shall issue regulations requiring the unit’s baselines 

10 for heat input and sulfur dioxide and nitrogen oxides 

11 emission rates to be based on the same year and 

12 specifying minimum requirements concerning the 

13 percentage of the unit’s operating hours for which 

14 quality assured CEMS data must be available during 

15 such year. The baseline heat input and emissions 

16 baselines in this subparagraph shall be calculated, at 

17 the election of the owner or operator of the relevant 

18 unit, under (i) or (ii): 

19 ‘‘(i) for heat input, the average of the 

20 unit’s highest heat input for three years of the 

21 five years before the year for which the Admin22 istrator is determining the allocations and for 

23 emissions baselines, the average of the relevant 

24 emissions for the same years used to determine 

25 heat input. 
43

S 1844 IS 

1 ‘‘(ii) for heat input, the average of any pe2 riod of twenty-four consecutive months during a 

3 ten-year period immediately prior to submission 

4 of an application under subsection (b), and for 

5 emissions baselines, the average of the relevant 

6 emissions for the same twenty-four month pe7 riod used to calculate heat input. 

8 ‘‘(3) The regulations implementing subpara9 graph (2) shall authorize the use of any reliable data 

10 on emissions of sulfur dioxide and nitrogen oxides in 

11 addition to, and other than, data collected pursuant 

12 to paragraph (1), including, but not limited to, alter13 native data that has been used to determine compli14 ance with a regulatory or monitoring requirement 

15 under this Act or a comparable State law if the data 

16 establishes a reliable measure of heat input and sul17 fur dioxide and nitrogen oxides emissions over a si18 multaneous period of time; or if such data is not 

19 available, the Administrator may prescribe a baseline 

20 based on alternative reliable data. In determining 

21 the reliability of data, the Administrator may con22 sider the cost of generating more reliable data com23 pared to the quantitative importance of the resulting 

24 gain in quantifying emissions. 
44

S 1844 IS 

1 ‘‘(e) EMISSION LIMITATIONS.—After approval of the 

2 designation of the unit under paragraph (c), the unit shall 

3 become— 

4 ‘‘(1) an affected unit under subpart 2 of part 

5 B, and shall be allocated sulfur dioxide allowances 

6 under paragraph (f), starting the later of January 1, 

7 2010, or January 1 of the year after approval of the 

8 designation; 

9 ‘‘(2) an affected unit under subpart 2 of part 

10 C, and shall be allocated nitrogen oxides allowances 

11 under paragraph (f), starting the later of January 1, 

12 2010, or January 1 of the year after approval of the 

13 designation; and 

14 ‘‘(3) if applicable, an affected unit under part 

15 D, and shall be allocated mercury allowances, start16 ing the later of January l, 2010, or January 1 of the 

17 year after approval of designation. 

18 ‘‘(f) ALLOCATIONS.— 

19 ‘‘(1) SULFUR DIOXIDE AND NITROGEN OX20 IDES.—The Administrator shall promulgate regula21 tions determining the allocations of sulfur dioxide al22 lowances and nitrogen oxides allowances for each 

23 year during which a unit is an affected unit under 

24 subsection (e). The regulations shall provide for allo25 cations equal to 70 percent of the following amounts 
45

S 1844 IS 

1 beginning January 1, 2010, and 50 percent of the 

2 following amounts beginning January 1, 2018, the 

3 unit’s baseline heat input under subsection (d) mul4 tiplied by the lesser of—

5 ‘‘(A) the unit’s baseline sulfur dioxide 

6 emission rate or nitrogen oxides emission rate 

7 as the case may be; or 

8 ‘‘(B) the unit’s most stringent State or 

9 Federal emission limitation for sulfur dioxide or 

10 nitrogen oxides applicable to the year on which 

11 the unit’s baseline heat input is based under 

12 subsection (d). 

13 ‘‘(2) MERCURY.—The Administrator shall pro14 mulgate regulations providing for the allocation of 

15 mercury allowances to solid fuel-fired units des16 ignated under this section for each year after Janu17 ary 1, 2010, during which a unit is a designated 

18 unit under this section. The regulations shall provide 

19 for allocations equal to the lesser of the following 

20 amounts— 

21 ‘‘(A) the unit’s annual allowable emissions 

22 rate for mercury under the national emissions 

23 standards for hazardous air pollutants for boil24 ers and process heaters multiplied by the unit’s 

25 baseline heat input; or 
46

S 1844 IS 

1 ‘‘(B) the unit’s most stringent State or 

2 Federal emission limitation for mercury emis3 sions rate multiplied by the unit’s baseline heat 

4 input. 

5 ‘‘(3) LIMITATION.—Allowances allocated to 

6 electing units under subparagraphs (1) and (2) shall 

7 comprise a separate limitation on emissions from 

8 sections 423, 433, 453, 473, or other section of this 

9 Act. These allowances for sulfur dioxide, nitrogen 

10 oxides, or mercury, as the case may be, shall be 

11 tradeable with allowances allocated under sections 

12 414, 424, 454, 474, as applicable, provided that— 

13 ‘‘(A) electing units may only trade nitrogen 

14 oxides within the respective zones established 

15 under section 452 within which the electing unit 

16 is located, and 

17 ‘‘(B) affected units within the WRAP 

18 States may only purchase sulfur dioxide allow19 ances allocated or otherwise distributed by the 

20 Administrator to electing units within the 

21 WRAP States, and will not be counted for pur22 poses of the affected unit’s emissions within the 

23 meaning of the WRAP Annex. 

24 ‘‘(4) INCENTIVES FOR EARLY REDUCTIONS.—

25 The Administrator shall promulgate regulations 
47

S 1844 IS 

1 within 18 months authorizing the allocation of sulfur 

2 dioxide, nitrogen oxides and mercury allowances to 

3 units designated under this section that install or 

4 modify pollution control equipment or combustion 

5 technology improvements identified in such regula6 tions after the date of enactment of this section and 

7 prior to January 1, 2010. No allowances shall be al8 located under this paragraph for emissions reduc9 tions attributable to: pollution control equipment or 

10 combustion technology improvements that were oper11 ational or under construction at any time prior to 

12 the date of enactment of this section; fuel switching; 

13 or compliance with any Federal regulation. The al14 lowances allocated to any unit under this paragraph 

15 shall be in addition to the allowances allocated under 

16 paragraphs (1) and (2) and sections 414, 424, 434, 

17 454, and 474 and shall be allocated in an amount 

18 equal to one allowance of sulfur dioxide and nitrogen 

19 oxides for each 1.05 tons of reduction in emissions 

20 of sulfur dioxide and nitrogen oxides, respectively, 

21 and 1.05 ounces of reduction in the emissions of 

22 mercury achieved by the pollution control equipment 

23 or combustion technology improvements starting 

24 with the year in which the equipment or improve25 ment is implemented. 
48

S 1844 IS 

1 ‘‘(g) WITHDRAWAL.—The Administrator shall pro2 mulgate regulations withdrawing from the approved des3 ignation under subsection (c) any unit that qualifies as 

4 an affected EGU under subpart 2 of part B or subpart 

5 2 of part C, or part D after the approval of the designation 

6 of the unit under subsection (c). 

7 ‘‘(h) REGULATIONS.—The Administrator shall pro8 mulgate regulations implementing this section within 18 

9 months of the date of enactment of the Clear Skies Act 

10 of 2003. 

11 ‘‘(i) APPLICATION PERIOD.—Applications for des12 ignation of units under this section shall be accepted by 

13 the Administrator beginning not later than 180 days after 

14 the date of enactment of this section and the Adminis15 trator shall approve or disapprove of each application 

16 within 90 days of receipt. 

17 ‘‘(j) NESHAP APPLICABILITY.— 

18 ‘‘(1) A unit that is designated as an affected 

19 unit under this section shall not be subject to any 

20 national emissions standards for hazardous air pol21 lutants (NESHAP) promulgated pursuant to section 

22 112(d) after November 10, 2003, except that units 

23 that are boilers or process heaters shall be subject 

24 on and after January 1, 2010, to the emissions limi25 tation for mercury, and associated monitoring and 
49

S 1844 IS 

1 compliance requirements, that would be applicable to 

2 such units under the NESHAP for boilers and proc3 ess heaters promulgated pursuant to section 112(d). 

4 ‘‘(2) Not later than 18 months after the date 

5 of enactment of this section, the Administrator shall 

6 publish and make available for public comment, a 

7 peer reviewed preliminary report characterizing the 

8 emissions and public health effects that may reason9 ably be anticipated to occur from the implementation 

10 of paragraph (1) and subsection (f). No NESHAP 

11 for boilers and process heaters shall be promulgated 

12 under section 112(d) until the conclusion of, and 

13 considering, this report. Under section 112(n)(1)(A), 

14 the Administrator shall publish a final report, in15 cluding responses to the comments received, not 

16 later than 30 months after such date. The require17 ments of section 112(n)(1)(A), for purposes of this 

18 paragraph, shall be amended as follows. The report 

19 shall include— 

20 ‘‘(A) an estimate of the numbers and types 

21 of sources that are expected to be designated 

22 under this section; 

23 ‘‘(B) an estimate of any increase or de24 crease in the annual emissions of criteria pollut25 ants and of those hazardous air pollutants sub-
50

S 1844 IS 

1 ject to emission limitations under the 

2 NESHAPs identified in paragraph (1) from 

3 such sources that may reasonably be expected 

4 to occur for each year through 2018; 

5 ‘‘(C) an estimate of any increase or de6 crease in the annual emissions of criteria pollut7 ants and of those hazardous air pollutants sub8 ject to emission limitations under the 

9 NESHAPs identified in paragraph (1) from 

10 such sources that might reasonably be expected 

11 to occur for each year through 2018, if such 

12 sources estimated in subparagraph (A) are not 

13 designated under this section; and 

14 ‘‘(D) a description of the public health and 

15 environmental impacts associated with the emis16 sions increases and decreases described in sub17 paragraphs (B) and (C). 

18 Notwithstanding paragraph (1), the Administrator 

19 shall have the authority to regulate emissions of haz20 ardous air pollutants listed under section 112(b), 

21 other than mercury compounds, from sources des22 ignated under this section in accordance with the re23 gime set forth in section 112(f)(2). The Adminis24 trator shall make a determination based on the 

25 study and other information satisfying the criteria of 
51

S 1844 IS 

1 the Data Quality Act whether to establish emissions 

2 limitations under section 112(f) for sources des3 ignated under this section, not later than 24 months 

4 after the final report is published. The determina5 tion shall be a final agency action subject to judicial 

6 review under section 307 and the Administrative 

7 Procedures Act. 

8 ‘‘(k) OTHER COMBUSTION SOURCES.—The owner or 

9 operator of an affected unit designated under this section 

10 may elect to designate other combustion sources, such as 

11 kilns and furnaces (including sources that are not oper12 ated to generate electricity) that are located on the same 

13 property as affected units under this section provided that 

14 the emissions from such sources are vented through a 

15 stack or duct. A source that is designated as an affected 

16 unit under this section shall not be subject to any national 

17 emissions standards for hazardous air pollutants promul18 gated pursuant to section 112(d) after August 2003. The 

19 Administrator shall have the authority to regulate emis20 sions of hazardous air pollutants listed under section 

21 112(b), other than mercury compounds, by units des22 ignated as affected units under this section in accordance 

23 with the regime set forth in sections 112(n)(1)(A) and 

24 112(f)(2) through (4). Any such regulation shall not re-
52

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1 quire compliance with emissions limitations for such pol2 lutants before January l, 2018. 

3 ‘‘(l) EXEMPTION FROM MAJOR SOURCE

4 PRECONSTRUCTION REVIEW REQUIREMENTS AND BEST

5 AVAILABLE RETROFIT CONTROL TECHNOLOGY REQUIRE6 MENTS.— 

7 ‘‘(1) MAJOR SOURCE EXEMPTION.—A unit des8 ignated as an affected unit under this section shall 

9 not be considered a major source, or a part of a 

10 major emitting facility or major stationary source 

11 for purposes of compliance with the requirements of 

12 parts C and D of title I. This exemption only applies 

13 if, beginning 8 years after the date of enactment of 

14 this section, or designation as an affected unit— 

15 ‘‘(A) the designated unit either achieves in 

16 fact, or is subject to a regulatory requirement 

17 to achieve, a limit on the emissions of particu18 late matter from the affected unit to the level 

19 not greater than the level applicable to the unit 

20 either pursuant to subpart Db of 40 CFR part 

21 60 or the national emissions standards for haz22 ardous air pollutants for industrial boilers and 

23 process heaters issued pursuant to section 112; 

24 or the owner or operator of the affected unit 

25 properly operates, maintains and repairs pollu-
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1 tion control equipment to limit emissions of 

2 particulate matter; and 

3 ‘‘(B) the owner or operator of the des4 ignated unit uses good combustion practices to 

5 minimize emissions of carbon monoxide. 

6 ‘‘(2) CLASS I AREA PROTECTIONS.—Notwith7 standing the exemption in paragraph (1), an af8 fected unit located within 50 km of a Class I area 

9 on which construction commences after the date of 

10 enactment of this section is subject to those provi11 sions under part C of title I to the review of a new 

12 or modified major stationary source’s impact on a 

13 Class I area. 

14 ‘‘(m) LIMITATION.—Any unit designated under this 

15 section shall not transfer or bank allowances produced as 

16 a result of reduced utilization or shutdown. In no case may 

17 the Administrator allocate to a source designated under 

18 this section allowances in an amount greater than the 

19 emissions resulting from operation of the source in full 

20 compliance with the requirements of this Act. No such al21 lowances shall authorize operation of a unit in violation 

22 of any other requirements of this Act. 
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1 ‘‘SEC. 408. CLEAN COAL TECHNOLOGY REGULATORY INCEN2 TIVES. 

3 ‘‘(a) DEFINITION.—For purposes of this section, 

4 ‘clean coal technology’ means any technology, including 

5 technologies applied at the precombustion, combustion, or 

6 post combustion stage, at a new or existing facility which 

7 will achieve significant reductions in air emissions of sul8 fur dioxide or oxides of nitrogen associated with the utili9 zation of coal in the generation of electricity, process 

10 steam, or industrial products, which is not in widespread 

11 use as of November 15, 1990.

12 ‘‘(b) REVISED REGULATIONS FOR CLEAN COAL

13 TECHNOLOGY DEMONSTRATIONS.— 

14 ‘‘(1) APPLICABILITY.—This subsection applies 

15 to physical or operational changes to existing facili16 ties for the sole purpose of installation, operation, 

17 cessation, or removal of a temporary or permanent 

18 clean coal technology demonstration project. For the 

19 purposes of this section, a clean coal technology 

20 demonstration project shall mean a project using 

21 funds appropriated under the heading ‘Department 

22 of Energy—Clean Coal Technology’, up to a total 

23 amount of $2,500,000,000 for commercial dem24 onstration of clean coal technology, or similar 

25 projects funded through appropriations for the Envi26 ronmental Protection Agency. The Federal contribu-
55

S 1844 IS 

1 tion for qualifying project shall be at least twenty 

2 percent of the total cost of the demonstration 

3 project. 

4 ‘‘(2) TEMPORARY PROJECTS.—Installation, op5 eration, cessation, or removal of a temporary clean 

6 coal technology demonstration project that is oper7 ated for a period of 5 years or less, and which com8 plies with the State implementation plans for the 

9 State in which the project is located and other re10 quirements necessary to attain and maintain the na11 tional ambient air quality standards during and 

12 after the project is terminated, shall not subject 

13 such facility to the requirements of section 111 or 

14 part C or D of title I. 

15 ‘‘(3) PERMANENT PROJECTS.—For permanent 

16 clean coal technology demonstration projects that 

17 constitute repowering as defined in section 411, any 

18 qualifying project shall not be subject to standards 

19 of performance under section 111 or to the review 

20 and permitting requirements of part C for any pol21 lutant the potential emissions of which will not in22 crease as a result of the demonstration project. 

23 ‘‘(4) EPA REGULATIONS.—Not later than 

24 twelve months after November 15, 1990, the Admin25 istrator shall promulgate regulations or interpretive 
56

S 1844 IS 

1 rulings to revise requirements under section 111 and 

2 parts C and D, as appropriate, to facilitate projects 

3 consistent in this subsection. With respect to parts 

4 C and D, such regulations or rulings shall apply to 

5 all areas in which EPA is the permitting authority. 

6 In those instances in which the State is the permit7 ting authority under part C or D, any State may 

8 adopt and submit to the Administrator for approval 

9 revisions to its implementation plan to apply the reg10 ulations or rulings promulgated under this sub11 section. 

12 ‘‘(c) EXEMPTION FOR REACTIVATION OF VERY

13 CLEAN UNITS.—Physical changes or changes in the meth14 od of operation associated with the commencement of com15 mercial operations by a coal-fired utility unit after a pe16 riod of discontinued operation shall not subject the unit 

17 to the requirements of section 111 or part C of the Act 

18 where the unit—

19 ‘‘(1) has not been in operation for the two-year 

20 period prior to November 15, 1990, and the emis21 sions from such unit continue to be carried in the 

22 permitting authority’s emissions inventory on No23 vember 15, 1990; 

24 ‘‘(2) was equipped prior to shut-down with a 

25 continuous system of emissions control that achieves 
57

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1 a removal efficiency for sulfur dioxide of no less 

2 than 85 percent and a removal efficiency for particu3 lates of no less than 98 percent; 

4 ‘‘(3) is equipped with low-NOX burners prior to 

5 the time of commencement; and 

6 ‘‘(4) is otherwise in compliance with the re7 quirements of this Act. 

8 ‘‘SEC. 409. ELECTRICITY RELIABILITY. 

9 ‘‘(a) RELIABILITY.—

10 ‘‘(1) APPLICABILITY.—At any time prior the 

11 applicability of this Act under sections 422, 432, 

12 454, and 474, in order to ensure the reliability of an 

13 electric utility company or system, including a sys14 tem cooperatively or municipally owned, for a speci15 fied geographic area or service territory, as deter16 mined by the Department of Energy in consultation 

17 with the Administrator, during the installation of 

18 sulfur dioxide pollution control technology or scrub19 bers, nitrogen oxides, mercury or particulate matter 

20 control technology, or any combination thereof, the 

21 owner or operator of an affected unit may meet the 

22 requirements of sections 422, 434, 454, and 474 by 

23 means of the compliance procedures of this sub24 section (a). 
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1 ‘‘(2) PETITION.—The owner or operator of an 

2 affected unit that believes it may experience an ad3 verse impact on the reliability of the company or 

4 system as a result, in substantial part, of the need 

5 to construct sulfur dioxide pollution control equip6 ment or scrubbers, nitrogen oxides, mercury or par7 ticulate matter control technology, or any combina8 tion thereof, may petition the Secretary of Energy, 

9 in consultation with the Administrator, for a deter10 mination that, to a reasonable degree of certainty, 

11 reliability will likely be threatened. Upon such a de12 termination, the owner or operator may elect to 

13 adopt a compliance method meeting the require14 ments of this subsection: 

15 ‘‘(A) Within 12 months of enactment the 

16 Secretary of Energy shall promulgate regula17 tions describing the requirements for a petition 

18 and the petition process, which will include no19 tice and public comment. The Secretary of En20 ergy, in consultation with the Administrator, 

21 shall make a final determination on a petition 

22 within 180 days of the submittal of a reason23 ably complete petition. Failure to act within the 

24 180-day period will extend the applicability by 

25 12 months for all units subject to the petition. 
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1 ‘‘(B) The petition must contain— 

2 ‘‘(i) a description of each affected 

3 unit, the estimated outage time and a con4 struction schedule; 

5 ‘‘(ii) an estimate of demand from date 

6 of applicability until 2018; 

7 ‘‘(iii) the impacts on reliability associ8 ated with constructing all of the pollution 

9 control projects, including those for sulfur 

10 dioxide, nitrogen oxides, mercury, or par11 ticulate matter, by the respective deadlines; 

12 and 

13 ‘‘(iv) how the proposed compliance 

14 schedule would alleviate detrimental im15 pacts. 

16 ‘‘(C) If the Secretary of Energy fails to 

17 promulgate final regulations or such regulations 

18 are not effective for any reason, within the pre19 scribed time, petitions containing reasonably 

20 sufficient information for a final determination 

21 may be submitted to the Secretary of Energy 

22 and will be deemed complete. 

23 ‘‘(3) FINAL DETERMINATION.—In making a 

24 final determination the Secretary of Energy, in con25 sultation with the Administrator, shall consider the 
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1 following factors, provided that not all factors need 

2 be present to make a determination that, to a rea3 sonable degree, reliability will be threatened: 

4 ‘‘(A) The ability of vendors to supply 

5 scrubbers; scrubber system equipment, mate6 rials and scrubber affected balance of plant 

7 equipment including, but not limited to, fans, 

8 pumps, electric motors, motor drives, dampers, 

9 electrical power supply equipment; at fair prices 

10 with meaningful guarantees or warranties as to 

11 availability, delivery dates and meeting con12 tracted pollution control reduction requirements 

13 or emissions limitations; with similar consider14 ations for nitrogen oxides, mercury or particu15 late matter control technology, or any combina16 tion thereof; 

17 ‘‘(B) The availability and limitations of key 

18 sulfur dioxide, nitrogen oxides or mercury con19 trols design resources and North American con20 struction resources. The design resources shall 

21 include but not be limited to Architect Engi22 neering companies experienced in the design of 

23 sulfur dioxide, nitrogen oxides, mercury or par24 ticulate matter control technology. The con25 struction resources shall include but not be lim-
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1 ited to construction companies with experience 

2 in the construction of sulfur dioxide, nitrogen 

3 oxides, mercury, or particulate matter control 

4 technology and trained and experienced labor 

5 resources including but not limited to boiler6 makers, iron workers, electricians, mechanics; 

7 ‘‘(C) The feasibility to complete the con8 struction of all pollution control technology 

9 projects by the relevant applicability compliance 

10 deadline; 

11 ‘‘(D) The impact in terms of unit outages 

12 and construction schedules on a company or 

13 systems reliability and whether such impact is 

14 unreasonable; 

15 ‘‘(i) Unreasonable shall be presumed 

16 to be an increase in the price of purchase 

17 power of (10) percent over the estimated 

18 cost in cents per kilowatt for the company, 

19 system or State, utilized in the latest sub20 missions to a relevant State or Federal 

21 agency; or 

22 ‘‘(ii) A projected reduction in available 

23 generating capacity such that adequate re24 serve margins for a company, system or 

25 State do not exist, as determined by the 
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1 Secretary of Energy in coordination with 

2 the relevant Federal or State utility agency 

3 or reliability council; or 

4 ‘‘(iii) A supply shortage of coal needed 

5 to meet emissions control expectations for 

6 any proposed emissions control device. 

7 ‘‘(E) A company or system which submits 

8 a petition to install sulfur dioxide, nitrogen ox9 ides, mercury, or particulate matter control 

10 technology, or any combination thereof, on af11 fected units equaling 25 percent or more of its 

12 coal-fired capacity shall be presumed to meet 

13 the requirements of a positive determination 

14 from the Secretary of Energy. 

15 ‘‘(4) COMPLIANCE.—Upon a positive determina16 tion by the Secretary of Energy in accordance with 

17 the paragraph (3), such affected units will be grant18 ed a one year extension from the relevant applica19 bility date under this title. 

20 ‘‘(b) During any year covered by this title, an affected 

21 unit may submit a petition in accordance with paragraph 

22 (a)(2) to allow use of sulfur dioxide allowances, nitrogen 

23 oxides allowances, and mercury allowances, as the case 

24 may be, allocated for the immediate next year to meet the 
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1 applicable requirement to hold such allowances equal to 

2 the petitioned year’s emissions. 

3 ‘‘(c) PRESIDENTIAL WAIVER.—Notwithstanding sub4 section (a) or any other provision of this Act, The Presi5 dent of the United States shall have authority to tempo6 rarily grant waivers from emission limitations under sec7 tions 412, 422, 432, 452, and 472, as the case may be, 

8 if the President determines that the reliability of any por9 tion of national electricity supply or national security is 

10 imperiled.

11 ‘‘PART B—SULFUR DIOXIDE EMISSION 

12 REDUCTIONS 

13 ‘‘Subpart 1—Acid Rain Program 

14 ‘‘SEC. 411. DEFINITIONS. 

15 ‘‘For purposes of this subpart and subpart 1 of part 

16 B: 

17 ‘‘(1) The term ‘actual 1985 emission rate’, for 

18 electric utility units means the annual sulfur dioxide 

19 or nitrogen oxides emission rate in pounds per mil20 lion Btu as reported in the 1985 National Acid Pre21 cipitation Assessment Program (NAPAP) Emissions 

22 Inventory, Version 2, National Utility Reference File 

23 (NURF). For nonutility units, the term ‘actual 1985 

24 emission rate’ means the annual sulfur dioxide or ni25 trogen oxides emission rate in pounds per million 
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1 Btu as reported in the NAPAP Emission Inventory, 

2 Version 2. 

3 ‘‘(2) The term ‘allowable 1985 emissions rate’ 

4 means a federally enforceable emissions limitation 

5 for sulfur dioxide or oxides of nitrogen, applicable to 

6 the unit in 1985 or the limitation applicable in such 

7 other subsequent year as determined by the Admin8 istrator if such a limitation for 1985 does not exist. 

9 Where the emissions limitation for a unit is not ex10 pressed in pounds of emissions per million Btu, or 

11 the averaging period of that emissions limitation is 

12 not expressed on an annual basis, the Administrator 

13 shall calculate the annual equivalent of that emis14 sions limitation. 

15 ‘‘(3) The term ‘alternative method of compli16 ance’ means a method of compliance in accordance 

17 with one or more of the following authorities— 

18 ‘‘(A) a substitution plan submitted and ap19 proved in accordance with subsections 413(b) 

20 and (c); or 

21 ‘‘(B) a phase I extension plan approved by 

22 the Administrator under section 413(d), using 

23 qualifying phase I technology as determined by 

24 the Administrator in accordance with that sec25 tion. 
65

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1 ‘‘(4) The term ‘baseline’ means the annual 

2 quantity of fossil fuel consumed by an affected unit, 

3 measured in millions of British Thermal Units 

4 (‘mmBtu’s’), calculated as follows: 

5 ‘‘(A) For each utility unit that was in com6 mercial operation prior to January 1, 1985, the 

7 baseline shall be the annual average quantity of 

8 mmBtu’s consumed in fuel during calendar 

9 years 1985, 1986, and 1987, as recorded by the 

10 Department of Energy pursuant to Form 767. 

11 For any utility unit for which such form was 

12 not filed, the baseline shall be the level specified 

13 for such unit in the 1985 (NAPAP) Emissions 

14 Inventory, Version 2 (NURF), or in a corrected 

15 data base as established by the Administrator 

16 pursuant to paragraph (3). For nonutility units, 

17 the baseline in the NAPAP Emissions Inven18 tory, Version 2. The Administrator, in the Ad19 ministrator’s sole discretion, may exclude peri20 ods during which a unit is shutdown for a con21 tinuous period of 4 calendar months or longer, 

22 and make appropriate adjustments under this 

23 paragraph. Upon petition of the owner or oper24 ator of any unit, the Administrator may make 

25 appropriate baseline adjustments for accidents, 
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1 strikes, disruptions of fuel supplies, failure of 

2 equipment, other causes beyond the reasonable 

3 control of the owner or operator of the unit that 

4 caused prolonged outages. 

5 ‘‘(B) For any other nonutility unit that is 

6 not included in the NAPAP Emissions Inven7 tory, Version 2, or a corrected data base as es8 tablished by the Administrator pursuant to 

9 paragraph (3), the baseline shall be the annual 

10 average quantity, in mmBtu consumed in fuel 

11 by that unit, as calculated pursuant to a meth12 od which the Administrator shall prescribe by 

13 regulation to be promulgated not later than 18 

14 months after November 15, 1990. 

15 ‘‘(C) The Administrator shall, upon appli16 cation or on his own motion, by December 31, 

17 1991, supplement data needed in support of 

18 this subpart and correct any factual errors in 

19 data from which affected phase II units’ base20 lines or actual 1985 emission rates have been 

21 calculated. Corrected data shall be used for pur22 poses of issuing allowances under this subpart. 

23 Such corrections shall not be subject to judicial 

24 review, nor shall the failure of the Adminis-
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1 trator to correct an alleged factual error in such 

2 reports be subject to judicial review. 

3 ‘‘(5) The term ‘basic phase II allowance alloca4 tions’ means: 

5 ‘‘(A) For calendar years 2000 through 

6 2009 inclusive, allocations of allowances made 

7 by the Administrator pursuant to section 412 

8 and subsections (b)(1), (3), and (4); (c)(1), (2), 

9 (3), and (5); (d)(1), (2), (4), and (5); (e); (f); 

10 (g)(1), (2), (3), (4), and (5); (h)(1); (i); and (j) 

11 of section 414. 

12 ‘‘(B) For each calendar year beginning in 

13 2010, allocations of allowances made by the Ad14 ministrator pursuant to section 412 and sub15 sections (b)(1), (3), and (4); (c)(1), (2), (3), 

16 and (5); (d)(1), (2), (4), and (5); (e); (f); 

17 (g)(1), (2), (3), (4), and (5); (h)(1) and (3); (i); 

18 and (j) of section 414. 

19 ‘‘(6) The term ‘capacity factor’ means the ratio 

20 between the actual electric output from a unit and 

21 the potential electric output from that unit. 

