I 

108TH CONGRESS 

1ST SESSION H. R. 999

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 HOUSE OF REPRESENTATIVES 

FEBRUARY 27, 2003

Mr. BARTON of Texas (for himself and Mr. TAUZIN) (both by request) introduced the following bill; which was referred to the Committee on Energy 

and Commerce 

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:
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Sec. 1. Short title, table of contents. 

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 of additional units. 

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

‘‘Sec. 409. Auctions. 

‘‘Sec. 410. Evaluation of limitations on total sulfur dioxide, nitrogen oxides, 

and mercury emissions that start in 2018. 

‘‘PART B—SULFUR DIOXIDE EMISSION REDUCTIONS

‘‘Subpart 1—Acid Rain Program 

‘‘Sec. 410. Evaluation of limitations on total sulfur dioxide, nitrogen oxides, 

and mercury emissions that start in 2018. 

‘‘Sec. 411. Definitions. 

‘‘Sec. 412. Allowance allocations. 

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

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

‘‘Sec. 415. Allowances for States with emission rates at or below .8 lbs/

mmBtu. 

‘‘Sec. 416. Election for additional sources. 

‘‘Sec. 417. Auctions, Reserve. 

‘‘Sec. 418. Industrial sulfur dioxide emissions. 

‘‘Sec. 419. Termination. 

‘‘Subpart 2—Clear Skies Sulfur Dioxide Allowance Program 

‘‘Sec. 421. Definitions. 

‘‘Sec. 422. Applicability. 

‘‘Sec. 423. Limitations on total emissions. 

‘‘Sec. 424. Allocations. 

‘‘Sec. 425. Disposition of sulfur dioxide allowances allocated under subpart 

1. 

‘‘Sec. 426. Incentives for sulfur dioxide emission control technology. 

‘‘Subpart 3—Western Regional Air Partnership 

‘‘Sec. 431. Definitions. 

‘‘Sec. 432. Applicability. 

‘‘Sec. 433. Limitations on total emissions. 

‘‘Sec. 434. Allocations. 

‘‘PART C—NITROGEN OXIDES EMISSIONS REDUCTIONS

‘‘Subpart 1—Acid Rain Program 
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‘‘Sec. 441. Nitrogen Oxides Emission Reduction Program. 

‘‘Sec. 442. Termination. 

‘‘Subpart 2—Clear Skies Nitrogen Oxides Allowance Program 

‘‘Sec. 451. Definitions. 

‘‘Sec. 452. Applicability. 

‘‘Sec. 453. Limitations on total emissions. 

‘‘Sec. 454. Allocations. 

‘‘Subpart 3—Ozone Season NOX Budget Program 

‘‘Sec. 461. Definitions. 

‘‘Sec. 462. General Provisions. 

‘‘Sec. 463. Applicable Implementation Plan. 

‘‘Sec. 464. Termination of Federal Administration of NOX Trading Program. 

‘‘Sec. 465. Carryforward of Pre-2008 Nitrogen Oxides Allowances. 

‘‘PART D—MERCURY EMISSION REDUCTIONS

‘‘Sec. 471. Definitions. 

‘‘Sec. 472. Applicability. 

‘‘Sec. 473. Limitations on total emissions. 

‘‘Sec. 474. Allocations. 

‘‘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. Exemption from major source preconstruction review and best 

availability retrofit control technology requirements.’’

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

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

3 as appropriate. 

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

5 source’ means a facility or source that includes one 

6 or more affected units. 

7 ‘‘(3) The term ‘affected unit’ means—

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

9 to emission reduction requirements or limita10 tions under part B, C, or D or, if applicable, 

11 under a specified part or subpart; or 

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

13 1 of part C, a unit that is subject to emission 

14 reduction requirements or limitations under 

15 that subpart. 

16 ‘‘(4) The term ‘allowance’ means—

17 ‘‘(A) an authorization, by the Adminis18 trator under this title, to emit one ton of sulfur 

19 dioxide, one ton of nitrogen oxides, or one 

20 ounce of mercury; or 

21 ‘‘(B) under subpart 1 of part B, an au22 thorization by the Administrator under this 

23 title, to emit one ton of sulfur dioxide. 

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

25 except under subpart 1 of part B and section 407, 
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1 the average annual heat input used by a unit during 

2 the 3 years in which the unit had the highest heat 

3 input for the period 1998 through 2002. 

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

5 unit commenced or commences operation during the 

6 period 2001 through 2004, then ‘baseline heat input’ 

7 means the manufacturer’s design heat input capacity 

8 for the unit multiplied by 80 percent for coal-fired 

9 units, 50 percent for boilers that are not coal-fired, 

10 50 percent for combustion turbines other than sim11 ple cycle turbines, and 5 percent for simple cycle 

12 combustion turbines. 

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

14 heat input—

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

16 405 for the unit, if the unit was required to re17 port heat input during the year under that sec18 tion; 

19 ‘‘(ii) reported to the Energy Information 

20 Administration for the unit, if the unit was not 

21 required to report heat input under section 405; 

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

23 to the State where the unit is located as re24 quired by State law, if the unit was not re25 quired to report heat input during the year 
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1 under section 405 and did not report to the En2 ergy Information Administration; or 

3 ‘‘(iv) based on fuel use and fuel heat con4 tent data for the unit from fuel purchase or use 

5 records, if the unit was not required to report 

6 heat input during the year under section 405 

7 and did not report to the Energy Information 

8 Administration and the State. 

9 ‘‘(D) Not later than 3 months after the enact10 ment of the Clear Skies Act of 2003, the Adminis11 trator shall promulgate regulations, without notice 

12 and opportunity for comment, specifying the format 

13 in which the information under subparagraphs 

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

15 Not later than 9 months after the enactment of the 

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

17 any unit under subparagraph (B)(ii) or (C)(ii), (iii), 

18 or (iv) to which allowances may be allocated under 

19 section 424, 434, 454, or 474 shall submit to the 

20 Administrator such information. The Administrator 

21 is not required to allocate allowances under such sec22 tions to a unit for which the owner or operator fails 

23 to submit information in accordance with the regula24 tions promulgated under this subparagraph. 
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1 ‘‘(6) The term ‘clearing price’ means the price 

2 at which allowances are sold at an auction conducted 

3 by the Administrator or, if allowances are sold at an 

4 auction conducted by the Administrator at more 

5 than one price, the lowest price at which allowances 

6 are sold at the auction. 

7 ‘‘(7) The term ‘coal’ means any solid fuel classi8 fied as anthracite, bituminous, subbituminous, or 

9 lignite. 

10 ‘‘(8) The term ‘coal-derived fuel’ means any 

11 fuel (whether in a solid, liquid, or gaseous state) 

12 produced by the mechanical, thermal, or chemical 

13 processing of coal. 

14 ‘‘(9) The term ‘coal-fired’ with regard to a unit 

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

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

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

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

19 ‘‘(10) The term ‘cogeneration unit’ means, ex20 cept under subpart 1 of part B and subpart 1 of 

21 part C, a unit that produces through the sequential 

22 use of energy: 

23 ‘‘(A) electricity; and 
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1 ‘‘(B) useful thermal energy (such as heat 

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

3 cooling purposes. 

4 ‘‘(11) The term ‘combustion turbine’ means any 

5 combustion turbine that is not self-propelled. The 

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

7 combustion turbine, a combined cycle combustion 

8 turbine and any duct burner or heat recovery device 

9 used to extract heat from the combustion turbine ex10 haust, and a regenerative combustion turbine. The 

11 term does not include a combined turbine in an inte12 grated gasification combined cycle plant. 

13 ‘‘(12) The term ‘commence operation’ with re14 gard to a unit means start up the unit’s combustion 

15 chamber. 

16 ‘‘(13) The term ‘compliance plan’ means ei17 ther—

18 ‘‘(A) a statement that the facility will com19 ply with all applicable requirements under this 

20 title, or 

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

22 1 of part C, where applicable, a schedule and 

23 description of the method or methods for com24 pliance and certification by the owner or oper-
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1 ator that the facility is in compliance with the 

2 requirements of that subpart. 

3 ‘‘(14) The term ‘continuous emission moni4 toring system’ (CEMS) means the equipment as re5 quired by section 405, used to sample, analyze, 

6 measure, and provide on a continuous basis a per7 manent record of emissions and flow (expressed in 

8 pounds per million British thermal units (lbs/

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

10 form as the Administrator may prescribe by regula11 tions under section 405. 

12 ‘‘(15) The term ‘designated representative’ 

13 means a responsible person or official authorized by 

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

15 includes the unit to represent the owner or operator 

16 in matters pertaining to the holding, transfer, or dis17 position of allowances, and the submission of and 

18 compliance with permits, permit applications, and 

19 compliance plans. 

20 ‘‘(16) The term ‘duct burner’ means a combus21 tion device that uses the exhaust from a combustion 

22 turbine to burn fuel for heat recovery. 

23 ‘‘(17) The term ‘facility’ means all buildings, 

24 structures, or installations located on one or more 
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1 contiguous or adjacent properties under common 

2 control of the same person or persons. 

3 ‘‘(18) The term ‘fossil fuel’ means natural gas, 

4 petroleum, coal, or any form of solid, liquid, or gas5 eous fuel derived from such material. 

6 ‘‘(19) The term ‘fossil fuel-fired’ with regard to 

7 a unit means combusting fossil fuel, alone or in com8 bination with any amount of other fuel or material. 

9 ‘‘(20) The term ‘fuel oil’ means a petroleum10 based fuel, including diesel fuel or petroleum deriva11 tives. 

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

13 means, except under subpart 1 of part B and sub14 part 1 of part C, combusting only natural gas or 

15 fuel oil, with natural gas comprising at least 90 per16 cent, and fuel oil comprising no more than 10 per17 cent, of the unit’s total heat input in any year. 

18 ‘‘(22) The term ‘gasify’ means to convert car19 bon-containing material into a gas consisting pri20 marily of carbon monoxide and hydrogen. 

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

22 produces electricity and, under subpart 1 of part B 

23 and subpart 1 of part C, that is reported as a gener24 ating unit pursuant to Department of Energy Form 

25 860. 
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1 ‘‘(24) The term ‘heat input’ with regard to a 

2 specific period of time means the product (in 

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

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

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

6 from preheated combustion air, recirculated flue 

7 gases, or exhaust. 

8 ‘‘(25) The term ‘integrated gasification com9 bined cycle plant’ means any combination of equip10 ment used to gasify fossil fuels (with or without 

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

12 cycle combustion turbine. 

13 ‘‘(26) The term ‘oil-fired’ with regard to a unit 

14 means, except under section 424 and 434, com15 busting fuel oil for more than 10 percent of the 

16 unit’s total heat input, and combusting no coal or 

17 coal-derived fuel, in any year. 

18 ‘‘(27) The term ‘owner or operator’ with regard 

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

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

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

22 unit or the facility. 

23 ‘‘(28) The term ‘permitting authority’ means 

24 the Administrator, or the State or local air pollution 
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1 control agency, with an approved permitting pro2 gram under title V of the Act. 

3 ‘‘(29) The term ‘potential electrical output’ with 

4 regard to a generator means the nameplate capacity 

5 of the generator multiplied by 8,760 hours. 

6 ‘‘(30) The term ‘simple cycle combustion tur7 bine’ means a combustion turbine that does not ex8 tract heat from the combustion turbine exhaust 

9 gases. 

10 ‘‘(31) The term ‘source’ means, except for sec11 tions 410, 481, and 482, all buildings, structures, or 

12 installations located on one or more contiguous or 

13 adjacent properties under common control of the 

14 same person or persons. 

15 ‘‘(32) The term ‘State’ means—

16 ‘‘(A) one of the 48 contiguous States, 

17 Alaska, Hawaii, the District of Columbia, the 

18 Commonwealth of Puerto Rico, the Virgin Is19 lands, Guam, American Samoa, or the Com20 monwealth of the Northern Mariana Islands; or 

21 ‘‘(B) under subpart 1 of part B and sub22 part 1 of part C, one of the 48 contiguous 

23 States or the District of Columbia. 

24 ‘‘(33) The term ‘unit’ means—
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1 ‘‘(A) a fossil fuel-fired boiler, combustion 

2 turbine, or integrated gasification combined 

3 cycle plan; or 

4 ‘‘(B) under subpart 1 of part B and sub5 part 1 of part C, a fossil fuel-fired combustion 

6 device. 

7 ‘‘(34) The term ‘utility unit’ shall have the 

8 meaning set forth in section 411. 

9 ‘‘(35) The term ‘year’ means calendar year. 

10 ‘‘SEC. 403. ALLOWANCE SYSTEM. 

11 ‘‘(a) ALLOCATIONS IN GENERAL.—

12 ‘‘(1) For the emission limitation programs 

13 under this title, the Administrator shall allocate an14 nual allowances for an affected unit, to be held or 

15 distributed by the designated representative of the 

16 owner or operator in accordance with this title as 

17 follows—

18 ‘‘(A) sulfur dioxide allowances in an 

19 amount equal to the annual tonnage emission 

20 limitation calculated under section 413, 414, 

21 415, or 416, except as otherwise specifically 

22 provided elsewhere in subpart 1 of part B, or 

23 in an amount calculated under section 424 or 

24 434, 
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1 ‘‘(B) nitrogen oxides allowances in an 

2 amount calculated under section 454, and 

3 ‘‘(C) mercury allowances in an amount cal4 culated under section 474. 

5 ‘‘(2) Notwithstanding any other provision of 

6 law to the contrary, the calculation of the allocation 

7 for any unit or facility, and the determination of any 

8 values used in such calculation, under sections 424, 

9 434, 454, and 474 shall not be subject to judicial re10 view. 

11 ‘‘(3) Allowances shall be allocated by the Ad12 ministrator without cost to the recipient, and shall 

13 be auctioned or sold by the Administrator, in accord14 ance with this title. 

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

16 allocated, auctioned, or sold by the Administrator under 

17 this title may be transferred among designated representa18 tives of the owners or operators of affected facilities under 

19 this title and any other person, as provided by the allow20 ance system regulations promulgated by the Adminis21 trator. With regard to sulfur dioxide allowances, the Ad22 ministrator shall implement this subsection under 40 CFR 

23 part 73 (2002), amended as appropriate by the Adminis24 trator. With regard to nitrogen oxides allowances and mer25 cury allowances, the Administrator shall implement this 
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1 subsection by promulgating regulations not later than 24 

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

3 of 2003. The regulations under this subsection shall estab4 lish the allowance system prescribed under this section, 

5 including, but not limited to, requirements for the alloca6 tion, transfer, and use of allowances under this title. Such 

7 regulations shall prohibit the use of any allowance prior 

8 to the calendar year for which the allowance was allocated 

9 or auctioned and shall provide, consistent with the pur10 poses of this title, for the identification of unused allow11 ances, and for such unused allowances to be carried for12 ward and added to allowances allocated in subsequent 

13 years, except as otherwise provided in section 425. Such 

14 regulations shall provide, or shall be amended to provide, 

15 that transfers of allowances shall not be effective until cer16 tification of the transfer, signed by a responsible official 

17 of the transferor, is received and recorded by the Adminis18 trator. 

19 ‘‘(c) ALLOWANCE TRACKING SYSTEM.—The Admin20 istrator shall promulgate regulations establishing a system 

21 for issuing, recording, and tracking allowances, which 

22 shall specify all necessary procedures and requirements for 

23 an orderly and competitive functioning of the allowance 

24 system. Such system shall provide, not later than the com25 mencement date of the nitrogen oxides allowance require-
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1 ment under section 452, for one or more facility-wide ac2 counts for holding sulfur dioxide allowances, nitrogen ox3 ides allowances, and, if applicable, mercury allowances for 

4 all affected units at an affected facility. With regard to 

5 sulfur dioxide allowances, the Administrator shall imple6 ment this subsection under 40 CFR part 73 (2002), 

7 amended as appropriate by the Administrator. With re8 gard to nitrogen oxides allowances and mercury allow9 ances, the Administrator shall implement this subsection 

10 by promulgating regulations not later than 24 months 

11 after the date of enactment of the Clear Skies Act of 2002. 

12 All allowance allocations and transfers shall, upon record13 ing by the Administrator, be deemed a part of each unit’s 

14 or facility’s permit requirements pursuant to section 404, 

15 without any further permit review and revision. 

16 ‘‘(d) NATURE OF ALLOWANCES.—A sulfur dioxide al17 lowance, nitrogen oxides allowance, or mercury allowance 

18 allocated, auctioned, or sold by the Administrator under 

19 this title is a limited authorization to emit one ton of sul20 fur dioxide, one ton of nitrogen oxides, or one ounce of 

21 mercury, as the case may be, in accordance with the provi22 sions of this title. Such allowance does not constitute a 

23 property right. Nothing in this title or in any other provi24 sion of law shall be construed to limit the authority of 

25 the United States to terminate or limit such authorization. 
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1 Nothing in this section relating to allowances shall be con2 strued as affecting the application of, or compliance with, 

3 any other provision of this Act to an affected unit or facil4 ity, including the provisions related to applicable National 

5 Ambient Air Quality Standards and State implementation 

6 plans. Nothing in this section shall be construed as requir7 ing a change of any kind in any State law regulating elec8 tric utility rates and charges or affecting any State law 

9 regarding such State regulation or as limiting State regu10 lation (including any prudency review) under such a State 

11 law. Nothing in this section shall be construed as modi12 fying the Federal Power Act or as affecting the authority 

13 of the Federal Energy Regulatory Commission under that 

14 Act. Nothing in this title shall be construed to interfere 

15 with or impair any program for competitive bidding for 

16 power supply in a State in which such program is estab17 lished. Allowances, once allocated or auctioned to a person 

18 by the Administrator, may be received, held, and tempo19 rarily or permanently transferred in accordance with this 

20 title and the regulations of the Administrator without re21 gard to whether or not a permit is in effect under title 

22 V or section 404 with respect to the unit for which such 

23 allowance was originally allocated and recorded. 

24 ‘‘(e) PROHIBITION.—
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1 ‘‘(1) It shall be unlawful for any person to hold, 

2 use, or transfer any allowance allocated, auctioned, 

3 or sold by the Administrator under this title, except 

4 in accordance with regulations promulgated by the 

5 Administrator. 

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

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

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

9 may be, during a year in excess of the number of al10 lowances held for that unit or facility for that year 

11 by the owner or operator as provided in sections 

12 412(c), 422, 432, 452, and 472. 

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

14 purchase allowances directly from the Administrator 

15 to be used only to meet the requirements of sections 

16 422, 432, 452, and 472, as the case may be, for the 

17 year in which the purchase is made or the prior 

18 year. Not later than 36 months after the date of en19 actment of the Clear Skies Act of 2003, the Admin20 istrator shall promulgate regulations providing for 

21 direct sales of sulfur dioxide allowances, nitrogen ox22 ides allowances, and mercury allowances to an owner 

23 or operator of a facility. The regulations shall pro24 vide that—
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1 ‘‘(A) such allowances may be used only to 

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

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

4 and for the year in which the purchase is made 

5 or the prior year, 

6 ‘‘(B) each such sulfur dioxide allowance 

7 shall be sold for $4,000, each such nitrogen ox8 ides allowance shall be sold for $4,000, and 

9 each such mercury allowance shall be sold for 

10 $2,187.50, with such prices adjusted for infla11 tion based on the Consumer Price Index on the 

12 date of enactment of the Clear Skies Act of 

13 2003 and annually thereafter, 

14 ‘‘(C) the proceeds from any sales of allow15 ances under subparagraph (B) shall be depos16 ited in the United States Treasury, 

17 ‘‘(D) the allowances directly purchased for 

18 use for the year specified in subparagraph (A) 

19 shall be taken from, and reduce, the amount of 

20 sulfur dioxide allowances, nitrogen oxides allow21 ances, or mercury allowances, as the case may 

22 be, that would otherwise be auctioned under 

23 section 423, 453, or 473 starting for the year 

24 after the specified year and continuing for each 

25 subsequent year as necessary, 
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1 ‘‘(E) if an owner or operator does not use 

2 any such allowance in accordance with para3 graph (A)—

4 ‘‘(i) the owner or operator shall hold 

5 the allowance for deduction by the Admin6 istrator, and 

7 ‘‘(ii) the Administrator shall deduct 

8 the allowance, without refund or other 

9 form of recompense, and offer it for sale in 

10 the auction from which it was taken under 

11 subparagraph (D) or a subsequent relevant 

12 auction as necessary, and 

13 ‘‘(F) if the direct sales of allowances result 

14 in the removal of all sulfur dioxide allowances, 

15 nitrogen oxides allowances, or mercury allow16 ances, as the case may be, from auctions under 

17 section 423, 453, or 473 for 3 consecutive 

18 years, the Administrator shall conduct a study 

19 to determine whether revisions to the relevant 

20 allowance trading program are necessary and 

21 shall report the results to the Congress. 

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

23 calendar year for which they are allocated or auc24 tioned. Nothing in this section or in the allowance 

25 system regulations shall relieve the Administrator of 
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1 the Administrator’s permitting, monitoring and en2 forcement obligations under this Act, nor relieve af3 fected facilities of their requirements and liabilities 

4 under the Act. 

5 ‘‘(f) COMPETITIVE BIDDING FOR POWER SUPPLY.—

6 Nothing in this title shall be construed to interfere with 

7 or impair any program for competitive bidding for power 

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

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

10 Nothing in this section affects—

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

12 the transfer, use, or sale of allowances, or

13 ‘‘(B) the authority of the Federal Energy Regu14 latory Commission under any provision of law re15 specting unfair methods of competition or anti16 competitive acts or practices. 

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

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

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

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

21 The acquisition or disposition of allowances pursuant to 

22 this title including the issuance of securities or the under23 taking of any other financing transaction in connection 

24 with such allowances shall not be subject to the provisions 

25 of the Public Utility Holding Company Act of 1935. 
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1 ‘‘(i) INTERPOLLUTANT TRADING.—Not later than 6 

2 years after the enactment of the Clear Skies Act of 2003, 

3 the Administrator shall furnish to the Congress a study 

4 evaluating the environmental and economic consequences 

5 of amending this title to permit trading sulfur dioxide al6 lowances for nitrogen oxides allowances and nitrogen ox7 ides allowances for sulfur dioxide allowances. 

8 ‘‘(j) INTERNATIONAL TRADING.—Not later than 24 

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

10 of 2003, the Administrator shall furnish to the Congress 

11 a study evaluating the feasibility of international trading 

12 of sulfur dioxide allowances, nitrogen oxides allowances, 

13 and mercury allowances. 

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

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

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

17 issued to units and facilities subject to this title and en18 forced in accordance with the provisions of title V, as 

19 modified by this title. Any such permit issued by the Ad20 ministrator, or by a State with an approved permit pro21 gram, shall prohibit—

22 ‘‘(1) annual emissions of sulfur dioxide, nitro23 gen oxides, and mercury in excess of the number of 

24 allowances required to be held in accordance with 

25 sections 412(c), 422, 432, 452, and 472, 
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1 ‘‘(2) exceeding applicable emissions rates under 

2 section 441, 

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

4 for which it was allocated or auctioned, and 

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

6 permit. 

7 No permit shall be issued that is inconsistent with the re8 quirements of this title, and title V as applicable. 

9 ‘‘(b) COMPLIANCE PLAN.—Each initial permit appli10 cation shall be accompanied by a compliance plan for the 

11 facility to comply with its requirements under this title. 

12 Where an affected facility consists of more than one af13 fected unit, such plan shall cover all such units, and such 

14 facility shall be considered a ‘facility’ under section 

15 502(c). Nothing in this section regarding compliance plans 

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

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

18 operator, or the designated representative of the 

19 owners and operators, of a unit subject to the emis20 sions limitation requirements of sections 412(c), 

21 413, 414, and 441, that the unit will meet the appli22 cable emissions limitation requirements of such sec23 tions in a timely manner or that, in the case of the 

24 emissions limitation requirements of sections 412(c), 

25 413, and 414, the owners and operators will hold 
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1 sulfur dioxide allowances in the amount required by 

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

3 and approved compliance planning requirements of 

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

5 that will meet the requirements of this title by 

6 means of an alternative method of compliance au7 thorized under section 413 (b), (c), (d), or (f), sec8 tion 416, and section 441 (d) or (e), the proposed 

9 and approved compliance plan, permit application 

10 and permit shall include, pursuant to regulations 

11 promulgated by the Administrator, for each alter12 native method of compliance a comprehensive de13 scription of the schedule and means by which the 

14 unit will rely on one or more alternative methods of 

15 compliance in the manner and time authorized under 

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

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

18 operator, or the designated representative, of a facil19 ity that includes a unit subject to the emissions limi20 tation requirements of sections 422, 432, 452, and 

21 472 that the owner or operator will hold sulfur diox22 ide allowances, nitrogen oxide allowances, and mer23 cury allowances, as the case may be, in the amount 

24 required by such sections shall be deemed to meet 

25 the proposed and approved compliance planning re-
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1 quirements of this section and title V with regard to 

2 subparts A through D. 

3 ‘‘(3) Recording by the Administrator of trans4 fers of allowances shall amend automatically all ap5 plicable proposed or approved permit applications, 

6 compliance plans and permits. 

7 ‘‘(c) PERMITS.—The owner or operator of each facil8 ity under this title that includes an affected unit subject 

9 to title V shall submit a permit application and compliance 

10 plan with regard to the applicable requirements under sec11 tions 412(c), 422, 432, 441, 452, and 472 for sulfur diox12 ide emissions, nitrogen oxide emissions, and mercury emis13 sions from such unit to the permitting authority in accord14 ance with the deadline for submission of permit applica15 tions and compliance plans under title V. The permitting 

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

17 or the designated representative of such owner or oper18 ator, that satisfies the requirements of title V and this 

19 title. 

20 ‘‘(d) AMENDMENT OF APPLICATION AND COMPLI21 ANCE PLAN.—At any time after the submission of an ap22 plication and compliance plan under this section, the ap23 plicant may submit a revised application and compliance 

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

25 ‘‘(e) PROHIBITION.—
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•HR 999 IH 

1 ‘‘(1) It shall be unlawful for an owner or oper2 ator, or designated representative, required to sub3 mit a permit application or compliance plan under 

4 this title to fail to submit such application or plan 

5 in accordance with the deadlines specified in this 

6 section or to otherwise fail to comply with regula7 tions implementing this section. 

8 ‘‘(2) It shall be unlawful for any person to oper9 ate any facility subject to this title except in compli10 ance with the terms and requirements of a permit 

11 application and compliance plan (including amend12 ments thereto) or permit issued by the Adminis13 trator or a State with an approved permit program. 

14 For purposes of this subsection, compliance, as pro15 vided in section 504(f), with a permit issued under 

16 title V which complies with this title for facilities 

17 subject to this title shall be deemed compliance with 

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

19 ‘‘(3) In order to ensure reliability of electric 

20 power, nothing in this title or title V shall be con21 strued as requiring termination of operations of a 

22 unit serving a generator for failure to have an ap23 proved permit or compliance plan under this section, 

24 except that any such unit may be subject to the ap25 plicable enforcement provisions of section 113. 
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•HR 999 IH 

1 ‘‘(f) CERTIFICATE OF REPRESENTATION.—No per2 mit shall be issued under this section to an affected unit 

3 or facility until the designated representative of the own4 ers or operators has filed a certificate of representation 

5 with regard to matters under this title, including the hold6 ing and distribution of allowances and the proceeds of 

7 transactions involving allowances. 

8 ‘‘SEC. 405. MONITORING, REPORTING, AND RECORD9 KEEPING REQUIREMENTS. 

10 ‘‘(a) APPLICABILITY.—

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

12 subject to this title shall be required to install and 

13 operate CEMS on each affected unit subject to sub14 part 1 of part B or subpart 1 of part C at the facil15 ity, and to quality assure the data, for sulfur diox16 ide, nitrogen oxides, opacity, and volumetric flow at 

17 each such unit. 

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

19 specify the requirements for CEMS under subpara20 graph (A), for any alternative monitoring system 

21 that is demonstrated as providing information with 

22 the same precision, reliability, accessibility, and time 

23 lines as that provided by CEMS, and for record24 keeping and reporting of information from such sys25 tems. Such regulations may include limitations on 
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•HR 999 IH 

1 the use of alternative compliance methods by units 

2 equipped with an alternative monitoring system as 

3 may be necessary to preserve the orderly functioning 

4 of the allowance system, and which will ensure the 

5 emissions reductions contemplated by this title. 

6 Where 2 or more units utilize a single stack, a sepa7 rate CEMS shall not be required for each unit, and 

8 for such units the regulations shall require that the 

9 owner or operator collect sufficient information to 

10 permit reliable compliance determinations for each 

11 such unit. 

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

13 subject to this title shall be required to install and 

14 operate CEMS to monitor the emissions from each 

15 affected unit at the facility, and to quality assure 

16 the data for—

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

18 flow for all affected units subject to subpart 2 

19 of part B at the facility, 

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

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

22 and 

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

24 to part D at the facility. 
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•HR 999 IH 

1 ‘‘(B)(i) The Administrator shall, by regulations, 

2 specify the requirements for CEMS under subpara3 graph (A), for any alternative monitoring system 

4 that is demonstrated as providing information with 

5 the same precision, reliability, accessibility, and 

6 timeliness as that provided by CEMS, for record7 keeping and reporting of information from such sys8 tems, and if necessary under section 474, for moni9 toring, recordkeeping, and reporting of the mercury 

10 content of fuel. 

11 ‘‘(ii) Notwithstanding the requirements of 

12 clause (i), the regulations under clause (i) may 

13 specify an alternative monitoring system for deter14 mining mercury emissions to the extent that the Ad15 ministrator determines that CEMS for mercury with 

16 appropriate vendor guarantees are not commercially 

17 available. 

18 ‘‘(iii) The regulations under clause (i) may in19 clude limitation on the use of alternative compliance 

20 methods by units equipped with an alternative moni21 toring system as may be necessary to preserve the 

22 orderly functioning of the allowance system, and 

23 which will ensure the emissions reductions con24 templated by this title. 
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•HR 999 IH 

1 ‘‘(iv) Except as provided in clause (v), the regu2 lations under clause (i) shall not require a separate 

3 CEMS for each unit where two or more units utilize 

4 a single stack and shall require that the owner or 

5 operator collect sufficient information to permit reli6 able compliance determinations for such units. 

7 ‘‘(v) The regulations under clause (i) may re8 quire a separate CEMS for each unit where two or 

9 more units utilize a single stack and another provi10 sion of the Act requires data under subparagraph 

11 (A) for an individual unit. 

12 ‘‘(b) DEADLINES.—

13 ‘‘(1) NEW UTILITY UNITS.—Upon commence14 ment of commercial operation of each new utility 

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

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

17 ‘‘(2) DEADLINE FOR AFFECTED UNITS UNDER

18 SUBPART 2 OF PART B FOR INSTALLATION AND OP19 ERATION OF CEMS.—By the later of the date 12 

20 months before the commencement date of the sulfur 

21 dioxide allowance requirement of section 422, or the 

22 date on which the unit commences operation, the 

23 owner or operator of each affected unit under sub24 part 2 of part B shall install and operate CEMS, 

25 quality assure the data, and keep records and re-
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•HR 999 IH 

1 ports in accordance with the regulations issued 

2 under paragraph (a)(2) with regard to sulfur diox3 ide, opacity, and volumetric flow. 

4 ‘‘(3) DEADLINE FOR AFFECTED UNITS UNDER

5 SUBPART 3 OF PART B FOR INSTALLATION AND OP6 ERATION OF CEMS.—By the later of January 1 of 

7 the year before the first covered year or the date on 

8 which the unit commences operation, the owner or 

9 operator of each affected unit under subpart 3 of 

10 part B shall install and operate CEMS, quality as11 sure the data, and keep records and reports in ac12 cordance with the regulations issued under para13 graph (a)(2) with regard to sulfur dioxide and volu14 metric flow. 

15 ‘‘(4) DEADLINE FOR AFFECTED UNITS UNDER

16 SUBPART 2 OF PART C FOR INSTALLATION AND OP17 ERATION OF CEMS.—By the later of the date 12 

18 months before the commencement date of the nitro19 gen oxides allowance requirement under section 452, 

20 or the date on which the unit commences operation, 

21 the owner or operator of each affected unit under 

22 subpart 2 of part C shall install and operate CEMS, 

23 quality assure the data, and keep records and re24 ports in accordance with the regulations issued 
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•HR 999 IH 

1 under paragraph (a)(2) with regard to nitrogen ox2 ides. 

