476 
(3) CALENDAR YEAR FOR USE.—An allowance may not be used prior 
to the calendar year for which the allowance is allocated. 
(4) PERMITTING, MONITORING, AND
ENFORCEMENT.—Nothing in 
this section (including the allowance system regulations) shall— 
(A) relieve the Administrator of the Administrator’s permitting, 
monitoring, and enforcement obligations under this division; or 
(B) relieve affected sources of their requirements and liabilities 
under this division. 
(g) COMPETITIVE BIDDING FOR POWER SUPPLY.—Nothing in this sub-
division shall be construed to interfere with or impair any program for com-
petitive bidding for power supply in a State in which such a program is es-
tablished. 
(h) APPLICABILITY OF ANTITRUST LAWS.— 
(1) DEFINITION OF ANTITRUST LAWS.—In this section, the term 
‘‘antitrust laws’’ has the meaning given the term in the 1st section of 
the Clayton Act (15 U.S.C. 12). 
(2) EFFECT OF SECTION.—Nothing in this section affects— 
(A) the applicability of the antitrust laws to the transfer, use, 
or sale of an allowance; or 
(B) the authority of the Federal Energy Regulatory Commission 
under any provision of law respecting unfair methods of competi-
tion or anticompetitive acts or practices. 
§ 233104. Conservation and renewable energy reserve; alter-
native allowance allocation for units in certain 
utility systems with optional baseline 
(a) CONSERVATION AND RENEWABLE ENERGY RESERVE.— 
(1) ESTABLISHMENT.—The Administrator shall establish a conserva-
tion and renewable energy reserve (referred to in this subsection as the 
‘‘Reserve’’). 
(2) ALLOCATIONS.—The Administrator may allocate from the Re-
serve an amount equal to a total of 300,000 allowances for emissions 
of sulfur dioxide pursuant to section 233103 of this title. 
(3) REDUCTION OF BASIC PHASE II ALLOWANCE ALLOCATION.—To 
provide 300,000 allowances for the Reserve, in each year through cal-
endar year 2009, the Administrator shall reduce each unit’s basic 
Phase II allowance allocation on the basis of its pro rata share of 
30,000 allowances. 
(4) REMAINING ALLOWANCES.—If allowances remain in the Reserve 
after January 2, 2010, the Administrator shall allocate those allow-
ances for affected units under section 233105 of this title on a pro rata 
basis. 
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477 
(5) PRO RATA BASIS.—For purposes of this subsection, for any unit 
subject to the emission limitation requirements of section 233105 of 
this title, the term ‘‘pro rata basis’’ refers to the ratio that— 
(A) the reductions made in the unit’s allowances to establish the 
Reserve; bears to 
(B) the total of such reductions for all such units. 
(b) ALTERNATIVE ALLOWANCE ALLOCATION
FOR UNITS
IN CERTAIN 
UTILITY SYSTEMS WITH OPTIONAL BASELINE.— 
(1) OPTIONAL BASELINE FOR UNITS IN CERTAIN SYSTEMS.— 
(A) IN GENERAL.—In the case of a unit described in subpara-
graph (B), at the election of the owner or operator of the unit 
made not later than March 1, 1991, the unit’s baseline may be 
calculated— 
(i) as provided under section 233102(6) of this title; or 
(ii) by utilizing the unit’s average annual fuel consumption 
at a 60 percent capacity factor. 
(B) UNITS.—A unit referred to in subparagraph (A) is a unit 
that was subject to the emission limitation requirements of section 
404 of the Clean Air Act (42 U.S.C. 7651c) (as in effect before 
the repeal of that section) that, as of November 15, 1990— 
(i) had an emission rate below 1.0 pound per million Brit-
ish thermal units; 
(ii) had decreased its sulfur dioxide emission rate by 60 
percent or greater since 1980; and 
(iii) was part of a utility system that had a weighted aver-
age sulfur dioxide emission rate for all fossil fuel-fired units 
below 1.0 pound per million British thermal units. 