22 ‘‘(7) The term ‘commenced’ as applied to con23 struction of any new electric utility unit means that 

24 an owner or operator has undertaken a continuous 

25 program of construction or that an owner or oper-
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1 ator has entered into a contractual obligation to un2 dertake and complete, within a reasonable time, a 

3 continuous program of construction. 

4 ‘‘(8) The term ‘commenced commercial oper5 ation’ with regard to a unit means the start up of 

6 the unit’s combustion chamber and commencement 

7 of the generation of electricity for sale. 

8 ‘‘(9) The term ‘construction’ means fabrication, 

9 erection, or installation of an affected unit. 

10 ‘‘(10) The term ‘existing unit’ means a unit (in11 cluding units subject to section 111) that com12 menced commercial operation before November 15, 

13 1990. Any unit that commenced commercial oper14 ation before November 15, 1990, which is modified, 

15 reconstructed, or repowered after November 15, 

16 1990, shall continue to be an existing unit for the 

17 purposes of this subpart. For the purposes of this 

18 subpart, existing units shall not include simple com19 bustion turbines, or units which serve a generator 

20 with a nameplate capacity of 25 MWe or less. 

21 ‘‘(11) The term ‘independent power producer’ 

22 means any person who owns or operates, in whole or 

23 in part, one or more new independent power produc24 tion facilities. 
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1 ‘‘(12) The term ‘new independent power pro2 duction facility’ means a facility that— 

3 ‘‘(A) is used for the generation of electric 

4 energy, 80 percent or more of which is sold at 

5 wholesale; 

6 ‘‘(B) in nonrecourse project-financed (as 

7 such term is defined by the Secretary of Energy 

8 within 3 months of the date of the enactment 

9 of the Clean Air Act Amendments of 1990); 

10 and 

11 ‘‘(C) is a new unit required to hold allow12 ances under this subpart. 

13 ‘‘(13) The term ‘industrial source’ means a unit 

14 that does not serve a generator that produces elec15 tricity, a ‘nonutility unit’ as defined in this section, 

16 or a process source. 

17 ‘‘(14) The term ‘life-of-the-unit, firm power 

18 contractual arrangement’ means a unit participation 

19 power sales agreement under which a utility or in20 dustrial customer reserves, or is entitled to receive, 

21 a specified amount or percentage of capacity and as22 sociated energy generated by a specified generating 

23 unit (or units) and pays its proportional amount of 

24 such unit’s total costs, pursuant to a contract ei25 ther— 
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1 ‘‘(A) for the life of the unit; 

2 ‘‘(B) for a cumulative term of no less than 

3 30 years, including contracts that permit an 

4 election for early termination; or 

5 ‘‘(C) for a period equal to or greater than 

6 25 years or 70 percent of the economic useful 

7 life of the unit determined as of the time the 

8 unit was built, with option rights to purchase or 

9 release some portion of the capacity and associ10 ated energy generated by the unit (or units) at 

11 the end of the period. 

12 ‘‘(15) The term ‘new unit’ means a unit that 

13 commences commercial operation on or after Novem14 ber 15, 1990.

15 ‘‘(16) The term ‘nonutility unit’ means a unit 

16 other than a utility unit. 

17 ‘‘(17) The term ‘phase II bonus allowance allo18 cations’ means, for calendar year 2000 through 

19 2009, inclusive, and only for such years, allocations 

20 made by the Administrator pursuant to section 412, 

21 subsections (a)(2), (b)(2), (c)(4), (d)(3) (except as 

22 otherwise provided therein), and (h)(2) of section 

23 414, and section 415. 

24 ‘‘(18) The term ‘qualifying phase I technology’ 

25 means a technological system of continuous emission 
71

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1 reduction which achieves a 90 percent reduction in 

2 emissions of sulfur dioxide from the emissions that 

3 would have resulted from the use of fuels which were 

4 not subject to treatment prior to combustion. 

5 ‘‘(19) The term ‘repowering’ means replacement 

6 of an existing coal-fired boiler with one of the fol7 lowing clean coal technologies: atmospheric or pres8 surized fluidized bed combustion, integrated gasifi9 cation combined cycle, magneto-hydrodynamics, di10 rect and indirect coal-fired turbines, integrated gas11 ification fuel cells, or as determined by the Adminis12 trator, in consultation with the Secretary of Energy, 

13 a derivative of one or more of these technologies, 

14 and any other technology capable of controlling mul15 tiple combustion emissions simultaneously with im16 proved boiler or generation efficiency and with sig17 nificantly greater waste reduction relative to the per18 formance of technology in widespread commercial 

19 use as of November 15, 1990. 

20 ‘‘(20) The term ‘reserve’ means any bank of al21 lowances established by the Administrator under this 

22 subpart. 

23 ‘‘(21)(A) The term ‘utility unit’ means—
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1 ‘‘(i) a unit that serves a generator lo2 cated in any State and that produces elec3 tricity for sale; or 

4 ‘‘(ii) a unit that, during 1985, served 

5 a generator located in any State and that 

6 produced electricity for sale. 

7 ‘‘(B) Notwithstanding subparagraph (A), a 

8 unit described in subparagraph (A) that—

9 ‘‘(i) was in commercial operation dur10 ing 1985; but 

11 ‘‘(ii) did not during 1985, serve a gen12 erator in any State that produced elec13 tricity for sale shall not be a utility unit 

14 for purposes of this subpart. 

15 ‘‘(C) A unit that cogenerates steam and 

16 electricity is not a ‘utility unit’ for purposes of 

17 this subpart unless the unit is constructed for 

18 the purpose of supplying, or commences con19 struction after November 15, 1990 and supplies 

20 more than one-third of its potential electric out21 put capacity of more than 25 megawatts elec22 trical output to any utility power distribution 

23 system for sale. 
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1 ‘‘SEC. 412. ALLOWANCE ALLOCATION. 

2 ‘‘(a) Except as provided in sections 414(a)(2), 

3 415(a)(3), and 416, beginning January 1, 2000, the Ad4 ministrator shall not allocate annual emission allowances 

5 for sulfur dioxide from utility units in excess of 8.90 mil6 lion tons except that the Administrator shall not take into 

7 account unused allowances carried forward by owners and 

8 operators of affected units or by other persons holding 

9 such allowances, following the year for which they were 

10 allocated. If necessary to meeting the restrictions imposed 

11 in the preceding sentence, the Administrator shall reduce, 

12 pro rata, the basic phase II allowance allocations for each 

13 unit subject to the requirements of section 414. Subject 

14 to the provisions of section 417, the Administrator shall 

15 allocate allowances for each affected until at an affected 

16 source annually, as provided in paragraphs (2) and (3) 

17 and section 404. Except as provided in sections 416, the 

18 removal of an existing affected unit or source from com19 mercial operation at any time after November 15, 1990 

20 (whether before or after January 1, 1995, or January 1, 

21 2000), shall not terminate or otherwise affect the alloca22 tion of allowances pursuant to section 413 or 414 to which 

23 the unit is entitled. Prior to June 1, 1998, the Adminis24 trator shall publish a revised final statement of allowance 

25 allocations, subject to the provisions of section 414(a)(2). 

26 ‘‘(b) NEW UTILITY UNITS.—
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1 ‘‘(1) After January 1, 2000 and through De2 cember 31, 2007, it shall be unlawful for a new util3 ity unit to emit an annual tonnage of sulfur dioxide 

4 in excess of the number of allowances to emit held 

5 for the unit by the unit’s owner or operator. 

6 ‘‘(2) Starting January 1, 2008, a new utility 

7 unit shall be subject to the prohibition in subsection 

8 (c)(3). 

9 ‘‘(3) New utility units shall not be eligible for 

10 an allocation of sulfur dioxide allowances under sub11 section (a)(1), unless the unit is subject to the provi12 sions of subsection (g)(2) or (3) of section 414. New 

13 utility units may obtain allowances from any person, 

14 in accordance with this title. The owner or operator 

15 of any new utility unit in violation of subsection 

16 (b)(1) or subsection(c)(3) shall be liable for fulfilling 

17 the obligations specified in section 406. 

18 ‘‘(c) PROHIBITIONS.— 

19 ‘‘(1) It shall be unlawful for any person to hold, 

20 use, or transfer any allowance allocated under this 

21 subpart, except in accordance with regulations pro22 mulgated by the Administrator. 

23 ‘‘(2) For any year 1995 through 2007, it shall 

24 be unlawful for any affected unit to emit sulfur diox25 ide in excess of the number of allowances held for 
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S 1844 IS 

1 that unit for that year by the owner or operator of 

2 the unit. 

3 ‘‘(3) Starting January 1, 2008, it shall be un4 lawful for the affected units at a source to emit a 

5 total amount of sulfur dioxide during the year in ex6 cess of the number of allowances held for the source 

7 for that year by the owner or operator of the source. 

8 ‘‘(4) Upon the allocation of allowances under 

9 this subpart, the prohibition in paragraphs (2) and 

10 (3) shall supersede any other emission limitation ap11 plicable under this subpart to the units for which 

12 such allowances are allocated. 

13 ‘‘(d) In order to ensure electricity reliability, regula14 tions establishing a system for issuing, recording, and 

15 tracking allowances under section 403(b) and this subpart 

16 shall not prohibit or affect temporary increases and de17 creases in emissions within utility systems, power pools, 

18 or utilities entering into allowance pool agreements, that 

19 result from their operations, including emergencies and 

20 central dispatch, and such temporary emissions increases 

21 and decreases shall not require transfer of allowances 

22 among units nor shall it require recording. The owners 

23 or operators of such units shall act through a designated 

24 representative. Notwithstanding the preceding sentence, 

25 the total tonnage of emissions in any calendar year (cal-
76

S 1844 IS 

1 culated at the end thereof) from all units in such a utility 

2 system, power pool, or allowance pool agreements shall not 

3 exceed the total allowances for such units for the calendar 

4 year concerned, including for calendar years after 2007, 

5 allowances held for such units by the owner or operator 

6 of the sources where the units are located. 

7 ‘‘(e) Where there are multiple holders of a legal or 

8 equitable title to, or a leasehold interest in, an affected 

9 unit, or where a utility or industrial customer purchases 

10 power from an affected unit (or units) under life-of-the11 unit, firm power contractual arrangements, the certificate 

12 of representation required under section 404(f) shall 

13 state— 

14 ‘‘(1) that allowances under this subpart and the 

15 proceeds of transactions involving such allowances 

16 will be deemed to be held or distributed in propor17 tion to each holder’s legal, equitable, leasehold, or 

18 contractual reservation or entitlement; or 

19 ‘‘(2) if such multiple holders have expressly pro20 vided for a different distribution of allowances by 

21 contract, that allowances under this subpart and the 

22 proceeds of transactions involving such allowances 

23 will be deemed to be held or distributed in accord24 ance with the contract. 
77

S 1844 IS 

1 A passive lessor, or a person who has an equitable interest 

2 through such lessor, whose rental payments are not based, 

3 either directly or indirectly, upon the revenues or income 

4 from the affected unit shall not be deemed to be a holder 

5 of a legal, equitable, leasehold, or contractual interest for 

6 the purpose of holding or distributing allowances as pro7 vided in this subsection, during either the term of such 

8 leasehold or thereafter, unless expressly provided for in the 

9 leasehold agreement. Except as otherwise provided in this 

10 subsection, where all legal or equitable title to or interest 

11 in an affected unit is held by a single person, the certifi12 cation shall state that all allowances under this subpart 

13 received by the unit are deemed to be held for that person. 

14 ‘‘SEC. 413. PHASE I SULFUR DIOXIDE REQUIREMENTS. 

15 ‘‘(a) EMISSION LIMITATIONS.—

16 ‘‘(1) After January 1, 1995, each source that 

17 includes one or more affected units listed in table A 

18 is an affected source under this section. After Janu19 ary 1, 1995, it shall be unlawful for any affected 

20 unit (other than an eligible phase I unit under sec21 tion 413(d)(2)) to emit sulfur dioxide in excess of 

22 the tonnage limitation stated as a total number of 

23 allowances in table A for phase 1; unless— 
78

S 1844 IS 

1 ‘‘(A) the emissions reduction requirements 

2 applicable to such unit have been achieved pur3 suant to subsection (b) or (d); or 

4 ‘‘(B) the owner or operator of such unit 

5 holds allowances to emit not less than the unit’s 

6 total annual emissions, except that, after Janu7 ary 1, 2000, the emissions limitations estab8 lished in this section shall be superseded by 

9 those established in section 414. The owner or 

10 operator of any unit in violation of this section 

11 be fully liable for such violation including, but 

12 not limited to, liability for fulfilling the obliga13 tions specified in section 406. 

14 ‘‘(2) Not later than December 31, 1991, the 

15 Administrator shall determine the total tonnage of 

16 reductions in the emissions of sulfur dioxide from all 

17 utility units in calendar year 1995 that will occur as 

18 a result of compliance with the emissions limitation 

19 requirements of this section, and shall establish a re20 serve of allowances equal in amount to the number 

21 of tons determined thereby not to exceed a total of 

22 3.50 million tons. In making such a determination, 

23 the Administrator shall compute for each unit sub24 ject to the emissions limitation requirements of this 

25 section the difference between—
79

S 1844 IS 

1 ‘‘(A) the product of its baseline multiplied 

2 by the lesser of each unit’s allowable 1985 

3 emissions rate and its actual 1985 emissions 

4 rate, divided by 2,000; and 

5 ‘‘(B) the product of each unit’s baseline 

6 multiplied by 2.50 lbs/mmBtu divided by 2,000, 

7 and sum the computations. The Administrator 

8 shall adjust the foregoing calculation to reflect 

9 projected calendar year 1995 utilization of the 

10 units subject to the emissions limitations of this 

11 subpart that the Administrator finds would 

12 have occurred in the absence of the imposition 

13 of such requirements. Pursuant to subsection 

14 (d), the Administrator shall allocate allowances 

15 from the reserve established hereunder until the 

16 earlier of such time as all such allowances in 

17 the reserve are allocated or December 31, 1999. 

18 ‘‘(3) In addition to allowances allocated pursu19 ant to paragraph (1), in each calendar year begin20 ning in 1995 and ending in 1999, inclusive, the Ad21 ministrator shall allocate for each unit on table A 

22 that is located in the States of Illinois, Indiana, or 

23 Ohio (other than units at Kyger Creek, Clifty Creek 

24 and Joppa Steam), allowances in an amount equal 

25 to 200,000 multiplied by the unit’s pro rata share 
80

S 1844 IS 

1 of the total number of allowances allocated for all 

2 units on table A in the 3 States (other than units 

3 at Kyger Creek, Clifty Creek, and Joppa Steam) 

4 pursuant to paragraph (1). Such allowances shall be 

5 excluded from the calculation of the reserve under 

6 paragraph (2). 

7 ‘‘(b) SUBSTITUTIONS.—The owner or operator of an 

8 affected unit under subsection (a) may include in its sec9 tion 404 permit application and proposed compliance plan 

10 a proposal to reassign, in whole or in part, the affected 

11 unit’s sulfur dioxide reduction requirements to any other 

12 unit(s) under the control of such owner or operator. Such 

13 proposal shall specify—

14 ‘‘(1) the designation of the substitute unit or 

15 units to which any part of the reduction obligations 

16 of subsection (a) shall be required, in addition to, or 

17 in lieu of, any original affected units designated 

18 under such subsection; 

19 ‘‘(2) the original affected unit’s baseline, the ac20 tual and allowable 1985 emissions rate for sulfur di21 oxide, and the authorized annual allowance alloca22 tion stated in table A; 

23 ‘‘(3) calculation of the annual average tonnage 

24 for calendar years 1985, 1986, and 1987, emitted by 

25 the substitute unit or units, based on the baseline 
81

S 1844 IS 

1 for each unit, as defined in section 411(4), multi2 plied by the lesser of the unit’s actual or allowable 

3 1985 emissions rate; 

4 ‘‘(4) the emissions rates and tonnage limita5 tions that would be applicable to the original and 

6 substitute affected units under the substitution pro7 posal; 

8 ‘‘(5) documentation, to the satisfaction of the 

9 Administrator, that the reassigned tonnage limits 

10 will, in total, achieve the same or greater emissions 

11 reduction than would have been achieved by the 

12 original affected unit and the substitute unit or 

13 units without such substitution; and 

14 ‘‘(6) such other information as the Adminis15 trator may require. 

16 ‘‘(c) ADMINISTRATOR’S ACTION ON SUBSTITUTION

17 PROPOSALS.— 

18 ‘‘(1) The Administrator shall take final action 

19 on such substitution proposal in accordance with 

20 section 404(c) if the substitution proposal fulfills the 

21 requirements of this subsection. The Administrator 

22 may approve a substitution proposal in whole or in 

23 part and with such modifications or conditions as 

24 may be consistent with the orderly functioning of the 

25 allowance system and which will ensure the emis-
82

S 1844 IS 

1 sions reductions contemplated by this title. If a pro2 posal does not meet the requirements of subsection 

3 (b), the Administrator shall disapprove it. The owner 

4 or operator of a unit listed in table A shall not sub5 stitute another unit or units without the prior ap6 proval of the Administrator. 

7 ‘‘(2) Upon approval of a substitution proposal, 

8 each substitute unit, and each source with such unit, 

9 shall be deemed affected under this title, and the 

10 Administrator shall issue a permit to the original 

11 and substitute affected source and unit in accord12 ance with the approved substitution plan and section 

13 404. The Administrator shall allocate allowances for 

14 the original and substitute affected units in accord15 ance with the approved substitution proposal pursu16 ant to section 412. It shall be unlawful for any 

17 source or unit that is allocated allowances pursuant 

18 to this section to emit sulfur dioxide in excess of the 

19 emissions limitation provided for in the approved 

20 substitution permit and plan unless the owner or op21 erator of each unit governed by the permit and ap22 proved substitution plan holds allowances to emit 

23 not less than the unit’s total annual emissions. The 

24 owner or operator of any original or substitute af25 fected unit operated in violation of this subsection 
83

S 1844 IS 

1 shall be fully liable for such violation, including li2 ability for fulfilling the obligations specified in sec3 tion 406. If a substitution proposal is disapproved, 

4 the Administrator shall allocate allowances to the 

5 original affected unit or units in accordance with 

6 subsection (a). 

7 ‘‘(d) ELIGIBLE PHASE I EXTENSION UNITS.— 

8 ‘‘(1) The owner or operator of any affected unit 

9 subject to an emissions limitation requirement under 

10 this section may petition the Administrator in its 

11 permit application under section 404 for an exten12 sion of 2 years of the deadline for meeting such re13 quirement, provided that the owner or operator of 

14 any such unit holds allowances to emit not less than 

15 the unit’s total annual emissions for each of the 2 

16 years of the period of extension. To qualify for such 

17 an extension, the affected unit must either employ a 

18 qualifying phase I technology, or transfer its phase 

19 I emissions reduction obligation to a unit employing 

20 a qualifying phase I technology. Such transfer shall 

21 be accomplished in accordance with a compliance 

22 plan, submitted and approved under section 404, 

23 that shall govern operations at all units included in 

24 the transfer, and that specifies the emissions reduc25 tion requirements imposed pursuant to this title. 
84

S 1844 IS 

1 ‘‘(2) Such extension proposal shall— 

2 ‘‘(A) specify the unit or units proposed for 

3 designation as an eligible phase I extension 

4 unit; 

5 ‘‘(B) provide a copy of an executed con6 tract, which may be contingent upon the Ad7 ministrator approving the proposal, for the de8 sign engineering, and construction of the quali9 fying phase I technology for the extension unit, 

10 or for the unit or units to which the extension 

11 unit’s emission reduction obligation is to be 

12 transferred; 

13 ‘‘(C) specify the unit’s or units’ baselines, 

14 actual 1985 emissions rates, allowable 1985 

15 emissions rates, and projected utilizations for 

16 calendar years 1995 through 1999; 

17 ‘‘(D) require CEMS on both the eligible 

18 phase I extension unit or units and the transfer 

19 unit or units beginning no later than January 

20 1, 1995; and 

21 ‘‘(E) specify the emission limitation and 

22 number of allowances expected to be necessary 

23 for annual operation after the qualifying phase 

24 I technology has been installed. 
85

S 1844 IS 

1 ‘‘(3) The Administrator shall review and take 

2 final action on each extension proposal in order of 

3 receipt, consistent with section 404, and for an ap4 proved proposal shall designate the unit or units as 

5 an eligible phase I extension unit. The Administrator 

6 may approve an extension proposal in whole or in 

7 part, and with such modifications or conditions as 

8 may be necessary, consistent with the orderly func9 tioning of the allowance system, and to ensure the 

10 emissions reductions contemplated by the subpart. 

11 ‘‘(4) In order to determine the number of pro12 posals eligible for allocations from the reserve under 

13 subsection (a)(2) and the number of the allowances 

14 remaining available after each proposal is acted 

15 upon, the Administrator shall reduce the total num16 ber of allowances remaining available in the reserve 

17 by the number of allowances calculated according to 

18 subparagraph (A), (B), and (C) until either no al19 lowances remain available in the reserve for further 

20 allocation or all approved proposals have been acted 

21 upon. If no allowances remain available in the re22 serve for further allocation before all proposals have 

23 been acted upon by the Administrator, any pending 

24 proposals shall be disapproved. The Administrator 

25 shall calculate allowances equal to— 
86

S 1844 IS 

1 ‘‘(A) the difference between the lesser of 

2 the average annual emissions in calendar years 

3 1988 and 1989 or the projected emissions ton4 nage for calendar year 1995 of each eligible 

5 phase I extension unit, as designated under 

6 paragraph (3), and the product of the unit’s 

7 baseline multiplied by an emission rate of 2.50 

8 lbs/mmBtu, divided by 2,000; 

9 ‘‘(B) the difference between the lesser of 

10 the average annual emissions in calendar years 

11 1988 and 1989 or the projected emissions ton12 nage for calendar year 1996 of each eligible 

13 phase I extension unit, as designated under 

14 paragraph (3), and the product of the unit’s 

15 baseline multiplied by an emission rate of 2.50 

16 lbs/mmBtu, divided by 2,000; and 

17 ‘‘(C) the amount by which (i) the product 

18 of each unit’s baseline multiplied by an emis19 sion rate of 1.20 lbs/mmBtu, divided by 2,000, 

20 exceeds (ii) the tonnage level specified under 

21 subparagraph (E) of paragraph (2) of this sub22 section multiplied by a factor of 3.

23 ‘‘(5) Each eligible phase I extension unit shall 

24 receive allowances determined under subsection 

25 (a)(1) or (c) of this section. In addition, for calendar 
87

S 1844 IS 

1 year 1995, the Administrator shall allocate to each 

2 eligible phase I extension unit, from the allowance 

3 reserve created pursuant to subsection (a)(2), allow4 ances equal to the difference between the lesser of 

5 the average annual emissions in calendar years 1988 

6 and 1989 or its projected emission tonnage for cal7 endar year 1995 and the product of the unit’s base8 line multiplied by an emission rate of 2.50 lbs/

9 mmBtu, divided by 2,000. In calendar year 1996, 

10 the Administrator shall allocate for each eligible 

11 unit, from the allowance reserve created pursuant to 

12 subsection (a)(2), allowances equal to the difference 

13 between the lesser of the average annual emissions 

14 in calendar years 1988 and 1989 or its projected 

15 emissions tonnage for calendar year 1996 and the 

16 product of the unit’s baseline multiplied by an emis17 sion rate of 2.50 lbs/mmBtu, divided by 2,000. It 

18 shall be unlawful for any source or unit subject to 

19 an approved extension plan under this subsection to 

20 emit sulfur dioxide in excess of the emissions limita21 tions provided for in the permit and approved exten22 sion plan, unless the owner or operator of each unit 

23 governed by the permit and approved plan holds al24 lowances to emit not less than the unit’s total an25 nual emissions. 
88

S 1844 IS 

1 ‘‘(6) In addition to allowances specified in para2 graph (4), the Administrator shall allocate for each 

3 eligible phase I extension unit employing qualifying 

4 phase I technology, for calendar years 1997, 1998, 

5 and 1999, additional allowances, from any remaining 

6 allowances in the reserve created pursuant to sub7 section (a)(2), following the reduction in the reserve 

8 provided for in paragraph (4), not to exceed the 

9 amount by which (A) the product of each eligible 

10 unit’s baseline times an emission rate of 1.20 lbs/

11 mmBtu, divided by 2,000 exceeds (B) the tonnage 

12 level specified under subparagraph (E) of paragraph 

13 (2) of this subsection. 

14 ‘‘(7) After January 1, 1997, in addition to any 

15 liability under this Act, including under section 406, 

16 if any eligible phase I extension unit employing 

17 qualifying phase I technology or any transfer unit 

18 under this subsection emits sulfur dioxide in excess 

19 of the annual tonnage limitation specified in the ex20 tension plan, as approved in paragraph (2) of this 

21 subsection, the Administrator shall, in the calendar 

22 year following such excess, deduct allowances equal 

23 to the amount of such excess from such unit’s an24 nual allowance allocation. 

25 ‘‘(e) EARLY REDUCTIONS.— 
89

S 1844 IS 

1 ‘‘(1) In the case of a unit that receives author2 ization from the Governor of the State in which such 

3 unit is located to make reductions in the emissions 

4 of sulfur dioxide prior to calendar year 1995 and 

5 that is part of a utility system that meets the fol6 lowing requirements— 

7 ‘‘(A) the total coal-fired generation within 

8 the utility system as a percentage of total sys9 tem generation decreased by more than 20 per10 cent between January 1, 1980, and December 

11 31, 1985; and 

12 ‘‘(B) the weighted capacity factor of all 

13 coal-fired units within the utility system aver14 aged over the period from January 1, 1985, 

15 through December 31, 1987, was below 50 per16 cent, the Administrator shall allocate allowances 

17 under this paragraph for the unit pursuant to 

18 this subsection. The Administrator shall allo19 cate allowances for a unit that is an affected 

20 unit pursuant to section 414 (but is not also an 

21 affected unit under this section) and part of a 

22 utility system that includes one or more af23 fected units under section 414 for reductions in 

24 the emissions of sulfur dioxide made during the 

25 period 1995–1999 if the unit meets the require-
90

S 1844 IS 

1 ments of this subsection and the requirements 

2 of the preceding sentence, except that for the 

3 purposes of applying this subsection to any 

4 such unit, the prior year concerned as specified 

5 below, shall be any year after January 1, 1995 

6 but prior to January 1, 2000. 

7 ‘‘(2) In the case of an affected unit under this 

8 section described in subparagraph (A), the allow9 ances allocated under this subsection for early reduc10 tions in any prior year may not exceed the amount 

11 which (A) the product of the unit’s baseline multi12 plied by the unit’s 1985 actual sulfur dioxide emis13 sion rate (in lbs per mmBtu), divided by 2,000 ex14 ceeds (B) the allowances specified for such unit in 

15 table A. In the case of an affected unit under section 

16 414, the allowances awarded under this subsection 

17 for early reductions in any prior year may not ex18 ceed the amount by which— 

19 ‘‘(A) the product of— 

20 ‘‘(i) the quantity of fossil fuel con21 sumed by the unit (in mmBtu) in the prior 

22 year multiplied by—

23 ‘‘(ii) the lesser of— 

24 ‘‘(I) 2.50, or 
91

S 1844 IS 

1 ‘‘(II) the most stringent emission 

2 rate (in lbs per mmBtu) applicable to 

3 the unit under the applicable imple4 mentation plan—

5 divided by 2,000 exceeds 

6 ‘‘(B) the unit’s actual tonnage of sulfur di7 oxide emission for the prior year concerned. 

8 Allowances allocated under this subsection for units 

9 may be allocated only for emission reductions 

10 achieved as a result of physical changes or changes 

11 in the method of operation made after November 15, 

12 1990, including changes in the type or quantity of 

13 fossil fuel consumed. 

14 ‘‘(3) In no event shall the provisions of this 

15 paragraph be interpreted as an event of force 

16 majeure or a commercial impracticability or in any 

17 other way as a basis for excused nonperformance by 

18 a utility system under a coal sales contract in effect 

19 before November 15, 1990.