3 ‘‘(5) DEADLINE FOR AFFECTED UNITS UNDER

4 PART D FOR INSTALLATION AND OPERATION OF

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

6 the commencement date of the mercury allowance 

7 requirement of section 472, or the date on which the 

8 unit commences operation, the owner or operator of 

9 each affected unit under part D shall install and op10 erate CEMS, quality assure the data, and keep 

11 records and reports in accordance with the regula12 tions issued under paragraph (a)(2) with regard to 

13 mercury. 

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

15 CEMS data or data from an alternative monitoring system 

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

17 available for any affected unit during any period of a cal18 endar year in which such data is required under this title, 

19 and the owner or operator cannot provide information, 

20 satisfactory to the Administrator, on emissions during 

21 that period, the Administrator shall deem the unit to be 

22 operating in an uncontrolled manner during the entire pe23 riod for which the data was not available and shall, by 

24 regulation, prescribe means to calculate emissions for that 

25 period. The owner or operator shall be liable for excess 
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•HR 999 IH 

1 emissions fees and offsets under section 406 in accordance 

2 with such regulations. Any fee due and payable under this 

3 subsection shall not diminish the liability of the unit’s 

4 owner or operator for any fine, penalty, fee or assessment 

5 against the unit for the same violation under any other 

6 section of this Act. 

7 ‘‘(d) IMPLEMENTATION.—With regard to sulfur diox8 ide, nitrogen oxides, opacity, and volumetric flow, the Ad9 ministrator shall implement subsections (a) and (c) under 

10 40 CFR part 75 (2002), amended as appropriate by the 

11 Administrator. With regard to mercury, the Administrator 

12 shall implement subsections (a) and (c) by issuing pro13 posed regulations not later than 36 months before the 

14 commencement date of the mercury allowance requirement 

15 under section 472 and final regulations not later than 24 

16 months before that commencement date. 

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

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

19 operate a facility without complying with the requirements 

20 of this section, and any regulations implementing this sec21 tion. 

22 ‘‘SEC. 406. EXCESS EMISSIONS PENALTY; GENERAL COMPLI23 ANCE WITH OTHER PROVISIONS; ENFORCE24 MENT. 

25 ‘‘(a) EXCESS EMISSIONS PENALTY.—
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1 ‘‘(1) AMOUNT FOR OXIDES OF NITROGEN.—The 

2 owner or operator of any unit subject to the require3 ments of section 441 that emits nitrogen oxides for 

4 any calendar year in excess of the unit’s emissions 

5 limitation requirement shall be liable for the pay6 ment of an excess emissions penalty, except where 

7 such emission were authorized pursuant to section 

8 110(f). That penalty shall be calculated on the basis 

9 of the number of tons emitted in excess of the unit’s 

10 emissions limitation requirement multiplied by 

11 $2,000. 

12 ‘‘(2) AMOUNT FOR SULFUR DIOXIDE BEFORE

13 2008.—The owner or operator of any unit subject to 

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

15 dioxide for any calendar year before 2008 in excess 

16 of the sulfur dioxide allowances the owner or oper17 ator holds for use for the unit for that calendar year 

18 shall be liable for the payment of an excess emis19 sions penalty, except where such emissions were au20 thorized pursuant to section 110(f). That penalty 

21 shall be calculated as follows: 

22 ‘‘(A) the product of the unit’s excess emis23 sions (in tons) multiplied by the clearing price 

24 of sulfur dioxide allowances sold at the most re25 cent auction under section 417, if within thirty 
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•HR 999 IH 

1 days after the date on which the owner or oper2 ator was required to hold sulfur dioxide allow3 ances—

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

5 excess emissions in accordance with para6 graph (b)(1); and 

7 ‘‘(ii) the Administrator receives the 

8 penalty required under this subparagraph. 

9 ‘‘(B) if the requirements of clause (A)(i) or 

10 (A)(ii) are not met, 300 percent of the product 

11 of the unit’s excess emissions (in tons) multi12 plied by the clearing price of sulfur dioxide al13 lowances sold at the most recent auction under 

14 section 417. 

15 ‘‘(3) AMOUNT FOR SULFUR DIOXIDE AFTER

16 2007.—If the units at a facility that are subject to 

17 the requirements of section 412(c) emit sulfur diox18 ide for any calendar year after 2007 in excess of the 

19 sulfur dioxide allowances that the owner or operator 

20 of the facility holds for use for the facility for that 

21 calendar year, the owner or operator shall be liable 

22 for the payment of an excess emissions penalty, ex23 cept where such emissions were authorized pursuant 

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

25 under paragraph (4)(A) or (4)(B). 
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•HR 999 IH 

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

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

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

4 emit sulfur dioxide, nitrogen oxides, or mercury for 

5 any calendar year in excess of the sulfur dioxide al6 lowances, nitrogen oxides allowances, or mercury al7 lowances, as the case may be, that the owner or op8 erator of the facility holds for use for the facility for 

9 that calendar year, the owner or operator shall be 

10 liable for the payment of an excess emissions pen11 alty, except where such emissions were authorized 

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

13 calculated as follows: 

14 ‘‘(A) the product of the units’ excess emis15 sions (in tons or, for mercury emissions, in 

16 ounces) multiplied by the clearing price of sul17 fur dioxide allowances, nitrogen oxides allow18 ances, or mercury allowances, as the case may 

19 be, sold at the most recent auction under sec20 tion 423, 453, or 473, if within thirty days 

21 after the date on which the owner or operator 

22 was required to hold sulfur dioxide, nitrogen ox23 ides allowance, or mercury allowances as the 

24 case may be—
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•HR 999 IH 

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

2 excess emissions in accordance with para3 graph (b)(2) or (b)(3), as applicable; and 

4 ‘‘(ii) the Administrator receives the 

5 penalty required under this subparagraph. 

6 ‘‘(B) if the requirements of clause (A)(i) or 

7 (A)(ii) are not met, 300 percent of the product 

8 of the units’ excess emissions (in tons or, for 

9 mercury emissions, in ounces) multiplied by the 

10 clearing price of sulfur dioxide allowances, ni11 trogen oxides allowances, or mercury allow12 ances, as the case may be, sold at the most re13 cent auction under section 423, 453, or 473. 

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

15 1, 2, 3, or 4 shall be due and payable without de16 mand to the Administrator as provided in regula17 tions issued by the Administrator. With regard to 

18 the penalty under paragraph 1, the Administrator 

19 shall implement this paragraph under 40 CFR part 

20 77 (2002), amended as appropriate by the Adminis21 trator. With regard to the penalty under paragraphs 

22 2, 3, and 4, the Administrator shall implement this 

23 paragraph by issuing regulations no later than 24 

24 months after the date of enactment of the Clear 

25 Skies Act of 2003. Any such payment shall be de-
38

•HR 999 IH 

1 posited in the United States Treasury. Any penalty 

2 due and payable under this section shall not dimin3 ish the liability of the unit’s owner or operator for 

4 any fine, penalty or assessment against the unit for 

5 the same violation under any other section of this 

6 Act. 

7 ‘‘(b) EXCESS EMISSIONS OFFSET.—

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

9 to the requirements of section 412(c) that emits sul10 fur dioxide during any calendar year before 2008 in 

11 excess of the sulfur dioxide allowances held for the 

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

13 excess emissions by an equal tonnage amount in the 

14 following calendar year, or such longer period as the 

15 Administrator may prescribe. The Administrator 

16 shall deduct sulfur dioxide allowances equal to the 

17 excess tonnage from those held for the facility for 

18 the calendar year, or succeeding years during which 

19 offsets are required, following the year in which the 

20 excess emissions occurred. 

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

22 to the requirements of section 412(c) emit sulfur di23 oxide for a year after 2007 in excess of the sulfur 

24 dioxide allowances that the owner or operator of the 

25 facility holds for use for the facility for that calendar 
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•HR 999 IH 

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

2 the excess emissions by an equal amount of tons in 

3 the following calendar year, or such longer period as 

4 the Administrator may prescribe. The Administrator 

5 shall deduct sulfur dioxide allowances equal to the 

6 excess emissions in tons from those held for the fa7 cility for the year, or succeeding years during which 

8 offsets are required, following the year in which the 

9 excess emissions occurred. 

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

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

12 emit sulfur dioxide, nitrogen oxides, or mercury for 

13 any calendar year in excess of the sulfur dioxide al14 lowances, nitrogen oxides allowances, or mercury al15 lowances, as the case may be, that the owner or op16 erator of the facility holds for use for the facility for 

17 that calendar year, the owner or operator shall be 

18 liable to offset the excess emissions by an equal 

19 amount of tons or, for mercury, ounces in the fol20 lowing calendar year, or such longer period as the 

21 Administrator may prescribe. The Administrator 

22 shall deduct sulfur dioxide allowances, nitrogen oxide 

23 allowances, or mercury allowances, as the case may 

24 be, equal to the excess emissions in tons or, for mer25 cury, ounces from those held for the facility for the 
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•HR 999 IH 

1 year, or succeeding years during which offsets are 

2 required, following the year in which the excess 

3 emissions occurred. 

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

5 shall, by regulation, adjust the penalty specified in sub6 section (a)(1) for inflation, based on the Consumer Price 

7 Index, on November 15, 1990, and annually thereafter. 

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

9 owner or operator of any unit or facility liable for a pen10 alty and offset under this section to fail—

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

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

13 subsection (b). 

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

15 limit or otherwise affect the application of section 113, 

16 114, 120, or 304 except as otherwise explicitly provided 

17 in this title. 

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

19 provided, compliance with the requirements of this title 

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

21 facility subject to this title from compliance with any other 

22 applicable requirements of this Act. Notwithstanding any 

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

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

25 or purchase of allowances under this title. 
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•HR 999 IH 

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

2 to this title of any prohibition of, requirement of, or regu3 lation promulgated pursuant to this title shall be a viola4 tion of this Act. In addition to the other requirements and 

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

6 affected unit or the affected units at a facility to emit sul7 fur dioxide, nitrogen oxides, or mercury in violation of sec8 tion 412(c), 422, 432, 452, and 472, as the case may be, 

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

10 of mercury, each ounce emitted in excess of allowances 

11 held constituting a separate violation. 

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

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

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

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

16 dioxide and nitrogen oxides are vented only through a 

17 stack or duct may elect to designate such unit as an af18 fected unit under subpart 2 of part B and subpart 2 of 

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

20 that is coal-fired and emits mercury vented only through 

21 a stack or duct, the owner or operator shall also designate 

22 the unit as an affected unit under part D. 

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

24 an election under subsection (a) shall submit an applica25 tion for the election to the Administrator for approval. 
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•HR 999 IH 

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

2 under subsection (b) meets the requirements of subsection 

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

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

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

6 requirements in subsections (d) through (g). 

7 ‘‘(d) ESTABLISHMENT OF BASELINE.—

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

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

10 and operate CEMS on the unit, and shall quality as11 sure the data, in accordance with the requirements 

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

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

14 utilize a single stack, separate monitoring shall be 

15 required for each unit. 

16 ‘‘(2) The baselines for heat input and sulfur di17 oxide, nitrogen oxides, and mercury emission rates, 

18 as the case may be, for the unit shall be the unit’s 

19 heat input and the emission rates of sulfur dioxide, 

20 nitrogen oxides, and mercury for a year starting 

21 after approval of the designation under subsection 

22 (c). The Administrator shall issue regulations requir23 ing all the unit’s baselines to be based on the same 

24 year and specifying minimum requirements con25 cerning the percentage of the unit’s operating hours 
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•HR 999 IH 

1 for which quality assured CEMS data must be avail2 able during such year. 

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

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

5 become: 

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

7 B, and shall be allocated sulfur dioxide allowances 

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

9 2010, or January 1 of the year after the year on 

10 which the unit’s baselines are based under sub11 section (d); 

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

13 C, and shall be allocated nitrogen oxides allowances 

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

15 2008, or January 1 of the year after the year on 

16 which the unit’s baselines are based under sub17 section (d); and 

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

19 D, and shall be allocated mercury allowances, start20 ing the later of January 1, 2010, or January 1 of 

21 the year after the year on which the unit’s baselines 

22 are based under subsection (d).

23 ‘‘(f) ALLOCATIONS AND AUCTION AMOUNTS.—

24 ‘‘(1) The Administrator shall promulgate regu25 lations determining the allocations of sulfur dioxide 
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•HR 999 IH 

1 allowances, nitrogen oxides allowances, and, if appli2 cable, mercury allowances for each year during 

3 which a unit is an affected unit under subsection (e). 

4 The regulations shall provide for allocations equal to 

5 50 percent of the following amounts, as adjusted 

6 under paragraph (2)—

7 ‘‘(A) the lesser of the unit’s baseline heat 

8 input under subsection (d) or the unit’s heat 

9 input for the year before the year for which the 

10 Administrator is determining the allocations; 

11 multiplied by 

12 ‘‘(B) the lesser of—

13 ‘‘(i) the unit’s baseline sulfur dioxide 

14 emission rate, nitrogen oxides emission 

15 rate, or mercury emission rate, as the case 

16 may be; 

17 ‘‘(ii) the unit’s sulfur dioxide emission 

18 rate, nitrogen oxides emission rate, or mer19 cury emission rate, as the case may be, 

20 during 2002, as determined by the Admin21 istrator based, to the extent available, on 

22 information reported to the State where 

23 the unit is located; or 

24 ‘‘(iii) the unit’s most stringent State 

25 or Federal emission limitation for sulfur 
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•HR 999 IH 

1 dioxide, nitrogen oxides, or mercury appli2 cable to the year on which the unit’s base3 line heat input is based under subsection 

4 (d). 

5 ‘‘(2) The Administrator shall reduce the alloca6 tions under paragraph (1) by 1.0 percent in the first 

7 year for which the Administrator is allocating allow8 ances to the unit, by an additional 1.0 percent of the 

9 allocations under paragraph (1) each year starting 

10 in the second year through the twentieth year, and 

11 by an additional 2.5 percent of the allocations under 

12 paragraph (1) each year starting in the 21 year and 

13 each year thereafter. The Administrator shall make 

14 corresponding increases in the amounts of allow15 ances auctioned under sections 423, 453, and 473. 

16 ‘‘(g) WITHDRAWAL.—The Administrator shall pro17 mulgate regulations withdrawing from the approved des18 ignation under subsection (c) any unit that qualifies as 

19 an affected EGU under subpart 2 of part B, subpart 2 

20 of part C, or part D after the approval of the designation 

21 of the unit under subsection (c). 

22 ‘‘(h) The Administrator shall promulgate regulations 

23 implementing this section within 24 months of the date 

24 of enactment of the Clear Skies Act of 2003. 
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•HR 999 IH 

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 the date of enactment of this title. 

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-
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•HR 999 IH 

1 tion for qualifying project shall be at least 20 per2 cent of the total cost of the demonstration project. 

3 ‘‘(2) TEMPORARY PROJECTS.—Installation, op4 eration, cessation, or removal of a temporary clean 

5 coal technology demonstration project that is oper6 ated for a period of 5 years or less, and which com7 plies with the State implementation plans for the 

8 State in which the project is located and other re9 quirements necessary to attain and maintain the na10 tional ambient air quality standards during and 

11 after the project is terminated, shall not subject 

12 such facility to the requirements of section 111 or 

13 part C or D of title I. 

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

15 clean coal technology demonstration projects that 

16 constitute repowering as defined in section 411, any 

17 qualifying project shall not be subject to standards 

18 of performance under section 111 or to the review 

19 and permitting requirements of part C for any pol20 lutant the potential emissions of which will not in21 crease as a result of the demonstration project. 

22 ‘‘(4) EPA REGULATIONS.—Not later than 12 

23 months after November 15, 1990, the Administrator 

24 shall promulgate regulations or interpretive rulings 

25 to revise requirements under section 111 and parts 
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•HR 999 IH 

1 C and D, as appropriate, to facilitate projects con2 sistent in this subsection. With respect to parts C 

3 and D, such regulations or rulings shall apply to all 

4 areas in which EPA is the permitting authority. In 

5 those instances in which the State is the permitting 

6 authority under part C or D, any State may adopt 

7 and submit to the Administrator for approval revi8 sions to its implementation plan to apply the regula9 tions or rulings promulgated under this subsection. 

10 ‘‘(c) EXEMPTION FOR REACTIVATION OF VERY

11 CLEAN UNITS.—Physical changes or changes in the meth12 od of operation associated with the commencement of com13 mercial operations by a coal-fired utility unit after a pe14 riod of discontinued operation shall not subject the unit 

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

16 where the unit—

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

18 period prior to November 15, 1990, and the emis19 sions from such unit continue to be carried in the 

20 permitting authority’s emissions inventory on No21 vember 15, 1990, 

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

23 continuous system of emissions control that achieves 

24 a removal efficiency for sulfur dioxide of no less 
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•HR 999 IH 

1 than 85 percent and a removal efficiency for particu2 lates of no less than 98 percent, 

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

4 the time of commencement, and 

5 ‘‘(4) is otherwise in compliance with the re6 quirements of this Act. 

7 ‘‘SEC. 409. AUCTIONS. 

8 ‘‘(a) IN GENERAL.—(1) Commencing in 2005 and in 

9 each year thereafter, the Administrator shall conduct auc10 tions, as required under sections 423, 424, 426, 434, 453, 

11 454, 473, and 474, at which allowances shall be offered 

12 for sale in accordance with regulations promulgated by the 

13 Administrator no later than 24 months after the date of 

14 enactment of the Clear Skies Act of 2003. 

15 ‘‘(2) Such regulations shall promote an efficient auc16 tion outcome and a competitive market for allowances. 

17 ‘‘(3) Such regulations may provide allowances to be 

18 offered for sale before or during the year for which such 

19 allowances may be used to meet the requirement to hold 

20 allowances under section 422, 432, 452, and 472, as the 

21 case may be. Such regulations shall specify the frequency 

22 and timing of auctions and may provide for more than 

23 one auction of sulfur dioxide allowances, nitrogen oxides 

24 allowances, or mercury allowances during a year. Allow25 ances purchased at the auction may be used for any pur-
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1 pose and at any time after the auction, subject to the pro2 visions of this title. 

3 ‘‘(4) The regulations shall provide that each auction 

4 shall be open to any person. A person wishing to bid for 

5 allowances in the auction shall submit bids according to 

6 auction procedures, a bidding schedule, a bidding means, 

7 and requirements for financial guarantees specified in the 

8 regulations. Winning bids, and required payments, for al9 lowances shall be determined in accordance with the regu10 lations. For any winning bid, the Administrator shall 

11 record the allowances in the Allowance Tracking System 

12 under section 403(c) only after the required payment for 

13 such allowances is received. 

14 ‘‘(b) DEFAULT AUCTION PROCEDURES.—If the Ad15 ministrator is required to conduct an auction of allowances 

16 under subsection (a) before regulations have been promul17 gated under that subsection, such auction shall be con18 ducted as follows: 

19 ‘‘(1) The auction shall begin on the first busi20 ness day in October of the year in which the auction 

21 is required or, of the year before the first year for 

22 which the allowances may be used to meet the re23 quirements of section 403(e)(2). 

24 ‘‘(2) The auction shall be open to any person. 
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1 ‘‘(3) The auction shall be a multiple-round auc2 tion in which sulfur dioxide allowances, nitrogen ox3 ides allowances, and mercury allowances are offered 

4 simultaneously. 

5 ‘‘(4) In order to bid for allowances included in 

6 the auction, a person shall submit, and the Adminis7 trator must receive by the date three business days 

8 before the auction, one or more initial bids to pur9 chase a specified quantity of sulfur dioxide allow10 ances, nitrogen oxides allowances, and mercury al11 lowances, as the case may be, at a reserve price 

12 specified by the Administrator. The bidder shall 

13 identify the account in the Allowance Tracking Sys14 tem under section 403(c) in which the such allow15 ances that are purchased are to be recorded. Each 

16 bid must be guaranteed by a certified check, a funds 

17 transfer, or, in a form acceptable to the Adminis18 trator, a letter of credit for such quantity multiplied 

19 by the reserve price payable to the U.S. EPA. 

20 ‘‘(5) The procedures in paragraph (4) shall con21 stitute the first round of the auction. 

22 ‘‘(6) In each round of the auction, the Adminis23 trator shall—
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•HR 999 IH 

1 ‘‘(A) announce current round reserve 

2 prices for sulfur dioxide allowances, nitrogen 

3 oxides allowances, and mercury allowances; 

4 ‘‘(B) receive bids comprising nonnegative 

5 quantities for sulfur dioxide allowances, nitro6 gen oxides allowances, and mercury allowances, 

7 as the case may be; 

8 ‘‘(C) determine whether bids are acceptable 

9 as meeting auction requirements; 

10 ‘‘(D) for sulfur dioxide allowances, nitro11 gen oxides allowances, and mercury allowances, 

12 as the case may be, determine whether the sum 

13 of the acceptable bids exceeds the quantity of 

14 such allowances available for auction; 

15 ‘‘(E) if the sum of the acceptable bids for 

16 sulfur dioxide allowances, nitrogen oxides allow17 ances, and mercury allowances, as the case may 

18 be, exceeds the quantity of such allowances 

19 available for auction, increase the reserve price 

20 for the next round based on the amount by 

21 which the sum of such acceptable bids exceeds 

22 the quantity of such allowances; and 

23 ‘‘(F) if the sum of the acceptable bids for 

24 sulfur dioxide allowances, nitrogen oxides allow25 ances, and mercury allowances, as the case may 
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•HR 999 IH 

1 be, does not exceed the quantity of such allow2 ances available for auction, declare that round 

3 the last round of the auction for such allow4 ances. 

5 ‘‘(7) In the second and all subsequent rounds of 

6 the auction, the Administrator shall require that, for 

7 sulfur dioxide allowances, nitrogen oxides allowances, 

8 and mercury allowances, as the case may be, a bid9 der’s quantity bid may not exceed the bidder’s quan10 tity bid for such allowances in the first round of the 

11 auction. 

12 ‘‘(8) After the auction, the Administrator shall 

13 publish the names of winning and losing bidders, 

14 their quantities awarded, and the final prices. The 

15 Administrator shall provide the successful bidders 

16 notice of the allowances that they have purchased 

17 within thirty days after payments equaling the quan18 tity awarded multiplied by the corresponding final 

19 reserve price is collected by the Administrator. After 

20 the conclusion of the auction, the Administrator 

21 shall return payment to unsuccessful bidders and 

22 add any unsold allowances to the next relevant auc23 tion. 
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1 ‘‘(9) The Administrator may specify by regula2 tions, without notice and opportunity for comment, 

3 the following auction requirements and procedures: 

4 ‘‘(A) reserve prices for sulfur dioxide allow5 ances, nitrogen oxides allowances, and mercury 

6 allowances, as the case may be; 

7 ‘‘(B) procedures for adjusting reserve 

8 prices in each round; 

9 ‘‘(C) procedures limiting a bidder’s bids 

10 based on his or her bids in previous rounds; 

11 ‘‘(D) rationing procedures to treat tie bids; 

12 ‘‘(E) procedures allowing bids at inter13 mediate prices between previous reserve prices 

14 and current reserve prices; 

15 ‘‘(F) procedures allowing bid withdrawals 

16 before the final round of the auction; 

17 ‘‘(G) anti-collusion rules; 

18 ‘‘(H) market share limitations on a bidder 

19 or associated bidders; 

20 ‘‘(I) aggregate information made available 

21 to bidders during the auction; 

22 ‘‘(J) proxy bidding or procedures for facili23 tating participation by small bidders; 

24 ‘‘(K) levels and details of financial guaran25 tees; 
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•HR 999 IH 

1 ‘‘(L) technical specifications for electronic 

2 bidding; and 

3 ‘‘(M) bidding schedules and other adminis4 trative requirements and procedures of the auc5 tion. 

6 ‘‘(c) DELEGATION OR CONTRACT.—The Adminis7 trator may by delegation or contract provide for the con8 duct of auctions under the Administrator’s supervision by 

9 other departments or agencies of the United States Gov10 ernment or by nongovernmental agencies, groups, or orga11 nizations. 

12 ‘‘(d) PROCEEDS.—The proceeds from any auction 

13 conducted under this title shall be deposited in the United 

14 States Treasury. 

15 ‘‘SEC. 410. EVALUATION OF LIMITATIONS ON TOTAL SUL16 FUR DIOXIDE, NITROGEN OXIDES, AND MER17 CURY EMISSIONS THAT START IN 2018. 

18 ‘‘(a) EVALUATION.—(1) The Administrator, in con19 sultation with the Secretary of Energy, shall study wheth20 er the limitations on the total annual amounts of allow21 ances available starting in 2018 for sulfur dioxide under 

22 section 423, nitrogen oxides under section 453, and mer23 cury under section 473 should be adjusted. 
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•HR 999 IH 

1 ‘‘(2) In conducting the study, the Administrator shall 

2 include the following analyses and evaluations concerning 

3 the pollutants under paragraph (1) of subsection (a)(1): 

4 ‘‘(A) An evaluation of the need for further 

5 emission reductions from affected EGUs under sub6 part 2 of part B, subpart 2 of part C, or part D and 

7 other sources to attain or maintain the national am8 bient air quality standards. 

9 ‘‘(B) A benefit-cost analysis to evaluate whether 

10 the benefits of the limitations on the total annual 

11 amounts of allowances available starting in 2018 

12 justify the costs and whether adjusting any of the 

13 limitations would provide additional benefits which 

14 justify the costs of such adjustment, taking into ac15 count both quantifiable and non-quantifiable factors. 

16 ‘‘(C) The marginal cost effectiveness of reduc17 ing emissions for each pollutant. 

18 ‘‘(D) The merits of allowing trading between ni19 trogen oxides emissions and sulfur dioxide emissions. 

20 ‘‘(E) An evaluation of the relative marginal cost 

21 effectiveness of reducing sulfur dioxide and nitrogen 

22 oxide emissions from affected EGUs under subpart 

23 2 of part B and subpart 2 of part C, as compared 

24 to the marginal cost effectiveness of controls on 

25 other sources of sulfur dioxide, nitrogen oxides and 
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•HR 999 IH 

1 other pollutants that can be controlled to attain or 

2 maintain national ambient air quality standards. 

3 ‘‘(F) An evaluation of the feasibility of attain4 ing the limitations on the total annual amounts of 

5 allowances available starting in 2018 given the avail6 able control technologies and the ability to install 

7 control technologies by 2018, and the feasibility of 

8 attaining alternative limitations on the total annual 

9 amounts of allowances available starting in 2018 

10 under paragraph (1) of subsection (a) for each pol11 lutant, including the ability to achieve alternative 

12 limitations given the available control technologies, 

13 and the feasibility of installing the control tech14 nologies needed to meet the alternative limitation by 

15 2018. 

16 ‘‘(G) An assessment of the results of the most 

17 current research and development regarding tech18 nologies and strategies to reduce the emissions of 

19 one or more of these pollutants from affected EGUs 

20 under subpart 2 of part B, subpart 2 of part C, or 

21 part D, as applicable and the results of the most 

22 current research and development regarding tech23 nologies for other sources of the same pollutants. 

24 ‘‘(H) The projected impact of the limitations on 

25 the total annual amounts of allowances available 
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•HR 999 IH 

1 starting in 2018 and the projected impact of adjust2 ing any of the limitations on the total annual 

3 amounts of allowances available starting in 2018 

4 under paragraph (1) of subsection (a) on the safety 

5 and reliability of affected EGUs under subpart 2 of 

6 part B, subpart 2 of part C, or part D and on fuel 

7 diversity within the power generation section. 

8 ‘‘(I) An assessment of the best available and 

9 most current scientific information relating to emis10 sions, transformation and deposition of these pollut11 ants, including studies evaluating—

12 ‘‘(i) the role of emissions of affected EGUs 

13 under subpart 2 of part B, subpart 2 of part 

14 C, or part D in the atmospheric formation of 

15 pollutants for which national ambient air qual16 ity standards exist; 

17 ‘‘(ii) the transformation, transport, and 

18 fate of these pollutants in the atmosphere, 

19 other media, and biota; 

20 ‘‘(iii) the extent to which effective control 

21 programs in other countries would prevent air 

22 pollution generated in those countries from con23 tributing to nonattainment, or interfering with 

24 the maintenance of any national ambient air 

25 quality standards; 
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•HR 999 IH 

1 ‘‘(iv) whether the limitations starting in 

2 2010 or 2018 will result in an increase in the 

3 level of any other pollutant and the level of any 

4 such increase; and 

5 ‘‘(v) speciated monitoring data for particu6 late matter and the effect of various compo7 nents of fine particulate matter on public 

8 health. 

9 ‘‘(J) An assessment of the best available and 

10 most current scientific information relating to emis11 sions, transformation and deposition of mercury, in12 cluding studies evaluating—

13 ‘‘(i) known and potential human health 

14 and environmental effects of mercury; 

15 ‘‘(ii) whether emissions of mercury from 

16 affected EGUs under part D contribute signifi17 cantly to elevated levels of mercury in fish; 

18 ‘‘(iii) human population exposure to mer19 cury; and 

20 ‘‘(iv) the relative marginal cost effective21 ness of reducing mercury emissions from af22 fected EGUs under part D, as compared to the 

23 marginal cost effectiveness of controls on other 

24 sources of mercury. 
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•HR 999 IH 

1 ‘‘(K) A comparison of the extent to which 

2 sources of mercury not located in the United States 

3 contributed to adverse affects on terrestrial or 

4 aquatic systems as opposed to the contribution from 

5 affected EGUs under part D, and the extent to 

6 which effective mercury control programs in other 

7 countries could minimize such impairment. 

8 ‘‘(L) An analysis of the effectiveness and effi9 ciency of the sulfur dioxide allowance program under 

10 subpart 2 of part B, the nitrogen oxides allowance 

11 program under subpart 2 of part C, and the mer12 cury allowance program under part D. 

13 ‘‘(3) As part of the study, the Administrator shall 

14 take into account the best available information pursuant 

15 to the review of the air quality criteria for particulate mat16 ter under section 108. 

17 ‘‘(b) PEER REVIEW PROCEDURES.—(1) The draft re18 sults of the study under subsection (a), including the ben19 efit-cost analysis, the risk assessment, technological infor20 mation and related technical documents shall be subject 

21 to an independent and external peer review in accordance 

22 with this section. Any documents that are to be considered 

23 by the Administrator in the study shall be independently 

24 peer reviewed no later than July 1, 2008. The peer review 
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•HR 999 IH 

1 required under this section shall not be subject to the Fed2 eral Advisory Committee Act (5 U.S.C. App.). 

3 ‘‘(2) The Administrator shall conduct the peer review 

4 in an open manner. Such peer review shall—

5 ‘‘(A) be conducted through a formal panel that 

6 is broadly representative and involves qualified spe7 cialists who—

8 ‘‘(i) are selected primarily on the basis of 

9 their technical expertise relevant to the analyses 

10 required under this section; 

11 ‘‘(ii) disclose to the agency prior technical 

12 or policy positions they have taken on the issues 

13 under consideration; and 

14 ‘‘(iii) disclose to the agency their sources 

15 of personal and institutional funding from the 

16 private or public sectors; 

17 ‘‘(B) contain a balanced presentation of all con18 siderations, including minority reports; 

19 ‘‘(C) provide adequate protections for confiden20 tial business information and trade secrets, including 

21 requiring panel members or participants to enter 

22 into confidentiality agreements; 

23 ‘‘(D) afford an opportunity for public comment; 

24 and 
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1 ‘‘(E) be complete by no later than January 1, 

2 2009. 

3 ‘‘(2) The Administrator shall respond, in writing, to 

4 all significant peer review and public comments and certify 

5 that—

6 ‘‘(A) each peer review participant has the ex7 pertise and independence required under this sec8 tion; and 

9 ‘‘(B) the agency has adequately responded to 

10 the peer review comments as required under this 

11 section. 