(2) ALLOWANCE ALLOCATION.— 
(A) IN GENERAL.—When the owner or operator of a unit de-
scribed in paragraph (1) elects to calculate the unit’s baseline as 
provided in paragraph (1)(A)(ii), the Administrator shall allocate 
allowances for the unit pursuant to section 233103(a)(1) of this 
title, this section, and section 233105 of this title (as basic Phase 
II allowance allocations) in an amount equal to— 
(i) the baseline selected; multiplied by 
(ii) the lower of— 
(I) the average annual emission rate for the unit in 
1989; or 
(II) 1.0 pound per million British thermal units. 
(B) ALLOWANCE IN LIEU OF OTHER ALLOCATION.—An allow-
ance allocation under subparagraph (A) shall be in lieu of any al-
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478 
location of allowances under this section and section 233105 of 
this title. 
§ 233105. Phase II sulfur dioxide requirements 
(a) APPLICABILITY.— 
(1) IN GENERAL.— 
(A) EXISTING UNITS.—Each existing utility unit as provided in 
this subsection is subject to the limitations or requirements of this 
section. 
(B) AFFECTED UNITS.—Each utility unit subject to an annual 
sulfur dioxide tonnage emission limitation under this section is an 
affected unit under this subdivision. 
(C) AFFECTED SOURCES.—Each source that includes 1 or more 
affected units is an affected source. 
(D) EXISTING UNITS NOT IN OPERATION DURING 1985.—In the 
case of an existing unit that was not in operation during calendar 
year 1985, the emission rate for a calendar year after 1985, as 
determined by the Administrator, shall be used in lieu of the 1985 
rate. 
(E) UNIT OPERATED IN VIOLATION OF THIS SECTION.—The 
owner or operator of any unit operated in violation of this section 
shall be fully liable under this chapter for fulfilling the obligations 
specified in section 233110 of this title. 
(2) ALLOCATION OF PHASE II BONUS ALLOWANCES.— 
(A) ALLOCATION.—In addition to basic Phase II allowance allo-
cations, in each year ending in calendar year 2009, the Adminis-
trator shall allocate up to 530,000 Phase II bonus allowances pur-
suant to subsections (b)(2) and (c)(4), subparagraphs (A) and (B) 
of subsection (d)(3), and subsection (h)(2) and section 233106 of 
this title. 
(B) CALCULATION.—The Administrator shall— 
(i) calculate, for each unit granted an extension pursuant 
to section 409 of the Clean Air Act (42 U.S.C. 7651h) (as 
in effect before the repeal of that section), the difference be-
tween— 
(I) the number of allowances allocated for the unit in 
calendar year 2000; and 
(II)(aa) the unit’s baseline; multiplied by 
(bb) 1.20 pounds per million British thermal units; di-
vided by 
(cc) 2000; and 
(ii) sum the calculations for all such units. 
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479 
(C) DEDUCTION.—In each year ending in calendar year 2009, 
the Administrator shall deduct from each unit’s basic Phase II al-
lowance allocation its pro rata share of 10 percent of the sum cal-
culated pursuant to subparagraph (B). 
(3) ADDITIONAL ALLOWANCES.— 
(A) IN GENERAL.—In addition to basic Phase II allowance allo-
cations and Phase II bonus allowance allocations, the Adminis-
trator shall allocate for each unit listed on table A and located in 
Illinois, Indiana, Ohio, Georgia, Alabama, Missouri, Pennsylvania, 
West Virginia, Kentucky, or Tennessee allowances in an amount 
equal to— 
(i) 50,000; multiplied by 
(ii) the unit’s pro rata share of the total number of basic 
Phase II allowances allocated for all units listed on table A. 
TABLE A.—UNITS 
State 
Plant Name 
Gener-
ator 
Alabama .................
Colbert .........................................................................
E.C. Gaston .................................................................
Florida ....................
Big Bend ......................................................................
Crist .............................................................................
Georgia ...................
Bowen ..........................................................................
Hammond ....................................................................
J. McDonough .............................................................
Wansley ........................................................................
Yates ............................................................................
Illinois .....................
Baldwin ........................................................................
Coffeen .........................................................................
Grand Tower ................................................................
Hennepin .....................................................................
Kincaid .........................................................................
Meredosia .....................................................................
Vermilion .....................................................................
Indiana ...................
Bailly ...........................................................................
Breed.
Cayuga .........................................................................