‘‘TABLE A—AFFECTED SOURCES AND UNITS IN PHASE 

I AND THEIR SULFUR DIOXIDE ALLOWANCES (TONS) 

State Plant name Generator Phase I

allowances 

Alabama ......................... Colbert ........................... 1 13,570

2 15,310

3 15,400

4 15,410

5 37,180

E.C. Gaston ................... 1 18,100

2 18,540

3 18,310
92

S 1844 IS 

‘‘TABLE A—AFFECTED SOURCES AND UNITS IN PHASE 

I AND THEIR SULFUR DIOXIDE ALLOWANCES 

(TONS)—Continued

State Plant name Generator Phase I

allowances 

4 19,280

5 59,840

Florida ............................ Big Bend ....................... 1 28,410

2 27,100

3 26,740

Crist ............................... 6 19,200

7 31,680

Georgia ........................... Bowen ............................ 1 56,320

2 54,770

3 71,750

4 71,740

Hammond ...................... 1 8,780

2 9,220

3 8,910

4 37,640

J. McDonough ............... 1 19,910

2 20,600

Wansley ......................... 1 70,770

2 65,430

Yates .............................. 1 7,210

2 7,040

3 6,950

4 8,910

5 9,410

6 24,760

7 21,480

Illinois ............................. Baldwin ......................... 1 42,010

2 44,420

3 42,550

Coffeen .......................... 1 11,790

2 35,670

Grand Tower ................. 4 5,910

Hennepin ....................... 2 18,410

Joppa Steam ................. 1 12,590

2 10,770

3 12,270

4 11,360

5 11,420

6 10,620

Kincaid .......................... 1 31,530

2 33,810

Meredosia ...................... 3 13,890

Vermilion ....................... 2 8,880

Indiana ........................... Bailly ............................. 7 11,180

8 15,630

Breed ............................. 1 18,500

Cayuga ........................... 1 33,370

2 34,130

Clifty Creek ................... 1 20,150
93

S 1844 IS 

‘‘TABLE A—AFFECTED SOURCES AND UNITS IN PHASE 

I AND THEIR SULFUR DIOXIDE ALLOWANCES 

(TONS)—Continued

State Plant name Generator Phase I

allowances 

2 19,810

3 20,410

4 20,080

5 19,360

6 20,380

E.W. Stout .................... 5 3,880

6 4,770

7 23,610

F.B. Culley .................... 2 4,290

3 16,970

F.E. Ratts ..................... 1 8,330

2 8,480

Gibson ........................... 1 40,400

2 41,010

3 41,080

4 40,320

H.T. Pritchard .............. 6 5,770

Michigan City ................ 12 23,310

Petersburg..................... 1 16,430

2 32,380

R. Gallagher .................. 1 6,490

2 7,280

3 6,530

4 7,650

Tanners Creek ............... 4 24,820

Wabash River ................ 1 4,000

2 2,860

3 3,750

5 3,670

6 12,280

Warrick .......................... 4 26,980

Iowa ................................ Burlington ..................... 1 10,710

Des Moines .................... 7 2,320

George Neal ................... 1 1,290

M.L. Kapp ..................... 2 13,800

Prairie Creek ................. 4 8,180

Riverside ........................ 5 3,990

Kansas ............................ Quindaro ........................ 2 4,220

Kentucky ........................ Coleman ......................... 1 11,250

2 12,840

3 12,340

Cooper ........................... 1 7,450

2 15,320

E.W. Brown .................. 1 7,110

2 10,910

3 26,100

Elmer Smith .................. 1 6,520

2 14,410

Ghent ............................. 1 28,410
94

S 1844 IS 

‘‘TABLE A—AFFECTED SOURCES AND UNITS IN PHASE 

I AND THEIR SULFUR DIOXIDE ALLOWANCES 

(TONS)—Continued

State Plant name Generator Phase I

allowances 

Green River ................... 4 7,820

H.L. Spurlock ............... 1 22,780

Henderson II ................. 1 13,340

2 12,310

Paradise ......................... 3 59,170

Shawnee ......................... 10 10,170

Maryland ........................ Chalk Point ................... 1 21,910

2 24,330

C.P. Crane ..................... 1 10,330

2 9,230

Morgantown ................... 1 35,260

2 38,480

Michigan ......................... J.H. Campbell ............... 1 19,280

2 23,060

Minnesota ....................... High Bridge .................. 6 4,270

Mississippi ...................... Jack Watson .................. 4 17,910

5 36,700

Missouri .......................... Asbury ........................... 1 16,190

James River .................. 5 4,850

Labadie .......................... 1 40,110

2 37,710

3 40,310

4 35,940

Montrose ........................ 1 7,390

2 8,200

3 10,090

New Madrid ................... 1 28,240

2 32,480

Sibley ............................. 3 15,580

Sioux .............................. 1 22,570

2 23,690

Thomas Hill .................. 1 10,250

2 19,390

New Hampshire .............. Merrimack ..................... 1 10,190

2 22,000

New Jersey ..................... B.L. England ................ 1 9,060

2 11,720

New York ....................... Dunkirk ......................... 3 12,600

4 14,060

Greenidge ...................... 4 7,540

Milliken .......................... 1 11,170

2 12,410

Northport ...................... 1 19,810

2 24,110

3 26,480

Port Jefferson ............... 3 10,470

4 12,330

Ohio ................................ Ashtabula ...................... 5 16,740

Avon Lake ..................... 8 11,650
95

S 1844 IS 

‘‘TABLE A—AFFECTED SOURCES AND UNITS IN PHASE 

I AND THEIR SULFUR DIOXIDE ALLOWANCES 

(TONS)—Continued

State Plant name Generator Phase I

allowances 

9 30,480

Cardinal ......................... 1 34,270

2 38,320

Conesville ....................... 1 4,210

2 4,890

3 5,500

4 48,770

Eastlake ......................... 1 7,800

2 8,640

3 10,020

4 14,510

5 34,070

Edgewater ..................... 4 5,050

Gen. J.M. Gavin ............ 1 79,080

2 80,560

Kyger Creek .................. 1 19,280

2 18,560

3 17,910

4 18,710

5 18,740

Miami Fort .................... 5 760

6 11,380

7 38,510

Muskingum River .......... 1 14,880

2 14,170

3 13,950

4 11,780

5 40,470

Niles .............................. 1 6,940

2 9,100

Picway ........................... 5 4,930

R.E. Burger .................. 3 6,150

4 10,780

5 12,430

W.H. Sammis ................ 5 24,170

6 39,930

7 43,220

W.C. Beckjord ............... 5 8,950

6 23,020

Pennsylvania ................... Armstrong..................... 1 14,410

2 15,430

Brunner Island .............. 1 27,760

2 31,100

3 53,820

Cheswick ........................ 1 39,170

Conemaugh .................... 1 59,790

2 66,450

Hatfield’s Ferry ............ 1 37,830

2 37,320
96

S 1844 IS 

‘‘TABLE A—AFFECTED SOURCES AND UNITS IN PHASE 

I AND THEIR SULFUR DIOXIDE ALLOWANCES 

(TONS)—Continued

State Plant name Generator Phase I

allowances 

3 40,270

Martins Creek ............... 1 12,660

2 12,820

Portland ........................ 1 5,940

2 10,230

Shawville ........................ 1 10,320

2 10,320

3 14,220

4 14,070

Sunbury ......................... 3 8,760

4 11,450

Tennessee ....................... Allen .............................. 1 15,320

2 16,770

3 15,670

Cumberland ................... 1 86,700

2 94,840

Gallatin .......................... 1 17,870

2 17,310

3 20,020

4 21,260

Johnsonville ................... 1 7,790

2 8,040

3 8,410

4 7,990

5 8,240

6 7,890

7 8,980

8 8,700

9 7,080

10 7,550

West Virginia ................. Albright ......................... 3 12,000

Fort Martin ................... 1 41,590

2 41,200

Harrison ........................ 1 48,620

2 46,150

3 41,500

Kammer ......................... 1 18,740

2 19,460

3 17,390

Mitchell .......................... 1 43,980

2 45,510

Mount Storm ................. 1 43,720

2 35,580

3 42,430

Wisconsin ....................... Edgewater ..................... 4 24,750

La Crosse/Genoa ........... 3 22,700

Nelson Dewey ................ 1 6,010

2 6,680

N. Oak Creek ................ 1 5,220
97

S 1844 IS 

‘‘TABLE A—AFFECTED SOURCES AND UNITS IN PHASE 

I AND THEIR SULFUR DIOXIDE ALLOWANCES 

(TONS)—Continued

State Plant name Generator Phase I

allowances 

2 5,140

3 5,370

4 6,320

Pulliam .......................... 8 7,510

S. Oak Creek ................. 5 9,670

6 12,040

7 16,180

8 15,790 

1 ‘‘(f) ENERGY CONSERVATION AND RENEWABLE EN2 ERGY.— 

3 ‘‘(1) DEFINITIONS.—As used in this subsection: 

4 ‘‘(A) QUALIFIED ENERGY CONSERVATION

5 MEASURE.—The term ‘qualified energy con6 servation measure’ means a cost effective meas7 ure, as identified by the Administrator in con8 sultation with the Secretary of Energy, that in9 creases the efficiency of the use of electricity 

10 provided by an electric utility to its customers. 

11 ‘‘(B) QUALIFIED RENEWABLE ENERGY.—

12 The term ‘qualified renewable energy’ means 

13 energy derived from biomass, solar, geothermal, 

14 or wind as identified by the Administrator in 

15 consultation with the Secretary of Energy. 

16 ‘‘(C) ELECTRIC UTILITY.—The term ‘elec17 tric utility’ means any person, State agency, or 

18 Federal agency, which sells electric energy.
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1 ‘‘(2) ALLOWANCES FOR EMISSIONS AVOIDED

2 THROUGH ENERGY CONSERVATION AND RENEWABLE

3 ENERGY.— 

4 ‘‘(A) IN GENERAL.—The regulations under 

5 paragraph (4) of this subsection shall provide 

6 that for each ton of sulfur dioxide emissions 

7 avoided by an electric utility, during the appli8 cable period, through the use of qualified en9 ergy conservation measures or qualified renew10 able energy, the Administrator shall allocate a 

11 single allowance to such electric utility, on a 

12 first-come-first-served basis from the Conserva13 tion and Renewable Energy Reserve established 

14 under subsection (g), up to a total of 300,000 

15 allowances for allocation from such Reserve. 

16 ‘‘(B) REQUIREMENTS FOR ISSUANCE.—

17 The Administrator shall allocate allowances to 

18 an electric utility under this subsection only if 

19 all of the following requirements are met: 

20 ‘‘(i) Such electric utility is paying for 

21 or participating in the qualified energy 

22 conservation measures or qualified renew23 able energy. 

24 ‘‘(ii) The emissions of sulfur dioxide 

25 avoided through the use of qualified energy 
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1 conservation measures or qualified renew2 able energy are quantified in accordance 

3 with regulations promulgated by the Ad4 ministrator under this subsection. 

5 ‘‘(iii)(I) Such electric utility has 

6 adopted and is implementing a least cost 

7 energy conservation and electric power 

8 plan which evaluates a range of resources, 

9 including new power supplies, energy con10 servation, and renewable energy resources, 

11 in order to meet expected future demand 

12 at the lowest system cost. 

13 ‘‘(II) The qualified energy conserva14 tion measures or qualified renewable en15 ergy, or both, are consistent with that 

16 plan. 

17 ‘‘(III) In the case of electric utilities 

18 subject to the jurisdiction of a State regu19 latory authority such plan shall have been 

20 approved by such authority. For electric 

21 utilities not subject to the jurisdiction of a 

22 State regulatory authority such plan shall 

23 have been approved by the Administrator. 

24 ‘‘(iv) In the case of qualified energy 

25 conservation measures undertaken by a 
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1 State regulated electric utility, the Sec2 retary of Energy has certified that the 

3 State regulatory authority with jurisdiction 

4 over the electric rates of such electric util5 ity has established rates and charges which 

6 ensure that the net income of such electric 

7 utility after implementation of specific cost 

8 effective energy conservation measures is 

9 at least as high as such net income would 

10 have been if the energy conservation meas11 ures had not been implemented. Upon the 

12 date of any such certification by the Sec13 retary of Energy, all allowances which, but 

14 for this paragraph, would have been allo15 cated under subparagraph (B) before such 

16 date, shall be allocated to the electric util17 ity. This clause is not a requirement for 

18 qualified renewable energy. 

19 ‘‘(v) Such utility or any subsidiary of 

20 the utility’s holding company owns or oper21 ates at least one affected unit. 

22 ‘‘(C) PERIOD OF APPLICABILITY.—Allow23 ances under this subsection shall be allocated 

24 only with respect to kilowatt hours of electric 

25 energy saved by qualified energy conservation 
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1 measures or generated by qualified renewable 

2 energy after January 1, 1992, and before the 

3 earlier of (i) December 31, 2000, or (ii) the 

4 date on which any electric utility steam gener5 ating unit owned or operated by the electric 

6 utility to which the allowances are allocated be7 comes subject to this subpart (including those 

8 sources that elect to become affected by this 

9 title, pursuant to section 417). 

10 ‘‘(D) Determination of avoided emis11 sions.— 

12 ‘‘(i) APPLICATION.—In order to re13 ceive allowances under this subsection, an 

14 electric utility shall make an application 

15 which— 

16 ‘‘(I) designates the qualified en17 ergy conservation measures imple18 mented and the qualified renewable 

19 energy sources used for purposes of 

20 avoiding emissions; 

21 ‘‘(II) calculates, in accordance 

22 with subparagraphs (F) and (G), the 

23 number of tons of emissions avoided 

24 by reason of the implementation of 
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1 such measures or the use of such re2 newable energy sources; and 

3 ‘‘(III) demonstrates that the re4 quirements of subparagraph (B) have 

5 been met. 

6 ‘‘(ii) APPROVAL.—Such application 

7 for allowances by a State-regulated electric 

8 utility shall require approval by the State 

9 regulatory authority with jurisdiction over 

10 such electric utility. The authority shall re11 view the application for accuracy and com12 pliance with this subsection and the rules 

13 under this subsection. Electric utilities 

14 whose retail rates are not subject to the ju15 risdiction of a State regulatory authority 

16 shall apply directly to the Administrator 

17 for such approval. 

18 ‘‘(E) AVOIDED EMISSIONS FROM QUALI19 FIED ENERGY CONSERVATION MEASURES.—For 

20 the purposes of this subsection, the emission 

21 tonnage deemed avoided by reason of the imple22 mentation of qualified energy conservation 

23 measures for any calendar year shall be a ton24 nage equal to the product of multiplying— 
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1 ‘‘(i) the kilowatt hours that would 

2 otherwise have been supplied by the utility 

3 during such year in the absence of such 

4 qualified energy conservation measures; by 

5 ‘‘(ii) 0.004, and dividing the product 

6 so derived by 2,000. 

7 ‘‘(F) AVOIDED EMISSIONS FROM THE USE

8 OF QUALIFIED RENEWABLE ENERGY.—The 

9 emissions tonnage deemed avoided by reason of 

10 the use of qualified renewable energy by an 

11 electric utility for any calendar year shall be a 

12 tonnage equal to the product of multiplying— 

13 ‘‘(i) the actual kilowatt hours gen14 erated by, or purchased from, qualified re15 newable energy; by 

16 ‘‘(ii) 0.004, and dividing the product 

17 so derived by 2,000. 

18 ‘‘(G) PROHIBITIONS.— 

19 ‘‘(i) No allowances shall be allocated 

20 under this subsection for the implementa21 tion of programs that are exclusively infor22 mational or educational in nature. 

23 ‘‘(ii) No allowances shall be allocated 

24 for energy conservation measures or renew-
104

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1 able energy that were operational before 

2 January 1, 1992. 

3 ‘‘(3) SAVINGS PROVISION.—Nothing in this sub4 section precludes a State or State regulatory author5 ity from providing additional incentives to utilities to 

6 encourage investment in demand-side resources. 

7 ‘‘(4) REGULATIONS.—The Administrator shall 

8 implement this subsection under 40 CFR part 73 

9 (2002), amended as appropriate by the Adminis10 trator. Such regulations shall list energy conserva11 tion measures and renewable energy sources which 

12 may be treated as qualified energy conservation 

13 measures and qualified renewable energy for pur14 poses of this subsection. Allowances shall only be al15 located if all requirements of this subsection and the 

16 rules promulgated to implement this subsection are 

17 complied with. The Administrator shall review the 

18 determinations of each State regulatory authority 

19 under this subsection to encourage consistency from 

20 electric utility and from State-to-State in accordance 

21 with the Administrator’s rules. The Administrator 

22 shall publish and make available to the public the 

23 findings of this review no less than annually. 

24 ‘‘(g) CONSERVATION AND RENEWABLE ENERGY RE25 SERVE.—The Administrator shall establish a Conservation 
105

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1 and Renewable Energy Reserve under this subsection. Be2 ginning on January 1, 1995, the Administrator may allo3 cate from the Conservation and Renewable Energy Re4 serve an amount equal to a total of 300,000 allowances 

5 for emissions of sulfur dioxide pursuant to section 411. 

6 In order to provide 300,000 allowances for such reserve, 

7 in each year beginning in calendar year 2000 and until 

8 calendar year 2009, inclusive, the Administrator shall re9 duce each unit’s basic phase II allowance allocation on the 

10 basis of its pro rata share of 30,000 allowances. Notwith11 standing the prior sentence, if allowances remain in the 

12 reserve on January 1, 2010, the Administrator shall allo13 cate such allowances for affected units under section 414 

14 on a pro rata basis. For purposes of this subsection, for 

15 any unit subject to the emissions limitation requirements 

16 of section 414, the term ‘pro rata basis’ refers to the ratio 

17 which the reductions made in such unit’s allowances in 

18 order to establish the reserve under this subsection bears 

19 to the total of such reductions for all such units. 

20 ‘‘(h) ALTERNATIVE ALLOWANCE ALLOCATION FOR

21 UNITS IN CERTAIN UTILITY SYSTEMS WITH OPTIONAL

22 BASELINE.— 

23 ‘‘(1) OPTIONAL BASELINE FOR UNITS IN CER24 TAIN SYSTEMS.—In the case of a unit subject to the 
106

S 1844 IS 

1 emissions limitation requirements of this section 

2 which (as of November 15, 1990)— 

3 ‘‘(A) has an emission rate below 1.0 lbs/

4 mmBtu,

5 ‘‘(B) has decreased its sulfur dioxide emis6 sions rate by 60 percent or greater since 1980, 

7 and 

8 ‘‘(C) is part of a utility system which has 

9 a weighted average sulfur dioxide emissions rate 

10 for all fossil fueled-fired units below 1.0 lbs/

11 mmBtu, at the election to the owner or oper12 ator of such unit, the unit’s baseline may be 

13 calculated— 

14 ‘‘(i) as provided under section 411, or 

15 ‘‘(ii) by utilizing the unit’s average 

16 annual fuel consumption at a 60 percent 

17 capacity factor. Such election shall be 

18 made no later than March 1, 1991. 

19 ‘‘(2) ALLOWANCE ALLOCATION.—Whenever a 

20 unit referred to in paragraph (1) elects to calculate 

21 its baseline as provided in clause (ii) of paragraph 

22 (1), the Administrator shall allocate allowances for 

23 the unit pursuant to section 412(a), this section, 

24 and section 414 (as basic phase II allowance alloca25 tions) in an amount equal to the baseline selected 
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1 multiplied by the lower of the average annual emis2 sion rate for such unit in 1989, or 1.0 lbs/mmBtu. 

3 Such allowance allocation shall be in lieu of any allo4 cation of allowances under this section and section 

5 414. 

6 ‘‘SEC. 414. PHASE II SULFUR DIOXIDE REQUIREMENTS. 

7 ‘‘(a) APPLICABILITY.— 

8 ‘‘(1) After January l, 2000, each existing utility 

9 unit as provided below is subject to the limitations 

10 or requirements of this section. Each utility unit 

11 subject to an annual sulfur dioxide tonnage emission 

12 limitation under this section is an affected unit 

13 under this subpart. Each source that includes one or 

14 more affected units is an affected source. In the case 

15 of an existing unit that was not in operation during 

16 calendar year 1985, the emission rate for a calendar 

17 year after 1985, as determined by the Adminis18 trator, shall be used in lieu of the 1985 rate. 

19 ‘‘(2) In addition to basic phase II allowance al20 locations, in each year beginning in calendar year 

21 2000 and ending in calendar year 2009, inclusive, 

22 the Administrator shall allocate up to 530,000 phase 

23 II bonus allowances pursuant to subsections (b)(2), 

24 (c)(4), (d)(3) (A) and (B), and (h)(2) of this section 

25 and section 415. 
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1 ‘‘(3) In addition to basic phase II allowances al2 locations and phase II bonus allowance allocations, 

3 beginning January 1, 2000, the Administrator shall 

4 allocate for each unit listed on table A in section 

5 413 (other than units at Kyger Creek, Clifty Creek, 

6 and Joppa Stream) and located in the States of Illi7 nois, Indiana, Ohio, Georgia, Alabama, Missouri, 

8 Pennsylvania, West Virginia, Kentucky, or Ten9 nessee allowances in an amount equal to 50,000 

10 multiplied by the unit’s pro rata share of the total 

11 number of basic allowances allocated for all units 

12 listed on table A (other than units at Kyger Creek, 

13 Clifty Creek, and Joppa Stream). Allowances allo14 cated pursuant to this paragraph shall not be sub15 ject to the 8,900,000 ton limitation in section 

16 412(a). 

17 ‘‘(b) UNITS EQUAL TO, OR ABOVE, 75 MWE AND

18 1.20 LBS/MMBTU.— 

19 ‘‘(1) Except as otherwise provided in paragraph 

20 (3), after January 1, 2000, it shall be unlawful for 

21 any existing utility unit that serves a generator with 

22 nameplate capacity equal to, or greater, than 75 

23 MWe and an actual 1985 emission rate equal to or 

24 greater than 1.20 lbs/mmBtu to exceed an annual 

25 sulfur dioxide tonnage emission limitation equal to 
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S 1844 IS 

1 the product of the unit’s baseline multiplied by an 

2 emission rate equal to 1.20 lbs/mmBtu, divided by 

3 2,000, unless the owner or operator of such unit 

4 holds allowances to emit not less than the unit’s 

5 total annual emissions or, for a year after 2007, un6 less the owner or operator of the source that in7 cludes such unit holds allowances to emit not less 

8 than the total annual emissions of all affected units 

9 at the source. 

10 ‘‘(2) In addition to allowances allocated pursu11 ant to paragraph (1) and section 412(a) as basic 

12 phase II allowance allocations, beginning January 1, 

13 2000, and for each calendar year thereafter until 

14 and including 2009, the Administrator shall allocate 

15 annually for each unit subject to the emissions limi16 tation requirements of paragraph (1) with an actual 

17 1985 emissions rate greater than 1.20 lbs/mmBtu 

18 and less than 2.50 lbs/mmBtu and a baseline capac19 ity factor of less than 60 percent, allowances from 

20 the reserve created pursuant to subsection (a)(2) in 

21 an amount equal to 1.20 lbs/mmBtu multiplied by 

22 50 percent of the difference, on a Btu basis, between 

23 the unit’s baseline and the unit’s fuel consumption 

24 at a 60 percent capacity factor. 
110

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1 ‘‘(3) After January 1, 2000, it shall be unlawful 

2 for any existing utility unit with an actual 1985 

3 emissions rate equal to or greater than 1.20 lbs/

4 mmBtu whose annual average fuel consumption dur5 ing 1985, 1986, and 1987 on a Btu basis exceeded 

6 90 percent in the form of lignite coal which is lo7 cated in a State in which, as of July 1, 1989, no 

8 county or portion of a county was designated non9 attainment under section 107 of this Act for any 

10 pollutant subject to the requirements of section 109 

11 of this Act to exceed an annual sulfur dioxide ton12 nage limitation equal to the product of the unit’s 

13 baseline multiplied by the lesser of the unit’s actual 

14 1985 emissions rate or its allowable 1985 emissions 

15 rate, divided by 2,000, unless the owner or operator 

16 of such unit holds allowances to emit not less than 

17 the unit’s total annual emissions or, for a year after 

18 2007, unless the owner or operator of the source 

19 that includes such unit holds allowances to emit not 

20 less than the total annual emissions of all affected 

21 units at the source. 

22 ‘‘(4) After January 1, 2000, the Administrator 

23 shall allocate annually for each unit, subject to the 

24 emissions limitation requirements of paragraph (1), 

25 which is located in a State with an installed elec-
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S 1844 IS 

1 trical generating capacity of more than 30,000,000 

2 kw in 1988 and for which was issued a prohibition 

3 order or a proposed prohibition order (from burning 

4 oil), which unit subsequently converted to coal be5 tween January 1, 1980, and December 31, 1985, al6 lowances equal to the difference between (A) the 

7 product of the unit’s annual fuel consumption, on a 

8 Btu basis, at a 65 percent capacity factor multiplied 

9 by the lesser of its actual or allowable emissions rate 

10 during the first full calendar year after conversion, 

11 divided by 2,000, and (B) the number of allowances 

12 allocated for the unit pursuant to paragraph (1): 

13 Provided, That the number of allowances allocated 

14 pursuant to this paragraph shall not exceed an an15 nual total of five thousand. If necessary to meeting 

16 the restriction imposed in the preceding sentence the 

17 Administrator shall reduce, pro rata, the annual al18 lowances allocated for each unit under this para19 graph. 

20 ‘‘(c) COAL OR OIL-FIRED UNITS BELOW 75 MWE

21 AND ABOVE 1.20 LBS/MMBTU.— 

22 ‘‘(1) Except as otherwise provided in paragraph 

23 (3), after January 1, 2000, it shall be unlawful for 

24 a coal or oil-fired existing utility unit that serves a 

25 generator with nameplate capacity of less than 75 
112

S 1844 IS 

1 MWe and an actual 1985 emission rate equal to, or 

2 greater than, 1.20 lbs/mmBtu and which is a unit 

3 owned by a utility operating company whose aggre4 gate nameplate fossil fuel steam-electric capacity is, 

5 as of December 31, 1989, equal to, or greater than, 

6 250 MWe to exceed an annual sulfur dioxide emis7 sions limitation equal to the product of the unit’s 

8 baseline multiplied by an emission rate equal to 1.20 

9 lbs/mmBtu, divided by 2,000 unless the owner or op10 erator of such unit holds allowances to emit not less 

11 than the unit’s total annual emissions for a year 

12 after 2007, or the owner or operator of the source 

13 that includes such unit holds allowances to emit not 

14 less than the total annual emissions of all affected 

15 units at the source. 

16 ‘‘(2) After January 1, 2000, it shall be unlawful 

17 for a coal or oil-fired existing utility unit that serves 

18 a generator with nameplate capacity of less than 75 

19 MWe and an actual 1985 emission rate equal to, or 

20 greater than, 1.20 lbs/mmBtu (excluding units sub21 ject to section 111 of the Act or to a federally en22 forceable emissions limitation for sulfur dioxide 

23 equivalent to an annual rate of less than 1.20 lbs/

24 mmBtu) and which is a unit owned by a utility oper25 ating company whose aggregate nameplate fossil fuel 
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1 steam-electric capacity is, as of December 31, 1989, 

2 less than 250 MWe, to exceed an annual sulfur diox3 ide tonnage emissions limitation equal to the product 

4 of the unit’s baseline multiplied by the lesser of its 

5 actual 1985 emissions rate or its allowable 1985 

6 emissions rate, divided by 2,000, unless the owner or 

7 operator of such unit holds allowances to emit not 

8 less than the unit’s total annual emissions, for a 

9 year after 2007, or the owner or operator of the 

10 source that includes such unit holds allowances to 

11 emit not less than the total annual emissions of all 

12 affected units at the source. 

13 ‘‘(3) After January 1, 2000 it shall be unlawful 

14 for any existing utility unit with a nameplate capac15 ity below 75 MWe and an actual 1985 emissions 

16 rate equal to, or greater than, 1.20 lbs/mmBtu 

17 which became operational on or before December 31, 

18 1965, which is owned by a utility operating company 

19 with, as of December 31, 1989, a total fossil fuel 

20 steam-electric generating capacity greater than 250 

21 MWe, and less than 450 MWe which serves fewer 

22 than 78,000 electrical customers as of November 15, 

23 1990, to exceed an annual sulfur dioxide emissions 

24 tonnage limitation equal to the product of its base25 line multiplied by the lesser of its actual or allowable 
114

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1 1985 emission rate, divided by 2,000, unless the 

2 owner or operator holds allowances to emit not less 

3 than the units total annual emissions or, for a year 

4 after 2007, unless the owner or operator of the 

5 source that includes such unit holds allowances to 

6 emit not less than the total annual emissions of all 

7 affected units at the source. After January 1, 2010, 

8 it shall be unlawful for each unit subject to the 

9 emissions limitation requirements of this paragraph 

10 to exceed an annual emissions tonnage limitation 

11 equal to the product of its baseline multiplied by an 

12 emissions rate of 1.20 lbs/mmBtu, divided by 2,000, 

13 unless the owner or operator holds allowances to 

14 emit not less than the unit’s total annual emissions 

15 for a year after 2007, or the owner or operator of 

16 the source that includes such unit holds allowances 

17 to emit not less than the total annual emissions of 

18 all affected units at the source. 

19 ‘‘(4) In addition to allowances allocated pursu20 ant to paragraph (1) and section 412(a) as basic 

21 phase II allowance allocations, beginning January 1, 

22 2000, and for each calendar year thereafter until 

23 and including 2009, inclusive, the Administrator 

24 shall allocate annually for each unit subject to the 

25 emissions limitation requirements of paragraph (1) 
115

S 1844 IS 

1 with an actual 1985 emissions rate equal to, or 

2 greater than, 1.20 lbs/mmBtu and less than 2.50 

3 lbs/mmBtu and a baseline capacity factor of less 

4 than 60 percent, allowances from the reserve created 

5 pursuant to subsection (a)(2) in an amount equal 

6 to 1.20 lbs/mmBtu multiplied by 50 percent of the 

7 difference, on a Btu basis, between the unit’s base8 line and the unit’s fuel consumption at a 60 percent 

9 capacity factor. 