12 ‘‘(c) RECOMMENDATION TO CONGRESS.—The Ad13 ministrator, in consultation with the Secretary of Energy, 

14 should submit to Congress no later than July 1, 2009, 

15 a recommendation whether to revise the limitations on the 

16 total annual amounts of allowances available starting in 

17 2018 under paragraph (1) of subsection (a). The rec18 ommendation shall include the final results of the study 

19 under subsections (a) and (b) and shall address the factors 

20 described in paragraph (2) of subsection (a). The Admin21 istrator may submit separate recommendations addressing 

22 sulfur dioxide, nitrogen oxides, or mercury at any time 

23 after the study has been completed under paragraph (2) 

24 of subsection (a) and the peer review process has been 

25 completed under subsection (b). 
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1 ‘‘PART B—SULFUR DIOXIDE EMISSION 

2 REDUCTIONS 

3 ‘‘Subpart 1—Acid Rain Program 

4 ‘‘SEC. 410. EVALUATION OF LIMITATIONS ON TOTAL SUL5 FUR DIOXIDE, NITROGEN OXIDES, AND MER6 CURY EMISSIONS THAT START IN 2018. 

7 ‘‘(a) EVALUATION.—(1) The Administrator, in con8 sultation with the Secretary of Energy, shall study wheth9 er the limitations on the total annual amounts of allow10 ances available starting in 2018 for sulfur dioxide under 

11 section 423, nitrogen oxides under section 453, and mer12 cury under section 473 should be adjusted. 

13 ‘‘(2) In conducting the study, the Administrator shall 

14 include the following analyses and evaluations concerning 

15 the pollutants under paragraph (a)(1): 

16 ‘‘(A) an evaluation of the need for further emis17 sion reductions from affected EGUs under subpart 

18 2 of part B, subpart 2 of part C, or part D and 

19 other sources to attain or maintain the national am20 bient air quality standards; 

21 ‘‘(B) a benefit-cost analysis to evaluate whether 

22 the benefits of the limitations on the total annual 

23 amounts of allowances available starting in 2018 

24 justify the costs and whether adjusting any of the 

25 limitations would provide additional benefits which 
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•HR 999 IH 

1 justify the costs of such adjustment, taking into ac2 count both quantifiable and non-quantifiable factors; 

3 ‘‘(C) the marginal cost effectiveness of reducing 

4 emissions for each pollutant; 

5 ‘‘(D) the merits of allowing trading between 

6 NOX and SO2 limitations; 

7 ‘‘(E) an evaluation of the relative marginal cost 

8 effectiveness of reducing sulfur dioxide and nitrogen 

9 oxide emissions from affected EGUs under sub-part 

10 2 of part B and subpart 2 of part C, as compared 

11 to the marginal cost effectiveness of controls on 

12 other sources of sulfur dioxide, nitrogen oxides and 

13 other pollutants that can be controlled to attain or 

14 maintain national ambient air quality standard; 

15 ‘‘(F) an evaluation of the feasibility of attaining 

16 the limitations on the total annual amounts of allow17 ances available starting in 2018 given the available 

18 control technologies and the ability to install control 

19 technologies by 2018, and the feasibility of attaining 

20 alternative limitations on the total annual amounts 

21 of allowances available starting in 2018 under para22 graph (a)(1) for each pollutant, including the ability 

23 to achieve alternative limitations given the available 

24 control technologies, and the feasibility of installing 
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•HR 999 IH 

1 the control technologies needed to meet the alter2 native limitation by 2018; 

3 ‘‘(G) an assessment of the results of the most 

4 current research and development regarding tech5 nologies and strategies to reduce the emissions of 

6 one or more of these pollutants from affected EGUs 

7 under subpart 2 of part B, subpart 2 of part C, or 

8 part D, as applicable and the results of the most 

9 current research and development regarding tech10 nologies for other sources of the same pollutants; 

11 ‘‘(H) the projected impact of the limitations on 

12 the total annual amounts of allowances available 

13 starting in 2018 and the projected impact of adjust14 ing any of the limitations on the total annual 

15 amounts of allowances available starting in 2018 

16 under paragraph (a)(1) on the safety and reliability 

17 of affected EGUs under subpart 2 of part B, sub18 part 2 of part C, or part D and on fuel diversity 

19 within the power generation section; 

20 ‘‘(I) an assessment of the best available and 

21 most current scientific information relating to emis22 sions, transformation and deposition of these pollut23 ants, including studies evaluating—

24 ‘‘(i) the role of emissions of affected EGUs 

25 under subpart 2 of part B, subpart 2 of part 
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•HR 999 IH 

1 C, or part D in the atmospheric formation of 

2 pollutants for which national ambient air qual3 ity standards exist; 

4 ‘‘(ii) the transformation, transport, and 

5 fate of these pollutants in the atmosphere, 

6 other media, and biota; 

7 ‘‘(iii) the extent to which effective control 

8 programs in other countries would prevent air 

9 pollution generated in those countries from con10 tributing to nonattainment, or interfering with 

11 the maintenance of any national ambient air 

12 quality standards; 

13 ‘‘(iv) whether the limitations starting in 

14 2010 or 2018 will result in an increase in the 

15 level of any other pollutant and the level of any 

16 such increase; and 

17 ‘‘(v) speciated monitoring data for particu18 late matter and the effect of various elements 

19 of fine particulate matter on public health; 

20 ‘‘(J) an assessment of the best available and 

21 most current scientific information relating to emis22 sions, transformation and deposition of mercury, in23 cluding studies evaluating— 

24 ‘‘(i) known and potential human health 

25 and environmental effects of mercury; 
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1 ‘‘(ii) whether emissions of mercury from 

2 affected EGUs under part D contribute signifi3 cantly to elevated levels of mercury in fish; 

4 ‘‘(iii) human population exposure to mer5 cury; and 

6 ‘‘(iv) the relative marginal cost effective7 ness of reducing mercury emissions from af8 fected EGUs under part D, as compared to the 

9 marginal cost effectiveness of controls on other 

10 sources of mercury; 

11 ‘‘(K) a comparison of the extent to which 

12 sources of mercury not located in the United States 

13 contributed to adverse affects on terrestrial or 

14 aquatic systems as opposed to the contribution from 

15 affected EGUs under part D, and the extent to 

16 which effective mercury control programs in other 

17 countries could minimize such impairment; and 

18 ‘‘(L) an analysis of the effectiveness and effi19 ciency of the sulfur dioxide allowance program under 

20 subpart 2 of part B, the nitrogen oxides allowance 

21 program under subpart 2 of part C, and the mer22 cury allowance program under part D. 

23 ‘‘(3) As part of the study, the Administrator shall 

24 take into account the best available information pursuant 
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1 to the review of the air quality criteria for particulate mat2 ter under section 108. 

3 ‘‘(b) PEER REVIEW PROCEDURES.—(1) The draft re4 sults of the study under subsection (a) shall be subject 

5 to an independent and external peer review in accordance 

6 with this section. Any documents that are to be considered 

7 by the Administrator in the study shall be independently 

8 peer reviewed no later than July 1, 2008. The peer review 

9 required under this section shall not be subject to the Fed10 eral Advisory Committee Act (5 U.S.C. App.). 

11 ‘‘(2) The Administrator shall conduct the peer review 

12 in an open and rigorous manner. Such peer review shall—

13 ‘‘(A) be conducted through a formal panel that 

14 is broadly representative of the relevant scientific 

15 and technical views and involves qualified specialists 

16 who— 

17 ‘‘(i) are selected primarily on the basis of 

18 their technical expertise relevant to the analyses 

19 required under this section; 

20 ‘‘(ii) disclose to the agency prior technical 

21 or policy positions they have taken on the issues 

22 under consideration; and 

23 ‘‘(iii) disclose to the agency their sources 

24 of personal and institutional funding from the 

25 private or public sectors; 
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•HR 999 IH 

1 ‘‘(B) contain a balanced presentation of all con2 siderations, including minority reports; 

3 ‘‘(C) provide adequate protections for confiden4 tial business information and trade secrets, including 

5 requiring panel members or participants to enter 

6 into confidentiality agreements; 

7 ‘‘(D) afford an opportunity for public comment; 

8 and 

9 ‘‘(E) be complete by no later than January 1, 

10 2009. 

11 ‘‘(3) The Administrator shall respond, in writing, to 

12 all significant peer review and public comments; and 

13 ‘‘(4) The Administrator shall certify that—

14 ‘‘(A) each peer review participant has the ex15 pertise an independence required under this section; 

16 and 

17 ‘‘(B) the agency has adequately responded to 

18 the peer review comments as required under this 

19 section. 

20 ‘‘(c) RECOMMENDATION TO CONGRESS.—The Ad21 ministrator, in consultation with the Secretary of Energy, 

22 shall submit to Congress no later than July 1, 2009, a 

23 recommendation whether to revise the limitations on the 

24 total annual amounts of allowances available starting in 

25 2018 under paragraph (a)(1). The recommendation shall 
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•HR 999 IH 

1 include the final results of the study under subsections (a) 

2 and (b) and shall address the factors described in para3 graph (2) of subsection (a). The Administrator may sub4 mit separate recommendations addressing sulfur dioxide, 

5 nitrogen oxides, or mercury at any time after the study 

6 has been completed under paragraph (2) of subsection (a) 

7 and the peer review process has been completed under sub8 section (b). 

9 ‘‘SEC. 411. DEFINITIONS. 

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

11 B: 

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

13 electric utility units means the annual sulfur dioxide 

14 or nitrogen oxides emission rate in pounds per mil15 lion Btu as reported in the NAPAP Emissions In16 ventory, Version, 2 National Utility reference File. 

17 For nonutility units, the term ‘actual 1985 emission 

18 rate’ means the annual sulfur dioxide or nitrogen ox19 ides emission rate in pounds per million Btu as re20 ported in the NAPAP Emission Inventory, Version 

21 2. 

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

23 means a federally enforceable emissions limitation 

24 for sulfur dioxide or oxides of nitrogen, applicable to 

25 the unit in 1985 or the limitation applicable in such 
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•HR 999 IH 

1 other subsequent year as determined by the Admin2 istrator if such a limitation for 1985 does not exist. 

3 Where the emissions limitation for a unit is not ex4 pressed in pounds of emissions per million Btu, or 

5 the averaging period of that emissions limitation is 

6 not expressed on an annual basis, the Administrator 

7 shall calculate the annual equivalent of that emis8 sions. 

9 ‘‘(3) The term ‘alternative method of compli10 ance’ means a method of compliance in accordance 

11 with one or more of the following authorities—

12 ‘‘(A) a substitution plan submitted and ap13 proved in accordance with subsections 413(b) 

14 and (c); or 

15 ‘‘(B) a Phase I extension plan approved by 

16 the Administrator under section 413(d), using 

17 qualifying phase I technology as determined by 

18 the Administrator in accordance with that sec19 tion. 

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

21 quantity of fossil fuel consumed by an affected unit, 

22 measured in millions of British Thermal Units 

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

24 ‘‘(A) For each utility unit that was in com25 mercial operation prior to January 1, 1985, the 
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1 baseline shall be the annual average quantity of 

2 mmBtu’s consumed in fuel during calendar 

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

4 Department of Energy pursuant to Form 767. 

5 For any utility unit for which such form was 

6 not filed, the baseline shall be the level specified 

7 for such unit in the 1985 National Acid Pre8 cipitation Assessment Program (NAPAP) 

9 Emissions Inventory, Version 2, National Util10 ity Reference File (NURF) or in a corrected 

11 data base as established by the Administrator 

12 pursuant to paragraph (3). For non-utility 

13 units, the baseline in the NAPAP Emissions In14 ventory, Version 2. The Administrator, in the 

15 Administrator’s sole discretion, may exclude pe16 riods during which a unit is shutdown for a 

17 continuous period of 4 calendar months or 

18 longer, and make appropriate adjustments 

19 under this paragraph. Upon petition of the 

20 owner or operator of any unit, the Adminis21 trator may make appropriate baseline adjust22 ments for accidents that caused prolonged out23 ages. 

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

25 not included in the NAPAP Emissions Inven-
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•HR 999 IH 

1 tory, Version 2, or a corrected data base as es2 tablished by the Administrator pursuant to 

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

4 average quantity, in mmBtu consumed in fuel 

5 by that unit, as calculated pursuant to a meth6 od which the Administrator shall prescribe by 

7 regulation to be promulgated not later than 18 

8 months after November 15, 1990. 

9 ‘‘(C) The Administrator shall, upon appli10 cation or on his own motion, by December 31, 

11 1991, supplement data needed in support of 

12 this subpart and correct any factual errors in 

13 data from which affected Phase II units’ base14 lines or actual 1985 emission rates have been 

15 calculated. Corrected data shall be used for pur16 poses of issuing allowances under this subpart. 

17 Such corrections shall not be subject to judicial 

18 review, nor shall the failure of the Adminis19 trator to correct an alleged factual error in such 

20 reports be subject to judicial review. 

21 ‘‘(5) The term ‘basic Phase II allowance alloca22 tions’ means: 

23 ‘‘(A) For calendar years 2000 through 

24 2009 inclusive, allocations of allowances made 

25 by the Administrator pursuant to section 412 
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1 and subsections (b)(1), (3), and (4); (c)(1), (2), 

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

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

4 of section 414. 

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

6 2010, allocations of allowances made by the Ad7 ministrator pursuant to section 412 and sub8 sections (b)(1), (3), and (4); (c)(1), (2), (3), 

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

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

11 of section 414. 

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

13 between the actual electric output from a unit and 

14 the potential electric output from that unit. 

15 ‘‘(7) The term ‘commenced’ as applied to con16 struction of any new electric utility unit means that 

17 an owner or operator has undertaken a continuous 

18 program of construction or that an owner or oper19 ator has entered into a contractual obligation to un20 dertake and complete, within a reasonable time, a 

21 continuous program of construction. 

22 ‘‘(8) The term ‘commenced commercial oper23 ation’ means to have begun to generate electricity 

24 for sale. 
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1 ‘‘(9) The term ‘construction’ means fabrication, 

2 erection, or installation of an affected unit. 

3 ‘‘(10) The term ‘existing unit’ means a unit (in4 cluding units subject to section 111) that com5 menced commercial operation before November 15, 

6 1990. Any unit that commenced commercial oper7 ation before November 15, 1990 which is modified, 

8 reconstructed, or repowered after November 15, 

9 1990 shall continue to be an existing unit for the 

10 purposes of this subpart. For the purposes of this 

11 subpart, existing units shall not include simple com12 bustion turbines, or units which serve a generator 

13 with a nameplate capacity of 25 MWe or less. 

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

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

16 in part, one or more new independent power produc17 tion facilities. 

18 ‘‘(12) The term ‘new independent power pro19 duction facility’ means a facility that—

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

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

22 wholesale; 

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

24 such term is defined by the Secretary of Energy 

25 within 3 months of the date of the enactment 
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1 of the Clean Air Act Amendments of 1990); 

2 and 

3 ‘‘(C) is a new unit required to hold allow4 ances under this subpart. 

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

6 that does not serve a generator that produces elec7 tricity, a ‘non-utility unit’ as defined in this section, 

8 or a process source. 

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

10 contractual arrangement’ means a unit participation 

11 power sales agreement under which a utility or in12 dustrial customer reserves, or is entitled to receive, 

13 a specified amount or percentage of capacity and as14 sociated energy generated by a specified generating 

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

16 such unit’s total costs, pursuant to a contract ei17 ther—

18 ‘‘(A) for the life of the unit; 

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

20 30 years, including contracts that permit an 

21 election for early termination; or 

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

23 25 years or 70 percent of the economic useful 

24 life of the unit determined as of the time the 

25 unit was built, with option rights to purchase or 
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1 release some portion of the capacity and associ2 ated energy generated by the unit (or units) at 

3 the end of the period. 

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

5 commences commercial operation on or after Novem6 ber 15, 1990. 

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

8 other than a utility unit. 

9 ‘‘(17) The term ‘Phase II bonus allowance allo10 cations’ means, for calendar year 2000 through 

11 2009, inclusive, and only for such years, allocations 

12 made by the Administrator pursuant to section 412, 

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

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

15 414, and section 415. 

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

17 means a technological system of continuous emission 

18 reduction which achieves a 90 percent reduction in 

19 emissions of sulfur dioxide from the emissions that 

20 would have resulted from the use of fuels which were 

21 not subject to treatment prior to combustion. 

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

23 of an existing coal-fired boiler with one of the fol24 lowing clean coal technologies: atmospheric or pres25 surized fluidized bed combustion, integrated gasifi-
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1 cation combined cycle, magneto-hydrodynamics, di2 rect and indirect coal-fired turbines, integrated gas3 ification fuel cells, or as determined by the Adminis4 trator, in consultation with the Secretary of Energy, 

5 a derivative of one or more of these technologies, 

6 and any other technology capable of controlling mul7 tiple combustion emissions simultaneously with im8 proved boiler or generation efficiency and with sig9 nificantly greater waste reduction relative to the per10 formance of technology in widespread commercial 

11 use as of November 15, 1990. 

12 ‘‘(20) The term ‘reserve’ means any bank of al13 lowances established by the Administrator under this 

14 subpart. 

15 ‘‘(21)(A) The term ‘utility unit’ means—

16 ‘‘(i) a unit that serves a generator in any 

17 State that produces electricity for sale, or 

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

19 generator in any State that produced electricity 

20 for sale. 

21 ‘‘(B) Notwithstanding subparagraph (A), a unit 

22 described in subparagraph (A) that—

23 ‘‘(i) was in commercial operations during 

24 1985, but 
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1 ‘‘(ii) did not during 1985, serve a gener2 ator in any State that produced electricity for 

3 sale shall not be a utility unit for purposes of 

4 this subpart. 

5 ‘‘(C) A unit that cogenerates steam and elec6 tricity is not a ‘utility unit’ for purposes of this sub7 part unless the unit is constructed for the purpose 

8 of supplying, or commences construction after No9 vember 15, 1990 and supplies more than one-third 

10 of its potential electric output capacity of more than 

11 25 megawatts electrical output to any utility power 

12 distribution system for sale. 

13 ‘‘SEC. 412. ALLOWANCE ALLOCATION. 

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

15 415(a)(3), and 416, beginning January 1, 2000, the Ad16 ministrator shall not allocate annual missions of sulfur di17 oxide from utility units in excess of 8.90 million tons ex18 cept that the Administrator shall not to take into account 

19 unused allowances carried forward by owners and opera20 tors of affected units or by other persons holding such al21 lowances, following the year for which they were allocated. 

22 If necessary to meeting he restrictions imposed in the pre23 ceding sentence, the Administrator shall reduce, pro rata, 

24 the basic Phase II allowance allocations for each unit sub25 ject to the requirements of section 414. Subject to the pro-
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1 visions of section 417, the Administrator shall allocate al2 lowances for each affected until at an affected source an3 nually, as provided in paragraphs (2) and(3) and section 

4 404. Except as provided in sections 416, the removal of 

5 an existing affected unit or source from commercial oper6 ation at any time after November 15, 1990 (whether be7 fore or after January 1, 1995, or January 1, 2000), shall 

8 not terminate or otherwise affect the allocation of allow9 ances pursuant to section 413 or 414 to which the unit 

10 is entitled. Prior to June 1, 1998, the Administrator shall 

11 publish a revised final statement of allowance allocations, 

12 subject to the provisions of section 414(a)(2). 

13 ‘‘(b) NEW UTILITY UNITS.—

14 ‘‘(1) After January 1, 2000 and through De15 cember 31, 2007, it shall be unlawful for a new util16 ity unit to emit an annual tonnage of sulfur dioxide 

17 in excess of the number of allowances to emit held 

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

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

20 unit shall be subject to the prohibition in subsection 

21 (c)(3). 

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

23 an allocation of sulfur dioxide allowances under sub24 section (a)(1), unless the unit is subject to the provi25 sions of subsection (g)(2) or (3) of section 414. New 
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1 utility units may obtain allowances from any person, 

2 in accordance with this title. The owner or operator 

3 of any new utility unit in violation of subsection 

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

5 the obligations specified in section 406. 

6 ‘‘(c) PROHIBITIONS.—

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

8 use, or transfer any allowance allocated under this 

9 subpart, except in accordance with regulations pro10 mulgated by the Administrator.

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

12 be unlawful for any affected unit to emit sulfur diox13 ide in excess of the number of allowances held for 

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

15 the unit. 

16 ‘‘(3) Starting January 1, 2008, it shall be un17 lawful for the affected units at a source to emit a 

18 total amount of sulfur dioxide during the year in ex19 cess of the number of allowances held for the source 

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

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

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

23 (3) shall supersede any other emission limitation ap24 plicable under this subpart to the units for which 

25 such allowances are allocated. 
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1 ‘‘(d) In order to insure electric reliability, regulations 

2 establishing a system for issuing, recording, and tracking 

3 allowances under section 403(b) and this subpart shall not 

4 prohibit or affect temporary increases and decreases in 

5 emissions within utility systems, power pools, or utilities 

6 entering into allowance pool agreements, that result from 

7 their operations, including emergencies and central dis8 patch, and such temporary emissions increases and de9 creases shall not require transfer of allowances among 

10 units nor shall it require recording. The owners or opera11 tors of such units shall act through a designated rep12 resentative. Notwithstanding the preceding sentence, the 

13 total tonnage of emissions in any calendar year (calculated 

14 at the end thereof) from all units in such a utility system, 

15 power pool, or allowance pool agreements shall not exceed 

16 the total allowances for such units for the calendar year 

17 concerned, including for calendar years after 2007, allow18 ances held for such units by the owner or operator of the 

19 sources where the units are located. 

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

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

22 unit, or where a utility or industrial customer purchases 

23 power from an affected unit (or units) under life-of-the24 unit, firm power contractual arrangements, the certificate 
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1 of representation required under section 404(f) shall 

2 state—

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

4 proceeds of transactions involving such allowances 

5 will be deemed to be held or distributed in propor6 tion to each holder’s legal, equitable, leasehold, or 

7 contractual reservation or entitlement, or 

8 ‘‘(2) if such multiple holders have expressly pro9 vided for a different distribution of allowances by 

10 contract, that allowances under this subpart and the 

11 proceeds of transactions involving such allowances 

12 will be deemed to be held or distributed in accord13 ance with the contract. 

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

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

16 either directly or indirectly, upon the revenues or income 

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

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

19 the purpose of holding or distributing allowances as pro20 vided in this subsection, during either the term of such 

21 leasehold or thereafter, unless expressly provided for in the 

22 leasehold agreement. Except as otherwise provided in this 

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

24 in an affected unit is held by a single person, the certifi-
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•HR 999 IH 

1 cation shall state that all allowances under this subpart 

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

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

4 ‘‘(a) EMISSION LIMITATIONS.—

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

6 includes one or more affected units listed in table A 

7 is an affected source under this section. After Janu8 ary 1, 1995, it shall be unlawful for any affected 

9 unit (other than an eligible phase I unit under sec10 tion 413(d)(2)) to emit sulfur dioxide in excess of 

11 the tonnage limitation stated as a total number of 

12 allowances in table A for phase I, unless—

13 ‘‘(A) the emissions reduction requirements 

14 applicable to such unit have been achieved pur15 suant to subsection (b) or (d), or 

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

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

18 total annual emissions, except that, after Janu19 ary 1, 2000, the emissions limitations estab20 lished in this section shall be superseded by 

21 those established in section 414. The owner or 

22 operator of any unit in violation of this section 

23 be fully liable for such violation including, but 

24 not limited to, liability for fulfilling the obliga25 tions specified in section 406. 
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1 ‘‘(2) Not later than December 31, 1991, the 

2 Administrator shall determine the total tonnage of 

3 reductions in the emissions of sulfur dioxide from all 

4 utility units in calendar year 1995 that will occur as 

5 a result of compliance with the emissions limitation 

6 requirements of this section, and shall establish a re7 serve of allowances equal in amount to the number 

8 of tons determined thereby not to exceed a total of 

9 3.50 million tons. In making such a determination, 

10 the Administrator shall compute for each unit sub11 ject to the emissions limitation requirements of this 

12 section the difference between—

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

14 by the lesser of each unit’s allowable 1985 

15 emissions rate and its actual 1985 emissions 

16 rate, divided by 2,000, and 

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

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

19 and sum the computations. The Administrator 

20 shall adjust the foregoing calculation to reflect 

21 projected calendar year 1995 utilization of the 

22 units subject to the emissions limitations of this 

23 subpart that the Administrator finds would 

24 have occurred in the absence of the imposition 

25 of such requirements. Pursuant to subsection 
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1 (d), the Administrator shall allocate allowances 

2 from the reserve established hereunder until the 

3 earlier of such time as all such allowances in 

4 the reserve are allocated or December 31, 1999. 

5 ‘‘(3) In addition to allowances allocated pursu6 ant to paragraph (1), in each calendar year begin7 ning in 1995 and ending in 1999, inclusive, the Ad8 ministrator shall allocate for each unit on Table A 

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

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

11 and Joppa Steam), allowances in an amount equal 

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

13 of the total number of allowances allocated for all 

14 units on Table A in the 3 States (other than units 

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

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

17 excluded from the calculation of the reserve under 

18 paragraph (2). 

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

20 affected unit under subsection (a) may include in its sec21 tion 404 permit application and proposed compliance 

22 plan a proposal to reassign, in whole or in part, the af23 fected unit’s sulfur dioxide reduction requirements to any 

24 other unit(s) under the control of such owner or operator. 

25 Such proposal shall specify—
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1 ‘‘(1) the designation of the substitute unit or 

2 units to which any part of the reduction obligations 

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

4 in lieu of, any original affected units designated 

5 under such subsection; 

6 ‘‘(2) the original affected unit’s baseline, the ac7 tual and allowable 1985 emissions rate for sulfur di8 oxide, and the authorized annual allowance alloca9 tion stated in table A; 

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

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

12 the substitute unit or units, based on the baseline 

13 for each unit, as defined in section 411(4), multi14 plied by the lesser of the unit’s actual or allowable 

15 1985 emissions rate; 

16 ‘‘(4) the emissions rates and tonnage limita17 tions that would be applicable to the original and 

18 substitute affected units under the substitution pro19 posal; 

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

21 Administrator, that the reassigned tonnage limits 

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

23 reduction than would have been achieved by the 

24 original affected unit and the substitute unit or 

25 units without such substitution; and 
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1 ‘‘(6) such other information as the Adminis2 trator may require. 

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

4 PROPOSALS.—

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

6 on such substitution proposal in accordance with 

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

8 requirements of this subsection. The Administrator 

9 may approve a substitution proposal in whole or in 

10 part and with such modifications or conditions as 

11 may be consistent with the orderly functioning of the 

12 allowance system and which will ensure the emis13 sions reductions contemplated by this title. If a pro14 posal does not meet the requirements of subsection 

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

16 or operator of a unit listed in table A shall not sub17 stitute another unit or units without the prior ap18 proval of the Administrator. 

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

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

21 shall be deemed affected under this title, and the 

22 Administrator shall issue a permit to the original 

23 and substitute affected source and unit in accord24 ance with the approved substitution plan and section 

25 404. The Administrator shall allocate allowances for 
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•HR 999 IH 

1 the original and substitute affected units in accord2 ance with the approved substitution proposal pursu3 ant to section 412. It shall be unlawful for any 

4 source or unit that is allocated allowances pursuant 

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

6 emissions limitation provided for in the approved 

7 substitution permit and plan unless the owner or op8 erator of each unit governed by the permit and ap9 proved substitution plan holds allowances to emit 

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

11 owner or operator of any original or substitute af12 fected unit operated in violation of this subsection 

13 shall be fully liable for such violation, including li14 ability for fulfilling the obligations specified in sec15 tion 406. If a substitution proposal is disapproved, 

16 the Administrator shall allocate allowances to the 

17 original affected unit or units in accordance with 

18 subsection (a). 

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

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

21 subject to an emissions limitation requirement under 

22 this section may petition the Administrator in its 

23 permit application under section 404 for an exten24 sion of 2 years of the deadline for meeting such re25 quirement, provided that the owner or operator of 
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1 any such unit holds allowances to emit not less than 

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

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

4 an extension, the affected unit must either employ a 

5 qualifying phase I technology, or transfer its phase 

6 I emissions reduction obligation to a unit employing 

7 a qualifying phase I technology. Such transfer shall 

8 be accomplished in accordance with a compliance 

9 plan, submitted and approved under section 404, 

10 that shall govern operations at all units included in 

11 the transfer, and that specifies the emissions reduc12 tion requirements imposed pursuant to this title. 

13 ‘‘(2) Such extension proposal shall—

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

15 designation as an eligible phase I extension 

16 unit; 

17 ‘‘(B) provide a copy of an executed con18 tract, which may be contingent upon the Ad19 ministrator approving the proposal, for the de20 sign engineering, and construction of the quali21 fying phase I technology for the extension unit, 

22 or for the unit or units to which the extension 

23 unit’s emission reduction obligation is to be 

24 transferred; 
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•HR 999 IH 

1 ‘‘(C) specify the unit’s or units’ baseline, 

2 actual 1985 emissions rate, allowable 1985 

3 emissions rate, and projected utilization for cal4 endar years 1995 through 1999; 

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

6 phase I extension unit or units and the transfer 

7 unit or units beginning no later than January 

8 1, 1995; and 

9 ‘‘(E) specify the emission limitation and 

10 number of allowances expected to be necessary 

11 for annual operation after the qualifying phase 

12 I technology has been installed. 

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

14 final action on each extension proposal in order of 

15 receipt, consistent with section 404, and for an ap16 proved proposal shall designate the unit or units as 

17 an eligible phase I extension unit. The Administrator 

18 may approve an extension proposal in whole or in 

19 part, and with such modifications or conditions as 

20 may be necessary, consistent with the orderly func21 tioning of the allowance system, and to ensure the 

22 emissions reductions contemplated by the subpart. 

23 ‘‘(4) In order to determine the number of pro24 posals eligible for allocations from the reserve under 

25 subsection (a)(2) and the number of the allowances 
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1 remaining available after each proposal is acted 

2 upon, the Administrator shall reduce the total num3 ber of allowances remaining available in the reserve 

4 by the number of allowances calculated according to 

5 subparagraph (A), (B) and (C) until either no allow6 ances remain available in the reserve for further al7 location or all approved proposals have been acted 

8 upon. If no allowances remain available in the re9 serve for further allocation before all proposals have 

10 been acted upon by the Administrator, any pending 

11 proposals shall be disapproved. The Administrator 

12 shall calculate allowances equal to—

13 ‘‘(A) the difference between the lesser of 

14 the average annual emissions in calendar years 

15 1988 and 1989 or the projected emissions ton16 nage for calendar year 1995 of each eligible 

17 phase I extension unit, as designated under 

18 paragraph (3), and the product of the unit’s 

19 baseline multiplied by an emission rate of 2.50 

20 lbs/mmBtu, divided by 2,000; 

21 ‘‘(B) the difference between the lesser of 

22 the average annual emissions in calendar years 

23 1988 and 1989 or the projected emissions ton24 nage for calendar year 1996 of each eligible 

25 phase I extension unit, as designated under 
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1 paragraph (3), and the product of the unit’s 

2 baseline multiplied by an emission rate of 2.50 

3 lbs/mmBtu, divided by 2,000; and 

4 ‘‘(C) the amount by which (i) the product 

5 of each unit’s baseline multiplied by an emis6 sion rate of 1.20 lbs/mmBtu, divided by 2,000, 

7 exceeds (ii) the tonnage level specified under 

8 subparagraph (E) of paragraph (2) of this sub9 section multiplied by a factor of 3. 

10 ‘‘(5) Each eligible Phase I extension unit shall 

11 receive allowances determined under subsection 

12 (a)(1) or (c) of this section. In addition, for calendar 

13 year 1995, the Administrator shall allocate to each 

14 eligible Phase I extension unit, from the allowance 

15 reserve created pursuant to subsection (a)(2), allow16 ances equal to the difference between the lesser of 

17 the average annual emissions in calendar years 1988 

18 and 1989 or its projected emission tonnage for cal19 endar year 1995 and the product of the unit’s base20 line multiplied by an emission rate of 2.50 lbs/

21 mmBtu, divided by 2,000. In calendar year 1996, 

22 the Administrator shall allocate for each eligible 

23 unit, from the allowance reserve created pursuant to 

24 subsection (a)(2), allowances equal to the difference 

25 between the lesser of the average annual emissions 
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•HR 999 IH 

1 in calendar years 1988 and 1989 or its projected 

2 emissions tonnage for calendar year 1996 and the 

3 product of the unit’s baseline multiplied by an emis4 sion rate of 2.50 lbs/mmBtu, divided by 2,000. It 

5 shall be unlawful for any source or unit subject to 

6 an approved extension plan under this subsection to 

7 emit sulfur dioxide in excess of the emissions limita8 tions provided for in the permit and approved exten9 sion plan, unless the owner or operator of each unit 

10 governed by the permit and approved plan holds al11 lowances to emit not less than the unit’s total an12 nual emissions. 