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480 
TABLE A.—UNITS—Continued 
State 
Plant Name 
Gener-
ator 
E. W. Stout .................................................................
F. B. Culley .................................................................
F. E. Ratts ..................................................................
Gibson ..........................................................................
H. T. Pritchard.
Michigan City ..............................................................
Petersburg ...................................................................
R. Gallagher .................................................................
Tanners Creek .............................................................
Wabash River ..............................................................
Warrick ........................................................................
Iowa ........................
Burlington ...................................................................
Des Moines ..................................................................
George Neal .................................................................
M.L. Kapp ...................................................................
Prairie Creek ...............................................................
Riverside ......................................................................
Kansas ....................
Quindaro ......................................................................
Kentucky ................
Coleman .......................................................................
Cooper ..........................................................................
E.W. Brown .................................................................
Elmer Smith ................................................................
Ghent ...........................................................................
Green River ..................................................................
H.L. Spurlock ..............................................................
Henderson II ...............................................................
Paradise .......................................................................
Shawnee .......................................................................
Maryland ................
Chalk Point ..................................................................
C. P. Crane ..................................................................
Morgantown .................................................................
Michigan .................
J. H. Campbell ............................................................
Minnesota ...............
High Bridge .................................................................
Mississippi ..............
Jack Watson ................................................................
Missouri ..................
Asbury ..........................................................................
James River .................................................................
Labadie ........................................................................
Montrose ......................................................................
New Madrid .................................................................
Sibley ...........................................................................
Sioux ............................................................................
Thomas Hill .................................................................
New Hampshire ......
Merrimack ....................................................................
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483 
(2) ADDITIONAL ALLOWANCES FOR UNITS WITH AN ACTUAL 1985 
SULFUR DIOXIDE EMISSION RATE GREATER THAN 1.20 POUNDS PER 
MILLION BRITISH THERMAL UNITS AND LESS THAN 2.50 POUNDS PER 
MILLION BRITISH THERMAL UNITS AND A BASELINE CAPACITY FACTOR 
OF LESS THAN 60 PERCENT.—In addition to allowances allocated pur-
suant to paragraph (1) and section 233103(a) of this title as basic 
Phase II allowance allocations, for each calendar year through 2009, 
the Administrator shall allocate annually for each unit subject to the 
emission limitation requirements of paragraph (1) with an actual 1985 
sulfur dioxide emission rate greater than 1.20 pounds per million Brit-
ish thermal units and less than 2.50 pounds per million British thermal 
units and a baseline capacity factor of less than 60 percent, allowances 
from the reserve created pursuant to subsection (a)(2) in an amount 
equal to— 
(A) 1.20 pounds per million British thermal units; multiplied by 
(B) 50 percent of the difference, on a British thermal unit 
basis, between— 
(i) the unit’s baseline; and 
(ii) the unit’s fuel consumption at a 60 percent capacity 
factor. 
(3) PROHIBITION APPLICABLE TO CERTAIN UNITS CONSUMING LIG-
NITE COAL.—Unless the owner or operator of the existing unit holds 
allowances to emit not less than the existing unit’s total annual emis-
sions, it shall be unlawful for an existing utility unit with an actual 
1985 sulfur dioxide emission rate equal to or greater than 1.20 pounds 
per million British thermal units whose annual average fuel consump-
tion during 1985, 1986, and 1987 on a British thermal unit basis ex-
ceeded 90 percent in the form of lignite coal located in a State in 
which, as of July 1, 1989, no county or portion of a county was des-
ignated nonattainment under section 107 of the Clean Air Act (42 
U.S.C. 7407) (as in effect on that date) for any pollutant subject to 
the requirements of section 109 of the Clean Air Act (42 U.S.C. 7409) 
(as in effect on that date) to exceed an annual sulfur dioxide tonnage 
limitation equal to— 
(A) the unit’s baseline; multiplied by 
(B) the lesser of— 
(i) the unit’s actual 1985 sulfur dioxide emission rate; or 
(ii) its allowable 1985 sulfur dioxide emission rate; divided 
by 
(C) 2,000. 