10 ‘‘(5) After January 1, 2000, it shall be unlawful 

11 for any existing unit with a nameplate capacity 

12 below 75 MWe and an actual 1985 emissions rate 

13 equal to, or greater than, 1.20 lbs/mmBtu which is 

14 part of an electric utility system which, as of No15 vember 15, 1990—

16 ‘‘(A) has at least 20 percent of its fossil17 fuel capacity controlled by flue gas 

18 desulfurization devices; 

19 ‘‘(B) has more than 10 percent of its fos20 sil-fuel capacity consisting of coal-fired units of 

21 less than 75 MWe; and 

22 ‘‘(C) has large units (greater than 400 

23 MWe) all of which have difficult or very dif24 ficult FGD Retrofit Cost Factors (according to 

25 the Emissions and the FGD Retrofit Feasibility 
116

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1 at the 200 Top Emitting Generating Stations, 

2 prepared for the United States Environmental 

3 Protection Agency on January 10, 1986) to ex4 ceed an annual sulfur dioxide emissions tonnage 

5 limitation equal to the product of its baseline 

6 multiplied by an emissions rate of 2.5 lbs/

7 mmBtu, divided by 2,000, unless the owner or 

8 operator holds allowances to emit not less than 

9 the unit’s total annual emissions, for a year 

10 after 2007, or the owner or operator of the 

11 source that includes such unit holds allowances 

12 to emit not less than the total annual emissions 

13 of all affected units at the source. After Janu14 ary 1, 2010, it shall be unlawful for each unit 

15 subject to the emissions limitation requirements 

16 of this paragraph to exceed an annual emissions 

17 tonnage limitation equal to the project of its 

18 baseline multiplied by an emissions rate of 1.20 

19 lbs/mmBtu, divided by 2,000, unless the owner 

20 or operator holds for use allowances to emit not 

21 less than the unit’s total annual emissions for 

22 a year after 2007, or the owner or operator of 

23 the source that includes such unit holds allow24 ances to emit not less than the total annual 

25 emissions of all affected units at the source. 
117

S 1844 IS 

1 ‘‘(d) COAL-FIRED UNITS BELOW 1.20 LBS/

2 MMBTU.—

3 ‘‘(1) After January 1, 2000, it shall be unlawful 

4 for any existing coal-fired utility unit the lesser of 

5 whose actual or allowable 1985 sulfur dioxide emis6 sions rate is less than 0.60 lbs/mmBtu to exceed an 

7 annual sulfur dioxide tonnage emission limitation 

8 equal to the product of the unit’s baseline multiplied 

9 by—

10 ‘‘(A) the lesser of 0.60 lbs/mmBtu or the 

11 unit’s allowable 1985 emissions rate; and 

12 ‘‘(B) a numerical factor of 120 percent, di13 vided by 2,000, unless the owner or operator of 

14 such unit holds allowances to emit not less than 

15 the unit’s total annual emissions for a year 

16 after 2007, or the owner or operator of the 

17 source that includes such unit holds allowances 

18 to emit not less than the total annual emissions 

19 of all affected units at the source. 

20 ‘‘(2) After January 1, 2000, it shall be unlawful 

21 for any existing coal-fired utility unit the lesser of 

22 whose actual or allowable 1985 sulfur dioxide emis23 sions rate is equal to, or greater than, 0.60 lbs/

24 mmBtu and less than 1.20 lbs/mmBtu to exceed an 

25 annual sulfur dioxide tonnage emissions limitation 
118

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1 equal to the product of the unit’s baseline multiplied 

2 by (A) the lesser of its actual 1985 emissions rate 

3 or its allowable 1985 emissions rate, and (B) a nu4 merical factor of 120 percent, divided by 2,000, un5 less the owner or operator of such unit holds allow6 ances to emit not less than the unit’s total annual 

7 emissions for a year after 2007, or the owner or op8 erator of the source that includes such unit holds al9 lowances to emit not less than the total annual emis10 sions of all affected units at the source. 

11 ‘‘(3)(A) In addition to allowances allocated pur12 suant to paragraph (1) and section 412(a) as basic 

13 phase II allowance allocations, at the election of the 

14 designated representative of the operating company, 

15 beginning January 1, 2000, and for each calendar 

16 year thereafter until and including 2009, the Admin17 istrator shall allocate annually for each unit subject 

18 to the emissions limitation requirements of para19 graph (1) allowances from the reserve created pursu20 ant to subsection (a)(2) in an amount equal to the 

21 amount by which—

22 ‘‘(i) the product of the lesser of 0.60 lbs/

23 mmBtu or the unit’s allowable 1985 emissions 

24 rate multiplied by the unit’s baseline adjusted 
119

S 1844 IS 

1 to reflect operation at a 60 percent capacity 

2 factor, divided by 2,000, exceeds 

3 ‘‘(ii) the number of allowances allocated 

4 for the unit pursuant to paragraph (1) and sec5 tion 403(a)(1) as basic phase II allowance allo6 cations. 

7 ‘‘(B) In addition to allowances allocated pursu8 ant to paragraph (2) and section 412(a) as basic 

9 phase II allowance allocations, at the election of the 

10 designated representative of the operating company, 

11 beginning January 1, 2000, and for each calendar 

12 year thereafter until and including 2009, the Admin13 istrator shall allocate annually for each unit subject 

14 to the emissions limitation requirements of para15 graph (2) allowances from the reserve created pursu16 ant to subsection (a)(2) in an amount equal to the 

17 amount by which—

18 ‘‘(i) the product of the lesser of the unit’s 

19 actual 1985 emissions rate or its allowable 

20 1985 emissions rate multiplied by the unit’s 

21 baseline adjusted to reflect operation at a 60 

22 percent capacity factor, divided by 2,000; ex23 ceeds 

24 ‘‘(ii) the number of allowances allocated 

25 for the unit pursuant to paragraph (2) and sec-
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1 tion 412(a) as basic phase II allowance alloca2 tions. 

3 ‘‘(C) An operating company with units subject 

4 to the emissions limitation requirements of this sub5 section may elect the allocation of allowances as pro6 vided under subparagraphs (A) and (B). Such elec7 tion shall apply to the annual allowance allocation 

8 for each and every unit in the operating company 

9 subject to the emissions limitation requirements of 

10 this subsection. The Administrator shall allocate al11 lowances pursuant to subparagraphs (A) and (B) 

12 only in accordance with this subparagraph. 

13 ‘‘(4) Notwithstanding any other provision of 

14 this section, at the election of the owner or operator, 

15 after January l, 2000, the Administrator shall allo16 cate in lieu of allocation, pursuant to paragraph (1), 

17 (2), (3), (5), or (6), allowances for a unit subject to 

18 the emissions limitation requirements of this sub19 section which commenced commercial operation on 

20 or after January 1, 1981 and before December 31, 

21 1985, which was subject to, and in compliance with, 

22 section 111 of the Act in an amount equal to the 

23 unit’s annual fuel consumption, on a Btu basis, at 

24 a 65-percent-capacity factor multiplied by the unit’s 

25 allowable 1985 emissions rate, divided by 2,000. 
121

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1 ‘‘(5) For the purposes of this section, in the 

2 case of an oil- and gas-fired unit which has been 

3 awarded a clean coal technology demonstration grant 

4 as of January 1, 1991, by the United States Depart5 ment of Energy, beginning January 1, 2002, the Ad6 ministrator shall allocate for the unit allowances in 

7 an amount equal to the unit’s baseline multiplied by 

8 1.20 lbs/mmBtu, divided by 2,000. 

9 ‘‘(e) OIL AND GAS-FIRED UNITS EQUAL TO OR

10 GREATER THAN 0.60 LBS/MMBTU AND LESS THAN 1.20 

11 LBS/MMBTU.—After January 1, 2000, it shall be unlawful 

12 for any existing oil and gas-fired utility unit the lesser of 

13 whose actual or allowable 1985 sulfur dioxide emission 

14 rate is equal to, or greater than, 0.60 lbs/mmBtu, but less 

15 than 1.20 lbs/mmBtu to exceed an annual sulfur dioxide 

16 tonnage limitation equal to the product of the unit’s base17 line multiplied by (A) the lesser of the unit’s allowable 

18 1985 emissions rate or its actual 1985 emissions rate and 

19 (B) a numerical factor of 120 percent divided by 2,000, 

20 unless the owner or operator of such unit holds allowances 

21 to emit not less than the unit’s total annual emissions for 

22 a year after 2007, or the owner or operator of the source 

23 that includes such unit holds allowances to emit not less 

24 than the total annual emissions of all affected units at 

25 the source. 
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S 1844 IS 

1 ‘‘(f) OIL AND GAS-FIRED UNITS LESS THAN 0.60 

2 LBS/MMBTU.—

3 ‘‘(1) After January 1, 2000, it shall be unlawful 

4 for any oil and gas-fired existing utility unit the less5 er of whose actual or allowance 1985 emission rate 

6 is less than 0.60 lbs/mmBtu and whose average an7 nual fuel consumption during the period 1980 

8 through 1989 on a Btu basis was 90 percent or less 

9 in the form of natural gas to exceed an annual sul10 fur dioxide tonnage emissions limitation equal to the 

11 product of the unit’s baseline multiplied by—

12 ‘‘(A) the lesser of 0.60 lbs/mmBtu or the 

13 unit’s allowance 1985 emissions, and 

14 ‘‘(B) a numerical factor of 120 percent, di15 vided by 2,000, unless the owner or operator of 

16 such unit holds allowances to emit not less than 

17 the unit’s total annual emissions, for a year 

18 after 2007, or the owner or operator of the 

19 source that includes such unit holds allowances 

20 to emit not less than the total annual emissions 

21 of all affected units at the source. 

22 ‘‘(2) In addition to allowances allocated pursu23 ant to paragraph (1) as basic phase II allowance al24 locations and section 412(a), beginning January 1, 

25 2000, the Administrator shall, in the case of any 
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1 unit operated by a utility that furnishes electricity, 

2 electric energy, steam, and natural gas within an 

3 area consisting of a city and 1 contiguous county, 

4 and in the case of any unit owned by a State author5 ity, the output of which unit is furnished within that 

6 same area consisting of a city and 1 contiguous 

7 county, the Administrator shall allocate for each unit 

8 in the utility its pro rata share of 7,000 allowances 

9 and for each unit in the State authority its pro rata 

10 share of 2,000 allowances. 

11 ‘‘(g) UNITS THAT COMMENCE COMMERCIAL OPER12 ATION BETWEEN 1986 AND DECEMBER 31, 1995.—

13 ‘‘(1) After January 1, 2000, it shall be unlawful 

14 for any utility unit that has commenced commercial 

15 operation on or after January 1, 1986, but not later 

16 than September 30, 1990 to exceed an annual ton17 nage emission limitation equal to the product of the 

18 unit’s annual fuel consumption, on a Btu basis, at 

19 a 65-percent-capacity factor multiplied by the unit’s 

20 allowance 1985 sulfur dioxide emission rate (con21 verted, if necessary, to pounds per mmBtu), divided 

22 by 2,000 unless the owner or operator of such unit 

23 holds allowances to emit not less than the unit’s 

24 total annual emissions for a year after 2007, or the 

25 owner or operator of the source that includes such 
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1 unit holds allowances to emit not less than the total 

2 annual emissions of all affected units at the source. 

3 ‘‘(2) After January 1, 2000, the Administrator 

4 shall allocate allowances pursuant to section 411 to 

5 each unit which is listed in table B of this paragraph 

6 in an annual amount equal to the amount specified 

7 in table B.

‘‘TABLE B 

Unit Allowances 

Brandon Shores .............................................................................. 8,907 

Miller 4 ........................................................................................... 9,197 

TNP One 2 ..................................................................................... 4,000 

Zimmer 1 ........................................................................................ 18,458 

Spruce 1 ......................................................................................... 7,647 

Clover 1 .......................................................................................... 2,796 

Clover 2 .......................................................................................... 2,796 

Twin Oak 2 ..................................................................................... 1,760 

Twin Oak 1 ..................................................................................... 9,158 

Cross 1 ............................................................................................ 6,401 

Malakoff 1 ...................................................................................... 1,759 

8 Notwithstanding any other paragraph of this subsection, 

9 for units subject to this paragraph, the Administrator 

10 shall not allocate allowances pursuant to any other para11 graph of this subsection, provided that the owner or oper12 ator of a unit listed on table B may elect an allocation 

13 of allowances under another paragraph of this subsection 

14 in lieu of an allocation under this paragraph. 

15 ‘‘(3) Beginning January 1, 2000, the Adminis16 trator shall allocate to the owner or operator of any 

17 utility unit that commences commercial operation, or 

18 has commenced commercial operation, on or after 
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1 October 1, 1990, but not later than December 31, 

2 1992, allowances in an amount equal to the product 

3 of the unit’s annual fuel consumption, on a Btu 

4 basis, at a 65 percent capacity factor multiplied by 

5 the lesser of 0.30 lbs/mmBtu or the unit’s allowable 

6 sulfur dioxide emission rate (converted, if necessary, 

7 to pounds per mmBtu), divided by 2,000. 

8 ‘‘(4) Beginning January 1, 2000, the Adminis9 trator shall allocate to the owner or operator of any 

10 utility unit that has commenced construction before 

11 December 31, 1990 and that commences commercial 

12 operation between January 1, 1993, and December 

13 31, 1995, allowances in an amount equal to the 

14 product of the unit’s annual fuel consumption, on a 

15 Btu basis, at a 65 percent capacity factor multiplied 

16 by the lesser of 0.30 lbs/mmBtu or the unit’s allow17 able sulfur dioxide emission rate (converted, if nec18 essary, to pounds per mmBtu), divided by 2,000. 

19 ‘‘(5) After January 1, 2000, it shall be unlawful 

20 for any existing utility unit that has completed con21 version from predominantly gas fired existing oper22 ation to coal fired operation between January 1, 

23 1985, and December 31, 1987, for which there has 

24 been allocated a proposed or final prohibition order 

25 pursuant to section 301(b) of the Powerplant and 
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1 Industrial Fuel Use Act of 1978 (42 U.S.C. 8301 et 

2 seq., repealed 1987) to exceed an annual sulfur diox3 ide tonnage emissions limitation equal to the product 

4 of the unit’s annual fuel consumption, on a Btu 

5 basis, at a 65 percent capacity factor multiplied by 

6 the lesser of 1.20 lbs/mmBtu or the unit’s allowable 

7 1987 sulfur dioxide emissions rate, divided by 2,000, 

8 unless the owner or operator of such unit has ob9 tained allowances equal to its actual emissions for a 

10 year after 2007, or the owner or operator of the 

11 source that includes such unit holds allowances to 

12 emit not less than the total annual emissions of all 

13 affected units at the source. 

14 ‘‘(6) Unless the Administrator has approved a 

15 designation of such facility under section 417, the 

16 provisions of this subpart shall not apply to a ‘quali17 fying small power production facility’ or ‘qualifying 

18 cogeneration facility’ (within the meaning of section 

19 3(17)(C) or 3(18)(B) of the Federal Power Act) or 

20 to a ‘new independent power production facility’ if, 

21 as of November 15, 1990—

22 ‘‘(A) an applicable power sales agreement 

23 has been executed; 

24 ‘‘(B) the facility is the subject of a State 

25 regulatory authority order requiring an electric 
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1 utility to enter into a power sales agreement 

2 with, purchase capacity from, or (for purposes 

3 of establishing terms and conditions of the elec4 tric utility’s purchase of power) enter into arbi5 tration concerning, the facility; 

6 ‘‘(C) an electric utility has issued a letter 

7 of intent or similar instrument committing to 

8 purchase power from the facility at a previously 

9 offered or lower price and a power sales agree10 ment is executed within a reasonable period of 

11 time; or 

12 ‘‘(D) the facility has been selected as a 

13 winning bidder in a utility competitive bid solic14 itation. 

15 ‘‘(h) OIL- AND GAS-FIRED UNITS LESS THAN 10 

16 PERCENT OIL CONSUMED.— 

17 ‘‘(1) After January 1, 2000, it shall be unlawful 

18 for any oil- and gas-fired utility unit whose average 

19 annual fuel consumption during the period 1980 

20 through 1989 on a Btu basis exceeded 90 percent in 

21 the form of natural gas to exceed an annual sulfur 

22 dioxide tonnage limitation equal to the product of 

23 the unit’s baseline multiplied by the unit’s actual 

24 1985 emissions rate divided by 2,000 unless the 

25 owner or operator of such unit holds allowances to 
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1 emit not less than the unit’s total annual emissions 

2 for a year after 2007, or the owner or operator of 

3 the source that includes such unit holds allowances 

4 to emit not less than the total annual emissions of 

5 all affected units at the source. 

6 ‘‘(2) In addition to allowances allocated pursu7 ant to paragraph (1) and section 412(a) as basic 

8 phase II allowance allocations, beginning January 1, 

9 2000, and for each calendar year thereafter until 

10 and including 2009, the Administrator shall allocate 

11 annually for each unit subject to the emissions limi12 tation requirements of paragraph (1) allowances 

13 from the reserve created pursuant to subsection 

14 (a)(2) in an amount equal to the unit’s baseline mul15 tiplied by 0.050 lbs/mmBtu, divided by 2,000. 

16 ‘‘(3) In addition to allowances allocated pursu17 ant to paragraph (1) and section 412(a), beginning 

18 January 1, 2010, the Administrator shall allocate 

19 annually for each unit subject to the emissions limi20 tation requirements of paragraph (1) allowances in 

21 an amount equal to the unit’s baseline multiplied by 

22 0.050 lbs/mmBtu, divided by 2,000. 

23 ‘‘(i) UNITS IN HIGH GROWTH STATES.— 

24 ‘‘(1) In addition to allowances allocated pursu25 ant to this section and section 412(a) as basic phase 
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1 II allowance allocations, beginning January 1, 2000, 

2 the Administrator shall allocate annually allowances 

3 for each unit, subject to an emissions limitation re4 quirement under this section, and located in a State 

5 that—

6 ‘‘(A) has experienced a growth in popu7 lation in excess of 25 percent between 1980 and 

8 1988 according to State Population and House9 hold Estimates, With Age, Sex, and Compo10 nents of Change: 1981–1988 allocated by the 

11 United States Department of Commerce, and

12 ‘‘(B) had an installed electrical generating 

13 capacity of more than 30,000,000 kw in 1988, 

14 in an amount equal to the difference between— 

15 ‘‘(i) the number of allowances that 

16 would be allocated for the unit pursuant to 

17 the emissions limitation requirements of 

18 this section applicable to the unit adjusted 

19 to reflect the unit’s annual average fuel 

20 consumption on a Btu basis of any three 

21 consecutive calendar years between 1980 

22 and 1989 (inclusive) as elected by the 

23 owner or operator; and 

24 ‘‘(ii) the number of allowances allo25 cated for the unit pursuant to the emis-
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1 sions limitation requirements of this sec2 tion: 

3 Provided, That the number of allowances allo4 cated pursuant to this subsection shall not ex5 ceed an annual total of 40,000. If necessary to 

6 meeting the 40,000 allowance restriction im7 posed under this subsection the Administrator 

8 shall reduce, pro rata, the additional annual al9 lowances allocated to each unit under this sub10 section. 

11 ‘‘(2) Beginning January 1, 2000, in addition to 

12 allowances allocated pursuant to this section and 

13 section 403(a)(1) as basic phase II allowance alloca14 tions, the Administrator shall allocate annually for 

15 each unit subject to the emissions limitation require16 ments of subsection (b)(1)—

17 ‘‘(A) the lesser of whose actual or allow18 able 1980 emissions rate has declined by 50 

19 percent or more as of November 15, 1990; 

20 ‘‘(B) whose actual emissions rate is less 

21 than 1.2 lbs/mmBtu as of January 1, 2000; 

22 ‘‘(C) which commenced operation after 

23 January 1, 1970; 

24 ‘‘(D) which is owned by a utility company 

25 whose combined commercial and industrial kilo-
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1 watt-hour sales have increased by more than 20 

2 percent between calendar year 1980 and No3 vember 15, 1990; and 

4 ‘‘(E) whose company-wide fossil-fuel sulfur 

5 dioxide emissions rate has declined 40 percent 

6 or more from 1980 to 1988, allowances in an 

7 amount equal to the difference between—

8 ‘‘(i) the number of allowances that 

9 would be allocated for the unit pursuant to 

10 the emissions limitation requirements of 

11 subsection (b)(1) adjusted to reflect the 

12 unit’s annual average fuel consumption on 

13 a Btu basis for any three consecutive years 

14 between 1980 and 1989 (inclusive) as 

15 elected by the owner or operator; and 

16 ‘‘(ii) the number of allowances allo17 cated for the unit pursuant to the emis18 sions limitation requirements of subsection 

19 (b)(1): 

20 Provided, That the number of allowances allo21 cated pursuant to this paragraph shall not ex22 ceed an annual total of 5,000. If necessary to 

23 meeting the 5,000 allowance restriction imposed 

24 in the last clause of the preceding sentence the 

25 Administrator shall reduce, pro rata, the addi-
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1 tional allowances allocated to each unit pursu2 ant to this paragraph. 

3 ‘‘(j) CERTAIN MUNICIPALLY OWNED POWER

4 PLANTS.—Beginning January 1, 2000, in addition to al5 lowances allocated pursuant to this section and section 

6 412(a) as basic phase II allowance allocations, the Admin7 istrator shall allocate annually for each existing munici8 pally owned oil and gas-fired utility unit with nameplate 

9 capacity equal to, or less than, 40 MWe, the lesser of 

10 whose actual or allowable 1985 sulfur dioxide emission 

11 rate is less than 1.20 lbs/mmBtu, allowances in an amount 

12 equal to the product of the unit’s annual fuel consumption 

13 on a Btu basis at a 60 percent capacity factor multiplied 

14 by the lesser of its allowable 1985 emission rate or its 

15 actual 1985 emission rate, divided by 2,000. 

16 ‘‘SEC. 415. ALLOWANCES FOR STATES WITH EMISSIONS 

17 RATES AT OR BELOW 0.80 LBS/MMBTU. 

18 ‘‘(a) ELECTION OF GOVERNOR.—In addition to basic 

19 phase II allowance allocations, upon the election of the 

20 Governor of any State, with a 1985 statewide annual sul21 fur dioxide emissions rate equal to or less than, 0.80 lbs/

22 mmBtu, averaged over all fossil fuel-fired utility steam 

23 generating units, beginning January 1, 2000, and for each 

24 calendar year thereafter until and including 2009, the Ad25 ministrator shall allocate, in lieu of other phase 11 bonus 
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1 allowance allocations, allowances from the reserve created 

2 pursuant to section 414(a)(2) to all such units in the State 

3 in an amount equal to 125,000 multiplied by the unit’s 

4 pro rata share of electricity generated in calendar year 

5 1985 at fossil fuel-fired utility steam units in all States 

6 eligible for the election. 

7 ‘‘(b) NOTIFICATION OF ADMINISTRATOR.—Pursuant 

8 to section 412(a), each Governor of a State eligible to 

9 make an election under paragraph (a) shall notify the Ad10 ministrator of such election. In the event that the Gov11 ernor of any such State fails to notify the Administrator 

12 of the Governor’s elections, the Administrator shall allo13 cate allowances pursuant to section 414. 

14 ‘‘(c) ALLOWANCES AFTER JANUARY 1, 2010.—After 

15 January 1, 2010, the Administrator shall allocate allow16 ances to units subject to the provisions of this section pur17 suant to section 414. 

18 ‘‘SEC. 416. ELECTION FOR ADDITIONAL SOURCES. 

19 ‘‘(a) APPLICABILITY.—The owner or operator of any 

20 unit that is not, nor will become, an affected unit under 

21 section 412(b), 413, or 414, that emits sulfur dioxide, may 

22 elect to designate that unit or source to become an af23 fected unit and to receive allowances under this subpart. 

24 An election shall be submitted to the Administrator for 

25 approval, along with a permit application and proposed 
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1 compliance plan in accordance with section 404. The Ad2 ministrator shall approve a designation that meets the re3 quirements of this section, and such designated unit shall 

4 be allocated allowances, and be an affected unit for pur5 poses of this subpart. 

6 ‘‘(b) ESTABLISHMENT OF BASELINE.—The baseline 

7 for a unit designated under this section shall be estab8 lished by the Administrator by regulation, based on fuel 

9 consumption and operating data for the unit for calendar 

10 years 1985, 1986, and 1987, or if such data is not avail11 able, the Administrator may prescribe a baseline based on 

12 alternative representative data. 

13 ‘‘(c) EMISSION LIMITATIONS.— 

14 ‘‘(1) For a unit for which an election, along 

15 with a permit application and compliance plan, is 

16 submitted to the Administrator under paragraph (a) 

17 before January 1, 2002, annual emissions limita18 tions for sulfur dioxide shall be equal to the product 

19 of the baseline multiplied by the lesser of the unit’s 

20 1985 actual or allowable emission rate in lbs/

21 mmBtu, or, if the unit did not operate in 1985, by 

22 the lesser of the unit’s actual or allowable emission 

23 rate for a calendar year after 1985 (as determined 

24 by the Administrator); divided by 2,000. 
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1 ‘‘(2) For a unit for which an election, along 

2 with a permit application and compliance plan, is 

3 submitted to the Administrator under paragraph (a) 

4 on or after January 1, 2002, annual emissions limi5 tations for sulfur dioxide shall be equal to the prod6 uct of the baseline multiplied by the lesser of the 

7 unit’s 1985 actual or allowable emission rate in lbs/

8 mmBtu, or, if the unit did not operate in 1985, by 

9 the lesser of the unit’s actual or allowable emission 

10 rate for a calendar year after 1985 (as determined 

11 by the Administrator); divided by 4,000. 

12 ‘‘(d) ALLOWANCES AND PERMITS.—The Adminis13 trator shall issue allowances to an affected unit under this 

14 section in an amount equal to the emissions limitation cal15 culated under subsection (c), in accordance with section 

16 412. Such allowance may be used in accordance with, and 

17 shall be subject to, the provisions of section 412. Affected 

18 sources under this section shall be subject to the require19 ments of sections 404, 405, 406, and 412. 

20 ‘‘(e) LIMITATION.—Any unit designated under this 

21 section shall not transfer or bank allowances produced as 

22 a result of reduced utilization or shutdown, except that, 

23 such allowances may be transferred or carried forward for 

24 use in subsequent years to the extent that the reduced 

25 utilization or shutdown results from the replacement of 
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1 thermal energy from the unit designated under this sec2 tion, with thermal energy generated by any other unit or 

3 units subject to the requirements of this subpart, and the 

4 designated unit’s allowances are transferred or carried for5 ward for use at such other replacement unit or units. In 

6 no case may the Administrator allocate to a source des7 ignated under this section allowances in an amount great8 er than the emissions resulting from operation of the 

9 source in full compliance with the requirements of this 

10 Act. No such allowances shall authorize operation of a unit 

11 in violation of any other requirements of this Act. 

12 ‘‘(f) IMPLEMENTATION.—The Administrator shall 

13 implement this section under 40 CFR part 74 (2002), 

14 amended as appropriate by the Administrator. 

15 ‘‘SEC. 417. AUCTIONS, RESERVE. 

16 ‘‘(a) SPECIAL RESERVE OF ALLOWANCES.—For pur17 poses of establishing the Special Allowance Reserve, the 

18 Administrator shall withhold—

19 ‘‘(1) 2.8 percent of the allocation of allowances 

20 for each year from 1995 through 1999 inclusive; and 

21 ‘‘(2) 2.8 percent of the basic phase 11 allow22 ance allocation of allowances for each year beginning 

23 in the year 2000; 

24 which would (but for this subsection) be issued for each 

25 affected unit at an affected source. The Administrator 
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1 shall record such withholding for purposes of transferring 

2 the proceeds of the allowance sales under this subsection. 

3 The allowances so withheld shall be deposited in the Re4 serve under this section. 

5 ‘‘(b) AUCTION SALES.— 

6 ‘‘(1) SUBACCOUNT FOR AUCTIONS.—The Ad7 ministrator shall establish an Auction Subaccount in 

8 the Special Reserve established under this section. 

9 The Auction Subaccount shall contain allowances to 

10 be sold at auction under this section in the amount 

11 of 150,000 tons per year for each year from 1995 

12 through 1999, inclusive and 250,000 tons per year 

13 for each year from 2000 through 2009, inclusive. 

14 ‘‘(2) ANNUAL AUCTIONS.—Commencing in 

15 1993 and in each year thereafter until 2010, the Ad16 ministrator shall conduct auctions at which the al17 lowances referred to in paragraph (1) shall be of18 fered for sale in accordance with regulations promul19 gated by the Administrator. The allowances referred 

20 to in paragraph (1) shall be offered for sale at auc21 tion in the amounts specified in table C. The auction 

22 shall be open to any person. A person wishing to bid 

23 for such allowances shall submit (by a date set by 

24 the Administrator) to the Administrator (on a sealed 

25 bid schedule provided by the Administrator) offers to 
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1 purchase specified numbers of allowances at speci2 fied prices. Such regulations shall specify that the 

3 auctioned allowances shall be allocated and sold on 

4 the basis of bid price, starting with the highest5 priced bid and continuing until all allowances for 

6 sale at such auction have been allocated. The regula7 tions shall not permit that a minimum price be set 

8 for the purchase of withheld allowances. Allowances 

9 purchased at the auction may be used for any pur10 pose and at any time after the auction, subject to 

11 the provisions of this subpart and subpart 2.