13 ‘‘(6) In addition to allowances specified in para14 graph (4), the Administrator shall allocate for each 

15 eligible Phase I extension unit employing qualifying 

16 Phase I technology, for calendar years 1997, 1998, 

17 and 1999, additional allowances, from any remaining 

18 allowances in the reserve created pursuant to sub19 section (a)(2), following the reduction in the reserve 

20 provided for in paragraph (4), not to exceed the 

21 amount by which (A) the product of each eligible 

22 unit’s baseline times an emission rate of 1.20 lbs/

23 mmBtu, divided by 2,000 exceeds (B) the tonnage 

24 level specified under subparagraph (E) of paragraph 

25 (2) of this subsection. 
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1 ‘‘(7) After January 1, 1997, in addition to any 

2 liability under this Act, including under section 406, 

3 if any eligible phase I extension unit employing 

4 qualifying phase I technology or any transfer unit 

5 under this subsection emits sulfur dioxide in excess 

6 of the annual tonnage limitation specified in the ex7 tension plan, as approved in paragraph (2) of this 

8 subsection, the Administrator shall, in the calendar 

9 year following such excess, deduct allowances equal 

10 to the amount of such excess from such unit’s an11 nual allowance allocation. 

12 ‘‘(e)(1) In the case of a unit that receives authoriza13 tion from the Governor of the State in which such unit 

14 is located to make reductions in the emissions of sulfur 

15 dioxide prior to calendar year 1995 and that is part of 

16 a utility system that meets the following requirements—

17 ‘‘(A) the total coal-fired generation within the 

18 utility system as a percentage of total system gen19 eration decreased by more than 20 percent between 

20 January 1, 1980, and December 31, 1985; and 

21 ‘‘(B) the weighted capacity factor of all coal22 fired units within the utility system averaged over 

23 the period from January 1, 1985, through December 

24 31, 1987, was below 50 percent, the Administrator 

25 shall allocate allowances under this paragraph for 
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1 the unit pursuant to this subsection. The Adminis2 trator shall allocate allowances for a unit that is an 

3 affected unit pursuant to section 414 (but is not 

4 also an affected unit under this section) and part of 

5 a utility system that includes 1 or more affected 

6 units under section 414 for reductions in the emis7 sions of sulfur dioxide made during the period 

8 1995–1999 if the unit meets the requirements of 

9 this subsection and the requirements of the pre10 ceding sentence, except that for the purposes of ap11 plying this subsection to any such unit, the prior 

12 year concerned as specified below, shall be any year 

13 after January 1, 1995 but prior to January 1, 2000. 

14 ‘‘(2) In the case of an affected unit under this section 

15 described in subparagraph (A), the allowances allocated 

16 under this subsection for early reductions in any prior year 

17 may not exceed the amount which (A) the product of the 

18 unit’s baseline multiplied by the unit’s 1985 actual sulfur 

19 dioxide emission rate (in lbs. per mmBtu), divided by 

20 2,000 exceeds (B) the allowances specified for such unit 

21 in Table A. In the case of an affected unit under section 

22 414 described in subparagraph (A), the allowances award23 ed under this subsection for early reductions in any prior 

24 year may not exceed the amount by which (i) the product 

25 of the quality of fossil fuel consumed by the unit (in 
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1 mmBtu) in the prior year multiplied by the lesser of 2.50 

2 or the most stringent emission rate (in lbs. per mmBtu) 

3 applicable to the unit under the applicable implementation 

4 plan, divided by 2,000 exceeds (ii) the unit’s actual ton5 nage of sulfur dioxide emission for the prior year con6 cerned. Allowances allocated under this subsection for 

7 units referred to in subparagraph (A) may be allocated 

8 only for emission reductions achieved as a result of phys9 ical changes or changes in the method of operation made 

10 after November 15, 1990, including changes in the type 

11 or quality of fossil fuel consumed. 

12 ‘‘(3) In no event shall the provisions of this para13 graph be interpreted as an event of force majeure or a 

14 commercial impracticability or in any other way as a basis 

15 for excused nonperformance by a utility system under a 

16 coal sales contract in effect 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

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
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‘‘TABLE A.—AFFECTED SOURCES AND UNITS IN PHASE 

I AND THEIR SULFUR DIOXIDE ALLOWANCES 

(TONS)—Continued

State Plant name Generator Phase I

allowances 

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

2 19,810

3 20,410

4 20,080

5 19,360

6 20,380

E. W. Stout ................. 5 3,880

6 4,770
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‘‘TABLE A.—AFFECTED SOURCES AND UNITS IN PHASE 

I AND THEIR SULFUR DIOXIDE ALLOWANCES 

(TONS)—Continued

State Plant name Generator Phase I

allowances 

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

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
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‘‘TABLE A.—AFFECTED SOURCES AND UNITS IN PHASE 

I AND THEIR SULFUR DIOXIDE ALLOWANCES 

(TONS)—Continued

State Plant name Generator Phase I

allowances 

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

9 30,480

Cardinal ....................... 1 34,270

2 38,320

Conesville ..................... 1 4,210

2 4,890

3 5,500

4 48,770
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‘‘TABLE A.—AFFECTED SOURCES AND UNITS IN PHASE 

I AND THEIR SULFUR DIOXIDE ALLOWANCES 

(TONS)—Continued

State Plant name Generator Phase I

allowances 

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

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
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‘‘TABLE A.—AFFECTED SOURCES AND UNITS IN PHASE 

I AND THEIR SULFUR DIOXIDE ALLOWANCES 

(TONS)—Continued

State Plant name Generator Phase I

allowances 

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

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
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‘‘TABLE A.—AFFECTED SOURCES AND UNITS IN PHASE 

I AND THEIR SULFUR DIOXIDE ALLOWANCES 

(TONS)—Continued

State Plant name Generator Phase I

allowances 

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. 

19 ‘‘(2) ALLOWANCES FOR EMISSIONS AVOIDED

20 THROUGH ENERGY CONSERVATION AND RENEWABLE

21 ENERGY.—
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1 ‘‘(A) IN GENERAL.—The regulations under 

2 paragraph (4) of this subsection shall provide 

3 that for each ton of sulfur dioxide emissions 

4 avoided by an electric utility, during the appli5 cable period, through the use of qualified en6 ergy conservation measures or qualified renew7 able energy, the Administrator shall allocate a 

8 single allowance to such electric utility, on a 

9 first-come-first-served basis from the Conserva10 tion and Renewable Energy Reserve established 

11 under subsection (g), up to a total of 300,000 

12 allowances for allocation from such Reserve. 

13 ‘‘(B) REQUIREMENTS FOR ISSUANCE.—

14 The Administrator shall allocate allowances to 

15 an electric utility under this subsection only if 

16 all of the following requirements are met: 

17 ‘‘(i) Such electric utility is paying for 

18 the qualified energy conservation measures 

19 or qualified renewable energy directly or 

20 through purchase from another person. 

21 ‘‘(ii) The emissions of sulfur dioxide 

22 avoided through the use of qualified energy 

23 conservation measures or qualified renew24 able energy are quantified in accordance 
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1 with regulations promulgated by the Ad2 ministrator under this subsection. 

3 ‘‘(iii)(I) Such electric utility has 

4 adopted and is implementing a least cost 

5 energy conservation and electric power 

6 plan which evaluates a range of resources, 

7 including new power supplies, energy con8 servation, and renewable energy resources, 

9 in order to meet expected future demand 

10 at the lowest system cost. 

11 ‘‘(II) The qualified energy conserva12 tion measures or qualified renewable en13 ergy, or both, are consistent with that 

14 plan. 

15 ‘‘(III) Electric utilities subject to the 

16 jurisdiction of a State regulatory authority 

17 must have such plan approved by such au18 thority. For electric utilities not subject to 

19 the jurisdiction of a State regulatory au20 thority such plan shall be approved by the 

21 entity with rate-making authority for such 

22 utility. 

23 ‘‘(iv) In the case of qualified energy 

24 conservation measures undertaken by a 

25 State regulated electric utility, the Sec-
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1 retary of Energy certifies that the State 

2 regulatory authority with jurisdiction over 

3 the electric rates of such electric utility has 

4 established rates and charges which ensure 

5 that the net income of such electric utility 

6 after implementation of specific cost effec7 tive energy conservation measures is at 

8 least as high as such net income would 

9 have been if the energy conservation meas10 ures had not been implemented. Upon the 

11 date of any such certification by the Sec12 retary of Energy, all allowances which, but 

13 for this paragraph, would have been allo14 cated under subparagraph (B) before such 

15 date, shall be allocated to the electric util16 ity. This clause is not a requirement for 

17 qualified renewable energy. 

18 ‘‘(v) Such utility or any subsidiary of 

19 the utility’s holding company owns or oper20 ates at least one affected unit. 

21 ‘‘(C) PERIOD OF APPLICABILITY.—Allow22 ances under this subsection shall be allocated 

23 only with respect to kilowatt hours of electric 

24 energy saved by qualified energy conservation 

25 measures or generated by qualified renewable 
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1 energy after January 1, 1992, and before the 

2 earlier of (i) December 31, 2000, or (ii) the 

3 date on which any electric utility steam gener4 ating unit owned or operated by the electric 

5 utility to which the allowances are allocated be6 comes subject to this subpart (including those 

7 sources that elect to become affected by this 

8 title, pursuant to section 417). 

9 ‘‘(D) DETERMINATION OF AVOIDED EMIS10 SIONS.—

11 ‘‘(i) APPLICATION.—In order to re12 ceive allowances under this subsection, an 

13 electric utility shall make an application 

14 which—

15 ‘‘(I) designates the qualified en16 ergy conservation measures imple17 mented and the qualified renewable 

18 energy sources used for purposes of 

19 avoiding emissions; 

20 ‘‘(II) calculates, in accordance 

21 with subparagraphs (F) and (G), the 

22 number of tons of emissions avoided 

23 by reason of the implementation of 

24 such measures or the use of such re25 newable energy sources; and 
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1 ‘‘(III) demonstrates that the re2 quirements of subparagraph (B) have 

3 been met. Such application for allow4 ances by a State-regulated electric 

5 utility shall require approval by the 

6 State regulatory authority with juris7 diction over such electric utility. The 

8 authority shall review the application 

9 for accuracy and compliance with this 

10 subsection and the rules under this 

11 subsection. Electric utilities whose re12 tail rates are not subject to the juris13 diction of a State regulatory authority 

14 shall apply directly to the Adminis15 trator for such approval. 

16 ‘‘(E) AVOIDED EMISSIONS FROM QUALI17 FIED ENERGY CONSERVATION MEASURES.—For 

18 the purposes of this subsection, the emission 

19 tonnage deemed avoided by reason of the imple20 mentation of qualified energy conservation 

21 measures for any calendar year shall be a ton22 nage equal to the product of multiplying—

23 ‘‘(i) the kilowatt hours that would 

24 otherwise have been supplied by the utility 
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•HR 999 IH 

1 during such year in the absence of such 

2 qualified energy conservation measures, by 

3 ‘‘(ii) 0.004, and dividing by 2,000. 

4 ‘‘(F) AVOIDED EMISSIONS FROM THE USE

5 OF QUALIFIED RENEWABLE ENERGY.—The 

6 emissions tonnage deemed avoided by reason of 

7 the use of qualified renewable energy by an 

8 electric utility for any calendar year shall be a 

9 tonnage equal to the product of multiplying—

10 (i) the actual kilowatt hours generated by, or 

11 purchased from, qualified renewable energy, by 

12 (ii) 0.004, and dividing by 2,000. 

13 ‘‘(G) PROHIBITIONS.—

14 ‘‘(i) No allowances shall be allocated 

15 under this subsection for the implementa16 tion of programs that are exclusively infor17 mational or educational in nature. 

18 ‘‘(ii) No allowances shall be allocated 

19 for energy conservation measures or renew20 able energy that were operational before 

21 January 1, 1992. 

22 ‘‘(3) SAVINGS PROVISION.—Nothing in this sub23 section precludes a State or State regulatory author24 ity from providing additional incentives to utilities to 

25 encourage investment in demand-side resources. 
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•HR 999 IH 

1 ‘‘(4) REGULATIONS.—The Administrator shall 

2 implement this subsection under 40 CFR part 73 

3 (2002), amended as appropriate by the Adminis4 trator. Such regulations shall list energy conserva5 tion measures and renewable energy sources which 

6 may be treated as qualified energy conservation 

7 measures and qualified renewable energy for pur8 poses of this subsection. Allowances shall only be al9 located if all requirements of this subsection and the 

10 rules promulgated to implement this subsection are 

11 complied with. The Administrator shall review the 

12 determinations of each State regulatory authority 

13 under this subsection to encourage consistency from 

14 electric utility and from State-to-State in accordance 

15 with the Administrator’s rules. The Administrator 

16 shall publish the findings of this review no less than 

17 annually. 

18 ‘‘(g) CONSERVATION AND RENEWABLE ENERGY RE19 SERVE.—The Administrator shall establish a Conservation 

20 and Renewable Energy Reserve under this subsection. Be21 ginning on January 1, 1995, the Administrator may allo22 cate from the Conservation and Renewable Energy Re23 serve an amount equal to a total of 300,000 allowances 

24 for emissions of sulfur dioxide pursuant to section 411. 

25 In order to provide 300,000 allowances for such reserve, 
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•HR 999 IH 

1 in each year beginning in calendar year 2000 and until 

2 calendar year 2009, inclusive, the Administrator shall re3 duce each unit’s basic Phase II allowance allocation on 

4 the basis of its pro rata share of 30,000 allowances. Not5 withstanding the prior sentence, if allowances remain in 

6 the reserve one year after the date of enactment of the 

7 Clear Skies Act of 2003, the Administrator shall allocate 

8 such allowances for affected units under section 414 on 

9 a pro rata basis. For purposes of this subsection, for any 

10 unit subject to the emissions limitation requirements of 

11 section 414, the term ‘pro rata basis’ refers to the ratio 

12 which the reductions made in such unit’s allowances in 

13 order to establish the reserve under this subsection bears 

14 to the total of such reductions for all such units. 

15 ‘‘(h) ALTERNATIVE ALLOWANCE ALLOCATION FOR

16 UNITS IN CERTAIN UTILITY SYSTEMS WITH OPTIONAL

17 BASELINE.—

18 ‘‘(1) OPTIONAL BASELINE FOR UNITS IN CER19 TAIN SYSTEMS.—In the case of a unit subject to the 

20 emissions limitation requirements of this section 

21 which (as of November 15, 1990)—

22 ‘‘(A) has an emission rate below 1.0 lbs/

23 mmBtu, 
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•HR 999 IH 

1 ‘‘(B) has decreased its sulfur dioxide emis2 sions rate by 60 percent or greater since 1980, 

3 and 

4 ‘‘(C) is part of a utility system which has 

5 a weighted average sulfur dioxide emissions rate 

6 for all fossil fueled-fired units below 1.0 lbs/

7 mmBtu, at the election to the owner or oper8 ator of such unit, the unit’s baseline may be 

9 calculated— 

10 ‘‘(i) as provided under section 411, or 

11 ‘‘(ii) by utilizing the unit’s average 

12 annual fuel consumption at a 60 percent 

13 capacity factor. Such election shall be 

14 made no later than March 1, 1991. 

15 ‘‘(2) ALLOWANCE ALLOCATION.—Whenever a 

16 unit referred to in paragraph (1) elects to calculate 

17 its baseline as provided in clause (ii) of paragraph 

18 (1), the Administrator shall allocate allowances for 

19 the unit pursuant to section 412(a), this section, 

20 and section 414 (as Basic Phase II allowance alloca21 tions) in an amount equal to the baseline selected 

22 multiplied by the lower of the average annual emis23 sion rate for such unit in 1989, or 1.0 lbs./mmBtu. 

24 Such allowance allocation shall be in lieu of any allo-
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•HR 999 IH 

1 cation of allowances under this section and section 

2 414. 

3 ‘‘SEC. 414. PHASE II SULFUR DIOXIDE REQUIREMENTS. 

4 ‘‘(a) APPLICABILITY.—

5 ‘‘(1) After January 1, 2000, each existing util6 ity unit as provided below is subject to the limita7 tions or requirements of this section. Each utility 

8 unit subject to an annual sulfur dioxide tonnage 

9 emission limitation under this section is an affected 

10 unit under this subpart. Each source that includes 

11 one or more affected units is an affected source. In 

12 the case of an existing unit that was not in oper13 ation during calendar year 1985, the emission rate 

14 for a calendar year after 1985, as determined by the 

15 Administrator, shall be used in lieu of the 1985 rate. 

16 The owner or operator of any unit operated in viola17 tion of this section shall be fully liable under this 

18 Act for fulfilling the obligations specified in section 

19 406. 

20 ‘‘(2) In addition to basic Phase II allowance al21 locations, in each year beginning in calendar year 

22 2000 and ending in calendar year 2009, inclusive, 

23 the Administrator shall allocate up to 530,000 

24 Phase II bonus allowances pursuant to subsections 
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•HR 999 IH 

1 (b)(2),(c)(4), (d)(3)(A) and (B), and (h)(2) of this 

2 section and section 415. 

3 ‘‘(3) In addition to basic Phase II allowances 

4 allocations and Phase II bonus allowance allocations, 

5 beginning January 1, 2000, the Administrator shall 

6 allocate for each unit listed on Table A in section 

7 413 (other than units at Kyger Creek, Clifty Creek, 

8 and Joppa Stream) and located in the States of Illi9 nois, Indiana, Ohio, Georgia, Alabama, Missouri, 

10 Pennsylvania, West Virginia, Kentucky, or Ten11 nessee allowances in an amount equal to 50,000 

12 multiplied by the unit’s pro rata share of the total 

13 number of basic allowances allocated for all units 

14 listed on Table A (other than units at Kyger Creek, 

15 Clifty Creek, and Joppa Stream). Allowances allo16 cated pursuant to this paragraph shall not be sub17 ject to the 8,900,000 ton limitation in section 

18 412(a). 

19 ‘‘(b) UNITS EQUAL TO, OR ABOVE, 75 MWE AND

20 1.20 LBS/MMBTU.—

21 ‘‘(1) Except as otherwise provided in paragraph 

22 (3), after January 1, 2000, it shall be unlawful for 

23 any existing utility unit that serves a generator with 

24 nameplate capacity equal to, or greater, than 75 

25 MWe and an actual 1985 emission rate equal to or 
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•HR 999 IH 

1 greater than 1.20 lbs/mmBtu to exceed an annual 

2 sulfur dioxide tonnage emission limitation equal to 

3 the product of the unit’s baseline multiplied by an 

4 emission rate equal to 1.20 lbs/mmBtu, divided by 

5 2,000, unless the owner or operator of such unit 

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

7 total annual emissions or, for a year after 2007, un8 less the owner or operator of the source that in9 cludes such unit holds allowances to emit not less 

10 than the total annual emissions of all affected units 

11 at the source. 

12 ‘‘(2) In addition to allowances allocated pursu13 ant to paragraph (1) and section 412(a) as basic 

14 Phase II allowance allocations, beginning January 1, 

15 2000, and for each calendar year thereafter until 

16 and including 2009, the Administrator shall allocate 

17 annually for each unit subject to the emissions limi18 tation requirements of paragraph (1) with an actual 

19 1985 emissions rate greater than 1.20 lbs/mmBtu 

20 and less than 2.50 lbs/mmBtu and a baseline capac21 ity factor of less than 60 percent, allowances from 

22 the reserve created pursuant to subsection (a)(2) in 

23 an amount equal to 1.20 lbs/mmBtu multiplied by 

24 50 percent of the difference, on a Btu basis, between 
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•HR 999 IH 

1 the unit’s baseline and the unit’s fuel consumption 

2 at a 60 percent capacity factor. 

3 ‘‘(3) After January 1, 2000, it shall be unlawful 

4 for any existing utility unit with an actual 1985 

5 emissions rate equal to or greater than 1.20 lbs/

6 mmBtu whose annual average fuel consumption dur7 ing 1985, 1986, and 1987 on a Btu basis exceeded 

8 90 percent in the form of lignite coal which is lo9 cated in a State in which, as of July 1, 1989, no 

10 county or portion of a county was designated non11 attainment under section 107 of this Act for any 

12 pollutant subject to the requirements of section 109 

13 of this Act to exceed an annual sulfur dioxide ton14 nage limitation equal to the product of the unit’s 

15 baseline multiplied by the lesser of the unit’s actual 

16 1985 emissions rate or its allowable 1985 emissions 

17 rate, divided by 2,000, unless the owner or operator 

18 of such unit holds allowances to emit not less than 

19 the unit’s total annual emissions or, for a year after 

20 2007, unless the owner or operator of the source 

21 that includes such unit holds allowances to emit not 

22 less than the total annual emissions of all affected 

23 units at the source. 

24 ‘‘(4) After January 1, 2000, the Administrator 

25 shall allocate annually for each unit, subject to the 
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•HR 999 IH 

1 emissions limitation requirements of paragraph (1), 

2 which is located in a State with an installed elec3 trical generating capacity of more than 30,000,000 

4 kw in 1988 and for which was issued a prohibition 

5 order or a proposed prohibition order (from burning 

6 oil), which unit subsequently converted to coal be7 tween January 1, 1980 and December 31, 1985, al8 lowances equal to the difference between (A) the 

9 product of the unit’s annual fuel consumption, on a 

10 Btu basis, at a 65 percent capacity factor multiplied 

11 by the lesser of its actual or allowable emissions rate 

12 during the first full calendar year after conversion, 

13 divided by 2,000, and (B) the number of allowances 

14 allocated for the unit pursuant to paragraph (1): 

15 Provided, That the number of allowances allocated 

16 pursuant to this paragraph shall not exceed an an17 nual total of five thousand. If necessary to meeting 

18 the restriction imposed in the preceding sentence the 

19 Administrator shall reduce, pro rata, the annual al20 lowances allocated for each unit under this para21 graph. 

22 ‘‘(c) COAL OR OIL-FIRED UNITS BELOW 75 MWE

23 AND ABOVE 1.20 LBS/MMBTU.—

24 ‘‘(1) Except as otherwise provided in paragraph 

25 (3), after January 1, 2000, it shall be unlawful for 
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•HR 999 IH 

1 a coal or oil-fired existing utility unit that serves a 

2 generator with nameplate capacity of less than 75 

3 MWe and an actual 1985 emission rate equal to, or 

4 greater than, 1.20 lbs/mmBtu and which is a unit 

5 owned by a utility operating company whose aggre6 gate nameplate fossil fuel steam-electric capacity is, 

7 as of December 31, 1989, equal to, or greater than, 

8 250 MWe to exceed an annual sulfur dioxide emis9 sions limitation equal to the product of the unit’s 

10 baseline multiplied by an emission rate equal to 1.20 

11 lbs/mmBtu, divided by 2,000 unless the owner or op12 erator of such unit holds allowances to emit not less 

13 than the unit’s total annual emissions or, for a year 

14 after 2007, unless the owner or operator of the 

15 source that includes such unit holds allowances to 

16 emit not less than the total annual emissions of all 

17 affected units at the source. 

18 ‘‘(2) After January 1, 2000, it shall be unlawful 

19 for a coal or oil-fired existing utility unit that serves 

20 a generator with nameplate capacity of less than 75 

21 MWe and an actual 1985 emission rate equal to, or 

22 greater than, 1.20 lbs/mmBtu (excluding units sub23 ject to section 111 of the Act or to a federally en24 forceable emissions limitation for sulfur dioxide 

25 equivalent to an annual rate of less than 1.20 lbs/
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•HR 999 IH 

1 mmBtu) and which is a unit owned by a utility oper2 ating company whose aggregate nameplate fossil fuel 

3 steam-electric capacity is, as of December 31, 1989, 

4 less than 250 MWe, to exceed an annual sulfur diox5 ide tonnage emissions limitation equal to the product 

6 of the unit’s baseline multiplied by the lesser of its 

7 actual 1985 emissions rate or its allowable 1985 

8 emissions rate, divided by 2,000, unless the owner or 

9 operator of such unit holds allowances to emit not 

10 less than the unit’s total annual emissions or, for a 

11 year after 2007, unless the owner or operator of the 

12 source that includes such unit holds allowances to 

13 emit not less than the total annual emissions of all 

14 affected units at the source. 

15 ‘‘(3) After January 1, 2000 it shall be unlawful 

16 for any existing utility unit with a nameplate capac17 ity below 75 MWe and an actual 1985 emissions 

18 rate equal to, or greater than, 1.20 lbs/mmBtu 

19 which became operational on or before December 31, 

20 1965, which is owned by a utility operating company 

21 with, as of December 31, 1989, a total fossil fuel 

22 steam-electric generating capacity greater than 250 

23 MWe, and less than 450 MWe which serves fewer 

24 than 78,000 electrical customers as of November 15, 

25 1990, to exceed an annual sulfur dioxide emissions 
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1 tonnage limitation equal to the product of its base2 line multiplied by the lesser of its actual or allowable 

3 1985 emission rate, divided by 2,000, unless the 

4 owner or operator holds allowances to emit not less 

5 than the units total annual emissions or, for a year 

6 after 2007, unless the owner or operator of the 

7 source that includes such unit holds allowances to 

8 emit not less than the total annual emissions of all 

9 affected units at the source. After January 1, 2010, 

10 it shall be unlawful for each unit subject to the 

11 emissions limitation requirements of this paragraph 

12 to exceed an annual emissions tonnage limitation 

13 equal to the product of its baseline multiplied by an 

14 emissions rate of 1.20 lbs/mmBtu, divided by 2,000, 

15 unless the owner or operator holds allowances to 

16 emit not less than the unit’s total annual emissions 

17 or, for a year after 2007, unless the owner or oper18 ator of the source that includes such unit holds al19 lowances to emit not less than the total annual emis20 sions of all affected units at the source. 

21 ‘‘(4) In addition to allowances allocated pursu22 ant to paragraph (1) and section 412(a) as basic 

23 Phase II allowance allocations, beginning January 1, 

24 2000, and for each calendar year thereafter until 

25 and including 2009, inclusive, the Administrator 
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•HR 999 IH 

1 shall allocate annually for each unit subject to the 

2 emissions limitation requirements of paragraph (1) 

3 with an actual 1985 emissions rate equal to, or 

4 greater than, 1.20 lbs/mmBtu and less than 2.50 

5 lbs/mmBtu and a baseline capacity factor of less 

6 than 60 percent, allowances from the reserve created 

7 pursuant to subsection (a)(2) in an amount equal to 

8 1.20 lbs/mmBtu multiplied by 50 percent of the dif9 ference, on a Btu basis, between the unit’s baseline 

10 and the unit’s fuel consumption at a 60 percent ca11 pacity factor. 

12 ‘‘(5) After January 1, 2000, is shall be unlaw13 ful for any existing unit with a nameplate capacity 

14 below 75 MWe and an actual 1985 emissions rate 

15 equal to, or greater than, 1.20 lbs/mmBtu which is 

16 part of an electric utility system which, as of No17 vember 15, 1990— 

18 ‘‘(A) has at least 20 percent of its fossil19 fuel capacity controlled by flue gas 

20 desulfurization devices, 

21 ‘‘(B) has more than 10 percent of its fos22 sil-fuel capacity consisting of coal-fired unites of 

23 less than 75 MWe, and 

24 ‘‘(C) has large units (greater than 400 

25 MWe) all of which have difficult or very dif-
122

•HR 999 IH 

1 ficult FGD Retrofit Cost Factors (according to 

2 the Emissions and the FGD Retrofit Feasibility 

3 at the 200 Top Emitting Generating Stations, 

4 prepared for the United States Environmental 

5 Protection Agency on January 10, 1986) to ex6 ceed an annual sulfur dioxide emissions tonnage 

7 limitation equal to the product of its baseline 

8 multiplied by an emissions rate of 2.5 lbs/

9 mmBtu, divided by 2,000, unless the owner or 

10 operator holds allowances to emit not less than 

11 the unit’s total annual emissions or, for a year 

12 after 2007, unless the owner or operator of the 

13 source that includes such unit holds allowances 

14 to emit not less than the total annual emissions 

15 of all affected units at the source. After Janu16 ary 1, 2010, it shall be unlawful for each unit 

17 subject to the emissions limitation requirements 

18 of this paragraph to exceed an annual emissions 

19 tonnage limitation equal to the project of its 

20 baseline multiplied by an emissions rate of 1.20 

21 lbs/mmBtu, divided by 2,000, unless the owner 

22 or operator holds for use allowances to emit not 

23 less than the unit’s total annual emissions or, 

24 for a year after 2007, unless the owner or oper25 ator of the source that includes such unit holds 
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1 allowances to emit not less than the total an2 nual emissions of all affected units at the 

3 source. 

4 ‘‘(d) COAL-FIRED UNITS BELOW 1.20 LBS/

5 MMBTU.—

6 ‘‘(1) After January 1, 2000, it shall be unlawful 

7 for any existing coal-fired utility unit the lesser of 

8 whose actual or allowable 1985 sulfur dioxide emis9 sions rate is less than 0.60 lbs/mmBtu to exceed an 

10 annual sulfur dioxide tonnage emission limitation 

11 equal to the product of the unit’s baseline multiplied 

12 by— 

13 ‘‘(A) the lesser of 0.60 lbs/mmBtu or the 

14 unit’s allowable 1985 emissions rate, and 

15 ‘‘(B) a numerical factor of 120 percent, di16 vided by 2,000, unless the owner or operator of 

17 such unit holds allowances to emit not less than 

18 the unit’s total annual emissions or, for a year 

19 after 2007, unless the owner or operator of the 

20 source that includes such unit holds allowances 

21 to emit not less than the total annual emissions 

22 of all affected units at the source. 

23 ‘‘(2) After January 1, 2000, it shall be unlawful 

24 for any existing coal-fired utility unit the lesser of 

25 whose actual or allowable 1985 sulfur dioxide emis-
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1 sions rate is equal to, or greater than, 0.60 lbs/

2 mmBtu and less than 1.20 lbs/mmBtu to exceed an 

3 annual sulfur dioxide tonnage emissions limitation 

4 equal to the product of the unit’s baseline multiplied 

5 by (A) the lesser of its actual 1985 emissions rate 

6 or its allowable 1985 emissions rate, and (B) a nu7 merical factor of 120 percent, divided by 2,000, un8 less the owner or operator of such unit holds allow9 ances to emit not less than the unit’s total annual 

10 emissions or, for a year after 2007, unless the owner 

11 or operator of the source that includes such unit 

12 holds allowances to emit not less than the total an13 nual emissions of all affected units at the source. 

14 ‘‘(3)(A) In addition to allowances allocated pur15 suant to paragraph (1) and section 412(a) as basic 

16 Phase II allowance allocations, at the election of the 

17 designated representative of the operating company, 

18 beginning January 1, 2000, and for each calendar 

19 year thereafter until and including 2009, the Admin20 istrator shall allocate annually for each unit subject 

21 to the emissions limitation requirements of para22 graph (1) allowances from the reserve created pursu23 ant to subsection (a)(2) in an amount equal to the 

24 amount by which—
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1 ‘‘(i) the product of the lesser of 0.60 

2 lbs.mmBtu or the unit’s allowable 1985 emis3 sions rate multiplied by the unit’s baseline ad4 justed to reflect operation at a 60 percent ca5 pacity factor, divided by 2,000, exceeds 

6 ‘‘(ii) the number of allowances allocated 

7 for the unit pursuant to paragraph (1) and sec8 tion 403(a)(1) as basic Phase II allowance allo9 cations. 

10 ‘‘(B) In addition to allowances allocated pursu11 ant to paragraph (2) and section 412(a) as basic 

12 Phase II allowance allocations, at the election of the 

13 designated representative of the operating company, 

14 beginning January 1, 2000, and for each calendar 

15 year thereafter until and including 2009, the Admin16 istrator shall allocate annually for each unit subject 

17 to the emissions limitation requirements of para18 graph (2) allowances from the reserve created pursu19 ant to subsection (a)(2) in an amount equal to the 

20 amount by which—

21 ‘‘(i) the product of the lesser of the unit’s 

22 actual 1985 emissions rate or its allowable 

23 1985 emissions rate multiplied by the unit’s 

24 baseline adjusted to reflect operation at a 60 
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1 percent capacity factor, divided by 2,000, ex2 ceeds 

3 ‘‘(ii) the number of allowances allocated 

4 for the unit pursuant to paragraph (2) and sec5 tion 412(a) as basic Phase II allowance alloca6 tions. 