TABLE C—NUMBER OF ALLOWANCES AVAILABLE FOR 

AUCTION 

Year of sale Spot auction 

(same year) 

Advance 

auction 

1993 ........................................................................ 50,000 100,000 

1994 ........................................................................ 50,000 100,000 

1995 ........................................................................ 50,000 100,000 

1996 ........................................................................ 150,000 100,000 

1997 ........................................................................ 150,000 100,000 

1998 ........................................................................ 150,000 100,000 

1999 ........................................................................ 150,000 100,000 

2000 ........................................................................ 125,000 125,000 

2001 ........................................................................ 125,000 125,000 

2002 ........................................................................ 125,000 125,000 

2003 ........................................................................ 125,000 0

2004–2009 .............................................................. 125,000 0 

12 ‘‘(3) PROCEEDS.— 

13 ‘‘(A) TRANSFER.—Notwithstanding section 

14 3302 of title 31 of the United States Code or 

15 any other provision of law, within 90 days of re16 ceipt, the Administrator shall transfer the pro-
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1 ceeds from the auction under this section, on a 

2 pro rata basis, to the owners or operators of the 

3 affected units at an affected source from whom 

4 allowances were withheld under subsection (b). 

5 No funds transferred from a purchaser to a 

6 seller of allowances under this paragraph shall 

7 be held by any officer or employee of the United 

8 States or treated for any purpose as revenue to 

9 the United States or the Administrator. 

10 ‘‘(B) RETURN.—At the end of each year, 

11 any allowances offered for sale but not sold at 

12 the auction shall be returned without charge, on 

13 a pro rata basis, to the owner or operator of the 

14 affected units from whose allocation the allow15 ances were withheld. With 170 days after the 

16 date of enactment of the Clear Skies Act of 

17 2003, any allowance withheld under paragraph 

18 (a)(2) but not offered for sale at an auction 

19 shall be returned without charge, on a pro rata 

20 basis, to the owner or operator of the affected 

21 units from whose allocation the allowances were 

22 withheld. 

23 ‘‘(4) RECORDING BY EPA.—The Administrator 

24 shall record and publicly report the nature, prices 

25 and results of each auction under this subsection, in-
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1 cluding the prices of successful bids, and shall 

2 record the transfers of allowances as a result of each 

3 auction in accordance with the requirements of this 

4 section. The transfer of allowances at such auction 

5 shall be recorded in accordance with the regulations 

6 promulgated by the Administrator under this sub7 part. 

8 ‘‘(c) CHANGES IN AUCTIONS AND WITHHOLDING.—

9 Pursuant to rulemaking after public notice and comment 

10 the Administrator may at any time after the year 1998 

11 (in the case of advance auctions) and 2005 (in the case 

12 of spot auctions) decrease the number of allowances with13 held and sold under this section. 

14 ‘‘(d) TERMINATION OF AUCTIONS.—Not later than 

15 the commencement date of the sulfur dioxide allowance re16 quirement under section 422, the Administrator shall ter17 minate the withholding of allowances and the auction sales 

18 under this section. Pursuant to regulations under this sec19 tion, the Administrator may by delegation or contract pro20 vide for the conduct of sales or auctions under the Admin21 istrator’s supervision by other departments or agencies of 

22 the United States Government or by nongovernmental 

23 agencies, groups, or organizations. 
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1 ‘‘(e) The Administrator shall implement this section 

2 under 40 CFR part 73 (2002), amended as appropriate 

3 by the Administrator. 

4 ‘‘SEC. 418. INDUSTRIAL SULFUR DIOXIDE EMISSIONS. 

5 ‘‘(a) REPORT.—Not later than January 1, 1995 and 

6 every 5 years thereafter, the Administrator shall transmit 

7 to the Congress a report containing an inventory of na8 tional annual sulfur dioxide emissions from industrial 

9 sources (as defined in section 411(11)), including units 

10 subject to section 414(g)(2), for all years for which data 

11 are available, as well as the likely trend in such emission 

12 over the following twenty-year period. The reports shall 

13 also contain estimates of the actual emission reduction in 

14 each year resulting from promulgation of the diesel fuel 

15 desulfurization regulations under section 214. 

16 ‘‘(b) 5.60 MILLION TON CAP.—Whenever the inven17 tory required by this section indicates that sulfur dioxide 

18 emissions from industrial sources, including units subject 

19 to section 414(g)(2), and may reasonably be expected to 

20 reach levels greater than 5.60 million tons per year, the 

21 Administrator shall take such actions under the Act as 

22 may be appropriate to ensure that such emissions do not 

23 exceed 5.60 million tons per year. Such actions may in24 clude the promulgation of new and revised standards of 

25 performance for new sources, including units subject to 
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1 section 414(g)(2), under section 111(b), as well as pro2 mulgation of standards of performance for existing 

3 sources, including units subject to section 414(g)(2), 

4 under authority of this section. For an existing source reg5 ulated under this section, ‘standard of performance’ 

6 means a standard which the Administrator determines is 

7 applicable to that source and which reflects the degree of 

8 emission reduction achievable through the application of 

9 the best system of continuous emission reduction which 

10 (taking into consideration the cost of achieving such emis11 sion reduction, and any nonair quality health and environ12 mental impact and energy requirements) the Adminis13 trator determines has been adequately demonstrated for 

14 that category of sources. 

15 ‘‘(c) ELECTION.—Regulations promulgated under 

16 section 414(b) shall not prohibit a source from electing 

17 to become an affected unit under section 417. 

18 ‘‘SEC. 419. TERMINATION. 

19 ‘‘Starting January l, 2010, the owners or operators 

20 of affected units and affected facilities under sections 

21 412(b) and (c) and 416 and shall no longer be subject 

22 to the requirements of sections 412 through 417. 
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1 ‘‘Subpart 2—Clear Skies Sulfur Dioxide Allowance 

2 Program 

3 ‘‘SEC. 421. DEFINITIONS. 

4 ‘‘For purposes of this subpart— 

5 ‘‘(1) The term ‘affected EGU’ means— 

6 ‘‘(A) for a unit serving a generator before 

7 the date of enactment of the Clear Skies Act of 

8 2003, a unit in a State serving a generator with 

9 a nameplate capacity of greater than twenty10 five megawatts that produced or produces elec11 tricity for sale during 2002 or any year there12 after, except for a cogeneration unit that meets 

13 the criteria for qualifying cogeneration facilities 

14 codified in section 292.205 of title 18 of the 

15 Code of Federal Regulations as issued on April 

16 1, 2002 during 2002 and each year thereafter; 

17 and 

18 ‘‘(B) for a unit commencing service of a 

19 generator on or after the date of enactment of 

20 the Clear Skies Act of 2003, a unit in a State 

21 serving a generator that produces electricity for 

22 sale during any year starting with the year the 

23 unit commences service of a generator, except 

24 for a unit serving one or more generators with 

25 total nameplate capacity of twenty-five 

26 megawatts or less, or a cogeneration unit that 
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1 meets the criteria for qualifying cogeneration 

2 facilities codified in section 292.205 of title 18 

3 of the Code of Federal Regulations as issued on 

4 April 1, 2002, during each year starting with 

5 the year the unit commences services of a gen6 erator. 

7 Notwithstanding paragraphs (A) and (B), the term 

8 ‘affected EGU’ does not include a solid waste incin9 eration unit subject to section 129 or a unit for the 

10 treatment, storage, or disposal of hazardous waste 

11 subject to section 3005 of the Solid Waste Disposal 

12 Act. 

13 ‘‘(2) The term ‘coal-fired’ with regard to a unit 

14 means, for purposes of section 424, combusting coal 

15 or any coal-derived fuel alone or in combination with 

16 any amount of any other fuel in any year during 

17 1998 through 2002 or, for a unit that commenced 

18 operation on or after January 1, 2003, a unit de19 signed to combust coal or any coal derived fuel alone 

20 or in combination with any other fuel. 

21 ‘‘(3) The term ‘Eastern bituminous’ means bi22 tuminous that is from a mine located in a State east 

23 of the Mississippi River. 

24 ‘‘(4) The term ‘general account’ means an ac25 count in the Allowance Tracking System under sec-
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1 tion 403(c) established by the Administrator for any 

2 person under 40 CFR part 73.31(c) (2002), amend3 ed as appropriate by the Administrator. 

4 ‘‘(5) The term ‘oil-fired’ with regard to a unit 

5 means, for purposes of section 424, combusting fuel 

6 oil for more than 10 percent of the unit’s total heat 

7 input, and combusting no coal or coal-derived fuel, 

8 in any year during 1998 through 2002 or, for a unit 

9 that commenced operation on or after January 1, 

10 2003, a unit designed to combust oil for more than 

11 10 percent of the unit’s total heat input and not to 

12 combust any coal or coal-derived fuel. 

13 ‘‘(6) The term ‘unit account’ means an account 

14 in the Allowance Tracking System under section 

15 403(c) established by the Administrator for any unit 

16 under 40 CFR section 73.31 (a) and (b) (2002), 

17 amended as appropriate by the Administrator. 

18 ‘‘SEC. 422. APPLICABILITY. 

19 ‘‘(a) PROHIBITION.—Starting January 1, 2010, it 

20 shall be unlawful for the affected EGUs at a facility to 

21 emit a total amount of sulfur dioxide during the year in 

22 excess of the number of sulfur dioxide allowances held for 

23 such facility for that year by the owner or operator of the 

24 facility. 
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1 ‘‘(b) ALLOWANCES HELD.—Only sulfur dioxide al2 lowances under section 423 shall be held in order to meet 

3 the requirements of subsection (a), except as provided 

4 under section 425. 

5 ‘‘SEC. 423. LIMITATIONS ON TOTAL EMISSIONS. 

6 ‘‘(a) For affected EGUs for 2010 and each year 

7 thereafter, the Administrator shall allocate sulfur dioxide 

8 allowances under section 424.

‘‘TABLE A—TOTAL SO2 ALLOWANCES ALLOCATED FOR EGUS

Year SO2 allowances allocated 

2010 ............................................................................................. 4,416,666

2011–2012 ................................................................................... 4,416,667

2013–2017 ................................................................................... 4,500,000

2018 and thereafter ..................................................................... 3,000,000. 

9 ‘‘SEC. 424. EGU ALLOCATIONS. 

10 ‘‘(a) IN GENERAL.—Not later than thrity-six months 

11 before the commencement date of the sulfur dioxide allow12 ance requirement of section 422, the Administrator shall 

13 promulgate regulations determining allocations of sulfur 

14 dioxide allowances for affected EGUs for each year during 

15 2010 and thereafter. The regulations shall provide that: 

16 ‘‘(1)(A) 93 percent of the total amount of sul17 fur dioxide allowances allocated each year to fossil18 fuel-fired affected EGUs under section 424 shall be 

19 allocated by the Administrator to individual EGUs 

20 in the proportion to which the number of allowances 

21 to emit sulfur dioxide allocated to such EGUs under 

22 sections 413, 415, and 416 or their predecessors in 
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1 effect prior to enactment of the Clear Skies Act of 

2 2003 based on the aggregated number of allowances 

3 to emit sulfur dioxide issue to all sources under sub4 part 1 of part B of this title or its predecessor in 

5 effect prior to enactment of the Clear Skies Act of 

6 2003. 

7 ‘‘(B) The Administrator shall allocate sulfur di8 oxide allowances to each facility’s account and each 

9 general account in the Allowance Tracking System 

10 under section 403(c) as follows: 

11 ‘‘(i) For each unit account and each gen12 eral account in the Allowance Tracking System, 

13 the Administrator shall determine the total 

14 amount of sulfur dioxide allowances allocated 

15 under subpart 1 for 2010 and thereafter that 

16 are recorded, as of 12:00 noon, Eastern Stand17 ard time, on the date 180 days after enactment 

18 of the Clear Skies Act of 2003. The Adminis19 trator shall determine this amount in accord20 ance with 40 CFR part 73 (2002), amended as 

21 appropriate by the Administrator, except that 

22 the Administrator shall apply a discount rate of 

23 7 percent for each year after 2010 to the 

24 amounts of sulfur dioxide allowances allocated 

25 for 2011 or later. 
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1 ‘‘(ii) For each unit account and each gen2 eral account in the Allowance Tracking System, 

3 the Administrator shall determine an amount of 

4 sulfur dioxide allowances equal to the allocation 

5 amount under subparagraph (A) multiplied by 

6 the ratio of the amount of sulfur dioxide allow7 ances determined to be recorded in that account 

8 under clause (i) to the total amount of sulfur 

9 dioxide allowances determined to be recorded in 

10 all unit accounts and general accounts in the 

11 Allowance Tracking System under clause (i). 

12 ‘‘(iii) The Administrator shall allocate to 

13 each facility’s account in the Allowance Track14 ing System an amount of sulfur dioxide allow15 ances equal to the total amount of sulfur diox16 ide allowances determined under clause (ii) for 

17 the unit accounts of the units at the facility and 

18 shall allocate to each general account in the Al19 lowance Tracking System the amount of sulfur 

20 dioxide allowances determined under clause (ii) 

21 for that general account. 

22 ‘‘(2)(A) 7 percent of the total amount of sulfur 

23 dioxide allowances allocated each year under section 

24 423 shall be allocated for units at a facility that are 
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1 affected EGUs, but did not receive sulfur dioxide al2 locations under subpart 1 of this title. 

3 ‘‘(B) The Administrator shall allocate each year 

4 for the units under subparagraph (A) that com5 menced operation before January 1, 2001, an 

6 amount of sulfur dioxide allowances determined by: 

7 ‘‘(i) For such units at the facility that are 

8 coal-fired, multiplying 0.40 lb/mmBtu by the 

9 total baseline heat input of such units and con10 verting to tons. 

11 ‘‘(ii) For such units at the facility that are 

12 oil-fired, multiplying 0.20 lb/mmBtu by the 

13 total baseline heat input of such units and con14 verting to tons. 

15 ‘‘(iii) For all such other units at the facil16 ity that are not covered by clause (i) or (ii), 

17 multiplying 0.05 lb/mmBtu by the total baseline 

18 heat input of such units and converting to tons. 

19 ‘‘(iv) If the total of the amounts for all fa20 cilities under clauses (i), (ii), and (iii) exceeds 

21 the allocation amount under subparagraph (A), 

22 multiplying the allocation amount under sub23 paragraph (A) by the ratio of the total of the 

24 amounts for the facility under clauses (i), (ii), 
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1 and (iii) to the total of the amounts for all fa2 cilities under clause (i), (ii), and (iii). 

3 ‘‘(v) Allocating to each facility the lesser of 

4 the total of the amounts for the facility under 

5 clauses (i), (ii), and (iii) or, if the total of the 

6 amounts for all facilities under clauses (i), (ii), 

7 and (iii) exceeds the allocation amount under

8 subparagraph (A), the amount under clause 

9 (iv). 

10 ‘‘(C) The Administrator shall allocate each year 

11 for units under subparagraph (A) that commence 

12 commercial operation on or after January l, 2001 

13 and before January 1, 2005, an amount of sulfur di14 oxide allowances determined by: 

15 ‘‘(i) For such units at the facility that are 

16 coal-fired or oil-fired, multiplying 0.19 lb/

17 mmBtu by the total baseline heat input of such 

18 units and converting to tons. 

19 ‘‘(ii) For all such other units at the facility 

20 that are not covered by clause (i), multiplying 

21 .005 lb/mmBtu by the total baseline heat input 

22 of such units and converting to tons. 

23 ‘‘(iii) If the total of the amounts for all fa24 cilities under clauses (i) and (ii) exceeds the al25 location amount under subparagraph (A), mul-
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1 tiplying the allocation amount under subpara2 graph (A) by the ratio of the total of the 

3 amounts for the facility under clauses (i) and 

4 (ii) to the total of the amounts for all facilities 

5 under clauses (i) and (ii). 

6 ‘‘(iv) Allocating to each facility the lesser 

7 of the total of the amounts for the facility 

8 under clauses (i) and (ii) or, if the total of the 

9 amounts for all facilities under clauses (i) and 

10 (ii) exceeds the allocation amount under sub11 paragraph (A), the amount under clause (iv). 

12 The Administrator shall allocate to the facilities 

13 under paragraphs (1) and (2) on a pro rata 

14 basis (based on the allocations under those 

15 paragraphs) any unallocated allowances under 

16 this paragraph. 

17 ‘‘(D) The Administrator shall allocate each year 

18 for units under subparagraph (A) that commence 

19 commercial operation on or after January 1, 2005, 

20 an amount of sulfur dioxide allowances determined 

21 for each such unit at the facility by multiplying the 

22 applicable National Emissions Standard under sec23 tion 481 by the applicable ‘‘baseline heat input,’’ 

24 considering fuel and combustion type, as defined in 

25 section 402(5)(B) and converting to tons. 
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1 ‘‘(E) In the event that allocation demand ex2 ceeds supply, the Administrator shall allocate allow3 ances under subparagraph (A) giving first priority to 

4 units qualifying under subparagraph (B), second pri5 ority to units qualifying under subparagraph (C), 

6 and third priority to units qualifying under subpara7 graph (D). Allowances allocated under subparagraph 

8 (D) shall be allocated to units on a first come basis 

9 determined by date of unit commencement of con10 struction, provided that such unit actually com11 mences operation. As such, allocations to units 

12 under sub-paragraph (D) will not be reduced as a 

13 result of new units commencing commercial oper14 ation. 

15 ‘‘(b)(1) FAILURE TO PROMULGATE.—For each year 

16 2010 and thereafter, if the Administrator has not promul17 gated regulations, determining allocations under sub18 section (a), each affected EGU shall comply with section 

19 422 by providing annual notice to the permitting author20 ity. Such notice shall indicate the amount of allowances 

21 the affected EGU believes it has for the relevant year and 

22 the amount of sulfur dioxide emissions for such year. The 

23 amount of sulfur dioxide emissions shall be determined 

24 using reasonable industry accepted methods unless the 
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1 Administrator has promulgated applicable monitoring and 

2 alternative monitoring requirements. 

3 ‘‘(2) Upon promulgation of regulations under sub4 section (a) determining the allocations for 2010 and there5 after, and promulgating regulations under section 403(b) 

6 providing for the transfer of sulfur dioxides and section 

7 403(c) establishing an Allowance Transfer System for sul8 fur dioxide allowances, each unit’s emissions shall be com9 pared to and reconciled to its actual allocations under the 

10 promulgated regulations. Each unit will have nine (9) 

11 months to purchase any allowance shortfall through allow12 ances purchased from other allowance holders or through 

13 direct sale. Any unit with an allowance excess shall be 

14 credited allowances in accordance with section 425.

15 ‘‘SEC. 425. SULFUR DIOXIDE EARLY ACTION REDUCTION 

16 CREDITS. 

17 ‘‘(a) The Administrator shall promulgate regulations 

18 within 18 months authorizing the allocation of sulfur diox19 ide allowances to units designated under this section that 

20 install or modify pollution control equipment or combus21 tion technology improvements identified in such regula22 tions after the date of enactment of this section and prior 

23 to January 1, 2010. 

24 ‘‘(b) No allowances shall be allocated under this para25 graph for emissions reductions: attributable to pollution 
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1 control equipment or combustion technology improvements 

2 that were operational or under construction at any time 

3 prior to the date of enactment of this section; attributable 

4 to fuel switching; or required under any Federal regula5 tion. 

6 ‘‘(c) The allowances allocated to any unit under this 

7 paragraph shall be in addition to the allowances allocated 

8 under section 424 and shall be allocated in an amount 

9 equal to one allowance of sulfur dioxide for each 1.05 tons 

10 of reduction in emissions of sulfur dioxide achieved by the 

11 pollution control equipment or combustion technology im12 provements starting with the year in which the equipment 

13 or improvement is implemented. The early compliance re14 duction allowances available under this section shall be 

15 used and tradeable in the same manner as allowances 

16 under section 424. 

17 ‘‘(d) The Administrator shall promulgate regulations 

18 as necessary to ensure affected units receive early compli19 ance allowance credit. Early compliance allowances shall 

20 be allocated at the end of an early compliance year. Should 

21 the Administrator fail to promulgate allocation regulations 

22 by the end of a given year, early compliance allowances 

23 for each year shall be allocated at the earliest possible time 

24 after allocation regulations are promulgated. 
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1 ‘‘SEC. 426. DISPOSITION OF SULFUR DIOXIDE ALLOWANCES 

2 ALLOCATED UNDER SUBPART 1. 

3 ‘‘(a) REMOVAL FROM ACCOUNTS.—After allocating 

4 allowances under section 424(a)(1), the Administrator 

5 shall remove from the unit accounts and general accounts 

6 in the Allowance Tracking System under section 403(c) 

7 and from the Special Allowances Reserve under section 

8 418 all sulfur dioxide allowances allocated or deposited 

9 under subpart 1 for 2010 or later. 

10 ‘‘(b) REGULATIONS.—The Administrator shall pro11 mulgate regulations as necessary to assure that the re12 quirement to hold allowances under section 422 may be 

13 met using sulfur dioxide allowances allocated under sub14 part 1 for 1995 through 2009. No part of this Act shall 

15 be construed to prevent use of unused pre-2010 allowances 

16 to meet the requirements of section 422. 

17 ‘‘SEC. 427. INCENTIVES FOR SULFUR DIOXIDE EMISSION 

18 CONTROL TECHNOLOGY. 

19 ‘‘(a) RESERVE.—The Administrator shall establish a 

20 reserve of 250,000 sulfur dioxide allowances comprising 

21 83,334 sulfur dioxide allowances for 2010, 83,333 sulfur 

22 dioxide allowances for 2011, and 83,333 sulfur dioxide al23 lowances for 2012. 

24 ‘‘(b) APPLICATION.—Not later than 18 months after 

25 the enactment of the Clear Skies Act of 2003, an owner 

26 or operator of an affected EGU that commenced operation 
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1 before 2001 and that during 2001 combusted Eastern bi2 tuminous may submit an application to the Administrator 

3 for sulfur dioxide allowances from the reserve under sub4 section (a). The application shall include each of the fol5 lowing: 

6 ‘‘(1) A statement that the owner or operator 

7 will install and commence commercial operation of 

8 specified sulfur dioxide control technology at the 

9 unit within 24 months after approval of the applica10 tion under subsection (c) if the unit is allocated the 

11 sulfur dioxide allowances requested under paragraph 

12 (4). The owner or operator shall provide description 

13 of the control technology. 

14 ‘‘(2) A statement that, during the period start15 ing with the commencement of operation of sulfur 

16 dioxide technology under paragraph (1) through 

17 2009, the unit will combust Eastern bituminous at 

18 a percentage of the unit’s total heat input equal to 

19 or exceeding the percentage of total heat input com20 busted by the unit in 2001 if the unit is allocated 

21 the sulfur dioxide allowances requested under para22 graph (4). 

23 ‘‘(3) A demonstration that the unit will achieve, 

24 while combusting fuel in accordance with paragraph 

25 (2) and operating the sulfur dioxide control tech-
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1 nology specified in paragraph (1), a specified ton2 nage of sulfur dioxide emission reductions during the 

3 period starting with the commencement of operation 

4 of sulfur dioxide control technology under subpara5 graph (1) through 2009. The tonnage of emission 

6 reductions shall be the difference between emissions 

7 monitored at a location at the unit upstream of the 

8 control technology described in paragraph (1) and 

9 emissions monitored at a location at the unit down10 stream of such control technology, while the unit is 

11 combusting fuel in accordance with paragraph (2). 

12 ‘‘(4) A request that the Administrator allocate 

13 for the unit a specified number of sulfur dioxide al14 lowances from the reserve under subsection (a) for 

15 the period starting with the commencement of oper16 ation of the sulfur dioxide technology under para17 graph (1) through 2009. 

18 ‘‘(5) A statement of the ratio of the number of 

19 sulfur dioxide allowances requested under paragraph 

20 (4) to the tonnage of sulfur dioxide emissions reduc21 tions under paragraph (3). 

22 ‘‘(c) APPROVAL OR DISAPPROVAL.—By order subject 

23 to notice and opportunity for comment, the Administrator 

24 shall—
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1 ‘‘(1) determine whether each application meets 

2 the requirements of subsection (b); 

3 ‘‘(2) list the applications meeting the require4 ments of subsection (b) and their respective allow5 ance-to-emission-reduction ratios under paragraph 

6 (b)(5) in order, from lowest to highest, of such ra7 tios; 

8 ‘‘(3) for each application listed under paragraph 

9 (2), multiply the amount of sulfur dioxide emission 

10 reductions requested by each allowance-to-emission11 reduction ratio on the list that equals or is less than 

12 the ratio for the application; 

13 ‘‘(4) sum, for each allowance-to-emission-reduc14 tion ratio in the list under paragraph (2), the 

15 amounts of sulfur dioxide allowances determined 

16 under paragraph (3); 

17 ‘‘(5) based on the calculations in paragraph (4), 

18 determine which allowance-to-emission-reduction 

19 ratio on the list under paragraph (2) results in the 

20 highest total amount of allowances that does not ex21 ceed 250,000 allowances; and 

22 ‘‘(6) approve each application listed under para23 graph (2) with a ratio equal to or less than the al24 lowance-to-emission-reduction ratio determined 
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1 under paragraph (5) and disapprove all the other 

2 applications. 

3 ‘‘(d) MONITORING.—An owner or operator whose ap4 plication is approved under subsection (c) shall install and 

5 operate a CEMS for monitoring sulfur dioxide and to 

6 quality assure the data. The installation of the CEMS and 

7 the quality assurance of data shall be in accordance with 

8 subparagraph (a)(2)(B) and subsections (c) through (e) 

9 of section 405, except that, where two or more units utilize 

10 a single stack, and one or more units are not subject to 

11 such standards, separate monitoring shall be required for 

12 each unit. 

13 ‘‘(e) ALLOCATIONS.—Not later than 6 months after 

14 the commencement date of the sulfur dioxide allowance re15 quirement of section 422, for the units for which applica16 tions are approved under subsection (c), the Administrator 

17 shall allocate sulfur dioxide allowances as follows: 

18 ‘‘(1) For each unit, the Administrator shall 

19 multiply the allowance-to-emission-reduction ratio of 

20 the last application that the Administrator approved 

21 under subsection (c) by the lesser of—

22 ‘‘(A) the total tonnage of sulfur dioxide 

23 emissions reductions achieved by the unit, dur24 ing the period starting with the commencement 

25 of operation of the sulfur dioxide control tech-
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1 nology under subparagraph (b)(1) through 

2 2009, through use of such control technology; 

3 or 

4 ‘‘(B) the tonnage of sulfur dioxide emission 

5 reductions under paragraph (b)(3). 

6 ‘‘(2) If the total amount of sulfur dioxide allow7 ances determined for all units under paragraph (1) 

8 exceeds 250,000 sulfur dioxide allowances, the Ad9 ministrator shall multiply 250,000 sulfur dioxide al10 lowances by the ratio of the amount of sulfur dioxide

11 allowances determined for each unit under para12 graph (1) to the total amount of sulfur dioxide al13 lowances determined for all units under paragraph 

14 (1). 

15 ‘‘(3) The Administrator shall allocate to each 

16 unit the lesser of the amount determined for that 

17 unit under paragraph (1) or, if the total amount of 

18 sulfur dioxide allowances determined for all units 

19 under paragraph (1) exceeds 250,000 sulfur dioxide 

20 allowances, under paragraph (2). The Administrator 

21 shall allocate to the facilities under section 424 

22 paragraphs (1) and (2) on a pro rata basis (based 

23 on the allocations under those paragraphs) any 

24 unallocated allowances under this paragraph. 
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1 ‘‘Subpart 3—Western Regional Air Partnership 

2 ‘‘SEC. 431. DEFINITIONS. 

3 ‘‘For purposes of this subpart— 

4 ‘‘(1) The term ‘adjusted baseline heat input’ 

5 means the average annual heat input used by a unit 

6 during the three years in which the unit had the 

7 highest heat input for the period from the eighth 

8 through the fourth year before the first covered 

9 year. 

10 ‘‘(A) Notwithstanding paragraph (1), if a 

11 unit commences operation during such period 

12 and— 

13 ‘‘(i) on or after January 1 of the fifth 

14 year before the first covered year, then ‘ad15 justed baseline heat input’ shall mean the 

16 average annual heat input used by the unit 

17 during the fifth and fourth years before 

18 the first covered year; and 

19 ‘‘(ii) on or after January 1 of the 

20 fourth year before the first covered year, 

21 then ‘adjusted baseline heat input’ shall 

22 mean the annual heat input used by the 

23 unit during the fourth year before the first 

24 covered year. 

25 ‘‘(B) A unit’s heat input for a year shall 

26 be the heat input— 
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1 ‘‘(i) required to be reported under sec2 tion 405 for the unit, if the unit was re3 quired to report heat input during the year 

4 under that section; 

5 ‘‘(ii) reported to the Energy Informa6 tion Administrator for the unit, if the unit 

7 was not required to report heat input 

8 under section 405; 

9 ‘‘(iii) based on data for the unit re10 ported to the WRAP State where the unit 

11 is located as required by State law, if the 

12 unit was not required to report heat input 

13 during the year under section 405 and did 

14 not report to the Energy Information Ad15 ministration; or 

16 ‘‘(iv) based on fuel use and fuel heat 

17 content data for the unit from fuel pur18 chase or use records, if the unit was not 

19 required to report heat input during the 

20 year under section 405 and did not report 

21 to the Energy Information Administration 

22 and the WRAP State. 

23 ‘‘(2) The term ‘affected EGU’ means an af24 fected EGU under subpart 2 that is in a WRAP 

25 State and that— 
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1 ‘‘(A) in 2000, emitted 100 tons or more of 

2 sulfur dioxide and was used to produce elec3 tricity for sale; or 

4 ‘‘(B) in any year after 2000, emits 100 

5 tons or more of sulfur dioxide and is used to 

6 produce electricity for sale. 

7 ‘‘(3) The term ‘coal-fired’ with regard to a unit 

8 means, for purposes of section 434, a unit com9 busting coal or any coal-derived fuel alone or in com10 bination with any amount of any other fuel in any 

11 year during the period from the eighth through the 

12 fourth year before the first covered year. 

13 ‘‘(4) The term ‘covered year’ means— 

14 ‘‘(A)(i) the third year after the year 2018 

15 or later when the total annual sulfur dioxide 

16 emissions of all affected EGUs in the WRAP 

17 States first exceed 271,000 tons; or

18 ‘‘(ii) the third year after the year 2013 or 

19 later when the Administrator determines by 

20 regulation that the total annual sulfur dioxide 

21 emissions of all affected EGUs in the WRAP 

22 States are reasonably projected to exceed 

23 271,000 tons in 2018 or any year thereafter. 

24 The Administrator may make such determina25 tion only if all the WRAP States submit to the 
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1 Administrator a petition requesting that the 

2 Administrator issue such determination and 

3 make all affected EGUs in the WRAP States 

4 subject to the requirements of sections 432 

5 through 434; and 

6 ‘‘(B) each year after the ‘covered year’ 

7 under subparagraph (A). 

8 ‘‘(5) The term ‘oil-fired’ with regard to a unit 

9 means, for purposes of section 434, a unit com10 busting fuel oil for more than 10 percent of the 

11 unit’s total heat input, and combusting no coal or 

12 coal-derived fuel, and any year during the period 

13 from the eighth through the fourth year before the 

14 first covered year. 

15 ‘‘(6) The term ‘WRAP State’ means Arizona, 

16 California, Colorado, Idaho, Nevada, New Mexico, 

17 Oregon, Utah, and Wyoming. 

18 ‘‘SEC. 432. APPLICABILITY. 

19 ‘‘(a) PROHIBITION.—Starting January 1 of the first 

20 covered year, it shall be unlawful for the affected EGUs 

21 at a facility to emit a total amount of sulfur dioxide during 

22 the year in excess of the number of sulfur dioxide allow23 ances held for such facility for that year by the owner or 

24 operator of the facility. 
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1 ‘‘(b) ALLOWANCES HELD.—Only sulfur dioxide al2 lowances under section 433 shall be held in order to meet 

3 the requirements of subsection (a). 

4 ‘‘SEC. 433. LIMITATIONS ON TOTAL EMISSIONS. 

5 For affected EGUs, the total amount of sulfur diox6 ide allowances that the Administrator shall allocate for 

7 each covered year under section 434 shall equal 271,000 

8 tons. 

9 ‘‘SEC. 434. EGU ALLOCATIONS. 

10 ‘‘(a) IN GENERAL.—By January 1 of the year before 

11 the first covered year, the Administrator shall promulgate 

12 regulations determining, for each covered year, the alloca13 tions of sulfur dioxide allowances for the units at a facility 

14 that are affected EGUs as of December 31 of the fourth 

15 year before the covered year by— 

16 ‘‘(1) for such units at the facility that are coal17 fired, multiplying 0.40 lb/mmBtu by the total ad18 justed baseline heat input of such units and con19 verting to tons; 

20 ‘‘(2) for such units at the facility that are oil21 fired, multiplying 0.20 lb/mmBtu by the total ad22 justed baseline heat input of such units and con23 verting to tons; 

24 ‘‘(3) for all such other units at the facility that 

25 are not covered by paragraph (1) or (2) multiplying 
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1 0.05 lb/mmBtu by the total adjusted baseline heat 

2 input of such units and converting to tons; and 

3 ‘‘(4) multiplying by 0.95 the allocation amount 

4 under section 433 by the ratio of the total of the 

5 amounts for the facility under paragraphs (1), (2), 

6 and (3) to the total of the amounts for all facilities 

7 under paragraphs (1), (2), and (3); and 

8 ‘‘(5)(A) 5 percent of the total amount of sulfur 

9 dioxide allowances allocated each year under section 

10 433 shall be allocated for units at a facility that are 

11 affected EGUs, but did not receive sulfur dioxide al12 locations under paragraph (4). These units shall be 

13 allocated allowances in accordance with paragraphs 

14 (1), (2), and (3). 

15 ‘‘(B) Allowances allocated under subparagraph 

16 (A) shall be allocated to units on a first come basis 

17 determined by date of unit commencement of con18 struction, provided that such unit actually com19 mences operation. As such, allocations to units 

20 under paragraph (A) will not be reduced as a result 

21 of new units commencing commercial operation. 

22 ‘‘(C) Allowances not allocated under subpara23 graph (B) shall be allocated to units in paragraphs 

24 (A) and (B) on a pro rata basis. 
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1 ‘‘(b)(1) FAILURE TO PROMULGATE.—For each year 

2 2010 and thereafter, if the Administrator has not promul3 gated regulations, determining allocations under para4 graph (a), each affected EGU shall comply with section 

5 422 by provided annual notice to the permitting authority. 

6 Such notice shall indicate the amount of allowances the 

7 affected EGU believes it has for the relevant year and the 

8 amount of sulfur dioxide emissions for such year. The 

9 amount of sulfur dioxide emissions shall be determined 

10 using reasonable industry accepted methods unless the 

11 Administrator has promulgated applicable monitoring and 

12 alternative monitoring requirements. 

13 ‘‘(2) Upon promulgation of regulations under sub14 section (a) determining the allocations for 2010 and there15 after, and promulgating regulations under section 403(b) 

16 providing for the transfer of sulfur dioxides and section 

17 403(c) establishing an Allowance Transfer System for sul18 fur dioxide allowances, each unit’s emissions shall be com19 pared to and reconciled to its actual allocations under the 

20 promulgated regulations. Each unit will have nine (9) 

21 months to purchase any allowance shortfall through allow22 ances purchased from other allowance holders or through 

23 direct sale. Any unit with an allowance excess shall be 

24 credited allowances in accordance with section 435. 
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1 ‘‘SEC. 435. WRAP EARLY ACTION REDUCTION CREDITS. 

2 ‘‘(a) The Administrator shall promulgate regulations 

3 within 18 months authorizing the allocation of sulfur diox4 ide allowances to units designated under this section that 

5 install or modify pollution control equipment or combus6 tion technology improvements identified in such regula7 tions after the date of enactment of this section and prior 

8 to January 1, 2010. 

9 ‘‘(b) No allowances shall be allocated under this para10 graph for emissions reductions: attributable to pollution 

11 control equipment or combustion technology improvements 

12 that were operational or under construction at any time 

13 prior to the date of enactment of this section; attributable 

14 to fuel switching; or required under any Federal regula15 tion. 

16 ‘‘(c) The allowances allocated to any unit under this 

17 paragraph shall be in addition to the allowances allocated 

18 under section 434 and shall be allocated in an amount 

19 equal to one allowance of sulfur dioxide for each 1.05 tons 

20 of reduction in emissions of sulfur dioxide achieved by the 

21 pollution control equipment or combustion technology im22 provements starting with the year in which the equipment 

23 or improvement is implemented. The early compliance re24 duction allowances available under this section shall be 

25 used and tradeable in the same manner as allowances 

26 under section 434. 
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1 ‘‘(d) The Administrator shall promulgate regulations 

2 as necessary to ensure affected units receive early compli3 ance allowance credit. Early compliance allowances shall 

4 be allocated at the end of an early compliance year. Should 

5 the Administrator fail to promulgate allocation regulations 

6 by the end of a given year, early compliance allowances 

7 for each year shall be allocated at the earliest possible time 

8 after allocation regulations are promulgated. 

9 ‘‘PART C—NITROGEN OXIDES CLEAR SKIES 

10 EMISSION REDUCTIONS 

11 ‘‘Subpart 1—Acid Rain Program 

12 ‘‘SEC. 441. NITROGEN OXIDES EMISSION REDUCTION PRO13 GRAM. 

14 ‘‘(a) APPLICABILITY.—On the date that a coal-fired 

15 utility unit becomes an affected unit pursuant to sections 

16 413 or 414, or on the date a unit subject to the provisions 

17 of section 413(d), must meet the NOX reduction require18 ments, each such unit shall become an affected unit for 

19 purposes of this section and shall be subject to the emis20 sion limitations for nitrogen oxides set forth herein. 

21 ‘‘(b) EMISSION LIMITATIONS.—(1) The Adminis22 trator shall by regulation establish annual allowable emis23 sion limitations for nitrogen oxides for the types of utility 

24 boilers listed below, which limitations shall not exceed the 

25 rates listed below: Provided, That the Administrator may 
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1 set a rate higher than that listed for any type of utility 

2 boiler if the Administrator finds that the maximum listed 

3 rate for that boiler type cannot be achieved using low NOX

4 burner technology. The Administrator shall implement 

5 this paragraph under 40 CFR part 76.5 (2002). The max6 imum allowable emission rates are as follows: 

7 ‘‘(A) for tangentially fired boilers, 0.45 lb/

8 mmBtu; and

9 ‘‘(B) for dry bottom wall-fired boilers (other 

10 than units applying cell burner technology), 0.50 lb/

11 mmBtu. After January 1, 1995, it shall be unlawful 

12 for any unit that is an affected unit on that date 

13 and is of the type listed in this paragraph to emit 

14 nitrogen oxides in excess of the emission rates set by 

15 the Administrator pursuant to this paragraph. 

16 ‘‘(2) The Administrator shall, by regulation, establish 

17 allowable emission limitations on a lb/mmBtu, annual av18 erage basis, for nitrogen oxides for the following types of 

19 utility boilers: 

20 ‘‘(A) wet bottom wall-fired boilers; 

21 ‘‘(B) cyclones; 

22 ‘‘(C) units applying cell burner technology; and 

23 ‘‘(D) all other types of utility boilers. 

24 The Administrator shall base such rates on the degree of 

25 reduction achievable through the retrofit application of the 
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1 best system of continuous emission reduction, taking into 

2 account available technology, costs and energy and envi3 ronmental impacts; and which is comparable to the costs 

4 of nitrogen oxides controls set pursuant to subsection 

5 (b)(1). The Administrator may revise the applicable emis6 sion limitations for tangentially fired and dry bottom, 

7 wall-fired boilers (other than cell burners) to be more 

8 stringent if the Administrator determines that more effec9 tive low NOX burned technology is available: Provided, 

10 That, no unit that is an affected unit pursuant to section 

11 413 and that is subject to the requirements of subsection 

12 (b)(1), shall be subject to the revised emission limitations, 

13 if any. The Administrator shall implement that paragraph 

14 under 40 CFR parts 76.6 and 76.7 (2002). 

15 ‘‘(c) ALTERNATIVE EMISSION LIMITATIONS.—(1) 

16 The permitting authority shall, upon request of an owner 

17 or operator of a unit subject to this section, authorize an 

18 emission limitation less stringent than the applicable limi19 tation established under subsection (b)(1) or (b)(2) upon 

20 a determination that— 

21 ‘‘(A) a unit subject to subsection (b)(1) cannot 

22 meet the applicable limitation using low NOX burner 

23 technology; or 

24 ‘‘(B) a unit subject to subsection (b)(2) cannot 

25 meet the applicable rate using the technology on 
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1 which the Administrator based the applicable emis2 sion limitation. 

3 ‘‘(2) The permitting authority shall base such deter4 mination upon a reasonable showing satisfactory to the 

5 permitting authority, in accordance with regulations es6 tablished by the Administrator, that the owner or oper7 ator— 

8 ‘‘(A) has properly installed appropriate control 

9 equipment designed to meet the applicable emission 

10 rate; 

11 ‘‘(B) has properly operated such equipment for 

12 a period of 15 months (or such other period of time 

13 as the Administrator determines through the regula14 tions), and provides operating and monitoring data 

15 for such period demonstrating that the unit cannot 

16 meet the applicable emission rate; and 

17 ‘‘(C) has specified an emission rate that such 

18 unit can meet on an annual average basis. The per19 mitting authority shall issue an operating permit for 

20 the unit in question, in accordance with section 404 

21 and title V— 

22 ‘‘(i) that permits the unit during the dem23 onstration period referred to in subparagraph 

24 (B), to emit at a rate in excess of the applicable 

25 emission rate; 
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1 ‘‘(ii) at the conclusion of the demonstra2 tion period to revise the operating permit to re3 flect the alternative emission rate demonstrated 

4 in subparagraphs (B) and (C). 

5 ‘‘(3) Units subject to subsection (b)(1) for which an 

6 alternative emission limitation is established shall not be 

7 required to install any additional control technology be8 yond low NOX burners. Nothing in this section shall pre9 clude an owner or operator from installing and operating 

10 an alternative NOX control technology capable of achiev11 ing the applicable emission limitation. The Administrator 

12 shall implement this subsection under 40 CFR part 76 

13 (2002), amended as appropriate by the Administrator. 

14 ‘‘(d) EMISSIONS AVERAGING.— 

15 ‘‘(1) In lieu of complying with the applicable 

16 emission limitations under subsection (b)(1), (2), or 

17 (c), the owner or operator of two or more units sub18 ject to one or more of the applicable emission limita19 tions set pursuant to these sections, may petition the 

20 permitting authority for alternative contempora21 neous annual emission limitations for such units 

22 that ensure that— 

23 ‘‘(A) the actual annual emission rate in 

24 pounds of nitrogen oxides per million Btu aver-
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1 aged over the units in question is a rate that 

2 is less than; or equal to 

3 ‘‘(B) the Btu-weighted average annual 

4 emission rate for the same units if they had 

5 been operated, during the same period of time, 

6 in compliance with limitations set in accordance 

7 with the applicable emission rates set pursuant 

8 to subsections (b)(1) and (2). 

9 ‘‘(2) If the permitting authority determines, in 

10 accordance with regulations issued by the Adminis11 trator that the conditions in paragraph (1) can be 

12 met, the permitting authority shall issue operating 

13 permits for such units, in accordance with section 

14 404 and title V, that allow alternative contempora15 neous annual emission limitations. Such emission 

16 limitations shall only remain in effect while both 

17 units continue operation under the conditions speci18 fied in their respective operating permits. The Ad19 ministrator shall implement this subsection under 40 

20 CFR part 76 (2002), amended as appropriate by the 

21 Administrator. 

22 ‘‘SEC. 442. TERMINATION. 

23 ‘‘Starting January 1, 2008, the owner or operator of 

24 affected units and affected facilities under section 441 
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1 shall no longer be subject to the requirements of that sec2 tion. 

3 ‘‘Subpart 2—Clear Skies Nitrogen Oxides Allowance 

4 Program 

5 ‘‘SEC. 451. DEFINITIONS. 

6 ‘‘For purposes of this subpart: 

7 ‘‘(1) The term ‘affected EGU’ means—

8 ‘‘(A) for a unit serving a generator before 

9 the date of enactment of the Clear Skies Act of 

10 2003, a unit in a State serving a generator with 

11 a nameplate capacity of greater than 25 

12 megawatts that produced or produces electricity 

13 for sale during 2002 or any year thereafter, ex14 cept for a cogeneration unit that meets the cri15 teria for qualifying for a cogeneration facilities 

16 codified in section 292.205 of title 18 of the 

17 Code of Federal Regulations as issued on April 

18 1, 2002 during 2002 and each year thereafter; 

19 and 

20 ‘‘(B) for a unit commencing service of a 

21 generator on or after the date of enactment of 

22 the Clear Skies Act of 2003, a unit in a State 

23 serving a generator that produces electricity for 

24 sale during any year starting with the year the 

25 unit commences service of a generator, except 
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1 for a gas-fired unit serving one or more genera2 tors with total nameplate capacity of 25 

3 megawatts or less, or a cogeneration unit that 

4 meets the criteria for qualifying for a cogenera5 tion facilities codified in section 292.205 of title 

6 18 of the Code of Federal Regulations as issued 

7 on April 1, 2002, during each year starting 

8 with the unit commences service of a generator. 

9 ‘‘(C) Notwithstanding paragraphs (A) and 

10 (B), the term ‘affected EGU’ does not include 

11 a solid waste incineration unit subject to section 

12 129 or a unit for the treatment, storage, or dis13 posal of hazardous waste subject to section 

14 3005 of the Solid Waste Disposal Act. 

15 ‘‘(2) The term ‘adjusted baseline heat input’ 

16 with regard to a unit means, for purposes of allo17 cating nitrogen oxides allowances in a particular 

18 year under this subpart, the units baseline multi19 plied by—

20 ‘‘(A) 1.0 for affected coal-fired units for 

21 2008 and each year thereafter; 

22 ‘‘(B) 0.55 for affected oil- and gas-fired 

23 units located in a Zone 1 State for years 2008 

24 through 2017 inclusive; 
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1 ‘‘(C) 0.8 for affected oil- and gas-fired 

2 units located in a Zone 1 State for 2018 and 

3 each year thereafter; and 

4 ‘‘(D) 0.4 for affected oil- and gas-fired 

5 units located in a Zone 2 State for 2008 and 

6 each year thereafter. 

7 ‘‘(3) The term ‘allowable nitrogen oxides emis8 sions rate’ means the most stringent federally en9 forceable emissions limitation for nitrogen oxides 

10 that applies to the unit as of date of enactment of 

11 this subpart. If the emissions limitation for a unit 

12 is not expressed in pounds of emissions per million 

13 Btu, or the averaging period of that emissions limi14 tation is not expressed on an annual basis, the Ad15 ministrator shall calculate the annual equivalent of 

16 that emissions limitation to establish the allowable 

17 rate. Such limitation shall not include any require18 ment to hold nitrogen oxides allowances under the 

19 federal NOX Budget Trading Program as codified at 

20 40 CFR part 97 (2002), or any State program 

21 adopted to meet the requirements of the NOX SIP 

22 Call as codified at 40 CFR 51.121 (2002). 

23 ‘‘(4) The term ‘Zone 1 State’ means Alabama, 

24 Arkansas, Connecticut, Delaware, the District of Co25 lumbia, Florida, Georgia, Illinois, Indiana, Iowa, 
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1 Kentucky, Louisiana, Maine, Maryland, Massachu2 setts, Michigan, Mississippi, the fine grid portion of 

3 Missouri, New Hampshire, New Jersey, New York, 

4 North Carolina, Ohio, Pennsylvania, Rhode Island, 

5 South Carolina, Tennessee, Texas east of Interstate 

6 35, Vermont, Virginia, West Virginia, and Wis7 consin. 

8 ‘‘(5) The term ‘Zone 2 State’ means Alaska, 

9 American Samoa, Arizona, California, Colorado, the 

10 Commonwealth of the Northern Mariana Islands, 

11 the Commonwealth of Puerto Rico, Guam, Hawaii, 

12 Idaho, Kansas, Minnesota, the coarse grid portion of 

13 Missouri, Montana, Nebraska, North Dakota, New 

14 Mexico, Nevada, Oklahoma, Oregon, South Dakota, 

15 Texas west of Interstate 35, Utah, the Virgin Is16 lands, Washington, and Wyoming.

17 ‘‘SEC. 452. APPLICABILITY. 

18 ‘‘(a) ZONE 1 PROHIBITION.—(1) Starting January 1, 

19 2008, it shall be unlawful for the affected EGUs at a facil20 ity in a Zone 1 State to emit a total amount of nitrogen 

21 oxides during a year in excess of the number of nitrogen 

22 oxides allowances held for such facility for that year by 

23 the owner or operator of the facility. 
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1 ‘‘(2) Only nitrogen oxides allowances under section 

2 453(a) shall be held in order to meet the requirements 

3 of paragraph (1), except as provided under section 465. 

4 ‘‘(b) ZONE 2 PROHIBITION.—(1) Starting January 1, 

5 2008, it shall be unlawful for the affected EGUs at a facil6 ity in a Zone 2 State to emit a total amount of nitrogen 

7 oxides during a year in excess of the number of nitrogen 

8 oxides allowances held for such facility for that year by 

9 the owner or operator of the facility. 

10 ‘‘(2) Only nitrogen oxides allowances under section 

11 453(b) shall be held in order to meet the requirements 

12 of paragraph (1). 

13 ‘‘SEC. 453. LIMITATIONS ON TOTAL EMISSIONS. 

14 ‘‘(a) ZONE 1 ALLOCATIONS.—For affected EGUs in 

15 the Zone 1 States for 2008 and each year thereafter, the 

16 Administrator shall allocate nitrogen oxides allowances 

17 under section 454(a) as specified in table A.

‘‘TABLE A—TOTAL NOX ALLOWANCES ALLOCATED FOR EGUS IN 

ZONE 1 

Year NOX allowances allocated 

2008–2017 ................................................................................... 1,473,603 

2018 and thereafter ..................................................................... 1,073,603

18 ‘‘(b) ZONE 2 ALLOCATIONS.—For affected EGUs in 

19 the Zone 2 States for 2008 and each year thereafter, the 

20 Administrator shall allocate nitrogen oxides allowances 

21 under section 454(b) as specified in table B.
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‘‘TABLE B—TOTAL NOX ALLOWANCES ALLOCATED FOR EGUS IN 

ZONE 2 

Year NOX allowance allocated 

2008 and thereafter ..................................................................... 714,794

1 ‘‘SEC. 454. EGU ALLOCATIONS. 

2 ‘‘(a) EGU ALLOCATIONS IN THE ZONE 1 STATES.—

3 ‘‘(1) EPA REGULATIONS.—Not later than 18 

4 months before commencement date of the nitrogen 

5 oxides allowance requirement of section 452, the Ad6 ministrator shall promulgate regulations determining 

7 the allocation of nitrogen oxides allowances for 2008 

8 and each subsequent year for units at a facility in 

9 a Zone 1 State that are affected EGUs as of the 

10 date of enactment of this section. 

11 ‘‘(A) The regulations shall determine the 

12 allocation for such units for each year and fu13 ture year by multiplying by 0.95 the allocation 

14 amount under section 453(a) by the ratio of the 

15 total amount of the adjusted baseline heat input 

16 of such units at the facility to the total amount 

17 of adjusted baseline heat input to all affected 

18 EGUs in the Zone 1 States. However, the regu19 lations shall not allocate allowances to any af20 fected unit in excess of the product of the unit’s 

21 baseline heat input multiplied by the unit’s al22 lowable nitrogen oxides emissions rate, divided 

23 by 2000. 
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1 ‘‘(B) 5 percent of the total amount of ni2 trogen oxides allowances allocated each year 

3 under section 453 shall be allocated for units at 

4 a facility that are affected EGUs, but did not 

5 receive nitrogen oxides allocations under para6 graph (A). These units shall be allocated allow7 ances for each year by multiplying the alloca8 tion amount under section 453(a) by the ratio 

9 of the total amount of the adjusted baseline 

10 heat input of such units at the facility to the 

11 total amount of adjusted baseline heat input to 

12 all affected EGUs in the Zone 1 States, includ13 ing those covered in (A). However, the regula14 tions shall not allocate allowances to any af15 fected unit in excess of the product of the unit’s 

16 baseline heat input multiplied by the unit’s al17 lowable nitrogen oxides emissions rate, divided 

18 by 2000. 

19 ‘‘(C) Allowances allocated under subpara20 graph (B) shall be allocated to units on a first 

21 come basis determined by date of unit com22 mencement of construction, provided that such 

23 unit actually commences operation. As such, al24 locations to units under paragraph (B) will not 
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1 be reduced as a result of new units commencing 

2 commercial operation. 

3 ‘‘(D) Allowances not allocated under sub4 paragraph (B) shall be allocated to units in 

5 paragraphs (A) and (B) on a pro rata basis. 

6 ‘‘(E) For each year 2008 and thereafter, if 

7 the Administrator has not promulgated the reg8 ulations determining allocation under subsection 

9 (a): 

10 ‘‘(i) each affected unit shall comply 

11 with section 452 by providing annual no12 tice to the permitting authority. Such no13 tice shall indicate the amount of allowances 

14 the affected unit believes it has for the rel15 evant year and the amount of nitrogen 

16 oxide emissions for such year. The amount 

17 of nitrogen oxide emissions shall be deter18 mined using reasonable industry accepted 

19 methods unless the Administrator has pro20 mulgated applicable monitoring and alter21 native monitoring requirements; and 

22 ‘‘(ii) Upon promulgation of regula23 tions under subsection (a) for Zone 1 de24 termining the allocations for 2008 and 

25 thereafter, and promulgating regulations 
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1 under section 403(b) providing for the 

2 transfer of nitrogen oxides and section 

3 403(c) establishing an Allowance Transfer 

4 System for nitrogen oxide allowances, each 

5 unit’s emissions shall be compared to and 

6 reconcile its actual allocations under the 

7 promulgated regulations. Each unit will 

8 have nine (9) months to submit allowances 

9 to the Administrator, without recompense, 

10 for any allowances shortfall. The submitted 

11 allowances may have been obtained and 

12 held by any mechanism consistent with 

13 this Act including, but not limited to, di14 rect sale. Any unit with an allowance ex15 cess shall be credited allowances in accord16 ance with section 455. 

17 ‘‘(b) EGU ALLOCATIONS IN THE ZONE 2 STATES.— 

18 ‘‘(1) EPA REGULATIONS.—Not later than 18 

19 months before the commencement date of the nitro20 gen oxides allowance requirement of section 452, the 

21 Administrator shall promulgate regulations deter22 mining the allocation of nitrogen oxides allowances 

23 for 2008 and each subsequent year for units at a fa24 cility in a Zone 2 State that are affected EGUs as 

25 of the date of enactment of this section. 
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1 ‘‘(A) The regulations shall determine the 

2 allocation for such units for each year by multi3 plying by 0.95 the allocation amount under sec4 tion 453(b) by the ratio of the total amount of 

5 the adjusted baseline heat input of such units 

6 at the facility to the total amount of the ad7 justed baseline heat input to all affected EGUs 

8 in the Zone 2 States. However, the regulations 

9 shall not allocate allowances to any affected 

10 unit in excess of the product of the unit’s base11 line heat input multiplied by the unit’s allow12 able nitrogen oxides emissions rate, divided by 

13 2000. 

14 ‘‘(B) 5 percent of the total amount of ni15 trogen oxides allowances allocated each year 

16 under section 453 shall be allocated for units at 

17 a facility that are affected EGUs, but did not 

18 receive nitrogen oxides allocations under para19 graph (A). These units shall be allocated allow20 ances for each year by multiplying the alloca21 tion amount under section 453(a) by the ratio 

22 of the total amount of the adjusted baseline 

23 heat input of such units at the facility to the 

24 total amount of adjusted baseline heat input to 

25 all affected EGUs in the Zone 2 States, includ-
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1 ing those covered in (A). However, the regula2 tions shall not allocate allowances to any af3 fected unit in excess of the product of the unit’s 

4 baseline heat input multiplied by the unit’s al5 lowable nitrogen oxides emissions rate, divided 

6 by 2000. 

7 ‘‘(C) Allowances allocated under subpara8 graph (B) shall be allocated to units on a first 

9 come basis determined by date of unit com10 mencement of construction, provided that such 

11 unit actually commences operation. As such, al12 locations to units under subparagraph (B) will 

13 not be reduced as a result of new units com14 mencing commercial operation. 

15 ‘‘(D) Allowances not allocated under sub16 paragraph (B) shall be allocated to units in 

17 paragraphs (A) and (B) on a pro rata basis. 

18 ‘‘(E) For each year 2008 and thereafter, if 

19 the Administrator has not promulgated the reg20 ulations determining allocation under subsection 

21 (a): 

22 ‘‘(i) each affected unit shall comply 

23 with section 452 by providing annual no24 tice to the permitting authority. Such no25 tice shall indicate the amount of allowances 
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1 the affected unit believes it has for the rel2 evant year and the amount of nitrogen 

3 oxide emissions for such year. The amount 

4 of nitrogen oxide emissions shall be deter5 mined using reasonable industry accepted 

6 methods unless the Administrator has pro7 mulgated applicable monitoring and alter8 native monitoring requirements; and 

9 ‘‘(ii) Upon promulgation of regula10 tions under subsection (b) for Zone 2 de11 termining the allocations for 2008 and 

12 thereafter, and promulgating regulations 

13 under section 403(b) providing for the 

14 transfer of nitrogen oxides and section 

15 403(c) establishing an Allowance Transfer 

16 System for nitrogen oxide allowances, each 

17 unit’s emissions shall be compared to and 

18 reconcile with its actual allocations under 

19 the promulgated regulations. Each unit 

20 will have nine (9) months to submit allow21 ances to the Administrator, without rec22 ompense, for any allowance shortfall. The 

23 submitted allowances may have been ob24 tained and held by any mechanism con25 sistent with this Act including, but not lim-
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1 ited to, direct sale. Any unit with an allow2 ance excess shall be credited allowances in 

3 accordance with section 455. 

4 ‘‘SEC. 455 NITROGEN OXIDES EARLY ACTION REDUCTION 

5 CREDITS. 

6 ‘‘(a) The Administrator shall promulgate regulations 

7 within 18 months authorizing the allocation of nitrogen 

8 oxides allowances to units designated under this section 

9 that install or modify pollution control equipment or com10 bustion technology improvements identified in such regu11 lations after the date of enactment of this section and 

12 prior to January 1, 2010.

13 ‘‘(b) No allowances shall be allocated under this para14 graph for emissions reductions: attributable to pollution 

15 control equipment or combustion technology improvements 

16 that were operational or under construction at any time 

17 prior to the date of enactment of this section; attributable 

18 to fuel switching; or required under any Federal regula19 tion. 