7 ‘‘(C) An operating company with units subject 

8 to the emissions limitation requirements of this sub9 section may elect the allocation of allowances as pro10 vided under subparagraphs (A) and (B). Such elec11 tion shall apply to the annual allowance allocation 

12 for each and every unit in the operating company 

13 subject to the emissions limitation requirements of 

14 this subsection. The Administrator shall allocate al15 lowances pursuant to subparagraphs (A) and (B) 

16 only in accordance with this subparagraph. 

17 ‘‘(4) Notwithstanding any other provision of 

18 this section, at the election of the owner or operator, 

19 after January 1, 2000, the Administrator shall allo20 cate in lieu of allocation, pursuant to paragraph (1), 

21 (2), (3), (5), or (6), allowances for a unit subject to 

22 the emissions limitation requirements of this sub23 section which commenced commercial operation on 

24 or after January 1, 1981 and before December 31, 

25 1985, which was subject to, and in compliance with, 
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1 section 111 of the Act in an amount equal to the 

2 unit’s annual fuel consumption, on a Btu basis, at 

3 a 65 percent capacity factor multiplied by the unit’s 

4 allowable 1985 emissions rate, divided by 2,000.

5 ‘‘(5) For the purposes of this section, in the 

6 case of an oil- and gas-fired unit which has been 

7 awarded a clean coal technology demonstration grant 

8 as of January 1, 1991, by the United States Depart9 ment of Energy, beginning January 1, 2002, the Ad10 ministrator shall allocate for the unit allowances in 

11 an amount equal to the unit’s baseline multiplied by 

12 1.20 lbs/mmBtu, divided by 2,000. 

13 ‘‘(e) OIL AND GAS-FIRED UNITS EQUAL TO OR

14 GREATER THAN 0.60 LBS/MMBTU AND LESS THAN 1.20 

15 LBS/MMBTU.—After January 1, 2000, it shall be unlawful 

16 for any existing oil and gas-fired utility unit the lesser of 

17 whose actual or allowable 1985 sulfur dioxide emission 

18 rate is equal to, or greater than, 0.60 lbs/mmBtu, but less 

19 than 1.20 lbs/mmBtu to exceed an annual sulfur dioxide 

20 tonnage limitation equal to the product of the unit’s base21 line multiplied by (A) the lesser of the unit’s allowable 

22 1985 emissions rate or its actual 1985 emissions rate and 

23 (B) a numerical factor of 120 percent divided by 2,000, 

24 unless the owner or operator of such unit holds allowances 

25 to emit not less than the unit’s total annual emissions or, 
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1 for a year after 2007, unless the owner or operator of the 

2 source that includes such unit holds allowances to emit 

3 not less than the total annual emissions of all affected 

4 units at the source. 

5 ‘‘(f) OIL AND GAS-FIRED UNITS LESS THAN 0.60 

6 LBS/MMBTU.—

7 ‘‘(1) After January 1, 2000, it shall be unlawful 

8 for any oil and gas-fired existing utility unit the less9 er of whose actual or allowance 1985 emission rate 

10 is less than 0.60 lbs/mmBtu and whose average an11 nual fuel consumption during the period 1980 

12 through 1989 on a Btu basis was 90 percent or less 

13 in the form of natural gas to exceed an annual sul14 fur dioxide tonnage emissions limitation equal to the 

15 product of the unit’s baseline multiplied by—

16 ‘‘(A) the lesser of 0.60 lbs/mmBtu or the 

17 unit’s allowance 1985 emissions, and 

18 ‘‘(B) a numerical factor of 120 percent, di19 vided by 2,000, unless the owner or operator of 

20 such unit holds allowances to emit not less than 

21 the unit’s total annual emissions or, for a year 

22 after 2007, 

23 unless the owner or operator of the source that in24 cludes such unit holds allowances to emit not less 
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1 than the total annual emissions of all affected units 

2 at the source. 

3 ‘‘(2) In addition to allowances allocated pursu4 ant to paragraph (1) as basic Phase II allowance al5 locations and section 412(a), beginning January 1, 

6 2000, the Administrator shall, in the case of any 

7 unit operated by a utility that furnishes electricity, 

8 electric energy, steam, and natural gas within an 

9 area consisting of a city and 1 contiguous county, 

10 and in the case of any unit owned by a State author11 ity, the output of which unit is furnished within that 

12 same area consisting of a city and 1 contiguous 

13 county, the Administrator shall allocate for each unit 

14 in the utility its pro rata share of 7,000 allowances 

15 and for each unit in the State authority its pro rata 

16 share of 2,000 allowances. 

17 ‘‘(g) UNITS THAT COMMENCE OPERATION BETWEEN

18 1986 AND DECEMBER 31, 1995.—

19 ‘‘(1) After January 1, 2000, it shall be unlawful 

20 for any utility unit that has commenced commercial 

21 operation on or after January 1, 1986, but not later 

22 than September 30, 1990 to exceed an annual ton23 nage emission limitation equal to the product of the 

24 unit’s annual fuel consumption, on a Btu basis, at 

25 a 65 percent capacity factor multiplied by the unit’s 
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1 allowance 1985 sulfur dioxide emission rate (con2 verted, if necessary, to pounds per mmBtu), divided 

3 by 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) After January 1, 2000, the Administrator 

11 shall allocate allowances pursuant to section 411 to 

12 each unit which is listed in table B of this paragraph 

13 in an annual amount equal to the amount specified 

14 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 

15 Notwithstanding any other paragraph of this sub16 section, for units subject to this paragraph, the Ad17 ministrator shall not allocate allowances pursuant to 

18 any other paragraph of this subsection, provided 

19 that the owner or operator of a unit listed on Table 
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1 B may elect an allocation of allowances under an2 other paragraph of this subsection in lieu of an allo3 cation under this paragraph. 

4 ‘‘(3) Beginning January 1, 2000, the Adminis5 trator shall allocate to the owner or operator of any 

6 utility unit that commences commercial operation, or 

7 has commenced commercial operation, on or after 

8 October 1, 1990, but not later than December 31, 

9 1992 allowances in an amount equal to the product 

10 of the unit’s annual fuel consumption, on a Btu 

11 basis, at a 65 percent capacity factor multiplied by 

12 the lesser of 0.30 lbs/mmBtu or the unit’s allowable 

13 sulfur dioxide emission rate (converted, if necessary, 

14 to pounds per mmBtu), divided by 2,000. 

15 ‘‘(4) Beginning January 1, 2000, the Adminis16 trator shall allocate to the owner or operator of any 

17 utility unit that has commenced construction before 

18 December 31, 1990 and that commences commercial 

19 operation between January 1, 1993 and December 

20 31, 1995, allowances in an amount equal to the 

21 product of the unit’s annual fuel consumption, on a 

22 Btu basis, at a 65 percent capacity factor multiplied 

23 by the lesser of 0.30 lbs/mmBtu or the unit’s allow24 able sulfur dioxide emission rate (converted, if nec25 essary, to pounds per mmBtu), divided by 2,000. 
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1 ‘‘(5) After January 1, 2000, it shall be unlawful 

2 for any existing utility unit that has completed con3 version from predominantly gas fired existing oper4 ation to coal fired operation between January 1, 

5 1985 and December 31, 1987, for which there has 

6 been allocated a proposed or final prohibition order 

7 pursuant to section 301(b) of the Powerplant and 

8 Industrial Fuel Use Act of 1978 (42 U.S.C. 8301 et 

9 seq, repealed 1987) to exceed an annual sulfur diox10 ide tonnage emissions limitation equal to the product 

11 of the unit’s annual fuel consumption, on a Btu 

12 basis, at a 65 percent capacity factor multiplied by 

13 the lesser of 1.20 lbs/mmBtu or the unit’s allowable 

14 1987 sulfur dioxide emissions rate, divided by 2,000, 

15 unless the owner or operator of such unit has ob16 tained allowances equal to its actual emissions or, 

17 for a year after 2007, unless the owner or operator 

18 of the source that includes such unit holds allow19 ances to emit not less than the total annual emis20 sions of all affected units at the source. 

21 ‘‘(6) Unless the Administrator has approved a 

22 designation of such facility under section 417, the 

23 provisions of this subpart shall not apply to a ‘quali24 fying small power production facility’ or ‘qualifying 

25 cogeneration facility’ (within the meaning of section 
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•HR 999 IH 

1 3(17)(C) or 3(18)(B) of the Federal Power Act) or 

2 to a ‘new independent power production facility’ if, 

3 as of November 15, 1990—

4 ‘‘(A) an applicable power sales agreement 

5 has been executed; 

6 ‘‘(B) the facility is the subject of a State 

7 regulatory authority order requiring an electric 

8 utility to enter into a power sales agreement 

9 with, purchase capacity from, or (for purposes 

10 of establishing terms and conditions of the elec11 tric utility’s purchase of power) enter into arbi12 tration concerning, the facility; 

13 ‘‘(C) an electric utility has issued a letter 

14 of intent or similar instrument committing to 

15 purchase power from the facility at a previously 

16 offered or lower price and a power sales agree17 ment is executed within a reasonable period of 

18 time; or 

19 ‘‘(D) the facility has been selected as a 

20 winning bidder in a utility competitive bid solic21 itation. 

22 ‘‘(h) OIL AND GAS-FIRED UNITS LESS THAN 10 

23 PERCENT OIL CONSUMED.—

24 ‘‘(1) After January 1, 2000, it shall be unlawful 

25 for any oil- and gas-fired utility unit whose average 
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1 annual fuel consumption during the period 1980 

2 through 1989 on a Btu basis exceeded 90 percent in 

3 the form of natural gas to exceed an annual sulfur 

4 dioxide tonnage limitation equal to the product of 

5 the unit’s baseline multiplied by the unit’s actual 

6 1985 emissions rate divided by 2,000 unless the 

7 owner or operator of such unit holds allowances to 

8 emit not less than the unit’s total annual emissions 

9 or, for a year after 2007, unless the owner or oper10 ator of the source that includes such unit holds al11 lowances to emit not less than the total annual emis12 sions of all affected units at the source. 

13 ‘‘(2) In addition to allowances allocated pursu14 ant to paragraph (1) and section 412(a) as basic 

15 Phase II allowance allocations, beginning January 1, 

16 2000, and for each calendar year thereafter until 

17 and including 2009, the Administrator shall allocate 

18 annually for each unit subject to the emissions limi19 tation requirements of paragraph (1) allowances 

20 from the reserve created pursuant to subsection 

21 (a)(2) in an amount equal to the unit’s baseline mul22 tiplied by 0.050 lbs/mmBtu, divided by 2,000. 

23 ‘‘(3) In addition to allowances allocated pursu24 ant to paragraph (1) and section 412(a), beginning 

25 January 1, 2010, the Administrator shall allocate 
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1 annually for each unit subject to the emissions limi2 tation requirements of paragraph (1) allowances in 

3 an amount equal to the unit’s baseline multiplied by 

4 0.050 lbs/mmBtu, divided by 2,000. 

5 ‘‘(i) UNITS IN HIGH GROWTH STATES.—

6 ‘‘(1) In addition to allowances allocated pursu7 ant to this section and section 412(a) as basic Phase 

8 II allowance allocations, beginning January 1, 2000, 

9 the Administrator shall allocate annually allowances 

10 for each unit, subject to an emissions limitation re11 quirement under this section, and located in a State 

12 that—

13 ‘‘(A) has experienced a growth in popu14 lation in excess of 25 percent between 1980 and 

15 1988 according to State Population and House16 hold Estimates, With Age, Sex, and Compo17 nents of Change: 1981–1988 allocated by the 

18 United States Department of Commerce, and 

19 ‘‘(B) had an installed electrical generating 

20 capacity of more than 30,000,000 kw in 1988, 

21 in an amount equal to the difference between 

22 (A) the number of allowances that would be al23 located for the unit pursuant to the emissions 

24 limitation requirements of this section applica25 ble to the unit adjusted to reflect the unit’s an-
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•HR 999 IH 

1 nual average fuel consumption on a Btu basis 

2 of any three consecutive calendar years between 

3 1980 and 1989 (inclusive) as elected by the 

4 owner or operator and (B) the number of allow5 ances allocated for the unit pursuant to the 

6 emissions limitation requirements of this sec7 tion: Provided, That the number of allowances 

8 allocated pursuant to this subsection shall not 

9 exceed an annual total of 40,000. If necessary 

10 to meeting the 40,000 allowance restriction im11 posed under this subsection the Administrator 

12 shall reduce, pro rata, the additional annual al13 lowances allocated to each unit under this sub14 section. 

15 ‘‘(2) Beginning January 1, 2000, in addition to 

16 allowances allocated pursuant to this section and 

17 section 403(a)(1) as basic Phase II allowance alloca18 tions, the Administrator shall allocate annually for 

19 each unit subject to the emissions limitation require20 ments of subsection (b)(1)—

21 ‘‘(A) the lesser of whose actual or allow22 able 1980 emissions rate has declined by 50 

23 percent or more as of November 15, 1990, 

24 ‘‘(B) whose actual emissions rate is less 

25 than 1.2 lbs/mmBtu as of January 1, 2000, 
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1 ‘‘(C) which commenced operation after 

2 January 1, 1970, 

3 ‘‘(D) which is owned by a utility company 

4 whose combined commercial and industrial kilo5 watt-hour sales have increased by more than 20 

6 percent between calendar year 1980 and No7 vember 15, 1990, and 

8 ‘‘(E) whose company-wide fossil-fuel sulfur 

9 dioxide emissions rate has declined 40 percent 

10 or more from 1980 to 1988, allowances in an 

11 amount equal to the difference between—

12 ‘‘(i) the number of allowances that 

13 would be allocated for the unit pursuant to 

14 the emissions limitation requirements of 

15 subsection (b)(1) adjusted to reflect the 

16 unit’s annual average fuel consumption on 

17 a Btu basis for any three consecutive years 

18 between 1980 and 1989 (inclusive) as 

19 elected by the owner or operator, and 

20 ‘‘(ii) the number of allowances allo21 cated for the unit pursuant to the emis22 sions limitation requirements of subsection 

23 (b)(1): Provided, That the number of al24 lowances allocated pursuant to this para25 graph shall not exceed an annual total of 
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•HR 999 IH 

1 5,000. If necessary to meeting the 5,000 

2 allowance restriction imposed in the last 

3 clause of the preceding sentence the Ad4 ministrator shall reduce, pro rata, the ad5 ditional allowances allocated to each unit 

6 pursuant to this paragraph. 

7 ‘‘(j) CERTAIN MUNICIPALLY OWNED POWER

8 PLANTS.—Beginning January 1, 2000, in addition to al9 lowances allocated pursuant to this section and section 

10 412(a) as basic Phase II allowance allocations, the Admin11 istrator shall allocate annually for each existing munici12 pally owned oil and gas-fired utility unit with nameplate 

13 capacity equal to, or less than, 40 MWe, the lesser of 

14 whose actual or allowable 1985 sulfur dioxide emission 

15 rate is less than 1.20 lbs/mmBtu, allowances in an amount 

16 equal to the product of the unit’s annual fuel consumption 

17 on a Btu basis at a 60 percent capacity factor multiplied 

18 by the lesser of its allowable 1985 emission rate or its 

19 actual 1985 emission rate, divided by 2,000. 

20 ‘‘SEC. 415. ALLOWANCES FOR STATES WITH EMISSIONS 

21 RATES AT OR BELOW 0.80 LBS/MMBTU. 

22 ‘‘(a) ELECTION OF GOVERNOR.—In addition to basic 

23 Phase II allowance allocations, upon the election of the 

24 Governor of any State, with a 1985 statewide annual sul25 fur dioxide emissions rate equal to or less than, 0.80 lbs/
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1 mmBtu, averaged over all fossil fuel-fired utility steam 

2 generating units, beginning January 1, 2000, and for each 

3 calendar year thereafter until and including 2009, the Ad4 ministrator shall allocate, in lieu of other Phase II bonus 

5 allowance allocations, allowances from the reserve created 

6 pursuant to section 414(a)(2) to all such units in the State 

7 in an amount equal to 125,000 multiplied by the unit’s 

8 pro rata share of electricity generated in calendar year 

9 1985 at fossil fuel-fired utility steam units in all States 

10 eligible for the election. 

11 ‘‘(b) NOTIFICATION OF ADMINISTRATOR.—Pursuant 

12 to section 412(a), each Governor of a State eligible to 

13 make an election under paragraph (a) shall notify the Ad14 ministrator of such election. In the event that the Gov15 ernor of any such State fails to notify the Administrator 

16 of the Governor’s elections, the Administrator shall allo17 cate allowances pursuant to section 414. 

18 ‘‘(c) ALLOWANCES AFTER JANUARY 1, 2010.—After 

19 January 1, 2010, the Administrator shall allocate allow20 ances to units subject to the provisions of this section pur21 suant to section 414. 

22 ‘‘SEC. 416. ELECTION FOR ADDITIONAL SOURCES. 

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

24 unit that is not, nor will become, an affected unit under 

25 section 412(b), 413, or 414, that emits sulfur dioxide, may 
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1 elect to designate that unit or source to become an af2 fected unit and to receive allowances under this subpart. 

3 An election shall be submitted to the Administrator for 

4 approval, along with a permit application and proposed 

5 compliance plan in accordance with section 404. The Ad6 ministrator shall approve a designation that meets the re7 quirements of this section, and such designated unit shall 

8 be allocated allowances, and be an affected unit for pur9 poses of this subpart. 

10 ‘‘(b) ESTABLISHMENT OF BASELINE.—The baseline 

11 for a unit designated under this section shall be estab12 lished by the Administrator by regulation, based on fuel 

13 consumption and operating data for the unit for calendar 

14 years 1985, 1986, and 1987, or if such data is not avail15 able, the Administrator may prescribe a baseline based on 

16 alternative representative data. 

17 ‘‘(c) EMISSION LIMITATIONS.—

18 ‘‘(1) For a unit for which an election, along 

19 with a permit application and compliance plan, is 

20 submitted to the Administrator under paragraph (a) 

21 before January 1, 2002, annual emissions limita22 tions for sulfur dioxide shall be equal to the product 

23 of the baseline multiplied by the lesser of the unit’s 

24 1985 actual or allowable emission rate in lbs/

25 mmBtu, or if the unit did not operate in 1985, by 
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1 the lesser of the unit’s actual or allowable emission 

2 rate for a calendar year after 1985 (as determined 

3 by the Administrator), divided by 2,000. 

4 ‘‘(2) For a unit for which an election, along 

5 with a permit application and compliance plan, is 

6 submitted to the Administrator under paragraph (a) 

7 on or after January 1, 2002, annual emissions limi8 tations for sulfur dioxide shall be equal to the prod9 uct of the baseline multiplied by the lesser of the 

10 unit’s 1985 actual or allowable emission rate in lbs/

11 mmBtu, or, if the unit did not operate in 1985, by 

12 the lesser of the unit’s actual or allowable emission 

13 rate for a calendar year after 1985 (as determined 

14 by the Administrator), divided by 4,000. 

15 ‘‘(d) ALLOWANCES AND PERMITS.—The Adminis16 trator shall issue allowances to an affected unit under this 

17 section in an amount equal to the emissions limitation cal18 culated under subsection (c), in accordance with section 

19 412. Such allowance may be used in accordance with, and 

20 shall be subject to, the provisions of section 412. Affected 

21 sources under this section shall be subject to the require22 ments of sections 404, 405, 406, and 412. 

23 ‘‘(e) LIMITATION.—Any unit designated under this 

24 section shall not transfer or bank allowances produced as 

25 a result of reduced utilization or shutdown, except that, 
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1 such allowances may be transferred or carried forward for 

2 use in subsequent years to the extent that the reduced 

3 utilization or shutdown results from the replacement of 

4 thermal energy from the unit designated under this sec5 tion, with thermal energy generated by any other unit or 

6 units subject to the requirements of this subpart, and the 

7 designated unit’s allowances are transferred or carried for8 ward for use at such other replacement unit or units. In 

9 no case may the Administrator allocate to a source des10 ignated under this section allowances in an amount great11 er than the emissions resulting from operation of the 

12 source in full compliance with the requirements of this 

13 Act. No such allowances shall authorize operation of a unit 

14 in violation of any other requirements of this Act. 

15 ‘‘(f) IMPLEMENTATION.—The Administrator shall 

16 implement this section under 40 CFR part 74 (2002), 

17 amended as appropriate by the Administrator.

18 ‘‘SEC. 417. AUCTIONS, RESERVE. 

19 ‘‘(a) SPECIAL RESERVE OF ALLOWANCES.—For pur20 poses of establishing the Special Allowance Reserve, the 

21 Administrator shall withhold—

22 ‘‘(1) 2.8 percent of the allocation of allowances 

23 for each year from 1995 through 1999 inclusive; and 
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1 ‘‘(2) 2.8 percent of the basic Phase II allowance 

2 allocation of allowances for each year beginning in 

3 the year 2000—

4 which would (but for this subsection) be issued for each 

5 affected unit at an affected source. The Administrator 

6 shall record such withholding for purposes of transferring 

7 the proceeds of the allowance sales under this subsection. 

8 The allowances so withheld shall be deposited in the Re9 serve under this section. 

10 ‘‘(b) AUCTION SALES.—

11 ‘‘(1) SUBACCOUNT FOR AUCTIONS.—The Ad12 ministrator shall establish an Auction Subaccount in 

13 the Special Reserve established under this section. 

14 The Auction Subaccount shall contain allowances to 

15 be sold at auction under this section in the amount 

16 of 150,000 tons per year for each year from 1995 

17 through 1999, inclusive and 250,000 tons per year 

18 for each year from 2000 through 2009, inclusive. 

19 ‘‘(2) ANNUAL AUCTIONS.—Commencing in 

20 1993 and in each year thereafter until 2010, the Ad21 ministrator shall conduct auctions at which the al22 lowances referred to in paragraph (1) shall be of23 fered for sale in accordance with regulations promul24 gated by the Administrator. The allowances referred 

25 to in paragraph (1) shall be offered for sale at auc-
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1 tion in the amounts specified in table C. The auction 

2 shall be open to any person. A person wishing to bid 

3 for such allowances shall submit (by a date set by 

4 the Administrator) to the Administrator (on a sealed 

5 bid schedule provided by the Administrator) offers to 

6 purchase specified numbers of allowance sat speci7 fied prices. Such regulations shall specify that the 

8 auctioned allowances shall be allocated and sold on 

9 the basis of bid price, starting with the highest10 priced bid and continuing until all allowances for 

11 sale at such auction have been allocated. The regula12 tions shall not permit that a minimum price be set 

13 for the purchase of withheld allowances. Allowances 

14 purchased at the auction may be used for any pur15 pose and at any time after the auction, subject to 

16 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
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‘‘TABLE C.—NUMBER OF ALLOWANCES AVAILABLE FOR 

AUCTION—Continued

Year of sale Spot auction

(same year) 

Advance

auction 

2004–2009 ...................................................... 125,000 0

Allowances sold in the spot sale in any year are allowances which may be used 

only in that year (unless banked for use in a later year), except as otherwise 

noted. Allowances sold in the advance auction in any year are allowances which 

may only be used in the 7th year after the year in which they are first offered 

for sale (unless banked for use in a later year). 

*Available for use only in 1995 (unless banked for use in a later year). 

1 ‘‘(3) PROCEEDS.—

2 ‘‘(A) TRANSFER.—Notwithstanding section 

3 3302 of title 31 of the United States Code or 

4 any other provision of law, within 90 days of re5 ceipt, the Administrator shall transfer the pro6 ceeds from the auction under this section, on a 

7 pro rata basis, to the owners or operators of the 

8 affected units at an affected source from whom 

9 allowances were withheld under subsection (b). 

10 No funds transferred from a purchaser to a 

11 seller of allowances under this paragraph shall 

12 be held by any officer or employee of the United 

13 States or treated for any purpose as revenue to 

14 the United States or the Administrator. 

15 ‘‘(B) RETURN.—At the end of each year, 

16 any allowances offered for sale but not sold at 

17 the auction shall be returned without charge, on 

18 a pro rata basis, to the owner or operator of the 

19 affected units from whose allocation the allow-
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1 ances were withheld. With 170 days after the 

2 date of enactment of the Clear Skies Act of 

3 2003, any allowance withheld under paragraph 

4 (a)(2) but not offered for sale at an auction 

5 shall be returned without charge, on a pro rata 

6 basis, to the owner or operator of the affected 

7 units from whose allocation the allowances were 

8 withheld. 

9 ‘‘(4) RECORDING BY EPA.—The Administrator 

10 shall record and publicly report the nature, prices 

11 and results of each auction under this subsection, in12 cluding the prices of successful bids, and shall 

13 record the transfers of allowances as a result of each 

14 auction in accordance with the requirements of this 

15 section. The transfer of allowances at such auction 

16 shall be recorded in accordance with the regulations 

17 promulgated by the Administrator under this sub18 part. 

19 ‘‘(c) CHANGES IN AUCTIONS AND WITHHOLDING.—

20 Pursuant to rulemaking after public notice and comment 

21 the Administrator may at any time after the year 1998 

22 (in the case of advance auctions) and 2005 (in the case 

23 of spot auctions) decrease the number of allowances with24 held and sold under this section. 
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1 ‘‘(d) TERMINATION OF AUCTIONS.—Not later than 

2 the commencement date of the sulfur dioxide allowance re3 quirement under section 422, the Administrator shall ter4 minate the withholding of allowances and the auction sales 

5 under this section. Pursuant to regulations under this sec6 tion, the Administrator may by delegation or contract pro7 vide for the conduct of sales or auctions under the Admin8 istrator’s supervision by other departments or agencies of 

9 the United States Government or by nongovernmental 

10 agencies, groups, or organizations. 

11 ‘‘(e) The Administrator shall implement this section 

12 under 40 CFR part 73 (2002), amended as appropriate 

13 by the Administrator.

14 ‘‘SEC. 418. INDUSTRIAL SO2 EMISSIONS. 

15 ‘‘(a) REPORT.—Not later than January 1, 1995 and 

16 every 5 years thereafter, the Administrator shall transmit 

17 to the Congress a report containing an inventory of na18 tional annual sulfur dioxide emissions from industrial 

19 sources (as defined in section 411(11)), including units 

20 subject to section 414(g)(2), for all years for which data 

21 are available, as well as the likely trend in such emission 

22 over the following twenty-year period. The reports shall 

23 also contain estimates of the actual emission reduction in 

24 each year resulting from promulgation of the diesel fuel 

25 desulfurization regulations under section 214. 
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1 ‘‘(b) 5.60 MILLION TON CAP.—Whenever the inven2 tory required by this section indicates that sulfur dioxide 

3 emissions from industrial sources, including units subject 

4 to section 414(g)(2), and may reasonably be expected to 

5 reach levels greater than 5.60 million tons per year, the 

6 Administrator shall take such actions under the Act as 

7 may be appropriate to ensure that such emissions do not 

8 exceed 5.60 million tons per year. Such actions may in9 clude the promulgation of new and revised standards of 

10 performance for new sources, including units subject to 

11 section 414(g)(2), under section 111(b), as well as pro12 mulgation of standards of performance for existing 

13 sources, including units subject to section 414(g)(2), 

14 under authority of this section. For an existing source reg15 ulated under this section, ‘standard of performance’ 

16 means a standard which the Administrator determines is 

17 applicable to that source and which reflects the degree of 

18 emission reduction achievable through the application of 

19 the best system of continuous emission reduction which 

20 (taking into consideration the cost of achieving such emis21 sion reduction, and any nonair quality health and environ22 mental impact and energy requirements) the Adminis23 trator determines has been adequately demonstrated for 

24 that category of sources. 
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1 ‘‘(c) ELECTION.—Regulations promulgated under 

2 section 414(b) shall not prohibit a source from electing 

3 to become an affected unit under section 417. 

4 ‘‘SEC. 419. TERMINATION. 

5 ‘‘Starting January 1, 2010, the owners or operators 

6 of affected units and affected facilities under sections 

7 412(b) and (c) and 416 and shall no longer be subject 

8 to the requirements of sections 412 through 417. 

9 ‘‘Subpart 2—Clear Skies Sulfur Dioxide Allowance 

10 Program 

11 ‘‘SEC. 421. DEFINITIONS. 

12 ‘‘For purposes of this subpart—

13 ‘‘(1) The term ‘affected EGU’ means—

14 ‘‘(A) for a unit serving a generator before 

15 the date of enactment of the Clear Skies Act of 

16 2003, a unit in a State serving a generator with 

17 a nameplate capacity of greater than 25 

18 megawatts that produced or produces electricity 

19 for sale during 2002 or any year thereafter, ex20 cept for a cogeneration unit that produced or 

21 produces electricity for sale equal to or less 

22 than one-third of the potential electrical output 

23 of the generator that it served or serves during 

24 2002 and each year thereafter; and 
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1 ‘‘(B) for a unit commencing service of a 

2 generator on or after the date of enactment of 

3 the Clear Skies Act of 2003, a unit in a State 

4 serving a generator that produces electricity for 

5 sale during any year starting with the year the 

6 unit commences service of a generator, except 

7 for a gas-fired unit serving one or more genera8 tors with total nameplate capacity of 25 

9 megawatts or less, or a cogeneration unit that 

10 produces electricity for sale equal to or less 

11 than one-third of the potential electrical output 

12 of the generator that it serves, during each year 

13 starting with the year the unit commences serv14 ices of a generator. 

15 Notwithstanding paragraphs (A) and (B), the term 

16 ‘affected EGU’ does not include a solid waste incin17 eration unit subject to section 129 or a unit for the 

18 treatment, storage, or disposal of hazardous waste 

19 subject to section 3005 of the Solid Waste Disposal 

20 Act. 

21 ‘‘(2) The term ‘coal-fired’ with regard to a unit 

22 means, for purposes of section 424, combusting coal 

23 or any coal-derived fuel alone or in combination with 

24 any amount of any other fuel in any year during 

25 1998 through 2002 or, for a unit that commenced 
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1 operation during 2001–2004, a unit designed to 

2 combust coal or any coal-derived fuel alone or in 

3 combination with any other fuel. 

4 ‘‘(3) The term ‘Eastern bituminous’ means bi5 tuminous that is from a mine located in a State east 

6 of the Mississippi River. 

7 ‘‘(4) The term ‘general account’ means an ac8 count in the Allowance Tracking System under sec9 tion 403(c) established by the Administrator for any 

10 person under 40 CFR § 73.31(c) (2002), amended 

11 as appropriate by the Administrator. 

12 ‘‘(5) The term ‘oil-fired’ with regard to a unit 

13 means, for purposes of section 424, combusting fuel 

14 oil for more than 10 percent of the unit’s total heat 

15 input, and combusting no coal or coal-derived fuel, 

16 in any year during 1998 through 2002 or, for a unit 

17 that commenced operation during 2001–2004, a unit 

18 designed to combust oil for more than 10 percent of 

19 the unit’s total heat input and not to combust any 

20 coal or coal-derived fuel coal. 

21 ‘‘(6) The term ‘unit account’ means an account 

22 in the Allowance Tracking System under section 

23 403(c) established by the Administrator for any unit 

24 under 40 CFR § 73.31(a) and (b) (2002), amended 

25 as appropriate by the Administrator. 
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1 ‘‘SEC. 422. APPLICABILITY. 

2 ‘‘(a) PROHIBITION.—Starting January 1, 2010, it 

3 shall be unlawful for the affected EGUs at a facility to 

4 emit a total amount of sulfur dioxide during the year in 

5 excess of the number of sulfur dioxide allowances held for 

6 such facility for that year by the owner or operator of the 

7 facility. 

8 ‘‘(b) ALLOWANCES HELD.—Only sulfur dioxide al9 lowances under section 423 shall be held in order to meet 

10 the requirements of subsection (a), except as provided 

11 under section 425. 

12 ‘‘SEC. 423. LIMITATIONS ON TOTAL EMISSIONS. 

13 ‘‘For affected EGUs for 2010 and each year there14 after, the Administrator shall allocate sulfur dioxide allow15 ances under section 424, and shall conduct auctions of sul16 fur dioxide allowances under section 409, in the amounts 

17 in Table A.