20 ‘‘(c) The allowances allocated to any unit under this 

21 paragraph shall be in addition to the allowances allocated 

22 under section 454 and shall be allocated in an amount 

23 equal to one allowance of nitrogen oxides for each 1.05 

24 tons of reduction in emissions of nitrogen oxides achieved 

25 by the pollution control equipment or combustion tech-
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1 nology improvements starting with the year in which the 

2 equipment or improvement is implemented. The early com3 pliance reduction allowances available under this section 

4 shall be used and tradeable in the same manner as allow5 ances under section 454. 

6 ‘‘(d) The Administrator shall promulgate regulations 

7 as necessary to ensure affected units receive early compli8 ance allowance credit. Early compliance allowances shall 

9 be allocated at the end of an early compliance year. Should 

10 the Administrator fail to promulgate allocation regulations 

11 by the end of a given year, early compliance allowances 

12 for each year shall be allocated at the earliest possible time 

13 after allocation regulations are promulgated. 

14 ‘‘Subpart 3—Ozone Season NOX Budget Program 

15 ‘‘SEC. 461. DEFINITIONS. 

16 ‘‘For purposes of this subpart: 

17 ‘‘(1) The term ‘ozone season’ means—

18 ‘‘(A) with regard to Connecticut, Delaware, 

19 the District of Columbia, Maryland, Massachu20 setts, New Jersey, New York, Pennsylvania, 

21 and Rhode Island, the period May 1 through 

22 September 30 for each year starting in 2003; 

23 and 
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1 ‘‘(B) with regard to all other States, the 

2 period May 1 through September 30, for each 

3 year starting in 2004 and thereafter. 

4 ‘‘(2) The term ‘non-ozone season’ means—

5 ‘‘(A) with regard to Connecticut, Delaware, 

6 the District of Columbia, Maryland, Massachu7 setts, New Jersey, New York, Pennsylvania, 

8 and Rhode Island, the period October 1 through 

9 April 30; and 

10 ‘‘(B) with regard to all other States, the 

11 period October 1, 2003, through May 29, 2004 

12 and the period October 1 through April 30 be13 ginning in the year 2004 and for each year 

14 thereafter. 

15 ‘‘(3) The term ‘NOX SIP Call State’ means 

16 Connecticut, Delaware, the District of Columbia, Il17 linois, Indiana, Kentucky, Maryland, Massachusetts, 

18 New Jersey, New York, North Carolina, Ohio, Penn19 sylvania, Rhode Island, South Carolina, Tennessee, 

20 Virginia, and West Virginia and the fine grid por21 tions of Alabama, Georgia, Michigan, and Missouri. 

22 ‘‘(4) The term ‘fine grid portions of Alabama, 

23 Georgia, Michigan, and Missouri’ means the areas in 

24 Alabama, Georgia, Michigan, and Missouri subject 

25 to 40 CFR part 51.121 (2001). 
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1 ‘‘SEC. 462. GENERAL PROVISIONS. 

2 ‘‘The provisions of sections 402 through 406 shall not 

3 apply to this subpart. 

4 ‘‘SEC. 463. APPLICABLE IMPLEMENTATION PLAN. 

5 ‘‘(a) SIPS.—Except as provided in subsection (b), 

6 the applicable implementation plan for each NOX SIP Call 

7 State shall be consistent with the requirements, including 

8 the NOX SIP Call State’s nitrogen oxides budget and com9 pliance supplement pool, in 40 CFR part 51.121 and 

10 51.122 (2001); 

11 ‘‘(b) REQUIREMENTS.—Notwithstanding any provi12 sion to the contrary in 40 CFR part 51.121 and 51.122 

13 (2001)—

14 ‘‘(1) the applicable implementation plan for 

15 each NOX SIP Call State shall require full imple16 mentation of the required emission control measures 

17 starting no later than the first ozone season; and 

18 ‘‘(2) starting January 1, 2008—

19 ‘‘(A) the owners and operators of a boiler, 

20 combustion turbine, or integrated gasification 

21 combined cycle plant subject to emission reduc22 tion requirements or limitations under part B, 

23 C, or D shall no longer be subject to the re24 quirements in a NOX SIP Call State’s applica25 ble implementation plan that meet the require26 ments of subsection (a) and paragraph (1); and 
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1 ‘‘(B) notwithstanding subparagraph (A), if 

2 the Administrator determines, by December 31, 

3 2007, that a NOX SIP Call State’s applicable 

4 implementation plan meets the requirements of 

5 subsection (a) and paragraph (1), such applica6 ble implementation plan shall be deemed to con7 tinue to meet such requirements; and 

8 ‘‘(3)(A) The owner or operator or designated 

9 representative of a boiler, combustion turbine, or 

10 combined cycle system may submit to the Adminis11 trator a petition to allow use of nitrogen oxides al12 lowances allocated for 2005 to meet the applicable 

13 requirement to hold nitrogen oxides allowances at 

14 least equal to 2004 ozone season emissions of such 

15 boiler, combustion turbine, or combined cycle sys16 tem. 

17 ‘‘(B) A petition under this paragraph shall be 

18 submitted to the Administrator by February 1, 

19 2004. 

20 ‘‘(C) The petition shall demonstrate that the 

21 owner or operator made reasonable efforts to install, 

22 at the boiler, combustion turbine, or combined cycle 

23 system, nitrogen oxides control technology designed 

24 to allow the owner or operator to meet such require25 ment to hold nitrogen oxides allowances. 
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1 ‘‘(D) The petition shall demonstrate that there 

2 is an undue risk for the reliability of electricity sup3 ply (taking into account the feasibility of purchasing 

4 electricity or nitrogen oxides allowances) because— 

5 ‘‘(i) the owner or operator is not likely to 

6 be able to install and operate the technology 

7 under subparagraph (C) on a timely basis; or 

8 ‘‘(ii) the technology under subparagraph 

9 (C) is not likely to be able to achieve its design 

10 control level on a timely basis. 

11 ‘‘(E) The petition shall include a statement by 

12 the NOX SIP Call State where the boiler, combus13 tion turbine, or combined cycle system is located 

14 that the NOX SIP Call State does not object to the 

15 petition. 

16 ‘‘(F) By May 30, 2004, by order, the Adminis17 trator shall approve the petition if it meets the re18 quirements of subparagraphs (B) through (E). 

19 ‘‘(c) SAVINGS PROVISION.—Nothing in this section or 

20 section 464 shall preclude or deny the right of any State 

21 or political subdivision thereof to adopt or enforce any reg22 ulation, requirement, limitation, or standard, relating to 

23 a boiler, combustion turbine, or integrated gasification 

24 combined cycle plant subject to emission reduction re25 quirements or limitations under part B, C, or D, that is 
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1 more stringent than a regulation, requirement, limitation, 

2 or standard in effect under this section or under any other 

3 provision of this Act. 

4 ‘‘SEC. 464. TERMINATION OF FEDERAL ADMINISTRATION 

5 OF NOX TRADING PROGRAM FOR EGUS. 

6 ‘‘Starting January 1, 2008, with regard to any boiler, 

7 combustion turbine, or integrated gasification combined 

8 cycle plant subject to emission reduction requirements or 

9 limitations under part B, C, or D, the Administrator shall 

10 not administer any nitrogen oxides trading program in11 cluded in any NOX SIP Call State’s applicable implemen12 tation plan and meeting the requirements of section 

13 463(a) and (b)(1). 

14 ‘‘SEC. 465. CARRYFORWARD OF PRE–2008 NITROGEN OX15 IDES ALLOWANCES. 

16 ‘‘The Administrator shall promulgate regulations as 

17 necessary to assure that the requirement to hold allow18 ances under section 452(a)(1) may be met using nitrogen 

19 oxides allowances allocated for an ozone season before 

20 2008 under a nitrogen oxides trading program that the 

21 Administrator administers, is included in a NOX SIP Call 

22 State’s applicable implementation plan, and meets the re23 quirements of section 463 (a) and (b)(1). 
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1 ‘‘SEC. 466. NON-OZONE SEASON VOLUNTARY ACTION 

2 CREDITS. 

3 ‘‘An affected facility that voluntarily elects to operate 

4 selective catalytic reduction (SCR) units, installed prior to 

5 enactment of this title, during the non-ozone season under 

6 section 461(2) shall be credited 0.5 allowances per ton of 

7 NOX emissions avoided as a result of operating these con8 trols. The amount avoided will equal every ton of nitrogen 

9 oxides reduction below the allowable emission rate. The 

10 Administrator shall determine if any other existing NOX

11 emission control devices are generally uneconomic to oper12 ate unless EGUs are provided incentives to control NOX

13 emissions during the non-ozone season. If the Adminis14 trator finds that incentives using different control equip15 ment are necessary to make the operation of these devices 

16 economic, the Administrator shall specify these types of 

17 control devices and, for an affected facility with these 

18 specified devices, installed prior to enactment of this title, 

19 that voluntarily elects to operate these devices during the 

20 nonozone season under section 461(2) shall be credited 0.5 

21 allowances per ton of emissions avoided as a result of oper22 ating these controls. The Administrator shall promulgate 

23 regulations as necessary to establish this NOX allowance 

24 credit program. Failure of the Administrator to promul25 gate implementing regulations prior to voluntary reduc26 tions being undertaken by affected facilities shall not in 
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1 any manner reduce the number of allowances an otherwise 

2 qualifying facility shall be credited upon promulgation of 

3 the regulations. 

4 ‘‘PART D—MERCURY EMISSIONS REDUCTIONS 

5 ‘‘SEC. 471. DEFINITIONS.

6 ‘‘For purposes of this part: 

7 ‘‘(1) The term ‘adjusted baseline heat input’ 

8 with regard to a unit means the unit’s baseline heat 

9 input multiplied by—

10 ‘‘(A) 1.0, for the portion of the baseline 

11 heat input that is the unit’s average annual 

12 combustion of bituminous during the years on 

13 which the unit’s baseline heat input is based; 

14 ‘‘(B) 3.0, for the portion of the baseline 

15 heat input that is the unit’s average annual 

16 combustion of lignite during the years on which 

17 the unit’s baseline heat input is based; 

18 ‘‘(C) 1.25, for the portion of the baseline 

19 heat input that is the unit’s average annual 

20 combustion of subbituminous during the years 

21 on which the unit’s baseline heat input is based; 

22 and 

23 ‘‘(D) 1.0, for the portion of the baseline 

24 heat input that is not covered by subparagraph 

25 (A), (B), or (C) or for the entire baseline heat 
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1 input if such baseline heat input is not based 

2 on the unit’s heat input in specified years. 

3 ‘‘(2) The term ‘affected EGU’ means—

4 ‘‘(A) for a unit serving a generator before 

5 the date of enactment of the Clear Skies Act of 

6 2003, a coal-fired unit in a State serving a gen7 erator with a nameplate capacity of greater 

8 than 25 megawatts that produced or produces 

9 electricity for sale during 2002 or any year 

10 thereafter, except for a cogeneration unit meets 

11 the criteria for qualifying for a cogeneration fa12 cilities codified in section 292.205 of title 18 of 

13 the Code of Federal Regulations as issued on 

14 April 1, 2002, during 2002 and each year 

15 thereafter; and 

16 ‘‘(B) for a unit commencing service of a 

17 generator on or after the date of enactment of 

18 the Clear Skies Act of 2003, a coal-fired unit 

19 in a State serving a generator that produces 

20 electricity for sale during any year starting with 

21 the year the unit commences service of a gener22 ator, except for a cogeneration unit that meets 

23 the criteria for qualifying for a cogeneration fa24 cilities codified in section 292.205 of title 18 of 

25 the Code of Federal Regulations as issued on 
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1 April 1, 2002, during each year starting with 

2 the year the unit commences service of a gener3 ator. 

4 ‘‘(C) Notwithstanding paragraphs (A) and 

5 (B), the term ‘affected EGU’ does not include 

6 a solid waste incineration unit subject to section 

7 129, a unit for the treatment, storage, or dis8 posal of hazardous waste subject to section 

9 3005 of the Solid Waste Disposal Act, or a unit 

10 with de minimus emissions equal to or less than 

11 50 pounds on an annual basis. 

12 ‘‘SEC. 472. APPLICABILITY. 

13 ‘‘Starting January 1, 2010, it shall be unlawful for 

14 the affected EGUs at a facility in a State to emit a total 

15 amount of mercury during the year in excess of the num16 ber of mercury allowances held for such facility for that 

17 year by the owner or operator of the facility. 

18 ‘‘SEC. 473. LIMITATIONS ON TOTAL EMISSIONS. 

19 ‘‘For affected EGUs for 2010 and each year there20 after, the Administrator shall allocate mercury allowances 

21 pursuant to section 474.

TABLE A.—TOTAL MERCURY ALLOWANCES ALLOCATED 

FOR EGUS 

Year 

Mercury allowances allocated 

2010–2017 ..................................................................................... 1,088,000 

2018 and thereafter ....................................................................... 480,000
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1 ‘‘SEC. 474. EGU ALLOCATIONS. 

2 ‘‘(a)(1) IN GENERAL.—Not later than 24 months be3 fore the commencement date of the mercury allowance re4 quirement of section 472, the Administrator shall promul5 gate regulations determining allocations of mercury allow6 ances for 2010 and thereafter for units at a facility that 

7 commence commercial operation by and are affected 

8 EGUs as of date of enactment. The regulations shall pro9 vide that the Administrator shall allocate each year for 

10 such units an amount determined by multiplying by 0.95 

11 the allocation amount in section 473 by the ratio of the 

12 total amount of the adjusted baseline heat input of such 

13 units at the facility to the total amount of adjusted base14 line heat input of all affected EGUs. 

15 ‘‘(2) 5 percent of the total amount of nitrogen oxides 

16 allowances allocated each year under section 473 shall be 

17 allocated for units at a facility that commence commercial 

18 operation and are affected EGUs after the date of enact19 ment. These units shall be allocated allowances for each 

20 year by multiplying the allocation amount under section 

21 473 by the ratio of the total amount of the adjusted base22 line heat input of such units at the facility to the total 

23 amount of adjusted baseline heat input to all affected 

24 EGUs, including those covered in paragraph (1). However, 

25 the regulations shall not allocate allowances to any af26 fected unit in excess of the product of the unit’s baseline 
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1 heat input multiplied by the unit’s allowable mercury 

2 emissions rate, divided by 2000. 

3 ‘‘(3) Allowances allocated under paragraph (2) shall 

4 be allocated to units on a first come basis determined by 

5 date of unit commencement of construction, provided that 

6 such unit actually commences commercial operation. As 

7 such, allocations to units under paragraph (2) will not be 

8 reduced as a result of new units commencing commercial 

9 operation. 

10 ‘‘(4) Allowances not allocated under paragraph (2) 

11 shall be allocated to units in paragraphs (1) and (2) on 

12 a pro rata basis. 

13 ‘‘(5) For each year 2010 and thereafter, if the Ad14 ministrator has not promulgated the regulations deter15 mining allocation under subsection (a)—

16 ‘‘(A) each affected unit shall comply with sec17 tion 472 by providing annual notice to the permit18 ting authority. Such notice shall indicate the amount 

19 of allowances the affected unit believes it has for the 

20 relevant year and the amount of mercury emissions 

21 for such year. The amount of mercury emissions 

22 shall be determined using reasonable industry ac23 cepted methods unless the Administrator has pro24 mulgated applicable monitoring and alternative mon25 itoring requirements; and 
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1 ‘‘(B) upon promulgation of regulations under 

2 subsection (a) determining the allocations for 2010 

3 and thereafter, and promulgating regulations under 

4 section 403(b) providing for the transfer of mercury 

5 allowances and section 403(c) establishing an Allow6 ance Transfer System for mercury allowances, each 

7 unit’s emissions shall be compared to and reconcile 

8 with its actual allocations under the promulgated 

9 regulation. Each unit will have nine (9) months to 

10 submit allowances to the Administrator, without rec11 ompense, for any allowances shortfall. The sub12 mitted allowances may have been obtained and held 

13 by any mechanism consistent with the Act including, 

14 but not limited to, direct sale. Any unit with an al15 lowance excess shall be credited allowances in ac16 cordance with section 475. 

17 ‘‘SEC. 475. MERCURY EARLY ACTION REDUCTION CREDITS. 

18 ‘‘(a) The Administrator shall promulgate regulations 

19 within 18 months authorizing the allocation of nitrogen 

20 oxides allowances to units designated under this section 

21 that install or modify pollution control equipment or com22 bustion technology improvements identified in such regu23 lations after the date of enactment of this section and 

24 prior to January 1, 2010. 
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1 ‘‘(b) No allowances shall be allocated under this para2 graph for emissions reductions: attributable to pollution 

3 control equipment or combustion technology improvements 

4 that were operational or under construction at any time 

5 prior to the date of enactment of this section; attributable 

6 to fuel switching; or required under any Federal regula7 tion. 

8 ‘‘(c) The allowances allocated to any unit under this 

9 paragraph shall be in addition to the allowances allocated 

10 under section 474 and shall be allocated in an amount 

11 equal to one allowance of mercury for each 1.05 tons of 

12 reduction in emissions of mercury achieved by the pollu13 tion control equipment or combustion technology improve14 ments starting with the year in which the equipment or 

15 improvement is implemented. The early compliance reduc16 tion allowances available under this section shall be used 

17 and tradeable in the same manner as allowances under 

18 section 474. 

19 ‘‘(d) The Administrator shall promulgate regulations 

20 as necessary to ensure affected units receive early compli21 ance allowance credit. Early compliance allowances shall 

22 be allocated at the end of an early compliance year. Should 

23 the Administrator fail to promulgate allocation regulations 

24 by the end of a given year, early compliance allowances 
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1 for each year shall be allocated at the earliest possible time 

2 after allocation regulations are promulgated. 

3 ‘‘PART E—NATIONAL EMISSION STANDARDS; RE4 SEARCH, ENVIRONMENTAL ACCOUNT5 ABILITY; MAJOR SOURCE PRECONSTRUC6 TION REVIEW AND BEST AVAILABLE RET7 ROFIT CONTROL TECHNOLOGY REQUIRE8 MENTS 

9 ‘‘SEC. 481. NATIONAL EMISSION STANDARDS FOR AF10 FECTED UNITS. 

11 ‘‘(a) DEFINITIONS.—For purposes of this section: 

12 ‘‘(1) The term ‘commenced’, with regard to con13 struction, means that an owner or operator has ei14 ther undertaken a continuous program of construc15 tion or has entered into a contractual obligation to 

16 undertake and complete, within a reasonable time, a 

17 continuous program of construction. For boilers and 

18 integrated gasification combined cycle plants, this 

19 term does not include undertaking such a program 

20 or entering into such an obligation more than 36 

21 months prior to the date on which the unit begins 

22 operation. For combustion turbines, this term does 

23 not include undertaking such a program or entering 

24 into such an obligation more than 18 months prior 

25 to the date on which the unit begins operation.
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1 ‘‘(2) The term ‘construction’ means fabrication, 

2 erection, or installation of an affected unit. 

3 ‘‘(3) The term ‘affected unit’ means any unit 

4 that is subject to emission limitations under subpart 

5 2 of part B, subpart 2 of part C, or part D. 

6 ‘‘(4) The term ‘existing affected unit’ means 

7 any affected unit that is not a new affected unit. 

8 ‘‘(5) The term ‘new affected unit;’ means any 

9 affected unit, the construction or reconstruction of 

10 which is commenced after the date of enactment of 

11 the Clear Skies Act of 2003, except that for the pur12 pose of any revision of a standard pursuant to sub13 section (e), ‘new affected unit’ means any affected 

14 unit, the construction or reconstruction of which is 

15 commenced after the publication of regulations (or, 

16 if earlier, proposed regulations) prescribing a stand17 ard under this section that will apply to such unit. 

18 ‘‘(6) The term ‘reconstruction’ means the re19 placement of components of a unit to such an extent 

20 that—

21 ‘‘(A) the fixed capital cost of the new com22 ponents exceeds 50 percent of the fixed capital 

23 cost that would be required to construct a com24 parable entirely new unit; and 
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1 ‘‘(B) it is technologically and economically 

2 feasible to meet the applicable standards set 

3 forth in this section. 

4 ‘‘(b) EMISSION STANDARDS.—

5 ‘‘(1) IN GENERAL.—No later than 12 months 

6 after the date of enactment of the Clear Skies Act 

7 of 2003, the Administrator shall promulgate regula8 tions prescribing the standards in subsections (c) 

9 through (d) for the specified affected units and es10 tablishing requirements to ensure compliance with 

11 these standards, including monitoring, record12 keeping, and reporting requirements. 

13 ‘‘(2) MONITORING.—(A) The owner or operator 

14 of any affected unit subject to the standards for sul15 fur dioxide, nitrogen oxides, or mercury under this 

16 section shall meet the requirements of section 405, 

17 except that, where two or more units utilize a single 

18 stack, separate monitoring shall be required for each 

19 affected unit for the pollutants for which the unit is 

20 subject to such standards. 

21 ‘‘(B) The Administrator shall, by regulation, re22 quire— 

23 ‘‘(i) the owner or operator of any affected 

24 unit subject to the standards for sulfur dioxide, 
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1 nitrogen oxides, or mercury under this section 

2 to— 

3 ‘‘(I) install and operate CEMS for 

4 monitoring output, including electricity and 

5 useful thermal energy, on the affected unit 

6 and to quality assure the data; and 

7 ‘‘(II) comply with recordkeeping and 

8 reporting requirements, including provi9 sions for reporting output data in mega10 watt hours. 

11 ‘‘(ii) the owner or operator of any affected 

12 unit subject to the standards for particulate 

13 matter under this section to— 

14 ‘‘(I) install and operate CEMS for 

15 monitoring particulate matter on the af16 fected unit and to quality assure the data; 

17 ‘‘(II) comply with recordkeeping and 

18 reporting requirements; and 

19 ‘‘(III) comply with alternative moni20 toring, quality assurance, recordkeeping, 

21 and reporting requirements for any period 

22 of time for which the Administrator deter23 mines that CEMS with appropriate vendor 

24 guarantees are not commercially available 

25 for particulate matter. 
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1 ‘‘(3) COMPLIANCE.—For boilers, integrated 

2 gasification combined cycle plants, and coal fired or 

3 gas-fired combustion turbines the Administrator 

4 shall require that the owner or operator demonstrate 

5 compliance with the standards daily, using a 30-day 

6 rolling average, except that in the case of mercury, 

7 the compliance period shall be the calendar year. 

8 For combustion turbines that are oil-fired the Ad9 ministrator shall require that the owner or operator 

10 demonstrate compliance with the standards hourly, 

11 using a 4-hour rolling average. 

12 ‘‘(c) BOILERS AND INTEGRATED GASIFICATION COM13 BINED CYCLE PLANTS.— 

14 ‘‘(1) After the effective date of standards pro15 mulgated under subsection (b), no owner or operator 

16 shall cause any boiler or integrated gasification com17 bined cycle plant that is a new affected unit to dis18 charge into the atmosphere any gases which con19 tain— 

20 ‘‘(A) sulfur dioxide in excess of 2.0 lb/

21 MWh; 

22 ‘‘(B) nitrogen oxides in excess of 1.0 lb/

23 MWh; 

24 ‘‘(C) particulate matter in excess of 0.20 

25 lb/MWh; or 
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1 ‘‘(D) if the unit is coal-fired, mercury in 

2 excess of 0.015 lb/GWh, unless— 

3 ‘‘(i) mercury emissions from the unit, 

4 determined assuming no use of on-site or 

5 off-site pre-combustion treatment of coal 

6 and no use of technology that captures 

7 mercury, are reduced by 80 percent; 

8 ‘‘(ii) flue gas desulfurization (FGD) 

9 and selective catalytic reduction (SCR) are 

10 applied to the unit; or 

11 ‘‘(iii) a technology is applied to the 

12 unit and the permitting authority deter13 mines that the technology is equivalent in 

14 terms of mercury capture to the applica15 tion of FGD and SCR. 

16 ‘‘(2) Notwithstanding subparagraph (1)(D), in17 tegrated gasification combined cycle plants with a 

18 combined capacity of less than 5 GW are exempt 

19 from the mercury requirement under subparagraph 

20 (1)(D) if they are constructed as part of a dem21 onstration project under the Secretary of Energy 

22 that will include a demonstration of removal of sig23 nificant amounts of mercury as determined by the 

24 Secretary of Energy in conjunction with the Admin25 istrator as part of the solicitation process. 
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1 ‘‘(3) After the effective date of standards pro2 mulgated under subsection (b), no owner or operator 

3 shall cause any oil-fired boiler that is an existing af4 fected unit to discharge into the atmosphere any 

5 gases which contain particulate matter in excess of 

6 0.30 lb/MWh. 

7 ‘‘(d) COMBUSTION TURBINES.— 

8 ‘‘(1) After the effective date of standards pro9 mulgated under subsection (b), no owner or operator 

10 shall cause any gas-fired combustion turbine that is 

11 a new affected unit to discharge into the atmosphere 

12 any gases which contain nitrogen oxides in excess 

13 of— 

14 ‘‘(A) 0.56 lb/MWh (15 ppm at 15 percent 

15 oxygen), if the unit is a simple cycle combustion 

16 turbine; 

17 ‘‘(B) 0.084 lb/MWh (3.5 ppm at 15 per18 cent oxygen), if the unit is not a simple cycle 

19 combustion turbine and either uses add-on con20 trols or is located within 50 km of a class I 

21 area; or 

22 ‘‘(C) 0.21 lb/MWh (9 ppm at 15 percent 

23 oxygen), if the unit is not a simple cycle turbine 

24 and neither uses add-on controls nor is located 

25 within 50 km of a class I area. 
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1 ‘‘(2) After the effective date of standards pro2 mulgated under subsection (b), no owner or operator 

3 shall cause any coal-fired combustion turbine that is 

4 a new affected unit to discharge into the atmosphere 

5 any gases which contain sulfur dioxide, nitrogen ox6 ides, particulate matter, or mercury in excess of the 

7 emission limits under subparagraphs (c)(1) (A) 

8 through (D).

9 ‘‘(3) After the effective date of standards pro10 mulgated under subsection (b), no owner or operator 

11 shall cause any combustion turbine that is not gas12 fired or coal-fired and that is a new affected unit to 

13 discharge into the atmosphere any gases which con14 tain— 

15 ‘‘(A) sulfur dioxide in excess of 2.0 lb/

16 MWh; 

17 ‘‘(B) nitrogen oxides in excess of— 

18 ‘‘(i) 0.289 lb/MWh (12 ppm at 15 

19 percent oxygen), if the unit is not a simple 

20 cycle combustion turbine, is dual-fuel capa21 ble, and uses add-on controls; or is not a 

22 simple cycle combustion turbine and is lo23 cated within 50 km of a class I area; and 

24 ‘‘(ii) 1.01 lb/MWh (42 ppm at 15 per25 cent oxygen), if the unit is a simple cycle 
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1 combustion turbine; is not a simple cycle 

2 combustion turbine and is not dual-fuel ca3 pable; or is not a simple cycle combustion 

4 turbine, is dual-fuel capable, and does not 

5 use add-on controls. 

6 ‘‘(C) particulate matter in excess of 0.20 

7 lb/MWh. 

8 ‘‘(e) PERIODIC REVIEW AND REVISION.— 

9 ‘‘(1) The Administrator shall, at least every 

10 eight years following the promulgation of standards 

11 under subsection (b), review and, if appropriate, re12 vise such standards to reflect the degree of emission 

13 limitation demonstrated by substantial evidence to 

14 be achievable through the application of the best sys15 tem of emission reduction which (taking into ac16 count the cost of achieving such reduction and any 

17 nonair quality health and environmental impacts and 

18 energy requirements). When implementation and en19 forcement of any requirement of this Act indicate 

20 that emission limitations and percent reductions be21 yond those required by the standards promulgated 

22 under this section are achieved in practice, the Ad23 ministrator shall, when revising standards promul24 gated under this section, consider the emission limi25 tations and percent reductions achieved in practice. 
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1 ‘‘(2) Notwithstanding the requirements of para2 graph (1) the Administrator need not review any 

3 standard promulgated under subsection (b) if the 

4 Administrator determines that such review is not ap5 propriate in light of readily available information on 

6 the efficacy of such standard. 

7 ‘‘(f) EFFECTIVE DATE.—The standard promulgated 

8 pursuant to this section shall become effective upon pro9 mulgation. 

10 ‘‘(g) DELEGATION.— 

11 ‘‘(1) Each State may develop and submit to the 

12 Administration a procedure for implementing and 

13 enforcing standards promulgated under this section 

14 for affected units located in such State. If the Ad15 ministrator finds the State procedure is adequate, 

16 the Administrator shall delegate to such State any 

17 authority the Administrator has under this Act to 

18 implement and enforce such standards. 

19 ‘‘(2) Nothing in this subsection shall prohibit 

20 the Administrator from enforcing any applicable 

21 standard under this section. 

22 ‘‘(h) VIOLATIONS.—After the effective date of stand23 ards promulgated under this section, it shall be unlawful 

24 for any owner or operator of any affected unit to operate 
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1 such unit in violation of any standard, established by this 

2 section applicable to such unit. 

3 ‘‘(i) COORDINATION WITH OTHER AUTHORITIES.—

4 For purposes of sections III(e), 113, 114, 116, 120, 303, 

5 304, 307, and other provisions for the enforcement of this 

6 Act, each standard established pursuant to this section 

7 shall be treated in the same manner as a standard of per8 formance under section 111, and each affected unit sub9 ject to standards under this section shall be treated in the 

10 same manner as a stationary source under section 111. 

11 ‘‘(j) STATE AUTHORITY.—Nothing in this section 

12 shall preclude or deny the right of any State or political 

13 subdivision thereof to adopt or enforce any regulation, re14 quirement, limitation, or standard relating to affected 

15 units, or other EGUs, that is more stringent than a regu16 lation, requirement, limitation, or standard in effect under 

17 this section or under any other provision of this Act. 

18 ‘‘(k) OTHER AUTHORITY UNDER THIS ACT.—Noth19 ing in this section shall diminish the authority of the Ad20 ministrator or a State to establish any other requirements 

21 applicable to affected units under any other authority of 

22 law, including the authority to establish for any air pollut23 ant a national ambient air quality standard, except that 

24 no new affected unit subject to standards under this sec-
213

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1 tion shall be subject to standards under section 111 of 

2 this Act. 

3 ‘‘SEC. 482. RESEARCH, ENVIRONMENTAL MONITORING, AND 

4 ASSESSMENT. 

5 ‘‘(a) PURPOSES.—The Administrator, in collabora6 tion with the Secretary of Energy and the Secretary of 

7 the Interior, shall conduct a comprehensive program of re8 search, environmental monitoring, and assessment to en9 hance scientific understanding of the human health and 

10 environmental effects of particulate matter and mercury 

11 and to demonstrate the efficacy of emission reductions 

12 under this title for purposes of reporting to Congress 

13 under (e)(2). The purposes of such a program are to— 

14 ‘‘(1) expand current research and knowledge of 

15 the contribution of emissions from electricity genera16 tion to exposure and health effects associated with 

17 particulate matter and mercury; 

18 ‘‘(2) enhance current research and development 

19 of promising multi-pollutant control strategies and 

20 CEMS for mercury; 

21 ‘‘(3) produce peer-reviewed scientific and tech22 nology information; 

23 ‘‘(4) improve environmental monitoring and as24 sessment of sulfur dioxide, nitrogen oxides and mer25 cury, and their transformation products, to track 
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1 changes in human health and the environment at2 tributable to emission reductions under this title; 

3 and 

4 ‘‘(5) periodically provide peer-reviewed reports 

5 on the costs, benefits, and effectiveness of emission 

6 reductions achieved under this title. 

7 ‘‘(b) RESEARCH.—The Administrator shall enhance 

8 planned and ongoing laboratory and field research and 

9 modeling analyses, and conduct new research and analyses 

10 to produce peer-reviewed information concerning the 

11 human health and environmental effects of mercury and 

12 particulate matter and the contribution of United States 

13 electrical generating units to those effects. Such informa14 tion shall be included in the report under subsection (d). 

15 In addition, such research and analyses shall— 

16 ‘‘(1) improve understanding of the rates and 

17 processes governing chemical and physical trans18 formations of mercury in the atmosphere, including 

19 speciation of emissions from electricity generation 

20 and the transport of these species; 

21 ‘‘(2) improve understanding of the contribution 

22 of mercury emissions from electricity generation to 

23 mercury in fish and other biota, including— 

24 ‘‘(A) the response of and contribution to 

25 mercury in the biota owing to atmospheric dep-
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1 osition of mercury from U.S. electricity genera2 tion on both local and regional scales; 

3 ‘‘(B) long-term contributions of mercury 

4 from U.S. electricity generation on mercury ac5 cumulations in ecosystems, and the effects of 

6 mercury reductions in that sector on the envi7 ronment and public health; 

8 ‘‘(C) the role and contribution of mercury, 

9 from U.S. electricity generating facilities and 

10 anthropogenic and natural sources to fish con11 tamination and to human exposure, particularly 

12 with respect to sensitive populations; 

13 ‘‘(D) the contribution of U.S. electricity 

14 generation to population exposure to mercury in 

15 freshwater fish and seafood and quantification 

16 of linkages between U.S. mercury emissions and 

17 domestic mercury exposure and its health ef18 fects; and 

19 ‘‘(E) the contribution of mercury from 

20 U.S. electricity generation in the context of 

21 other domestic and international sources of 

22 mercury, including transport of global anthro23 pogenic and natural background levels; 

24 ‘‘(3) improve understanding of the health ef25 fects of fine particulate matter components related 
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S 1844 IS 

1 to electricity generation emissions (as distinct from 

2 other fine particle fractions and indoor air expo3 sures) and the contribution of U.S. electrical gener4 ating units to those effects including— 

5 ‘‘(A) the chronic effects of fine particulate 

6 matter from electricity generation in sensitive 

7 population groups; and 

8 ‘‘(B) personal exposure to fine particulate 

9 matter from electricity generation; and 

10 ‘‘(4) improve understanding, by way of a review 

11 of the literature, of methods for valuing human 

12 health and environmental benefits associated with 

13 fine particulate matter and mercury. 

14 ‘‘(c) INNOVATIVE CONTROL TECHNOLOGIES.—The 

15 Administrator shall collaborate with the Secretary of En16 ergy to enhance research and development, and conduct 

17 new research that facilitates research into and develop18 ment of innovative technologies to control sulfur dioxide, 

19 nitrogen oxides, mercury, and particulate matter at a 

20 lower cost than existing technologies. Such research and 

21 development shall provide updated information on the cost 

22 and feasibility of technologies. Such information shall be 

23 included in the report under subsection (d). In addition, 

24 the research and development shall— 
217

S 1844 IS 

1 ‘‘(1) upgrade cost and performance models to 

2 include results from ongoing and future electricity 

3 generation and pollution control demonstrations by 

4 the Administrator and the Secretary of Energy; 

5 ‘‘(2) evaluate the overall environmental implica6 tions of the various technologies tested including the 

7 impact on the characteristics of coal combustion res8 idues;

9 ‘‘(3) evaluate the impact of the use of selective 

10 catalytic reduction on mercury emissions from the 

11 combustion of all coal types; 

12 ‘‘(4) evaluate the potential of integrated gasifi13 cation combined cycle to adequately control mercury; 

14 ‘‘(5) expand current programs by the Adminis15 trator to conduct research and promote, lower cost 

16 CEMS capable of providing real-time measurements 

17 of both speciated and total mercury and integrated 

18 compact CEMS that provide cost-effective real-time 

19 measurements of sulfur dioxide, nitrogen oxides, and 

20 mercury; 

21 ‘‘(6) expand lab- and pilot-scale mercury and 

22 multi-pollutant control programs by the Secretary of 

23 Energy and the Administrator, including develop24 ment of enhanced sorbents and scrubbers for use on 

25 all coal types; 
218

S 1844 IS 

1 ‘‘(7) characterize mercury emissions from low2 rank coals, for a range of traditional control tech3 nologies, like scrubbers and selective catalytic reduc4 tion; and 

5 ‘‘(8) improve low cost combustion modifications 

6 and controls for dry-bottom boilers. 

7 ‘‘(d) ENVIRONMENTAL ACCOUNTABILITY.— 

8 ‘‘(1) MONITORING AND ASSESSMENT.—The Ad9 ministrator shall conduct a program of environ10 mental monitoring and assessment to track on a 

11 continuing basis, changes in human health and the 

12 environment attributable to the emission reductions 

13 required under this title. Such a program shall— 

14 ‘‘(A) develop and employ methods to rou15 tinely monitor, collect, and compile data on the 

16 status and trends of mercury and its trans17 formation products in emissions from affected 

18 facilities, atmospheric deposition, surface water 

19 quality, and biological systems. Emphasis shall 

20 be placed on those methods that— 

21 ‘‘(i) improve the ability to routinely 

22 measure mercury in dry deposition proc23 esses; 

24 ‘‘(ii) improve understanding of the 

25 spatial and temporal distribution of mer-
219

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1 cury deposition in order to determine 

2 source-receptor relationships and patterns 

3 of long-range, regional, and local deposi4 tion; 

5 ‘‘(iii) improve understanding of aggre6 gate exposures and additive effects of 

7 methylmercury and other pollutants; and 

8 ‘‘(iv) improve understanding of the ef9 fectiveness and cost of mercury emissions 

10 controls; 

11 ‘‘(B) modernize and enhance the national 

12 air quality and atmospheric deposition moni13 toring networks in order to cost-effectively ex14 pand and integrate, where appropriate, moni15 toring capabilities for sulfur, nitrogen, and mer16 cury to meet the assessment and reporting re17 quirements of this section; 

18 ‘‘(C) perform and enhance long-term moni19 toring of sulfur, nitrogen, and mercury, and pa20 rameters related to acidification, nutrient en21 richment, and mercury bioaccumulation in 

22 freshwater and marine biota; 

23 ‘‘(D) maintain and upgrade models that 

24 describe the interactions of emissions with the 

25 atmosphere and resulting air quality implica-
220

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1 tions and models that describe the response of 

2 ecosystems to atmospheric deposition; and 

3 ‘‘(E) assess indicators of ecosystems health 

4 related to sulfur, nitrogen, and mercury, includ5 ing characterization of the causes and effects of 

6 episodic exposure to air pollutants and evalua7 tion of recovery. 

8 ‘‘(2) REPORTING REQUIREMENTS.—Not later 

9 than January 1, 2008, and not later than every 4 

10 years thereafter, the Administrator shall provide a 

11 peer reviewed report to the Congress on the costs, 

12 benefits, and effectiveness of emission reduction pro13 grams under this title. 

14 ‘‘(A) The report under this subparagraph 

15 shall address the relative contribution of emis16 sion reductions from U.S. electricity generation 

17 under this title compared to the emission reduc18 tions achieved under other titles of the Clean 

19 Air Act with respect to— 

20 ‘‘(i) actual and projected emissions of 

21 sulfur dioxide, nitrogen oxides, and mer22 cury; 

23 ‘‘(ii) average ambient concentrations 

24 of sulfur dioxide and nitrogen oxides trans25 formation products, related air quality pa-
221

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1 rameters, and indicators of reductions in 

2 human exposure; 

3 ‘‘(iii) status and trends in total at4 mospheric deposition of sulfur, nitrogen, 

5 and mercury, including regional estimates 

6 of total atmospheric deposition; 

7 ‘‘(iv) status and trends in visibility; 

8 ‘‘(v) status of terrestrial and aquatic 

9 ecosystems (including forests and forested 

10 watersheds, streams, lakes, rivers, estu11 aries, and nearcoastal waters); 

12 ‘‘(vi) status of mercury and its trans13 formation products in fish; 

14 ‘‘(vii) causes and effects of atmos15 pheric deposition, including changes in sur16 face water quality, forest and soil condi17 tions; 

18 ‘‘(viii) occurrence and effects of coast19 al eutrophication and episodic acidification, 

20 particularly with respect to high elevation 

21 watersheds; and 

22 ‘‘(ix) reduction in atmospheric deposi23 tion rates that should be achieved to pre24 vent or reduce adverse ecological effects. 
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1 ‘‘(B) The report under this subparagraph 

2 shall address the relative contribution of the 

3 United States to world-wide emissions as well 

4 as a comparison of the stringency of fossil fuel5 fired requirements under the Act to other coun6 tries. 

7 ‘‘SEC. 483. MAJOR SOURCE PRECONSTRUCTION REVIEW RE8 QUIREMENTS AND BEST AVAILABLE RET9 ROFIT CONTROL TECHNOLOGY REQUIRE10 MENTS; APPLICABILITY TO AFFECTED UNITS. 

11 ‘‘(a) MAJOR SOURCE EXEMPTION.—An affected unit 

12 shall not be considered a major emitting facility or major 

13 stationary source, or a part of a major emitting facility 

14 or major stationary source for purposes of compliance with 

15 the requirements of parts C and part D of title I nor shall 

16 it otherwise be subject to the requirements of section 169A 

17 or 169B. This applicability provision only applies to af18 fected units that are either subject to the performance 

19 standards of section 481 or meet the following require20 ments within 3 years after the date of enactment of the 

21 Clear Skies Act of 2003: 

22 ‘‘(1) The owner or operator of the affected unit 

23 properly operates, maintains and repairs pollution 

24 control equipment to limit emissions of particulate 

25 matter, or the owner or operator of the affected unit 
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1 is subject to an enforceable permit issued pursuant 

2 to title V or a permit program approved or promul3 gated as part of an applicable implementation plan 

4 to limit the emissions of particulate matter from the 

5 affected unit to 0.03 lb/mmBtu within eight years 

6 after the date of enactment of the Clear Skies Act 

7 of 2003, and 

8 ‘‘(2) The owner or operator of the affected unit 

9 uses good combustion practices to minimize emis10 sions of carbon monoxide. Good combustion prac11 tices may be accomplished through control tech12 nology, combustion technology improvements, or 

13 workplace practices. 

14 ‘‘(b) CLASS I AREA PROTECTIONS.—Notwith15 standing the provisions of subsection (a), an affected unit 

16 located within 50 km of a Class I area on which construc17 tion commences after the date of enactment of the Clear 

18 Skies Act of 2003 is subject to those provisions under part 

19 C of title I pertaining to the review of a new or recon20 structed major stationary source’s impact on a Class I 

21 area. 

22 ‘‘(c) PRECONSTRUCTION REQUIREMENTS.—Each 

23 State shall include in its plan under section 110, as pro24 gram to provide for the regulation of the construction of 

25 an affected unit that ensures that the following require-
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1 ments are met prior to the commencement of construction 

2 of an affected unit—

3 ‘‘(1) in an area designated as attainment or 

4 unclassifiable under section 107(d), the owner or op5 erator of the affected unit must demonstrate to the 

6 State that the emissions increase from the construc7 tion or operation of such unit will not cause, or con8 tribute to, air pollution in excess of any national am9 bient air quality standard; 

10 ‘‘(2) in an area designated as nonattainment 

11 under section 107(d), the State must determine that 

12 the emissions increase from the construction or oper13 ation of such unit will not interfere with any pro14 gram to assure that the national ambient air quality 

15 standards are achieved provided that interference 

16 with any program will be deemed not to occur, with 

17 respect to each nonattainment area located wholly or 

18 partially within the State, if on the date of submis19 sion of a complete permit application and through20 out a continuous period of three years immediately 

21 preceding such date, the nonattainment area was in 

22 full compliance with all requirements of this Act, in23 cluding but not limited to requirements for State 

24 Implementation Plans; 
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1 ‘‘(3) for a reconstructed unit, prior to beginning 

2 operation, the unit must comply with either the per3 formance standards of section 481 or best available 

4 control technology as defined in part C of title I for 

5 the pollutants whose hourly emissions will increase 

6 at the unit’s maximum capacity; and 

7 ‘‘(4) the State must provide for an opportunity 

8 for interested persons to comment on the Class I 

9 area protections and preconstruction requirements 

10 as set forth in this section. 

11 ‘‘(d) DEFINITIONS.—For purposes of this section: 

12 ‘‘(1) The term ‘affected unit’ means any unit 

13 that is subject to emission limitations under subpart 

14 2 of part B, subpart 2 of part C, or part D. 

15 ‘‘(2) The term ‘construction’ includes the con16 struction of a new affected unit and the modification 

17 of any affected unit. 

18 ‘‘(3) The term ‘modification’ means any phys19 ical change in, or change in the method of operation 

20 of, an affected unit that increases the maximum 

21 hourly emissions of any pollutant regulated under 

22 this Act above the maximum hourly emissions 

23 achievable at that unit during the five years prior to 

24 the change or that results in the emission of any 
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1 pollutant regulated under this Act and not pre2 viously emitted. 

3 ‘‘(e) SAVINGS CLAUSE.—Nothing in this section shall 

4 preclude or deny the right of any State or political subdivi5 sion thereof to adopt to enforce any regulation, require6 ment, limitation, or standard relating to affected units 

7 that is more stringent than a regulation, requirement, lim8 itation, or standard in effect under this section or under 

9 any other provision of this Act.’’. 

10 SEC. 3. OTHER AMENDMENTS. 

11 (a) Title I of the Clean Air Act is amended as follows: 

12 (1) In section 103 by repealing subparagraphs 

13 (E) and (F). 

14 (2) In section 107: 

15 (A) By amending subparagraph (A) of 

16 subsection (d)(1) as follows: 

17 (i) strike ‘‘or’’ at the end of clause 

18 (ii); 

19 (ii) strike the period at the end of 

20 clause (iii) and insert ‘‘, or’’; 

21 (iii) add the following clause (iv) after 

22 clause (iii): 

23 ‘‘(iv) notwithstanding clauses (i) 

24 through (iii), an area may be designated 

25 transitional for the PM 2.5 national pri-
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1 mary or secondary ambient air quality 

2 standards or the 8-hour ozone national pri3 mary or secondary ambient air quality 

4 standard if the Administrator has per5 formed air quality modeling and, in the 

6 case of an area that needs additional local 

7 control measures, the State has performed 

8 supplemental air quality modeling, dem9 onstrating that the area will attain the ap10 plicable standard or standards no later 

11 than December 31, 2015, and such mod12 eling demonstration and all necessary local 

13 controls have been approved into the State 

14 implementation plan no later than Decem15 ber 31, 2004.’’; and 

16 (iv) add at the end a sentence to read 

17 as follows: ‘‘For purposes of the PM 2.5 

18 national primary or secondary ambient air 

19 quality standards, the time period for the 

20 State to submit the designations shall be 

21 extended to no later than December 31, 

22 2003.’’. 

23 (B) By amending clause (i) of subsection 

24 (d)(1)(B) by adding at the end a sentence to 

25 read as follows: ‘‘The Administrator shall not 
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1 be required to designate areas for the revised 

2 PM 2.5 national primary or secondary ambient 

3 air quality standards prior to six months after 

4 the States are required to submit recommenda5 tions under section 107(d)(1)(A), but in no 

6 event shall the period for designating such 

7 areas be extended beyond December 31, 2004. 

8 (3) In section 110 as follows: 

9 (A) By amending clause (i) of subsection 

10 (a)(2)(D) by inserting ‘‘except as provided in 

11 subsection (q),’’ before the word ‘‘prohibiting’’. 

12 (B) By adding the following new sub13 sections at the end thereof: 

14 ‘‘(q) REVIEW OF CERTAIN PLANS.—(1) The Admin15 istrator shall, in reviewing, under clause (i) of subsection 

16 (a)(2)(D), any plan with respect to affected units, within 

17 the meaning of section 126(d)(l)— 

18 ‘‘(A) consider, among other relevant factors, 

19 emissions reductions required to occur by the attain20 ment date or dates of any relevant nonattainment 

21 areas in the other State or States; 

22 ‘‘(B) not require submission of plan provisions 

23 mandating emissions reductions from such affected 

24 units, unless the Administrator determines that— 
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1 ‘‘(i) emissions from such units may be re2 duced at least as cost-effectively as emissions 

3 from each other principal category of sources of 

4 the relevant pollutant, pollutants, or pre-cursors 

5 thereof, including industrial boilers, on-road 

6 mobile sources, and off-road mobile sources, 

7 and any other category of sources that the Ad8 ministrator may identify, and 

9 ‘‘(ii) reductions in such emissions will im10 prove air quality in the other State’s or States’ 

11 nonattainment areas at least as cost-effectively 

12 as reductions in emissions from each other prin13 cipal category of sources of the relevant pollut14 ant, pollutants, or pre-cursors thereof, to the 

15 maximum extent that a methodology is reason16 ably available to make such a determination; 

17 ‘‘(C) develop an appropriate peer reviewed 

18 methodology for making determinations under sub19 paragraph (B) by December 31, 2006; and 

20 ‘‘(D) not require submission of plan provisions 

21 subjecting affected units, within the meaning of sec22 tion 126(d)(1), to requirements with an effective 

23 date prior to December 31, 2014. 

24 ‘‘(2) In making the determination under clause (ii) 

25 of subparagraph (B) of paragraph (1), the Administrator 
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1 will use the best available peer-reviewed models and meth2 odology that consider the proximity of the source or 

3 sources to the other State or States and incorporate other 

4 source characteristics. 

5 ‘‘(3) Nothing in paragraph (1) shall be interpreted 

6 to require revisions to the provisions of 40 CFR parts 

7 51.121 and 51.122 (2001). 

8 ‘‘(r) TRANSITIONAL AREAS.— 

9 ‘‘(1) MAINTENANCE.—(A) By December 31, 

10 2011, each area designated as transitional pursuant 

11 to section 107(d)(1) shall submit an updated emis12 sion inventory and an analysis of whether growth in 

13 emissions, including growth in vehicle miles traveled, 

14 will interfere with attainment by December 31, 

15 2014. 

16 ‘‘(B) No later than December 31, 2011, the Ad17 ministrator shall review each transitional area’s 

18 maintenance analysis, and, if the Administrator de19 termines that growth in emissions will interfere with 

20 attainment by December 31, 2014, the Adminis21 trator shall consult with the State and determine 

22 what action, if any, is necessary to assure that at23 tainment will be achieved by December 31, 2014. 

24 ‘‘(2) PREVENTION OF SIGNIFICANT DETERIORA25 TION.—Each area designated as transitional pursu-
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1 ant to section 107(d)(1) shall be treated as an at2 tainment or unclassifiable area for purposes of the 

3 prevention of significant deterioration provisions of 

4 part C of this title. 

5 ‘‘(3) CONSEQUENCES OF FAILURE TO ATTAIN

6 BY 2015.—No later than June 30, 2016, the Admin7 istrator shall determine whether each area des8 ignated as transitional for the 8-hour ozone stand9 ard or for the PM 2.5 standard has attained that 

10 standard. If the Administrator determines that a 

11 transitional area has not attained the standard, the 

12 area shall be redesignated as nonattainment within 

13 one year of the determination and the State shall be 

14 required to submit a State implementation plan revi15 sion satisfying the provisions of section 172 within 

16 three years of redesignation as nonattainment.’’. 

17 (4) In section 111(b)(1) by adding the following 

18 new subparagraph (C) after subparagraph (B): 

19 ‘‘(C) No standards of performance promul20 gated under this section shall apply to units 

21 subject to regulations promulgated pursuant to 

22 section 481.’’. 

23 (5) In section 112: 

24 (A) By amending paragraph (1) of sub25 section (c) to read as follows: 
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1 ‘‘(1) IN GENERAL.—Not later than 12 months 

2 after November 15, 1990, the Administrator shall 

3 publish, and shall from time to time, but not less 

4 often than every eight years, revise, if appropriate, 

5 in response to public comment or new information, 

6 a list of all categories and subcategories of major 

7 sources and area sources (listed under paragraph 

8 (3)) of the air pollutants listed pursuant to sub9 section (b). Electric utility steam generating units 

10 not subject to section 3005 of the Solid Waste Dis11 posal Act shall not be included in any category or 

12 subcategory listed under this subsection. The Ad13 ministrator shall have the authority to regulate the 

14 emission of hazardous air pollutants listed under 

15 section 112(b), other than mercury compounds, by 

16 electric utility steam generating units, provided that 

17 any determination shall be based on public health 

18 concerns and, on an individual source basis shall: 

19 consider the effects of emissions controls installed or 

20 anticipated to be installed in order to meet other 

21 emission reduction requirements under this Act by 

22 2018; and, be based on a peer reviewed study with 

23 notice and opportunity to comment, to be completed 

24 not before January 2015. Any such regulations shall 

25 be promulgated within, and shall not take effect be-
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1 fore, the date eight years after the commencement 

2 date of the requirements set forth in section 472. To 

3 the extent practicable, the categories and subcat4 egories listed under this subsection shall be con5 sistent with the list of source categories established 

6 pursuant to section 111 and part C. Nothing in the 

7 preceding sentence limits the Administrator’s au8 thority to establish subcategories under this section, 

9 as appropriate.’’. 

10 (B) By amending subparagraph (A) of 

11 subsection (n)(1) to read as follows: 

12 ‘‘(A) The Administrator shall perform a 

13 study of the hazards to public health reasonably 

14 anticipated to occur as a result of emissions by 

15 electric utility steam generating units of pollut16 ants listed under subsection (b) after imposition 

17 of the requirements of this Act. The Adminis18 trator shall report the results of this study to 

19 the Congress within three years after November 

20 15, 1990.’’

21 (6) Section 126 is amended as follows: 

22 (A) By replacing ‘‘section 110(a)(2)(D)(ii) 

23 or this section’’ in subsection (b) with ‘‘section 

24 110(a)(2)(D)(i)’’. 
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1 (B) By replacing ‘‘this section and the pro2 hibition of section 110(a)(2)(D)(ii)’’ in sub3 section (e)(1) with ‘‘the prohibition of section 

4 110(a)(2)(D)(i)’’. 

5 (C) In the language at end of subsection 

6 (c) by striking ‘‘section 110(a)(2)(D)(ii)’’ and 

7 inserting ‘‘section 110(a)(2)(D)(i)’’ and deleting 

8 the last sentence. 

9 (D) By amending subsection (d) to read as 

10 follows: 

11 ‘‘(d)(1) For purposes of this subsection, the term ‘af12 fected unit’ means any unit that is subject to emission 

13 limitations under subpart 2 of part B, subpart 2 of part 

14 C, or part D, or is a designated unit under section 407. 

15 ‘‘(2) To the extent that any petition submitted under 

16 subsection (b) after the date of enactment of the Clear 

17 Skies Act of 2003 seeks a finding for any affected unit, 

18 then, notwithstanding any provision in subsections (a) 

19 through (c) to the contrary: 

20 ‘‘(A) In determining whether to make a finding 

21 under subsection (b) for any affected unit, the Ad22 ministrator shall consider, among other relevant fac23 tors, emissions reductions required to occur by the 

24 attainment date or dates of any relevant nonattain-
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1 ment areas in the petitioning State or political sub2 division. 

3 ‘‘(B) The Administrator may not determine 

4 that affected units emit, or would emit, any air pol5 lutant in violation of the prohibition of section 

6 110(a)(2)(D)(i) unless that Administrator deter7 mines that— 

8 ‘‘(i) such emissions may be reduced at 

9 least as cost-effectively as emissions from each 

10 other principal category of sources of sulfur di11 oxide or nitrogen oxides, including industrial 

12 boilers, on-road mobile sources, and off-road 

13 mobile sources, and any other category of 

14 sources that the Administrator may identify; 

15 and 

16 ‘‘(ii) reductions in such emissions will im17 prove air quality in the petitioning State’s non18 attainment area or areas at least as cost-effec19 tively as reductions in emissions from each 

20 other principal category of sources of sulfur di21 oxide or nitrogen oxides to the maximum extent 

22 that a methodology is reasonably available to 

23 make such a determination. 

24 In making the determination under clause (ii), the 

25 Administrator shall use the best available peer-re-
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1 viewed models and methodology that consider the 

2 proximity of the source or sources to the petitioning 

3 State or political subdivision and incorporate other 

4 sources characteristics. 

5 ‘‘(C) The Administrator shall develop an appro6 priate peer reviewed methodology for making deter7 minations under subparagraph (B) by December 31, 

8 2006. 

9 ‘‘(D) The Administrator shall not make any 

10 findings with respect to an affected unit under this 

11 section prior to December 1, 2011. For any petition 

12 submitted prior to January 1, 2010, the Adminis13 trator shall make a finding or deny the petition by 

14 the December 31, 2011. 

15 ‘‘(E) The Administrator, by rulemaking, shall 

16 extend the compliance and implementation deadlines 

17 in subsection (c) to the extent necessary to assure 

18 that no affected unit shall be subject to any such 

19 deadline prior to January 1, 2014.’’. 

20 (b) TITLE III.—Section 307(d)(1)(G) of title III of 

21 the Clean Air Act is amended to read as follows: 

22 ‘‘(G) the promulgation or revision of any 

23 regulation under title IV,’’. 

24 (c) NOISE POLLUTION.—Title IV of the Clean Air 

25 Act (relating to noise pollution) (42 U.S.C. 7641 et seq.) 
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1 is redesignated as title VII and amended by renumbering 

2 sections 401 through 403 as sections 701 through 703, 

3 respectively, and conforming all cross-references thereto 

4 accordingly. 

5 (d) SECTION 406.—Title IV of the Clean Air Act 

6 Amendments of 1990 (relating to acid deposition control) 

7 is amended by repealing section 406 (industrial sulfur di8 oxide emissions). 

9 (e) MONITORING.—Section 821 (a) of title VIII of 

10 the Clean Air Act Amendments of 1990 (miscellaneous 

11 provisions) is amended to read as follows: 

12 ‘‘(a) MONITORING.—The Administrator shall promul13 gate regulations within eighteen months after November 

14 15, 1990, to require that all affected sources subject to 

15 subpart 1 of part B of title IV of the Clean Air Act as 

16 of December 31, 2009, shall also monitor carbon dioxide 

17 emissions according to the same timetable as in section 

18 405(b). The required monitoring may be no more strin19 gent than that required by any two of the four most popu20 lous countries for units comparable to the affected units 

21 in the United States. The regulations shall require that 

22 such data be reported to the Administrator. The provi23 sions of section 405(e) of title IV of the Clean Air Act 

24 shall apply for purposes of this section in the same manner 

25 and to the same extent as such provision applies to the 
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1 monitoring and data referred to in section 405. The Ad2 ministrator shall implement this subsection under 40 CFR 

3 part 75 (2002), amended as appropriate by the Adminis4 trator.’’.

Æ