‘‘TABLE A.—TOTAL SO2 ALLOWANCES ALLOCATED OR 

AUCTIONED FOR EGUS 

Year 

SO2 allowances

allocated 

SO2 allowances

auctioned 

2010 ................................................................ 4,371,666 45,000

2011 ................................................................ 4,326,667 90,000

2012 ................................................................ 4,281,667 135,000

2013 ................................................................ 4,320,000 180,000

2014 ................................................................ 4,275,000 225,000

2015 ................................................................ 4,230,000 270,000

2016 ................................................................ 4,185,000 315,000

2017 ................................................................ 4,140,000 360,000

2018 ................................................................ 2,730,000 270,000

2019 ................................................................ 2,700,000 300,000

2020 ................................................................ 2,670,000 330,000

2021 ................................................................ 2,640,000 360,000
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‘‘TABLE A.—TOTAL SO2 ALLOWANCES ALLOCATED OR 

AUCTIONED FOR EGUS—Continued

Year 

SO2 allowances

allocated 

SO2 allowances

auctioned 

2022 ................................................................ 2,610,000 390,000

2023 ................................................................ 2,580,000 420,000

2024 ................................................................ 2,550,000 450,000

2025 ................................................................ 2,520,000 480,000

2026 ................................................................ 2,490,000 510,000

2027 ................................................................ 2,460,000 540,000

2028 ................................................................ 2,430,000 570,000

2029 ................................................................ 2,400,000 600,000

2030 ................................................................ 2,325,000 675,000

2031 ................................................................ 2,250,000 750,000

2032 ................................................................ 2,175,000 825,000

2033 ................................................................ 2,100,000 900,000

2034 ................................................................ 2,025,000 975,000

2035 ................................................................ 1,950,000 1,050,000

2036 ................................................................ 1,875,000 1,125,000

2037 ................................................................ 1,800,000 1,200,000

2038 ................................................................ 1,725,000 1,275,000

2039 ................................................................ 1,650,000 1,350,000

2040 ................................................................ 1,575,000 1,425,000

2041 ................................................................ 1,500,000 1,500,000

2042 ................................................................ 1,425,000 1,575,000

2043 ................................................................ 1,350,000 1,650,000

2044 ................................................................ 1,275,000 1,725,000

2045 ................................................................ 1,200,000 1,800,000

2046 ................................................................ 1,125,000 1,875,000

2047 ................................................................ 1,050,000 1,950,000

2048 ................................................................ 975,000 2,025,000

2049 ................................................................ 900,000 2,100,000

2050 ................................................................ 825,000 2,175,000

2051 ................................................................ 750,000 2,250,000

2052 ................................................................ 675,000 2,325,000

2053 ................................................................ 600,000 2,400,000

2054 ................................................................ 525,000 2,475,000

2055 ................................................................ 450,000 2,550,000

2056 ................................................................ 375,000 2,625,000

2057 ................................................................ 300,000 2,700,000

2058 ................................................................ 225,000 2,775,000

2059 ................................................................ 150,000 2,850,000

2060 ................................................................ 75,000 2,925,000

2061 ................................................................ 0 3,000,000

1 ‘‘SEC. 424. EGU ALLOCATIONS. 

2 ‘‘(a) IN GENERAL.—Not later than 24 months before 

3 the commencement date of the sulfur dioxide allowance re-
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1 quirement of section 422, the Administrator shall promul2 gate regulations determining allocations of sulfur dioxide 

3 allowances for affected EGUs for each year during 2010 

4 through 2060. The regulations shall provide that: 

5 ‘‘(1)(A) 95 percent of the total amount of sul6 fur dioxide allowances allocated each year under sec7 tion 423 shall be allocated based on the sulfur diox8 ide allowances that were allocated under subpart 1 

9 for 2010 or thereafter and are held in unit accounts 

10 and general accounts in the Allowance Tracking Sys11 tem under section 403(c). 

12 ‘‘(B) The Administrator shall allocate sulfur di13 oxide allowances to each facility’s account and each 

14 general account in the Allowance Tracking System 

15 under section 403(c) as follows: 

16 ‘‘(i) For each unit account and each gen17 eral account in the Allowance Tracking System, 

18 the Administrator shall determine the total 

19 amount of sulfur dioxide allowances allocated 

20 under subpart 1 for 2010 and thereafter that 

21 are recorded, as of 12:00 noon, Eastern Stand22 ard time, on the date 180 days after enactment 

23 of the Clear Skies Act of 2003. The Adminis24 trator shall determine this amount in accord25 ance with 40 CFR part 73 (2002), amended as 
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1 appropriate by the Administrator, except that 

2 the Administrator shall apply a discount rate of 

3 7 percent for each year after 2010 to the 

4 amounts of sulfur dioxide allowances allocated 

5 for 2011 or later. 

6 ‘‘(ii) For each unit account and each gen7 eral account in the Allowance Tracking System, 

8 the Administrator shall determine an amount of 

9 sulfur dioxide allowances equal to the allocation 

10 amount under subparagraph (A) multiplied by 

11 the ratio of the amount of sulfur dioxide allow12 ances determined to be recorded in that account 

13 under clause (i) to the total amount of sulfur 

14 dioxide allowances determined to be recorded in 

15 all unit accounts and general accounts in the 

16 Allowance Tracking System under clause (i). 

17 ‘‘(iii) The Administrator shall allocate to 

18 each facility’s account in the Allowance Track19 ing System an amount of sulfur dioxide allow20 ances equal to the total amount of sulfur diox21 ide allowances determined under clause (ii) for 

22 the unit accounts of the units at the facility and 

23 shall allocate to each general account in the Al24 lowance Tracking System the amount of sulfur 
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1 dioxide allowances determined under clause (ii) 

2 for that general account. 

‘‘(2)(A) 31 3 ⁄2 percent of the total amount of sul4 fur dioxide allowances allocated each year under sec5 tion 423 shall be allocated for units at a facility that 

6 are affected EGUs as of December 31, 2004, that 

7 commenced operation before January 1, 2001, and 

8 that are not allocated any sulfur dioxide allowances 

9 under subpart 1. 

10 ‘‘(B) The Administrator shall allocate each year 

11 for the units under subparagraph (A) an amount of 

12 sulfur dioxide allowances determined by: 

13 ‘‘(i) For such units at the facility that are 

14 coal-fired, multiplying 0.40 lb/mmBtu by the 

15 total baseline heat input of such units and con16 verting to tons. 

17 ‘‘(ii) For such units at the facility that are 

18 oil-fired, multiplying 0.20 lb/mmBtu by the 

19 total baseline heat input of such units and con20 verting to tons. 

21 ‘‘(iii) For all such other units at the facil22 ity that are not covered by clause (i) or (ii), 

23 multiplying 0.05 lb/mmBtu by the total baseline 

24 heat input of such units and converting to tons. 
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1 ‘‘(iv) If the total of the amounts for all fa2 cilities under clauses (i), (ii), and (iii) exceeds 

3 the allocation amount under subparagraph (A), 

4 multiplying the allocation amount under sub5 paragraph (A) by the ratio of the total of the 

6 amounts for the facility under clauses (i), (ii), 

7 and (iii) to the total of the amounts for all fa8 cilities under clause (i), (ii), and (iii). 

9 ‘‘(v) Allocating to each facility the lesser of 

10 the total of the amounts for the facility under 

11 clauses (i), (ii), and (iii) or, if the total of the 

12 amounts for all facilities under clauses (i), (ii), 

13 and (iii) exceeds the allocation amount under 

14 subparagraph (A), the amount under clause 

15 (iv). The Administrator shall add to the amount 

16 of sulfur dioxide allowances allocated under 

17 paragraph (3) any unallocated allowances under 

18 this paragraph. 

‘‘(3)(A) 11 19 ⁄2 percent of the total amount of sul20 fur dioxide allowances allocated each year under sec21 tion 423 shall be allocated for units that are affected 

22 EGUs as of December 31, 2004, that commence op23 eration on or after January 1, 2001 and before Jan24 uary 1, 2005, and that are not allocated any sulfur 

25 dioxide allowances under subpart 1. 
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1 ‘‘(B) The Administrator shall allocate each year 

2 for the units under subparagraph (A) an amount of 

3 sulfur dioxide allowances determined by: 

4 ‘‘(i) For such units at the facility that are 

5 coal-fired or oil-fired, multiplying 0.19 lb/

6 mmBtu by the total baseline heat input of such 

7 units and converting to tons. 

8 ‘‘(ii) For all such other units at the facility 

9 that are not covered by clause (i), multiplying 

10 0.02 lb/mmBtu by the total baseline heat input 

11 of such units and converting to tons. 

12 ‘‘(iii) If the total of the amounts for all fa13 cilities under clauses (i) and (ii) exceeds the al14 location amount under subparagraph (A), mul15 tiplying the allocation amount under subpara16 graph (A) by the ratio of the total of the 

17 amounts for the facility under clauses (i) and 

18 (ii) to the total of the amounts for all facilities 

19 under clauses (i) and (ii). 

20 ‘‘(iv) Allocating to each facility the lesser 

21 of the total of the amounts for the facility 

22 under clauses (i) and (ii) or, if the total of the 

23 amounts for all facilities under clauses (i) and 

24 (ii) exceeds the allocation amount under sub25 paragraph (A), the amount under clause (iv). 
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1 The Administrator shall allocate to the facilities 

2 under paragraphs (1) and (2) on a pro rata 

3 basis (based on the allocations under those 

4 paragraphs) any unallocated allowances under 

5 this paragraph. 

6 ‘‘(b) FAILURE TO PROMULGATE.—(1) If, by the date 

7 18 months before January 1 of each year 2010 through 

8 2060, the Administrator has signed proposed regulations, 

9 but has not promulgated final regulations, determining al10 locations under subsection (a), the Administrator shall al11 locate, for such year, for each facility where an affected 

12 EGU is located, and for each general account, the amount 

13 of sulfur dioxide allowances specified for that facility and 

14 the general account in such proposed regulations. 

15 ‘‘(2) If, by the date 18 months before January 1 of 

16 each year 2010 through 2060, the Administrator has not 

17 signed proposed regulations determining allocations under 

18 subsection (a), the Administrator shall—

19 ‘‘(A) determine, for such year, for each unit 

20 with coal as its primary or secondary fuel or residual 

21 oil as its primary fuel listed in the Administrator’s 

22 Emissions Scorecard 2001, Appendix B, Table B1 

23 an amount of sulfur dioxide allowances by multi24 plying 95 percent of the allocation amount under 

25 section 423 by the ratio of such unit’s heat input in 
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1 the Emissions Scorecard 2001, Appendix B, Table 

2 B1 to the total of the heat input in the Emissions 

3 Scorecard 2001, Appendix B, Table B1 for all units 

4 with coal as their primary or secondary fuel or resid5 ual oil as their primary fuel; 

6 ‘‘(B) allocate, for such year, for each facility 

7 where a unit under subparagraph (A) is located the 

8 total of the amounts of sulfur dioxide allowances for 

9 the units at such facility determined under subpara10 graph (A); and 

11 ‘‘(C) auction an amount of sulfur dioxide allow12 ances equal to 5 percent of the allocation amount 

13 under section 423 and conduct the auction on the 

14 first business day in October following the respective 

15 promulgation deadline under paragraph (1) and in 

16 accordance with section 409. 

17 ‘‘SEC. 425. DISPOSITION OF SULFUR DIOXIDE ALLOWANCES 

18 ALLOCATED UNDER SUBPART 1. 

19 ‘‘(a) REMOVAL FROM ACCOUNTS.—After allocating 

20 allowances under section 424(a)(1), the Administrator 

21 shall remove from the unit accounts and general accounts 

22 in the Allowance Tracking System under section 403(c) 

23 and from the Special Allowances Reserve under section 

24 418 all sulfur dioxide allowances allocated or deposited 

25 under subpart 1 for 2010 or later. 
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1 ‘‘(b) REGULATIONS.—The Administrator shall pro2 mulgate regulations as necessary to assure that the re3 quirement to hold allowances under section 422 may be 

4 met using sulfur dioxide allowances allocated under sub5 part 1 for 1995 through 2009. 

6 ‘‘SEC. 426. INCENTIVES FOR SULFUR DIOXIDE EMISSION 

7 CONTROL TECHNOLOGY. 

8 ‘‘(a) RESERVE.—The Administrator shall establish a 

9 reserve of 250,000 sulfur dioxide allowances comprising 

10 83,334 sulfur dioxide allowances for 2010, 83,333 sulfur 

11 dioxide allowances for 2011, and 83,333 sulfur dioxide al12 lowances for 2012. 

13 ‘‘(b) APPLICATION.—Not later than 18 months after 

14 the enactment of the Clear Skies Act of 2003, an owner 

15 or operator of an affected EGU that commenced operation 

16 before 2001 and that during 2001 combusted Eastern bi17 tuminous may submit an application to the Administrator 

18 for sulfur dioxide allowances from the reserve under sub19 section (a). The application shall include each of the fol20 lowing: 

21 ‘‘(1) A statement that the owner or operator 

22 will install and commence operation of specified sul23 fur dioxide control technology at the unit within 24 

24 months after approval of the application under sub25 section (c) if the unit is allocated the sulfur dioxide 
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1 allowances requested under paragraph (4). The 

2 owner or operator shall provide description of the 

3 control technology. 

4 ‘‘(2) A statement that, during the period start5 ing with the commencement of operation of sulfur 

6 dioxide technology under paragraph (1) through 

7 2009, the unit will combust Eastern bituminous at 

8 a percentage of the unit’s total heat input equal to 

9 or exceeding the percentage of total heat input com10 busted by the unit in 2001 if the unit is allocated 

11 the sulfur dioxide allowances requested under para12 graph (4). 

13 ‘‘(3) A demonstration that the unit will achieve, 

14 while combusting fuel in accordance with paragraph 

15 (2) and operating the sulfur dioxide control tech16 nology specified in paragraph (1), a specified ton17 nage of sulfur dioxide emission reductions during the 

18 period starting with the commencement of operation 

19 of sulfur dioxide control technology under subpara20 graph (1) through 2009. The tonnage of emission 

21 reductions shall be the difference between emissions 

22 monitored at a location at the unit upstream of the 

23 control technology described in paragraph (1) and 

24 emissions monitored at a location at the unit down-
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1 stream of such control technology, while the unit is 

2 combusting fuel in accordance with paragraph (2).

3 ‘‘(4) A request that EPA allocate for the unit 

4 a specified number of sulfur dioxide allowances from 

5 the reserve under subsection (a) for the period start6 ing with the commencement of operation of the sul7 fur dioxide technology under paragraph (1) through 

8 2009. 

9 ‘‘(5) A statement of the ratio of the number of 

10 sulfur dioxide allowances requested under paragraph 

11 (4) to the tonnage of sulfur dioxide emissions reduc12 tions under paragraph (3). 

13 ‘‘(c) APPROVAL OR DISAPPROVAL.—By order subject 

14 to notice and opportunity for comment, the Administrator 

15 shall—

16 ‘‘(1) determine whether each application meets 

17 the requirements of subsection (b); 

18 ‘‘(2) list the applications meeting the require19 ments of subsection (b) and their respective allow20 ance-to-emission-reduction ratios under paragraph 

21 (b)(5) in order, from lowest to highest, of such ra22 tios; 

23 ‘‘(3) for each application listed under paragraph 

24 (2), multiply the amount of sulfur dioxide emission 

25 reductions requested by each allowance-to-emission-
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1 reduction ratio on the list that equals or is less than 

2 the ratio for the application; 

3 ‘‘(4) sum, for each allowance-to-emission-reduc4 tion ratio in the list under paragraph (2), the 

5 amounts of sulfur dioxide allowances determined 

6 under paragraph (3); 

7 ‘‘(5) based on the calculations in paragraph (4), 

8 determine which allowance-to-emission-reduction 

9 ratio on the list under paragraph (2) results in the 

10 highest total amount of allowances that does not ex11 ceed 250,000 allowances; and 

12 ‘‘(6) approve each application listed under para13 graph (2) with a ratio equal to or less than the al14 lowance-to-emission-reduction ratio determined 

15 under paragraph (5) and disapprove all the other 

16 applications. 

17 ‘‘(d) MONITORING.—An owner or operator whose ap18 plication is approved under subsection (c) shall install, and 

19 quality assure data from, a CEMS for sulfur dioxide lo20 cated upstream of the sulfur dioxide control technology 

21 under paragraph (b)(1) at the unit and a CEMS for sulfur 

22 dioxide located downstream of such control technology at 

23 the unit during the period starting with the commence24 ment of operation of such control technology through 

25 2009. The installation of the CEMS and the quality assur-
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1 ance of data shall be in accordance with subparagraph 

2 (a)(2)(B) and subsections (c) through (e) of section 405, 

3 except that, where two or more units utilize a single stock, 

4 separate monitoring shall be required for each unit. 

5 ‘‘(e) ALLOCATIONS.—Not later than 6 months after 

6 the commencement date of the sulfur dioxide allowance 

7 requirement of section 422, for the units for which appli8 cations are approved under subsection (c), the Adminis9 trator shall allocate sulfur dioxide allowances as follows: 

10 ‘‘(1) For each unit, the Administrator shall 

11 multiply the allowance-to-emission-reduction ratio of 

12 the last application that EPA approved under sub13 section (c) by the lesser of—

14 ‘‘(A) the total tonnage of sulfur dioxide 

15 emissions reductions achieved by the unit, dur16 ing the period starting with the commencement 

17 of operation of the sulfur dioxide control tech18 nology under subparagraph (b)(1) through 

19 2009, through use of such control technology; 

20 or 

21 ‘‘(B) the tonnage of sulfur dioxide emission 

22 reductions under paragraph (b)(3). 

23 ‘‘(2) If the total amount of sulfur dioxide allow24 ances determined for all units under paragraph (1) 

25 exceeds 250,000 sulfur dioxide allowances, the Ad-
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1 ministrator shall multiply 250,000 sulfur dioxide al2 lowances by the ratio of the amount of sulfur dioxide 

3 allowances determined for each unit under para4 graph (1) to the total amount of sulfur dioxide al5 lowances determined for all units under paragraph 

6 (1). 

7 ‘‘(3) The Administrator shall allocate to each 

8 unit the lesser of the amount determined for that 

9 unit under paragraph (1) or, if the total amount of 

10 sulfur dioxide allowances determined for all units 

11 under paragraph (1) exceeds 250,000 sulfur dioxide 

12 allowances, under paragraph (2). The Administrator 

13 shall auction any unallocated allowances from the re14 serve under this section and conduct the auction by 

15 the first business day in October 2010 and in ac16 cordance with section 409. 

17 ‘‘Subpart 3—Western Regional Air Partnership 

18 ‘‘SEC. 431. DEFINITIONS. 

19 ‘‘For purposes of this subpart—

20 ‘‘(1) The term ‘adjusted baseline heat input’ 

21 means the average annual heat input used by a unit 

22 during the three years in which the unit had the 

23 highest heat input for the period from the eighth 

24 through the fourth year before the first covered 

25 year. 
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1 ‘‘(A) Notwithstanding paragraph (1), if a 

2 unit commences operation during such period 

3 and—

4 ‘‘(i) on or after January 1 of the fifth 

5 year before the first covered year, then ‘ad6 justed baseline heat input’ shall mean the 

7 average annual heat input used by the unit 

8 during the fifth and fourth years before 

9 the first covered year; and 

10 ‘‘(ii) on or after January 1 of the 

11 fourth year before the first covered year, 

12 then ‘adjusted baseline heat input’ shall 

13 mean the annual heat input used by the 

14 unit during the fourth year before the first 

15 covered year. 

16 ‘‘(B) A unit’s heat input for a year shall 

17 be the heat input—

18 ‘‘(i) required to be reported under sec19 tion 405 for the unit, if the unit was re20 quired to report heat input during the year 

21 under that section; 

22 ‘‘(ii) reported to the Energy Informa23 tion Administrator for the unit, if the unit 

24 was not required to report heat input 

25 under section 405; 
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1 ‘‘(iii) based on data for the unit re2 ported to the WRAP State where the unit 

3 is located as required by State law, if the 

4 unit was not required to report heat input 

5 during the year under section 405 and did 

6 not report to the Energy Information Ad7 ministration; or 

8 ‘‘(iv) based on fuel use and fuel heat 

9 content data for the unit from fuel pur10 chase or use records, if the unit was not 

11 required to report heat input during the 

12 year under section 405 and did not report 

13 to the Energy Information Administration 

14 and the WRAP State. 

15 ‘‘(2) The term ‘affected EGU’ means an af16 fected EGU under subpart 2 that is in a WRAP 

17 State and that—

18 ‘‘(A) in 2000, emitted 100 tons or more of 

19 sulfur dioxide and was used to produce elec20 tricity for sale; or 

21 ‘‘(B) in any year after 2000, emits 100 

22 tons or more of sulfur dioxide and is used to 

23 produce electricity for sale.

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

25 means, for purposes of section 434, a unit com-
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1 busting coal or any coal-derived fuel alone or in com2 bination with any amount of any other fuel in any 

3 year during the period from the eighth through the 

4 fourth year before the first covered year. 

5 ‘‘(4) The term ‘covered year’ means—

6 ‘‘(A)(i) the third year after the year 2018 

7 or later when the total annual sulfur dioxide 

8 emissions of all affected EGUs in the WRAP 

9 States first exceed 271,000 tons; or 

10 ‘‘(ii) the third year after the year 2013 or 

11 later when the Administrator determines by 

12 regulation that the total annual sulfur dioxide 

13 emissions of all affected EGUs in the WRAP 

14 States are reasonably projected to exceed 

15 271,000 tons in 2018 or any year thereafter. 

16 The Administrator may make such determina17 tion only if all the WRAP States submit to the 

18 Administrator a petition requesting that the 

19 Administrator issue such determination and 

20 make all affected EGUs in the WRAP States 

21 subject to the requirements of sections 432 

22 through 434; and 

23 ‘‘(B) each year after the ‘covered year’ 

24 under subparagraph (A). 
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1 ‘‘(5) The term ‘oil-fired’ with regard to a unit 

2 means, for purposes of section 434, a unit com3 busting fuel oil for more than 10 percent of the 

4 unit’s total heat input, and combusting no coal or 

5 coal-derived fuel, and any year during the period 

6 from the eighth through the fourth year before the 

7 first covered year. 

8 ‘‘(6) The term ‘WRAP State’ means Arizona, 

9 California, Colorado, Idaho, Nevada, New Mexico, 

10 Oregon, Utah, and Wyoming. 

11 ‘‘SEC. 432. APPLICABILITY. 

12 ‘‘(a) PROHIBITION.—Starting January 1 of the first 

13 covered year, it shall be unlawful for the affected EGUs 

14 at a facility to emit a total amount of sulfur dioxide during 

15 the year in excess of the number of sulfur dioxide allow16 ances held for such facility for that year by the owner or 

17 operator of the facility. 

18 ‘‘(b) ALLOWANCES HELD.—Only sulfur dioxide al19 lowances under section 433 shall be held in order to meet 

20 the requirements of subsection (a). 

21 ‘‘SEC. 433. LIMITATIONS ON TOTAL EMISSIONS. 

22 ‘‘For affected EGUs, the total amount of sulfur diox23 ide allowances that the Administrator shall allocate for 

24 each covered year under section 434 shall equal 271,000 

25 tons. 
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1 ‘‘SEC. 434. EGU ALLOCATIONS. 

2 ‘‘(a) IN GENERAL.—By January 1 of the year before 

3 the first covered year, the Administrator shall promulgate 

4 regulations determining, for each covered year, the alloca5 tions of sulfur dioxide allowances for the units at a facility 

6 that are affected EGUs as of December 31 of the fourth 

7 year before the covered year by—

8 ‘‘(1) for such units at the facility that are coal9 fired, multiplying 0.40 lb/mmBtu by the total ad10 justed baseline heat input of such units and con11 verting to tons; 

12 ‘‘(2) for such units at the facility that are oil13 fired, multiplying 0.20 lb/mmBtu by the total ad14 justed baseline heat input of such units and con15 verting to tons; 

16 ‘‘(3) for all such other units at the facility that 

17 are not covered by paragraph (1) or (2) multiplying 

18 0.05 lb/mmBtu by the total adjusted baseline heat 

19 input of such units and converting to tons; and 

20 ‘‘(4) multiplying the allocation amount under 

21 section 433 by the ratio of the total of the amounts 

22 for the facility under paragraphs (1), (2), and (3) to 

23 the total of the amounts for all facilities under para24 graphs (1), (2), and (3). 

25 ‘‘(b) FAILURE TO PROMULGATE.—(1) For each cov26 ered year, if, by the date 18 months before January 1 of 
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1 such year, the Administrator has signed proposed regula2 tions but has not promulgated final regulations deter3 mining allocations under paragraph (a), then the Adminis4 trator shall allocate, for such year, for each facility where 

5 an affected EGU is located the amount of sulfur dioxide 

6 allowances specified for that facility in such proposed reg7 ulations. 

8 ‘‘(2) For each covered year, if, by the date 18 months 

9 before January 1 of such year, the Administrator has not 

10 signed proposed regulations determining allocations under 

11 subsection (a), the Administrator shall—

12 ‘‘(A) determine, for such year, for each affected 

13 EGU with coal as its primary or secondary fuel or 

14 residual oil as its primary fuel listed in the Adminis15 trator’s Emissions Scorecard 2001, Appendix B, 

16 Table B1 an amount of sulfur dioxide allowances by 

17 multiplying 95 percent of the allocation amount 

18 under section 433 by the ratio of such unit’s heat 

19 input in the Emissions Scorecard 2001, Appendix B, 

20 Table B1 to the total of the heat input in the Emis21 sions Scorecard 2001, Appendix B, Table B1 for all 

22 affected EGUs with coal as their primary or sec23 ondary fuel or residual oil as their primary fuel; 

24 ‘‘(B) allocate, for such year, for each facility 

25 where a unit under subparagraph (A) is located the 
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1 total amounts of sulfur dioxide allowances for the 

2 units at such facility determined under subpara3 graph (A); and 

4 ‘‘(C) auction an amount of sulfur dioxide allow5 ances equal to 5 percent of the allocation amount 

6 under section 433 and conduct the auction on the 

7 first business day in October following the respective 

8 promulgation deadline under paragraph (1) and in 

9 accordance with section 409. 

10 ‘‘PART C—NITROGEN OXIDES CLEAR SKIES 

11 EMISSION REDUCTIONS 

12 ‘‘Subpart 1—Acid Rain Program 

13 ‘‘SEC. 441. NITROGEN OXIDES EMISSION REDUCTION PRO14 GRAM. 

15 ‘‘(a) APPLICABILITY.—On the date that a coal-fired 

16 utility unit becomes an affected unit pursuant to sections 

17 413 or 414, or on the date a unit subject to the provisions 

18 of section 413(d), must meet the SO2 reduction require19 ments, each such unit shall become an affected unit for 

20 purposes of this section and shall be subject to the emis21 sion limitations for nitrogen oxides set forth herein. 

22 ‘‘(b) EMISSION LIMITATIONS.—(1) The Adminis23 trator shall by regulation establish annual allowable emis24 sion limitations for nitrogen oxides for the types of utility 

25 boilers listed below, which limitations shall not exceed the 
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1 rates listed below: Provided, That the Administrator may 

2 set a rate higher than that listed for any type of utility 

3 boiler if the Administrator finds that the maximum listed 

4 rate for that boiler type cannot be achieved using low NOX

5 burner technology. The Administrator shall implement 

6 this paragraph under 40 CFR § 76.5 (2002). The max7 imum allowable emission rates are as follows:

8 ‘‘(A) for tangentially fired boilers, 0.45 lb/

9 mmBtu; and 

10 ‘‘(B) for dry bottom wall-fired boilers (other 

11 than units applying cell burner technology), 0.50 lb/

12 mmBtu. After January 1, 1995, it shall be unlawful 

13 for any unit that is an affected unit on that date 

14 and is of the type listed in this paragraph to emit 

15 nitrogen oxides in excess of the emission rates set by 

16 the Administrator pursuant to this paragraph. 

17 ‘‘(2) The Administrator shall, by regulation, establish 

18 allowable emission limitations on a lb/mmBtu, annual av19 erage basis, for nitrogen oxides for the following types of 

20 utility boilers: 

21 ‘‘(A) wet bottom wall-fired boilers; 

22 ‘‘(B) cyclones; 

23 ‘‘(C) units applying cell burner technology; and 

24 ‘‘(D) all other types of utility boilers. 
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1 The Administrator shall base such rates on the degree of 

2 reduction achievable through the retrofit application of the 

3 best system of continuous emission reduction, taking into 

4 account available technology, costs and energy and envi5 ronmental impacts; and which is comparable to the costs 

6 of nitrogen oxides controls set pursuant to subsection 

7 (b)(1). The Administrator may revise the applicable emis8 sion limitations for tangentially fired and dry bottom, 

9 wall-fired boilers (other than cell burners) to be more 

10 stringent if the Administrator determines that more effec11 tive low NOX burned technology is available: Provided, 

12 That, no unit that is an affected unit pursuant to section 

13 413 and that is subject to the requirements of subsection 

14 (b)(1), shall be subject to the revised emission limitations, 

15 if any. The Administrator shall implement that paragraph 

16 under 40 CFR §§ 76.6 and 76.7 (2002). 

17 ‘‘(c) ALTERNATIVE EMISSION LIMITATIONS.—(1) 

18 The permitting authority shall, upon request of an owner 

19 or operator of a unit subject to this section, authorize an 

20 emission limitation less stringent than the applicable limi21 tation established under subsection (b)(1) or (b)(2) upon 

22 a determination that—

23 ‘‘(A) a unit subject to subsection (b)(1) cannot 

24 meet the applicable limitation using low NOX burner 

25 technology; or 
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1 ‘‘(B) a unit subject to subsection (b)(2) cannot 

2 meet the applicable rate using the technology on 

3 which the Administrator based the applicable emis4 sion limitation. 

5 ‘‘(2) The permitting authority shall base such deter6 mination upon a showing satisfactory to the permitting 

7 authority, in accordance with regulations established by 

8 the Administrator, that the owner or operator—

9 ‘‘(A) has properly installed appropriate control 

10 equipment designed to meet the applicable emission 

11 rate; 

12 ‘‘(B) has properly operated such equipment for 

13 a period of 15 months (or such other period of time 

14 as the Administrator determines through the regula15 tions), and provides operating and monitoring data 

16 for such period demonstrating that the unit cannot 

17 meet the applicable emission rate; and 

18 ‘‘(C) has specified an emission rate that such 

19 unit can meet on an annual average basis. The per20 mitting authority shall issue an operating permit for 

21 the unit in question, in accordance with section 404 

22 and title V—

23 ‘‘(i) that permits the unit during the dem24 onstration period referred to in subparagraph 
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1 (B), to emit at a rate in excess of the applicable 

2 emission rate; 

3 ‘‘(ii) at the conclusion of the demonstra4 tion period to revise the operating permit to re5 flect the alternative emission rate demonstrated 

6 in subparagraphs (B) and (C). 

7 ‘‘(3) Units subject to subsection (b)(1) for which an 

8 alternative emission limitation is established shall not be 

9 required to install any additional control technology be10 yond low NOX burners. Nothing in this section shall pre11 clude an owner or operator from installing and operating 

12 an alternative NOX control technology capable of achiev13 ing the applicable emission limitation. The Administrator 

14 shall implement this subsection under 40 CFR part 76 

15 (2002), amended as appropriate by the Administrator. 

16 ‘‘(d) EMISSIONS AVERAGING.—(1) In lieu of com17 plying with the applicable emission limitations under sub18 section (b)(1), (2), or (c), the owner or operator of two 

19 or more units subject to one or more of the applicable 

20 emission limitations set pursuant to these sections, may 

21 petition the permitting authority for alternative contem22 poraneous annual emission limitations for such units that 

23 ensure that—

24 ‘‘(A) the actual annual emission rate in pounds 

25 of nitrogen oxides per million Btu averaged over the 
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1 units in question is a rate that is less than or equal 

2 to 

3 ‘‘(B) the Btu-weighted average annual emission 

4 rate for the same units if they had been operated, 

5 during the same period of time, in compliance with 

6 limitations set in accordance with the applicable 

7 emission rates set pursuant to subsections (b)(1) 

8 and (2). 

9 ‘‘(2) If the permitting authority determines, in ac10 cordance with regulations issued by the Administrator 

11 that the conditions in paragraph (1) can be met, the per12 mitting authority shall issue operating permits for such 

13 units, in accordance with section 404 and title V, that 

14 allow alternative contemporaneous annual emission limita15 tions. Such emission limitations shall only remain in effect 

16 while both units continue operation under the conditions 

17 specified in their respective operating permits. The Ad18 ministrator shall implement this subsection under 40 CFR 

19 part 76 (2002), amended as appropriate by the Adminis20 trator. 

21 ‘‘SEC. 442. TERMINATION. 

22 ‘‘Starting January 1, 2008, owner or operator of af23 fected units and affected facilities under section 441 shall 

24 no longer be subject to the requirements of that section. 
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1 ‘‘Subpart 2—Clear Skies Nitrogen Oxides Allowance 

2 Program 

3 ‘‘SEC. 451. 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 25 

10 megawatts that produced or produces electricity 

11 for sale during 2002 or any year thereafter, ex12 cept for a cogeneration unit that produced or 

13 produces electricity for sale equal to or less 

14 than one-third of the potential electrical output 

15 of the generator that it served or serves during 

16 2002 and each year thereafter; and 

17 ‘‘(B) for a unit commencing service of a 

18 generator on or after the date of enactment of 

19 the Clear Skies Act of 2003, a unit in a State 

20 serving a generator that produces electricity for 

21 sale during any year starting with the year the 

22 unit commences service of a generator, except 

23 for a gas-fired unit serving one or more genera24 tors with total nameplate capacity of 25 

25 megawatts or less, or a cogeneration unit that 

26 produces electricity for sale equal to or less 
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1 than one-third of the potential electrical output 

2 of the generator that it serves, during each year 

3 starting with the unit commences service of a 

4 generator. 

5 ‘‘(C) Notwithstanding paragraphs (A) and 

6 (B), the term ‘affected EGU’ does not include 

7 a solid waste incineration unit subject to section 

8 129 or a unit for the treatment, storage, or dis9 posal of hazardous waste subject to section 

10 3005 of the Solid Waste Disposal Act. 

11 ‘‘(2) The term ‘Zone 1 State’ means Alabama, 

12 Arkansas, Connecticut, Delaware, the District of Co13 lumbia, Florida, Georgia, Illinois, Indiana, Iowa, 

14 Kentucky, Louisiana, Maine, Maryland, Massachu15 setts, Michigan, Minnesota, Mississippi, Missouri, 

16 New Hampshire, New Jersey, New York, North 

17 Carolina, Ohio, Pennsylvania, Rhode Island, South 

18 Carolina, Tennessee, Texas east of Interstate 35, 

19 Vermont, Virginia, West Virginia, and Wisconsin. 

20 ‘‘(3) The term ‘Zone 2 State’ means Alaska, 

21 American Samoa, Arizona, California, Colorado, the 

22 Commonwealth of Northern Mariana Islands, the 

23 Commonwealth of Puerto Rico, Guam, Hawaii, 

24 Idaho, Kansas, Montana, Nebraska, North Dakota, 

25 New Mexico, Nevada, Oklahoma, Oregon, South Da-
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1 kota, Texas west of Interstate 35, Utah, the Virgin 

2 Islands, Washington, and Wyoming. 

3 ‘‘SEC. 452. APPLICABILITY. 

4 ‘‘(a) ZONE 1 PROHIBITION.—(1) Starting January 1, 

5 2008, it shall be unlawful for the affected EGUs at a facil6 ity in a Zone 1 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(a) shall be held in order to meet the requirements 

12 of paragraph (1), except as provided under section 465. 

13 ‘‘(b) ZONE 2 PROHIBITION.—(1) Starting January 1, 

14 2008, it shall be unlawful for the affected EGUs at a facil15 ity in a Zone 2 State to emit a total amount of nitrogen 

16 oxides during a year in excess of the number of nitrogen 

17 oxides allowances held for such facility for that year by 

18 the owner or operator of the facility. 

19 ‘‘(2) Only nitrogen oxides allowances under section 

20 453(b) shall be held in order to meet the requirements 

21 of paragraph (1). 

22 ‘‘SEC. 453. LIMITATIONS ON TOTAL EMISSIONS. 

23 ‘‘(a) ZONE 1 ALLOCATIONS.—For affected EGUs in 

24 the Zone 1 States for 2008 and each year thereafter, the 

25 Administrator shall allocate nitrogen oxides allowances 
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1 under section 454(a), and conduct auctions of nitrogen ox2 ides allowances under section 409, in the amounts in 

3 Table A.

‘‘TABLE A.—TOTAL NOX ALLOWANCES ALLOCATED OR 

AUCTIONED FOR EGUS IN ZONE 1

Year 

NOX allowances

allocated 

NOX allowances

auctioned 

2008 ................................................................ 1,546,380 15,620

2009 ................................................................ 1,530,760 31,240

2010 ................................................................ 1,515,140 46,860

2011 ................................................................ 1,499,520 62,480

2012 ................................................................ 1,483,900 78,100

2013 ................................................................ 1,468,280 93,720

2014 ................................................................ 1,452,660 109,340

2015 ................................................................ 1,437,040 124,960

2016 ................................................................ 1,421,420 140,580

2017 ................................................................ 1,405,800 156,200

2018 ................................................................ 1,034,180 127,820

2019 ................................................................ 1,022,560 139,440

2020 ................................................................ 1,010,940 151,060

2021 ................................................................ 999,320 162,680

2022 ................................................................ 987,700 174,300

2023 ................................................................ 976,080 185,920

2024 ................................................................ 964,460 197,540

2025 ................................................................ 952,840 209,160

2026 ................................................................ 941,220 220,780

2027 ................................................................ 929,600 232,400

2028 ................................................................ 900,550 261,450

2029 ................................................................ 871,500 290,500

2030 ................................................................ 842,450 319,550

2031 ................................................................ 813,400 348,600

2032 ................................................................ 784,350 377,650

2033 ................................................................ 755,300 406,700

2034 ................................................................ 726,250 435,750

2035 ................................................................ 697,200 464,800

2036 ................................................................ 668,150 493,850

2037 ................................................................ 639,100 522,900

2038 ................................................................ 610,050 551,950

2039 ................................................................ 581,000 581,000

2040 ................................................................ 551,950 610,050

2041 ................................................................ 522,900 639,100

2042 ................................................................ 493,850 668,150

2043 ................................................................ 464,800 697,200

2044 ................................................................ 435,750 726,250

2045 ................................................................ 406,700 755,300

2046 ................................................................ 377,650 784,350

2047 ................................................................ 348,600 813,400

2048 ................................................................ 319,550 842,450

2049 ................................................................ 290,500 871,500
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‘‘TABLE A.—TOTAL NOX ALLOWANCES ALLOCATED OR 

AUCTIONED FOR EGUS IN ZONE 1—Continued

Year 

NOX allowances

allocated 

NOX allowances

auctioned 

2050 ................................................................ 261,450 900,550

2051 ................................................................ 232,400 929,550

2052 ................................................................ 203,350 958,650

2053 ................................................................ 174,300 987,700

2054 ................................................................ 145,250 1,016,750

2055 ................................................................ 116,200 1,045,800

2056 ................................................................ 87,150 1,074,850

2057 ................................................................ 58,100 1,103,900

2058 ................................................................ 29,050 1,132,950

2059 ................................................................ 0 1,162,000

1 ‘‘(b) ZONE 2 ALLOCATIONS.—For affected EGUs in 

2 the Zone 2 States for 2008 and each year thereafter, the 

3 Administrator shall allocate nitrogen oxides allowances 

4 under section 454(b), and conduct auctions of nitrogen ox5 ides allowances under section 409, in the amounts in 

6 Table B.

‘‘TABLE B.—TOTAL NOX ALLOWANCES ALLOCATED FOR 

EGUS IN ZONE 2

Year NOX allowance

allocated 

NOX allowance

auctioned 

2008 ................................................................ 532,620 5,380

2009 ................................................................ 527,240 10,760

2010 ................................................................ 521,860 16,140

2011 ................................................................ 516,480 21,520

2012 ................................................................ 511,100 26,900

2013 ................................................................ 505,720 32,280

2014 ................................................................ 500,340 37,660

2015 ................................................................ 494,960 43,040

2016 ................................................................ 489,580 48,420

2017 ................................................................ 484,200 53,800

2018 ................................................................ 478,820 59,180

2019 ................................................................ 473,440 64,560

2020 ................................................................ 468,060 69,940

2021 ................................................................ 462,680 75,320

2022 ................................................................ 457,300 80,700

2023 ................................................................ 451,920 86,080

2024 ................................................................ 446,540 91,460

2025 ................................................................ 441,160 96,840
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‘‘TABLE B.—TOTAL NOX ALLOWANCES ALLOCATED FOR 

EGUS IN ZONE 2—Continued

Year NOX allowance

allocated 

NOX allowance

auctioned 

2026 ................................................................ 435,780 102,220

2027 ................................................................ 430,400 107,600

2028 ................................................................ 416,950 121,050

2029 ................................................................ 403,500 134,500

2030 ................................................................ 390,050 147,950

2031 ................................................................ 376,600 161,400

2032 ................................................................ 363,150 174,850

2033 ................................................................ 349,700 188,300

2034 ................................................................ 336,250 201,750

2035 ................................................................ 322,800 215,200

2036 ................................................................ 309,350 228,650

2037 ................................................................ 295,900 242,100

2038 ................................................................ 282,450 255,550

2039 ................................................................ 269,000 269,000

2040 ................................................................ 255,550 282,450

2041 ................................................................ 242,100 295,900

2042 ................................................................ 228,650 309,350

2043 ................................................................ 215,200 322,800

2044 ................................................................ 201,750 336,250

2045 ................................................................ 188,300 349,700 

2046 ................................................................ 174,850 363,150

2047 ................................................................ 161,400 376,600

2048 ................................................................ 147,950 390,050

2049 ................................................................ 134,500 403,500

2050 ................................................................ 121,050 416,950

2051 ................................................................ 107,600 430,400

2052 ................................................................ 94,150 443,850

2053 ................................................................ 80,700 457,300

2054 ................................................................ 67,250 470,750

2055 ................................................................ 53,800 484,200

2056 ................................................................ 40,350 497,650

2057 ................................................................ 26,900 511,100

2058 ................................................................ 13,450 524,550

2059 ................................................................ 0 538,000

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 the commencement date of the nitro5 gen oxides allowance requirement of section 452, the 

6 Administrator shall promulgate regulations deter-
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1 mining the allocation of nitrogen oxides allowances 

2 for each year during 2008 through 2058 for units 

3 at a facility in a Zone 1 State that commence oper4 ation by and are affected EGUs as of December 31, 

5 2004. The regulations shall determine the allocation 

6 for such units for each year by multiplying the allo7 cation amount under section 453(a) by the ratio of 

8 the total amount of baseline heat input of such units 

9 at the facility to the total amount of baseline heat 

10 input of all affected EGUs in the Zone 1 States.

11 ‘‘(2) FAILURE TO REGULATE.—(A) For each 

12 year 2008 through 2058, if, by the date 18 months 

13 before January 1 of such year, the Administrator—

14 ‘‘(i) has promulgated regulations under 

15 section 403(b) providing for the transfer of ni16 trogen oxides allowances and section 403(c) es17 tablishing the Allowance Tracking System for 

18 nitrogen oxides allowances; and 

19 ‘‘(ii) has signed proposed regulations but 

20 has not promulgated final regulations deter21 mining allocations under paragraph (1), 

22 the Administrator shall allocate, for such year, 

23 for each facility where an affected EGU is located 

24 in the Zone 1 States the amount of nitrogen oxides 
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1 allowances specified for that facility in such pro2 posed regulations. 

3 ‘‘(B) For each year 2008 through 2058, if, by 

4 the date 18 months before January 1 of such year, 

5 the Administrator—

6 ‘‘(i) has promulgated regulations under 

7 section 403(b) providing for the transfer of ni8 trogen oxides allowances and section 403(c) es9 tablishing the Allowance Tracking System for 

10 nitrogen oxides allowances; and 

11 ‘‘(ii) has not signed proposed regulations 

12 determining allocations under paragraph (1), 

13 the Administrator shall make allocations, for such 

14 year, for each unit in the Zone 1 States listed in the 

15 Administrator’s Emissions Scorecard 2001, Appen16 dix B, Table B1 as provided in subparagraph (C). 

17 ‘‘(C) Allocations of nitrogen oxides allowances 

18 for a unit under this subparagraph shall be deter19 mined by multiplying 95 percent of the allocation 

20 amount under section 453(a) by the ratio of such 

21 unit’s heat input in the Emissions Scorecard 2001, 

22 Appendix B, Table B1 to the total of the heat input 

23 in the Emissions Scorecard 2001, Appendix B, 

24 Table B1 for all units in the Zone 1 States. 
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1 ‘‘(D) When the Administrator makes an alloca2 tion under subparagraph (C), the Administrator 

3 shall—

4 ‘‘(i) allocate for each facility where a unit 

5 referred to in subparagraph (C) is located the 

6 total of the amounts of nitrogen oxides allow7 ances for the units at such facility, and 

8 ‘‘(ii) auction an amount of nitrogen oxides 

9 allowances equal to 5 percent of the allocation 

10 amount under section 453(a) and conduct the 

11 auction on the first business day in October fol12 lowing the respective promulgation deadline re13 ferred to in subparagraph (A) and in accord14 ance with section 409. 

15 ‘‘(E) For each year 2008 through 2058, if the 

16 Administrator has not signed proposed regulations 

17 referred to in subparagraph (A) and has not promul18 gated the regulations under section 403(b) providing 

19 for the transfer of nitrogen oxides allowances and 

20 section 403(c) establishing the Allowance Tracking 

21 System for nitrogen oxides allowances, by the date 

22 18 months before January 1 of such year, then it 

23 shall be unlawful for an affected EGU in the Zone 

24 1 States to emit nitrogen oxides during such year in 

25 excess of 0.14 lb/mmBtu. 
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1 ‘‘(b) EGU ALLOCATIONS IN THE ZONE 2 STATES.—

2 ‘‘(1) EPA REGULATIONS.—Not later than 18 

3 months before the commencement date of the nitro4 gen oxides allowance requirement of section 452, the 

5 Administrator shall promulgate regulations deter6 mining the allocation of nitrogen oxides allowances 

7 for each year during 2008 through 2058 for units 

8 at a facility in a Zone 2 State that commence oper9 ation by and are affected EGUs as of December 31, 

10 2004. The regulations shall determine the allocation 

11 for such units for each year by multiplying the allo12 cation amount under section 453(b) by the ratio of 

13 the total amount of baseline heat input of such units 

14 at the facility to the total amount of baseline heat 

15 input of all affected EGUs in the Zone 2 States. 

16 ‘‘(2) FAILURE TO REGULATE.—(A) For each 

17 year 2008 through 2058, if, by the date 18 months 

18 before January 1 of such year, the Administrator—

19 ‘‘(i) has promulgated regulations under 

20 section 403(b) providing for the transfer of ni21 trogen oxides allowances and section 403(c) es22 tablishing the Allowance Tracking System for 

23 nitrogen oxides allowances; and 
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1 ‘‘(ii) has signed proposed regulations but 

2 has not promulgated final regulations deter3 mining allocations under paragraph (1), 

4 the Administrator shall allocate, for such year, for 

5 each facility where an affected EGU is located in the 

6 Zone 2 States the amount of nitrogen oxides allow7 ances specified for that facility in such proposed reg8 ulations. 

9 ‘‘(B) For each year 2008 through 2058, if, by 

10 the date 18 months before January 1 of such year, 

11 the Administrator—

12 ‘‘(i) has promulgated regulations under 

13 section 403(b) providing for the transfer of ni14 trogen oxides allowances and section 403(c) es15 tablishing the Allowance Tracking System for 

16 nitrogen oxides allowances; and 

17 ‘‘(ii) has not signed proposed regulations 

18 determining allocations under paragraph (1), 

19 the Administrator shall make allocations, for such 

20 year, for each unit in the Zone 2 States listed in the 

21 Administrator’s Emissions Scorecard 2001, Appen22 dix B, Table B1 as provided in subparagraph (C). 

23 ‘‘(C) Allocations of nitrogen oxides allowances 

24 for a unit under this subparagraph shall be deter25 mined by multiplying 95 percent of the allocation 
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1 amount under section 453(b) by the ratio of such 

2 unit’s heat input in the Emissions Scorecard 2001, 

3 Appendix B, Table B1 to the total of the heat input 

4 in the Emissions Scorecard 2001, Appendix B, 

5 Table B1 for all units in the Zone 2 States. 

6 ‘‘(D) When the Administrator make an alloca7 tion under subparagraph (C), the Administrator 

8 shall—

9 ‘‘(i) allocate for each facility where a unit 

10 referred to in subparagraph (C) is located the 

11 total of the amounts of nitrogen oxides allow12 ances for the units at such facility, and 

13 ‘‘(ii) auction an amount of nitrogen oxides 

14 allowances equal to 5 percent of the allocation 

15 amount under section 453(b) and conduct the 

16 auction on the first business day in October fol17 lowing the respective promulgation deadline re18 ferred to in subparagraph (A) and in accord19 ance with section 409. 

20 ‘‘(E) For each year 2008 through 2058, if the 

21 Administrator has not signed proposed regulations 

22 referred to in subparagraph (A) and has not promul23 gated the regulations under section 403(b) providing 

24 for the transfer of nitrogen oxides allowances and 

25 section 403(c) establishing the Allowance Tracking 
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1 System for nitrogen oxides allowances, by the date 

2 18 months before January 1 of such year, then it 

3 shall be unlawful for an affected EGU in the Zone 

4 2 States to emit nitrogen oxides during such year in 

5 excess of 0.25 lb/mmBtu. 

6 ‘‘Subpart 3—Ozone Season Nox Budget Program 

7 ‘‘SEC. 461. DEFINITIONS. 

8 ‘‘For purposes of this subpart: 

9 ‘‘(1) The term ‘ozone season’ means—

10 ‘‘(A) with regard to Connecticut, Delaware, 

11 the District of Columbia, Maryland, Massachu12 setts, New Jersey, New York, Pennsylvania, 

13 and Rhode Island, the period May 1 through 

14 September 30 for each year starting in 2003; 

15 and 

16 ‘‘(B) with regard to all other States, the 

17 period May 30, 2004 through September 30, 

18 2004 and the period May 1 through September 

19 30 for each year thereafter. 

20 ‘‘(2) The term ‘NOX SIP Call State’ means 

21 Connecticut, Delaware, the District of Columbia, Il22 linois, Indiana, Kennedy, Maryland, Massachusetts, 

23 New Jersey, New York, North Carolina, Ohio, Penn24 sylvania, Rhode Island, South Carolina, Tennessee, 
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1 Virginia, and West Virginia and the fine grid por2 tions of Alabama, Georgia, Michigan, and Missouri. 

3 ‘‘(3) The term ‘fine grid portions of Alabama, 

4 Georgia, Michigan, and Missouri’ means the areas in 

5 Alabama, Georgia, Michigan, and Missouri subject 

6 to 40 CFR § 51.121 (2001), as it would be amended 

7 in the notice of proposed rulemaking at 67 Federal 

8 Register 8396 (February 22, 2002). 

9 ‘‘SEC. 462. GENERAL PROVISIONS. 

10 ‘‘The provisions of sections 402 through 406 and sec11 tion 409 shall not apply to this subpart. 

12 ‘‘SEC. 463. APPLICABLE IMPLEMENTATION PLAN. 

13 ‘‘(a) SIPS.—Except as provided in subsection (b), the 

14 applicable implementation plan for each NOX SIP Call 

15 State shall be consistent with the requirements, including 

16 the NOX SIP Call State’s nitrogen oxides budget and com17 pliance supplement pool, in 40 CFR §§ 51.121 and 51.122 

18 (2001), as it would be amended in the notice of proposed 

19 rulemaking at 67 Federal Register 8396 (February 22, 

20 2002). 

21 ‘‘(b) REQUIREMENTS.—Notwithstanding any provi22 sion to the contrary in 40 CFR §§ 51.121 and 51.122 

23 (2001), as it would be amended in the notice of proposed 

24 rulemaking at 67 Federal Register 8396 (February 22, 

25 2002)—
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1 ‘‘(1) the applicable implementation plan for 

2 each NOX SIP Call State shall require full imple3 mentation of the required emission control measures 

4 starting no later than the first ozone season; and 

5 ‘‘(2) starting January 1, 2008—

6 ‘‘(A) the owners and operators of a boiler, 

7 combustion turbine, or integrated gasification 

8 combined cycle plant subject to emission reduc9 tion requirements or limitations under part B, 

10 C, or D shall not longer be subject to the re11 quirements in a NOX SIP Call State’s applica12 ble implementation plan that meet the require13 ments of subsection (a) and paragraph (1); and 

14 ‘‘(B) notwithstanding subparagraph (A), if 

15 the Administrator determines, by December 31, 

16 2007, that a NOX SIP Call State’s applicable 

17 implementation plan meets the requirements of 

18 subsection (a) and paragraph (1), such applica19 ble implementation plan shall be deemed to con20 tinue to meet such requirements; and 

21 ‘‘(3)(A) The owner or operator of a boiler, com22 bustion turbine, or combined cycle system may sub23 mit to the Administrator a petition to allow use of 

24 nitrogen oxides allowances allocated for 2005 to 

25 meet the applicable requirement to hold nitrogen ox-
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•HR 999 IH 

1 ides allowances at least equal to 2004 ozone season 

2 emissions of such boiler, combustion turbine, or 

3 combined cycle system. 

4 ‘‘(B) A petition under this paragraph shall be 

5 submitted to the Administrator by February 1, 

6 2004. 

7 ‘‘(C) The petition shall demonstrate that the 

8 owner or operator made reasonable efforts to install, 

9 at the boiler, combustion turbine, or combined cycle 

10 system, nitrogen oxides control technology designed 

11 to allow the owner or operator to meet such require12 ment to hold nitrogen oxides allowances. 

13 ‘‘(D) The petition shall demonstrate that there 

14 is an undue risk for the reliability of electricity sup15 ply (taking into account the feasibility of purchasing 

16 electricity or nitrogen oxides allowances) because—

17 ‘‘(i) the owner or operator is not likely to 

18 be able to install and operate the technology 

19 under subparagraph (C) on a timely basis; or 

20 ‘‘(ii) the technology under subparagraph 

21 (C) is not likely to be able to achieve its design 

22 control level on a timely basis. 

23 ‘‘(E) The petition shall include a statement by 

24 the NOX SIP Call State where the boiler, combus25 tion turbine, or combined cycle system is located 
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1 that the NOX SIP Call State does not object to the 

2 petition. 

3 ‘‘(F) By May 30, 2004, by order, the Adminis4 trator shall approve the petition if it meets the re5 quirements of subparagraphs (B) through (E). 

6 ‘‘(c) SAVINGS PROVISION.—Nothing in this section or 

7 section 464 shall preclude or deny the right of any State 

8 or political subdivision thereof to adopt or enforce any reg9 ulation, requirement, limitation, or standard, relating to 

10 a boiler, combustion turbine, or integrated gasification 

11 combined cycle plant subject to emission reduction re12 quirements or limitations under part B, C, or D, that is 

13 more stringent than a regulation, requirement, limitation, 

14 or standard in effect under this section or under any other 

15 provision of this Act. 

16 ‘‘SEC. 464. TERMINATION OF FEDERAL ADMINISTRATION 

17 OF NOX TRADING PROGRAM FOR EGUS. 

18 ‘‘Starting January 1, 2008, with regard to any boiler, 

19 combustion turbine, or integrated gasification combined 

20 cycle plant subject to emission reduction requirements or 

21 limitations under part B, C, or D, the Administrator shall 

22 not administer any nitrogen oxides trading program in23 cluded in any NOX SIP Call State’s applicable implemen24 tation plan and meeting the requirements of section 

25 463(a) and (b)(1). 
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1 ‘‘SEC. 465. CARRYFORWARD OF PRE-2008 NITROGEN OXIDES 

2 ALLOWANCES. 

3 ‘‘The Administrator shall promulgate regulations as 

4 necessary to assure that the requirement to hold allow5 ances under section 452(a)(1) may be met using nitrogen 

6 oxides allowances allocated for an ozone season before 

7 2008 under a nitrogen oxides trading program that the 

8 Administrator administers, is included in a NOX SIP Call 

9 State’s applicable implementation plan, and meets the re10 quirements of section 463(a) and (b)(1). 

11 ‘‘PART D—MERCURY EMISSIONS REDUCTIONS 

12 ‘‘SEC. 471. DEFINITIONS. 

13 ‘‘For purposes of this subpart: 

14 ‘‘(1) The term ‘adjusted baseline heat input’ 

15 with regard to a unit means the unit’s baseline heat 

16 input multiplied by—

17 ‘‘(A) 1.0, for the portion of the baseline 

18 heat input that is the unit’s average annual 

19 combustion of bituminous during the years on 

20 which the unit’s baseline heat input is based;

21 ‘‘(B) 3.0, for the portion of the baseline 

22 heat input that is the unit’s average annual 

23 combustion of lignite during the years on which 

24 the unit’s baseline heat input is based; 

25 ‘‘(C) 1.25, for the portion of the baseline 

26 heat input that is the unit’s average annual 
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1 combustion of subbituminous during the years 

2 on which the unit’s baseline heat input is based; 

3 and 

4 ‘‘(D) 1.0, for the portion of the baseline 

5 heat input that is not covered by subparagraph 

6 (A), (B), or (C) or for the entire baseline heat 

7 input if such baseline heat input is not based 

8 on the unit’s heat input in specified years. 

9 ‘‘(2) The term ‘affected EGU’ means—

10 ‘‘(A) for a unit serving a generator before 

11 the date of enactment of the Clear Skies Act of 

12 2003, a coal-fired unit in a State serving a gen13 erator with a nameplate capacity of greater 

14 than 25 megawatts that produced or produces 

15 electricity for sale during 2002 or any year 

16 thereafter, except for a cogeneration unit that 

17 produced or produces electricity for sale equal 

18 to or less than one-third of the potential elec19 trical output of the generator that it served or 

20 serves during 2002 and each year thereafter; 

21 and 

22 ‘‘(B) for a unit commencing service of a 

23 generator on or after the date of enactment of 

24 the Clear Skies Act of 2003, a coal-fired unit 

25 in a State serving a generator that produces 
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1 electricity for sale during any year starting with 

2 the year the unit commences service of a gener3 ator, except for a cogeneration unit that pro4 duces electricity for sale equal to or less than 

5 one-third of the potential electrical output of 

6 the generator that it serves, during each year 

7 starting with the year the unit commences serv8 ice 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 ‘‘SEC. 472. APPLICABILITY. 

16 ‘‘Starting January 1, 2010, it shall be unlawful for 

17 the affected EGUs at a facility in a State to emit a total 

18 amount of mercury during the year in excess of the num19 ber of mercury allowances held for such facility for that 

20 year by the owner or operator of the facility. 

21 ‘‘SEC. 473. LIMITATIONS ON TOTAL EMISSIONS. 

22 ‘‘For affected EGUs for 2010 and each year there23 after, the Administrator shall allocate mercury allowances 

24 under section 474, and conduct auctions of mercury allow25 ances under section 409, in the amounts in Table A.
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‘‘TABLE A.—TOTAL MERCURY ALLOWANCES 

ALLOCATED OR AUCTIONED FOR EGUS 

Year 

Mercury

allowances

allocated 

Mercury

allowances

auctioned 

2010 ................................................................ 823,680 8,320

2011 ................................................................ 815,360 16,640

2012 ................................................................ 807,040 24,960

2013 ................................................................ 798,720 33,280

2014 ................................................................ 790,400 41,600

2015 ................................................................ 782,080 49,920

2016 ................................................................ 773,760 58,240

2017 ................................................................ 765,440 66,560

2018 ................................................................ 436,800 43,200

2019 ................................................................ 432,000 48,000

2020 ................................................................ 427,200 52,800

2021 ................................................................ 422,400 57,600

2022 ................................................................ 417,600 62,400

2023 ................................................................ 412,800 67,200

2024 ................................................................ 408,000 72,000

2025 ................................................................ 403,200 76,800

2026 ................................................................ 398,400 81,600

2027 ................................................................ 393,600 86,400

2028 ................................................................ 388,800 91,200

2029 ................................................................ 384,000 96,000

2030 ................................................................ 372,000 108,000

2031 ................................................................ 360,000 120,000

2032 ................................................................ 348,000 132,000

2033 ................................................................ 336,000 144,000

2034 ................................................................ 324,000 156,000

2035 ................................................................ 312,000 168,000

2036 ................................................................ 300,000 180,000

2037 ................................................................ 288,000 192,000

2038 ................................................................ 276,000 204,000

2039 ................................................................ 264,000 216,000

2040 ................................................................ 252,000 228,000

2041 ................................................................ 240,000 240,000

2042 ................................................................ 228,000 252,000

2043 ................................................................ 216,000 264,000

2044 ................................................................ 204,000 276,000

2045 ................................................................ 192,000 288,000

2046 ................................................................ 180,000 300,000

2047 ................................................................ 168,000 312,000

2048 ................................................................ 156,000 324,000

2049 ................................................................ 144,000 336,000

2050 ................................................................ 132,000 348,000

2051 ................................................................ 120,000 360,000

2052 ................................................................ 108,000 372,000

2053 ................................................................ 96,000 384,000

2054 ................................................................ 84,000 396,000

2055 ................................................................ 72,000 408,000

2056 ................................................................ 60,000 420,000

2057 ................................................................ 48,000 432,000

2058 ................................................................ 36,000 444,000
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‘‘TABLE A.—TOTAL MERCURY ALLOWANCES 

ALLOCATED OR AUCTIONED FOR EGUS—Continued

Year 

Mercury

allowances

allocated 

Mercury

allowances

auctioned 

2059 ................................................................ 24,000 456,000

2060 ................................................................ 12,000 468,000

2061 ................................................................ 0 480,000

1 ‘‘SEC. 474. EGU ALLOCATIONS. 

2 ‘‘(a) IN GENERAL.—Not later than 24 months before 

3 the commencement date of the mercury allowance require4 ment of section 472, the Administrator shall promulgate 

5 regulations determining allocations of mercury allowances 

6 for each year during 2010 through 2060 for units at a 

7 facility that commence operation by and are affected 

8 EGUs as of December 31, 2004. The regulations shall 

9 provide that the Administrator shall allocate each year for 

10 such units an amount determined by multiplying the allo11 cation amount in section 473 by the ratio of the total 

12 amount of the adjusted baseline heat input of such units 

13 at the facility to the total amount of adjusted baseline heat 

14 input of all affected EGUs. 

15 ‘‘(b) FAILURE TO PROMULGATE.—(1) For each year 

16 2010 through 2060, if, by the date 18 months before Jan17 uary 1 of such year, the Administrator—

18 ‘‘(A) has promulgated regulations under section 

19 403(b) providing for the transfer of mercury allow-
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1 ances and section 403(c) establishing the Allowance 

2 Tracking System for mercury allowances; and 

3 ‘‘(B) has signed proposed regulations but has 

4 not promulgated final regulations determining allo5 cations under subsection (a), 

6 the Administrator shall allocate, for such year, for each 

7 facility where an affected EGU is located the amount of 

8 mercury allowances specified for that facility in such pro9 posed regulations. 

10 ‘‘(2) If, by the date 18 months before January 1 of 

11 each year 2010 through 2060, the Administrator has not 

12 signed proposed regulations determining allocations under 

13 subsection (a), the Administrator shall: 

14 ‘‘(A) determine, for such year, for each unit 

15 with coal as its primary or secondary fuel listed in 

16 the Administrator’s Emissions Scorecard 2001, Ap17 pendix B, Table B1 an amount of mercury allow18 ances by multiplying 95 percent of the allocation 

19 amount under section 473 by the ratio of such unit’s 

20 heat input in the Emissions Scorecard 2001, Appen21 dix B, Table B1 to the total of the heat input in the 

22 Emissions Scorecard 2001, Appendix B, Table B1 

23 for all units with coal as their primary or secondary 

24 fuel; 
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1 ‘‘(B) allocate, for such year, for each facility 

2 where a unit under subparagraph (A) is located the 

3 total of the amounts of mercury allowances for the 

4 units at such facility determined under subpara5 graph (A); and 

6 ‘‘(C) auction an amount of mercury allowances 

7 equal to 5 percent of the allocation amount under 

8 section 473 and conduct the auction on the first 

9 business day in October following the respective pro10 mulgation deadline under paragraph (1) and in ac11 cordance with section 409. 

12 ‘‘(3) For each year 2010 through 2060, if the Admin13 istrator has not signed proposed regulations under sub14 section (a), and has not promulgated the regulations 

15 under section 403(b) providing for the transfer of mercury 

16 allowances and section 403(c) establishing the Allowance 

17 Tracking System for mercury allowances, by the date 18 

18 months before January 1 of such year, then it shall be 

19 unlawful for any affected EGU to emit mercury during 

20 such year in excess of 30 percent of the mercury content 

21 (in ounces per mmBtu) of the coal and coal-derived fuel 

22 combusted by the unit. 
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1 ‘‘PART E—NATIONAL EMISSION STANDARDS;

2 RESEARCH; ENVIRONMENTAL ACCOUNT3 ABILITY; MAJOR SOURCE 

4 PRECONSTRUCTION REVIEW AND BEST 

5 AVAILABLE RETROFIT CONTROL TECH6 NOLOGY REQUIREMENTS 

7 ‘‘SEC. 481. NATIONAL EMISSION STANDARDS FOR AF8 FECTED UNITS. 

9 ‘‘(a) DEFINITIONS.—For purposes of this section: 

10 ‘‘(1) The term ‘commenced’, with regard to con11 struction, means that an owner or operator has ei12 ther undertaken a continuous program of construc13 tion or has entered into a contractual obligation to 

14 undertake and complete, within a reasonable time, a 

15 continuous program of construction. For boilers and 

16 integrated gasification combined cycle plants, this 

17 term does not include undertaking such a program 

18 or entering into such an obligation more than 36 

19 months prior to the date on which the unit begins 

20 operation. For combustion turbines, this term does 

21 not include undertaking such a program or entering 

22 into such an obligation more than 18 months prior 

23 to the date on which the unit begins operation. 

24 ‘‘(2) The term ‘construction’ means fabrication, 

25 erection, or installation of an affected unit. 
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1 ‘‘(3) The term ‘affected unit’ means any unit 

2 that is subject to emission limitations under subpart 

3 2 of part B, subpart 2 of part C, or part D. 

4 ‘‘(4) The term ‘existing affected unit’ means 

5 any affected unit that is not a new affected unit. 

6 ‘‘(5) The term ‘new affected unit’ means any 

7 affected unit, the construction or reconstruction of 

8 which is commenced after the date of enactment of 

9 the Clear Skies Act of 2003, except that for the pur10 pose of any revision of a standard pursuant to sub11 section (e), ‘new affected unit’ means any affected 

12 unit, the construction or reconstruction of which is 

13 commenced after the public of regulations (or, if ear14 lier, proposed regulations) prescribing a standard 

15 under this section that will apply to such unit. 

16 ‘‘(6) The term ‘reconstruction’ means the re17 placement of components of a unit to such an extent 

18 that—

19 ‘‘(A) the fixed capital cost of the new com20 ponents exceeds 50 percent of the fixed capital 

21 cost that would be required to construct a com22 parable entirely new unit; and 

23 ‘‘(B) it is technologically and economically 

24 feasible to meet the applicable standards set 

25 forth in this section. 
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1 ‘‘(b) EMISSION STANDARDS.—

2 ‘‘(1) IN GENERAL.—No later than 12 months 

3 after the date of enactment of the Clear Skies Act 

4 of 2003, the Administrator shall promulgate regula5 tions prescribing the standards in subsections (c) 

6 through (d) for the specified affected units and es7 tablishing requirements to ensure compliance with 

8 these standards, including monitoring, record9 keeping, and reporting requirements. 

10 ‘‘(2) MONITORING.—(A) The owner or operator 

11 of any affected unit subject to the standards for sul12 fur dioxide, nitrogen oxides, or mercury under this 

13 section shall meet the requirements of section 405, 

14 except that, where two or more units utilize a single 

15 stack, separate monitoring shall be required for each 

16 affected unit for the pollutants for which the unit is 

17 subject to such standards. 

18 ‘‘(B) The Administrator shall, by regulation, re19 quire—

20 ‘‘(i) the owner or operator of any affected 

21 unit subject to the standards for sulfur dioxide, 

22 nitrogen oxides, or mercury under this section 

23 to—

24 ‘‘(I) install and operate CEMS for 

25 monitoring output, including electricity and 
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•HR 999 IH 

1 useful thermal energy, on the affected unit 

2 and to quality assure the data; and 

3 ‘‘(II) comply with recordkeeping and 

4 reporting requirements, including provi5 sions for reporting output data in mega6 watt hours. 

7 ‘‘(ii) the owner or operator of any affected 

8 unit subject to the standards for particulate 

9 matter under this section to—

10 ‘‘(I) install and operate CEMS for 

11 monitoring particulate matter on the af12 fected unit and to quality assure the data; 

13 ‘‘(II) comply with recordkeeping and 

14 reporting requirements; and 

15 ‘‘(III) comply with alternative moni16 toring, quality assurance, recordkeeping, 

17 and reporting requirements for any period 

18 of time for which the Administrator deter19 mines that CEMS with appropriate vendor 

20 guarantees are not commercially available 

21 for particulate matter. 

22 ‘‘(3) COMPLIANCE.—For boilers, integrated 

23 gasification combined cycle plants, and combustion 

24 turbines that are gas-fired or coal fired, the Admin25 istrator shall require that the owner or operator 
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1 demonstrate compliance with the standards daily, 

2 using a 30-day rolling average, except that in the 

3 case of mercury, the compliance period shall be the 

4 calendar year. For combustion turbines that are not 

5 gas-fired or coal-fired, the Administrator shall re6 quire that the owner or operator demonstrate com7 pliance with the standards hourly, using a 4-hour 

8 rolling average. 

9 ‘‘(c) BOILERS AND INTEGRATED GASIFICATION COM10 BINED CYCLE PLANTS.—

11 ‘‘(1) After the effective date of standards pro12 mulgated under subsection (b), no owner or operator 

13 shall cause any boiler or integrated gasification com14 bined cycle plant that is a new affected unit to dis15 charge into the atmosphere any gases which con16 tain—

17 ‘‘(A) sulfur dioxide in excess of 2.0 lb/

18 MWh; 

19 ‘‘(B) nitrogen oxides in excess of 1.0 lb/

20 MWh; 

21 ‘‘(C) particulate matter in excess of 0.20 

22 lb/MWh; or 

23 ‘‘(D) if the unit is coal-fired, mercury in 

24 excess of 0.015 lb/GWh, unless—
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1 ‘‘(i) mercury emissions from the unit, 

2 determined assuming no use of on-site or 

3 off-site pre-combustion treatment of coal 

4 and no use of technology that captures 

5 mercury, are reduced by 80 percent; 

6 ‘‘(ii) flue gas desulfurization (FGD) 

7 and selective catalytic reduction (SCR) are 

8 applied to the unit and are operated so as 

9 to optimize capture of mercury; or 

10 ‘‘(iii) a technology is applied to the 

11 unit and operated so as to optimize cap12 ture of mercury, and the permitting au13 thority determines that the technology is 

14 equivalent in terms of mercury capture to 

15 the application of FGD and SCR. 

16 ‘‘(2) Notwithstanding paragraph (1)(D), inte17 grated 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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•HR 999 IH 

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 2.0lb/

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; 

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 8 

10 years following the promulgation of standards under 

11 subsection (b), review and, if appropriate, revise 

12 such standards to reflect the degree of emission limi13 tation achievable through the application of the best 

14 system of emission reduction which (taking into ac15 count the cost of achieving such reduction and any 

16 nonair quality health and environmental impacts and 

17 energy requirements) the Administrator determines 

18 has been adequately demonstrated. When implemen19 tation and enforcement of any requirement of this 

20 Act indicate that emission limitations and percent 

21 reductions beyond those required by the standards 

22 promulgated under this section are achieved in prac23 tice, the Administrator shall, when revising stand24 ards promulgated under this section, consider the 
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1 emission limitations and percent reductions achieved 

2 in practice. 

3 ‘‘(2) Notwithstanding the requirements of para4 graph (1) the Administrator need not review any 

5 standard promulgated under subsection (b) if the 

6 Administrator determines that such review is not ap7 propriate in light of readily available information on 

8 the efficacy of such standard. 

9 ‘‘(f) EFFECTIVE DATE.—Standard promulgated pur10 suant to this section shall become effective upon promul11 gation. 

12 ‘‘(g) DELEGATION.—

13 ‘‘(1) Each State may develop and submit to the 

14 Administration a procedure for implementing and 

15 enforcing standards promulgated under this section 

16 for affected units located in such State. If the Ad17 ministrator finds the State procedure is adequate, 

18 the Administrator shall delegate to such State any 

19 authority the Administrator has under this Act to 

20 implement and enforce such standards. 

21 ‘‘(2) Nothing in this subsection shall prohibit 

22 the Administrator from enforcing any applicable 

23 standard under this section. 

24 ‘‘(h) VIOLATIONS.—After the effective date of stand25 ards promulgated under this section, it shall be unlawful 
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1 for any owner or operator of any affected unit to operate 

2 such unit in violation of any standard applicable to such 

3 unit. 

4 ‘‘(i) COORDINATION WITH OTHER AUTHORITIES.—

5 For purposes of sections 111(e), 113, 114, 116, 120, 303, 

6 304, 307 and other provisions for the enforcement of this 

7 Act, each standard established pursuant to this section 

8 shall be treated in the same manner as a standard of per9 formance under section 111, and each affected unit sub10 ject to standards under this section shall be treated in the 

11 same manner as a stationary source under section 111. 

12 ‘‘(j) STATE AUTHORITY.—Nothing in this section 

13 shall preclude or deny the right of any State or political 

14 subdivision thereof to adopt or enforce any regulation, re15 quirement, limitation, or standard relating to affected 

16 units that is more stringent than a regulation, require17 ment, limitation, or standard in effect under this section 

18 or under any other provision of this Act. 

19 ‘‘(k) OTHER AUTHORITY UNDER THIS ACT.—Noth20 ing in this section shall diminish the authority of the Ad21 ministrator or a State to establish any other requirements 

22 applicable to affected units under any other authority of 

23 law, including the authority to establish for any air pollut24 ant a national ambient air quality standard, except that 

25 no new affected unit subject to standards under this sec-
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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. The purposes of such a program are to—

13 ‘‘(1) expand current research and knowledge of 

14 the contribution of emissions from electricity genera15 tion to exposure and health effects associated with 

16 particulate matter and mercury; 

17 ‘‘(2) enhance current research and development 

18 of promising multi-pollutant control strategies and 

19 CEMS for mercury; 

20 ‘‘(3) produce peer-reviewed scientific and tech21 nology information to inform the review of emissions 

22 levels under section 410; 

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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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—
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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; 
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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) EMISSIONS LEVELS EVALUATION REPORT.—

8 Not later than January 1, 2008, the Administrator, in 

9 consultation with the Secretary of Energy, shall prepare 

10 a peer reviewed report to inform review of the emissions 

11 levels under section 410. The report shall be based on the 

12 best available peer-reviewed scientific and technology in13 formation. It shall address cost, feasibility, human health 

14 and ecological effects, and net benefits associated with 

15 emissions levels under this title. 

16 ‘‘(e) ENVIRONMENTAL ACCOUNTABILITY.—

17 ‘‘(1) MONITORING AND ASSESSMENT.—The Ad18 ministrator shall conduct a program of environ19 mental monitoring and assessment to track on a 

20 continuing basis, changes in human health and the 

21 environment attributable to the emission reductions 

22 required under this title. Such a program shall—

23 ‘‘(A) develop and employ methods to rou24 tinely monitor, collect, and compile data on the 

25 status and trends of mercury and its trans-
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1 formation products in emissions from affected 

2 facilities, atmospheric deposition, surface water 

3 quality, and biological systems. Emphasis shall 

4 be placed on those methods that—

5 ‘‘(i) improve the ability to routinely 

6 measure mercury in dry deposition proc7 esses; 

8 ‘‘(ii) improve understanding of the 

9 spatial and temporal distribution of mer10 cury deposition in order to determine 

11 source-receptor relationships and patterns 

12 of long-range, regional, and local deposi13 tion; 

14 ‘‘(iii) improve understanding of aggre15 gate exposures and additive effects of 

16 methylmercury and other pollutants; and 

17 ‘‘(iv) improve understanding of the ef18 fectiveness and cost of mercury emissions 

19 controls; 

20 ‘‘(B) modernize and enhance the national 

21 air quality and atmospheric deposition moni22 toring networks in order to cost-effectively ex23 pand and integrate, where appropriate, moni24 toring capabilities for sulfur, nitrogen, and mer-
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1 cury to meet the assessment and reporting re2 quirements of this section; 

3 ‘‘(C) perform and enhance long-term moni4 toring of sulfur, nitrogen, and mercury, and pa5 rameters related to acidification, nutrient en6 richment, and mercury bioaccumulation in 

7 freshwater and marine biota; 

8 ‘‘(D) maintain and upgrade models that 

9 describe the interactions of emissions with the 

10 atmosphere and resulting air quality implica11 tions and models that describe the response of 

12 ecosystems to atmospheric deposition; and 

13 ‘‘(E) assess indicators of ecosystems health 

14 related to sulfur, nitrogen, and mercury, includ15 ing characterization of the causes and effects of 

16 episodic exposure to air pollutants and evalua17 tion of recovery. 

18 ‘‘(2) REPORTING REQUIREMENTS.—Not later 

19 than January 1, 2008, and not later than every 4 

20 years thereafter, the Administrator shall provide a 

21 peer reviewed report to the Congress on the costs, 

22 benefits, and effectiveness of emission reduction pro23 grams under this title. The report shall address the 

24 relative contribution of emission reductions from 

25 U.S. electricity generation under this title compared 
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1 to the emission reductions achieved under other ti2 tles of the Clean Air Act with respect to—

3 ‘‘(A) actual and projected emissions of sul4 fur dioxide, nitrogen oxides, and mercury; 

5 ‘‘(B) average ambient concentrations of 

6 sulfur dioxide and nitrogen oxides trans7 formation products, related air quality param8 eters, and indicators of reductions in human ex9 posure;

10 ‘‘(C) status and trends in total atmos11 pheric deposition of sulfur, nitrogen, and mer12 cury, including regional estimates of total at13 mospheric deposition; 

14 ‘‘(D) status and trends in visibility; 

15 ‘‘(E) status of terrestrial and aquatic eco16 systems (including forests and forested water17 sheds, streams, lakes, rivers, estuaries, and 

18 near-coastal waters); 

19 ‘‘(F) status of mercury and its trans20 formation products in fish; 

21 ‘‘(G) causes and effects of atmospheric 

22 deposition, including changes in surface water 

23 quality, forest and soil conditions; 

24 ‘‘(H) occurrence and effects of coastal eu25 trophication and episodic acidification, particu-
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1 larly with respect to high elevation watersheds; 

2 and 

3 ‘‘(I) reduction in atmospheric deposition 

4 rates that should be achieved to prevent or re5 duce adverse ecological effects. 

6 ‘‘SEC. 483. EXEMPTION FROM MAJOR SOURCE 

7 PRECONSTRUCTION REVIEW REQUIREMENTS 

8 AND BEST AVAILABLE RETROFIT CONTROL 

9 TECHNOLOGY REQUIREMENTS. 

10 ‘‘(a) MAJOR SOURCE EXEMPTION.—An affected unit 

11 shall not be considered a major emitting facility or major 

12 stationary source, or a part of a major emitting facility 

13 or major stationary source for purposes of compliance with 

14 the requirements of parts C and part D of title I. This 

15 exemption only applies to units that are either subject to 

16 the performance standards of section 481 or meet the fol17 lowing requirements within 3 years after the date of enact18 ment of the Clear Skies Act of 2003: 

19 ‘‘(1) The owner or operator of the affected unit 

20 properly operates, maintains and repairs pollution 

21 control equipment to limit emissions of particulate 

22 matter, or the owner or operator of the affected unit 

23 is subject to an enforceable permit issued pursuant 

24 to title V or a permit program approved or promul25 gated as part of an applicable implementation plan 
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1 to limit the emissions of particular matter from the 

2 affected unit to 0.03 lb/mmBtu within 8 years after 

3 the date of enactment of the Clear Skies Act of 

4 2003, and 

5 ‘‘(2) The owner or operator of the affected unit 

6 uses good combustion practices to minimize emis7 sions of carbon monoxide. 

8 ‘‘(b) CLASS I AREA PROTECTIONS.—Notwith9 standing the exemption in subsection (a), an affected unit 

10 located within 50 km of a Class I area on which construc11 tion commences after the date of enactment of the Clear 

12 Skies Act of 2003 is subject to those provisions under part 

13 C of title I pertaining to the review of a new or modified 

14 major stationary source’s impact on a Class I area. 

15 ‘‘(c) PRECONSTRUCTION REQUIREMENTS.—Each 

16 State shall include in its plan under section 110, as pro17 gram to provide for the regulation of the construction of 

18 an affected unit that ensures that the following require19 ments are met prior to the commencement of construction 

20 of an affected unit—

21 ‘‘(1) in an area designated as attainment or 

22 unclassifiable under section 107(d), the owner or op23 erator of the affected unit must demonstrate to the 

24 State that the emissions increase from the construc25 tion or operation of such unit will not cause, or con-
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1 tribute to, air pollution in excess of any national am2 bient air quality standard; 

3 ‘‘(2) in an area designated as nonattainment 

4 under section 107(d), the State must determine that 

5 the emissions increase from the construction or oper6 ation of such unit will not interfere with any pro7 gram to assure that the national ambient air quality 

8 standards are achieved;

9 ‘‘(3) for a modified unit, the unit must comply 

10 prior to beginning operation with either the perform11 ance standards of section 481 or best available con12 trol technology as defined in part C of title I for the 

13 pollutants whose hourly emissions will increase at 

14 the unit’s maximum capacity; and 

15 ‘‘(4) the State must provide for an opportunity 

16 for interested persons to comment on the Class I 

17 area protections and preconstruction requirements 

18 as set forth in this section. 

19 ‘‘(d) DEFINITIONS.—For purposes of this section: 

20 ‘‘(1) The term ‘affected unit’ means any unit 

21 that is subject to emission limitations under subpart 

22 2 of part B, subpart 2 of part C, or part D. 

23 ‘‘(2) The term ‘construction’ includes the con24 struction of a new affected unit and the modification 

25 of any affected unit. 
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1 ‘‘(3) The term ‘modification’ means any phys2 ical change in, or change in the method of operation 

3 of, an affected unit that increases the maximum 

4 hourly emissions of any pollutant regulated under 

5 this Act above the maximum hourly emissions 

6 achievable at that unit during the 5 years prior to 

7 the change or that results in the emission of any 

8 pollutant regulated under this Act and not pre9 viously emitted. 

10 ‘‘(e) SAVINGS CLAUSE.—Nothing in this section shall 

11 preclude or deny the right of any State or political subdivi12 sion thereof to adopt to enforce any regulation, require13 ments, limitation, or standard relating to affected units 

14 that is more stringent than a regulation, requirement, lim15 itation, or standard in effect under this section or under 

16 any other provision of this Act.’’. 

17 SEC. 3. OTHER AMENDMENTS. 

18 (a) Title I of the Clean Air Act is amended as follows: 

19 (1) In section 103 by repealing subparagraphs 

20 (E) and (F). 

21 (2) In section 107—

22 (A) By amending subparagraph (A) of 

23 subsection (d)(1) as follows: 

24 (i) strike ‘‘or’’ at the end of clause 

25 (ii); 
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1 (ii) strike the period at the end of 

2 clause (iii) and insert ‘‘, or’’; 

3 (iii) add the following clause (iv) after 

4 clause (iii): 

5 ‘‘(iv) notwithstanding clauses (i) 

6 through (iii), an area may be designated 

7 transitional for the PM 2.5 national pri8 mary or secondary ambient air quality 

9 standards or the 8-hour ozone national pri10 mary or secondary ambient air quality 

11 standard if the Administrator has per12 formed air quality modeling and, in the 

13 case of an area that needs additional local 

14 control measures, the State has performed 

15 supplemental air quality modeling, dem16 onstrating that the area will attain the ap17 plicable standard or standards no later 

18 than December 31, 2015, and such mod19 eling demonstration and all necessary local 

20 controls have been approved into the State 

21 implementation plan no later than Decem22 ber 31, 2004.’’. 

23 (iv) add at the end a sentence to read 

24 as follows: ‘‘For purposes of the PM 2.5 

25 national primary or secondary ambient air 
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1 quality standards, the time period for the 

2 State to submit the designations shall be 

3 extended to no later than December 31, 

4 2003.’’. 

5 (B) By amending clause (i) of subsection 

6 (d)(1)(B) by adding at the end a sentence to 

7 read as follows: ‘‘The Administrator shall not 

8 be required to designate areas for the revised 

9 PM 2.5 national primary or secondary ambient 

10 air quality standards prior to 6 months after 

11 the States are required to submit recommenda12 tions under section 107(d)(1)(A), but in no 

13 event shall the period for designating such 

14 areas be extended beyond December 31, 2004.’’. 

15 (3) In section 110 as follows: 

16 (A) By amending clause (i) of subsection 

17 (a)(2)(D) by inserting ‘‘except as provided in 

18 subsection (q),’’ before the word ‘‘prohibiting’’. 

19 (B) By adding the following new sub20 sections at the end thereof: 

21 ‘‘(q) REVIEW OF CERTAIN PLANS.—(1) The Admin22 istrator shall, in reviewing, under clause (i) of subsection 

23 (a)(2)(D), any plan with respect to affected units, within 

24 the meaning of section 126(d)(1)—
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1 ‘‘(A) consider, among other relevant factors, 

2 emissions reductions required to occur by the attain3 ment date or dates of any relevant nonattainment 

4 areas in the other State or States; 

5 ‘‘(B) not require submission of plan provisions 

6 mandating emissions reductions from such affected 

7 units, unless the Administrator determines that—

8 ‘‘(i) emissions from such units may be re9 duced at least as cost-effectively as emissions 

10 from each other principal category of sources of 

11 sulfur dioxide or nitrogen oxides, including in12 dustrial boilers, on-road mobile sources, and 

13 off-road mobile sources, and any other category 

14 of sources that the Administrator may identify, 

15 and 

16 ‘‘(ii) reductions in such emissions will im17 prove air quality in the other State’s or States’ 

18 nonattainment areas at least as cost-effectively 

19 as reductions in emissions from each other prin20 cipal category of sources of sulfur dioxide or ni21 trogen oxides, to the maximum extent that a 

22 methodology is reasonably available to make 

23 such a determination; 
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1 ‘‘(C) develop and appropriate peer reviewed 

2 methodology for making determinations under sub3 paragraph (B) by December 31, 2006; and 

4 ‘‘(D) not require submission of plan provisions 

5 subjecting affected units, within the meaning of sec6 tion 126(d)(1), to requirements with an effective 

7 date prior to January 1, 2012. 

8 ‘‘(2) In making the determination under clause (ii) 

9 of subparagraph (B) of paragraph (1), the Administrator 

10 will use the best available peer- reviewed models and meth11 odology that consider the proximity of the source or 

12 sources to the other State or States and incorporate other 

13 source characteristics. 

14 ‘‘(3) Nothing in paragraph (1) shall be interpreted 

15 to require revisions to the provisions of 40 CFR 51.121 

16 and 51.122 (2001), as would be amended in the notice 

17 of proposed rulemaking at 67 Federal Register 8396 (Feb18 ruary 22, 2002)’’. 

19 ‘‘(r) TRANSITIONAL AREAS.—

20 ‘‘(1) MAINTENANCE.—(A) By December 31, 

21 2010, each area designated as transitional pursuant 

22 to section 107(d)(1) shall submit an updated emis23 sion inventory and an analysis of whether growth in 

24 emissions, including growth in vehicle miles traveled, 
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1 will interfere with attainment by December 31, 

2 2015. 

3 ‘‘(B) No later than December 31, 2011, the Ad4 ministrator shall review each transitional area’s 

5 maintenance analysis, and, if the Administrator de6 termines that growth in emissions will interfere with 

7 attainment by December 31, 2015, the Adminis8 trator shall consult with the State and determine 

9 what action, if any, is necessary to assure that at10 tainment will be achieved by 2015. 

11 ‘‘(2) PREVENTION OF SIGNIFICANT DETERIORA12 TION.—Each area designated as transitional pursu13 ant to section 107(d)(1) shall be treated as an at14 tainment or unclassifiable area for purposes of the 

15 prevention of significant deterioration provisions of 

16 part C of this title. 

17 ‘‘(3) CONSEQUENCES OF FAILURE TO ATTAIN

18 BY 2015.—No later than June 30, 2016, the Admin19 istrator shall determine whether each area des20 ignated as transitional for the 8-hour ozone stand21 ard or for the PM 2.5 standard has attained that 

22 standard. If the Administrator determines that a 

23 transitional area has not attained the standard, the 

24 area shall be redesignated as nonattainment within 

25 1 year of the determination and the State shall be 
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1 required to submit a State implementation plan revi2 sion satisfying the provisions of section 172 within 

3 3 years of redesignation as nonattainment.’’. 

4 (4) By adding to section 111(b)(1) a new sub5 paragraph (C) to read as follows: 

6 ‘‘(C) No standards of performance promul7 gated under this section shall apply to units 

8 subject to regulations promulgated pursuant to 

9 section 481.’’. 

10 (5) By amending section 112 as follows: 

11 (A) Paragraph (1) of subsection (c) is 

12 amended to read as follows: 

13 ‘‘(1) IN GENERAL.—Not later than 12 months 

14 after November 15, 1990, the Administrator shall 

15 publish, and shall from time to time, but not less 

16 often than every 8 years, revise, if appropriate, in 

17 response to public comment or new information, a 

18 list of all categories and subcategories of major 

19 sources and area sources (listed under paragraph 

20 (3)) of the air pollutants listed pursuant to sub21 section (b). Electric utility steam generating units 

22 not subject to section 3005 of the Solid Waste Dis23 posal Act shall not be included in any category or 

24 subcategory listed under this subsection. The Ad25 ministrator shall have the authority to regulate the 
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1 emission of hazardous air pollutants listed under 

2 section 112(b), other than mercury compounds, by 

3 electric utility steam generating units in accordance 

4 with the regime set forth in section 112(f)(2) 

5 through (4). Any such regulations shall be promul6 gated within, and shall not take effect before, the 

7 date 8 years after the commencement date of the 

8 mercury allowance requirement of section 472. To 

9 the extent practicable, the categories and subcat10 egories listed under this subsection shall be con11 sistent with the list of source categories established 

12 pursuant to section 111 and part C. Nothing in the 

13 preceding sentence limits the Administrator’s au14 thority to establish subcategories under this section, 

15 as appropriate.’’. 

16 (B) Subparagraph (A) of subsection (n)(1) 

17 is amended to read as follows: 

18 ‘‘(A) The Administrator shall perform a 

19 study of the hazards to public health reasonably 

20 anticipated to occur as a result of emissions by 

21 electric utility steam generating units of pollut22 ants listed under subsection (b) after imposition 

23 of the requirements of this Act. The Adminis24 trator shall report the results of this study to 
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1 the Congress within 3 years after November 15, 

2 1990.’’. 

3 (6) Section 126 is amended as follows: 

4 (A) By replacing ‘‘section 110(a)(2)(D)(ii) 

5 or this section’’ in subsection (b) with ‘‘section 

6 110(a)(2)(D)(i)’’. 

7 (B) By replacing ‘‘this section and the pro8 hibition of section 110(a)(2)(D)(ii)’’ in sub9 section (e)(1) with ‘‘the prohibition of section 

10 110(a)(2)(D)(i)’’. 

11 (C) In the flush language at end of sub12 section (c) by striking ‘‘section 

13 110(a)(2)(D)(ii)’’ and inserting ‘‘section 

14 110(a)(2)(D)(i)’’ and deleting the last sentence. 

15 (D) By amending subsection (d) to read as 

16 follows: 

17 ‘‘(d)(1) For purposes of this subsection, the term ‘af18 fected unit’ means any unit that is subject to emission 

19 limitations under subpart 2 of part B, subpart 2 of part 

20 C, or part D. 

21 ‘‘(2) To the extent that any petition submitted under 

22 subsection (b) after the date of enactment of the Clear 

23 Skies Act of 2003 seeks a finding for any affected unit, 

24 then, notwithstanding any provision in subsections (a) 

25 through (c) to the contrary—
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1 ‘‘(A) in determining whether to make a finding 

2 under subsection (b) for any affected unit, the Ad3 ministrator shall consider, among other relevant fac4 tors, emissions reductions required to occur by the 

5 attainment date or dates of any relevant nonattain6 ment areas in the petitioning State or political sub7 division; 

8 ‘‘(B) the Administrator may not determine that 

9 affected units emit, or would emit, any air pollutant 

10 in violation of the prohibition of section 

11 110(a)(2)(D)(i) unless that Administrator deter12 mines that—

13 ‘‘(i) such emissions may be reduced at 

14 least as cost-effectively as emissions from each 

15 other principal category of sources of sulfur di16 oxide or nitrogen oxides, including industrial 

17 boilers, on-road mobile sources, and off-road 

18 mobile sources, and any other category of 

19 sources that the Administrator may identify; 

20 and 

21 ‘‘(ii) reductions in such emissions will im22 prove air quality in the petitioning State’s non23 attainment area or areas at least as cost-effec24 tively as reductions in emissions from each 

25 other principal category of sources of sulfur di-
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1 oxide or nitrogen oxides to the maximum extent 

2 that a methodology is reasonably available to 

3 make such a determination. 

4 In making the determination under clause (ii), the 

5 Administrator shall use the best available peer-re6 viewed models and methodology that consider the 

7 proximity of the source or sources to the petitioning 

8 State or political subdivision and incorporate other 

9 sources characteristics. 

10 ‘‘(C) The Administrator shall develop an appro11 priate peer reviewed methodology for making deter12 minations under subparagraph (B) by December 31, 

13 2006. 

14 ‘‘(D) The Administrator shall not make any 

15 findings with respect to an affected unit under this 

16 section prior to January 1, 2009. For any petition 

17 submitted prior to January 1, 2007, the Adminis18 trator shall make a finding or deny the petition by 

19 the January 31, 2009. 

20 ‘‘(E) The Administrator, by rulemaking, shall 

21 extend the compliance and implementation deadlines 

22 in subsection (c) to the extent necessary to assure 

23 that no affected unit shall be subject to any such 

24 deadline prior to January 1, 2012.’’. 
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1 (b) TITLE III.—Section 307(d)(1)(G) of title III of 

2 the Clean Air Act is amended to read as follows: 

3 ‘‘(G) the promulgation or revision of any 

4 regulation under title IV,’’. 

5 (c) NOISE POLLUTION.—Title IV of the Clean Air 

6 Act (relating to noise pollution) (42 U.S.C. 7641 et seq.) 

7 is redesignated as title VII and amended by renumbering 

8 sections 401 through 403 as sections 701 through 703, 

9 respectively. 

10 (d) SECTION 406.—Title IV of the Clean Air Act 

11 Amendments of 1990 (relating to acid deposition control) 

12 is amended by repealing section 406 (industrial SO2 emis13 sions). 

14 (e) MONITORING.—Section 821(a) of title VIII of the 

15 Clean Air Act Amendments of 1990 (miscellaneous provi16 sions) is amended by modifying section 821(a) to read as 

17 follows: 

18 ‘‘(a) MONITORING.—The Administrator of the Envi19 ronmental Protection Agency shall promulgate regulations 

20 within 18 months after November 15, 1990, to require 

21 that all affected sources subject to subpart 1 of part B 

22 of title IV of the Clean Air Act as of December 31, 2009, 

23 shall also monitor carbon dioxide emissions according to 

24 the same timetable as in section 405(b). The regulations 

25 shall require that such data be reported to the Adminis-
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1 trator. The provisions of section 405(e) of title IV of the 

2 Clean Air Act shall apply for purposes of this section in 

3 the same manner and to the same extent as such provision 

4 applies to the monitoring and data referred to in section 

5 405. The Administrator shall implement this subsection 

6 under 40 CFR part 75 (2002), amended as appropriate 

7 by the Administrator.’’.

Æ