(4) ALLOWANCES FOR CERTAIN UNITS CONVERTED TO COAL.— 
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484 
(A) IN GENERAL.—The Administrator shall allocate annually 
for each unit that is subject to the emission limitation require-
ments of paragraph (1) and is located in a State with an installed 
electrical generating capacity of more than 30,000,000 kilowatts 
in 1988 and for which was issued a prohibition order or a pro-
posed prohibition order (from burning oil), which unit subse-
quently converted to coal between January 1, 1980, and December 
31, 1985, allowances equal to the difference between— 
(i)(I) the unit’s annual fuel consumption, on a British ther-
mal unit basis, at a 65 percent capacity factor; multiplied by 
(II) the lesser of the unit’s actual emission rate or allow-
able emission rate during the 1st full calendar year after con-
version; divided by 
(III) 2,000; and 
(ii) the number of allowances allocated for the unit pursu-
ant to paragraph (1). 
(B) RESTRICTION.— 
(i) IN GENERAL.—The number of allowances allocated pur-
suant to this paragraph shall not exceed an annual total of 
5,000. 
(ii) REDUCTION OF ALLOWANCE.—If necessary to meeting 
the restriction imposed by clause (i), the Administrator shall 
reduce, pro rata, the annual allowances allocated for each 
unit under this paragraph. 
(c) COAL- OR OIL-FIRED UNITS BELOW 75 MEGAWATTS ELECTRIC AND 
ABOVE 1.20 POUNDS PER MILLION BRITISH THERMAL UNITS.— 
(1) UTILITY OPERATING COMPANIES WITH CAPACITY EQUAL TO OR 
GREATER THAN 250 MEGAWATTS ELECTRIC.—Except as provided in 
paragraph (3), unless the owner or operator of the unit holds allow-
ances to emit not less than the unit’s total annual emissions, it shall 
be unlawful for a coal- or oil-fired existing utility unit that serves a 
generator with nameplate capacity of less than 75 megawatts electric 
and an actual 1985 sulfur dioxide emission rate equal to or greater 
than 1.20 pounds per million British thermal units and that is a unit 
owned by a utility operating company whose aggregate nameplate fossil 
fuel steam-electric capacity was, as of December 31, 1989, equal to or 
greater than 250 megawatts electric to exceed an annual sulfur dioxide 
emission limitation equal to— 
(A) the unit’s baseline; multiplied by 
(B) an emission rate equal to 1.20 pounds per million British 
thermal units; divided by 
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(C) 2,000. 
(2) UTILITY OPERATING COMPANIES WITH CAPACITY OF LESS THAN 
250 MEGAWATTS ELECTRIC.—Unless the owner or operator of the unit 
holds allowances to emit not less than the unit’s total annual emissions, 
it shall be unlawful for a coal or oil-fired existing utility unit that 
serves a generator with nameplate capacity of less than 75 megawatts 
electric and an actual 1985 sulfur dioxide emission rate equal to or 
greater than 1.20 pounds per million British thermal units (excluding 
units subject to section 211111 of this title or to a federally enforceable 
emission limitation for sulfur dioxide equivalent to an annual rate of 
less than 1.20 pounds per million British thermal units) and that is 
a unit owned by a utility operating company whose aggregate name-
plate fossil fuel steam-electric capacity was, as of December 31, 1989, 
less than 250 megawatts electric to exceed an annual sulfur dioxide 
tonnage emission limitation equal to— 
(A) the unit’s baseline; multiplied by 
(B) the lesser of the unit’s actual 1985 sulfur dioxide emission 
rate or its allowable 1985 sulfur dioxide emission rate; divided by 
(C) 2,000. 
(3) CERTAIN EXISTING UTILITY UNITS WITH CAPACITY OF LESS 
THAN 75 MEGAWATTS ELECTRIC AND AN ACTUAL 1985 SULFUR DIOXIDE 
EMISSION RATE EQUAL TO OR GREATER THAN 1.20 POUNDS PER MIL-
LION BRITISH THERMAL UNITS.— 
(A) BEFORE JANUARY 2, 2010.—Unless the owner or operator 
of the unit holds allowances to emit not less than the unit’s total 
annual emissions, it shall be unlawful for an existing utility unit 
that has a nameplate capacity of less than 75 megawatts electric 
and an actual 1985 sulfur dioxide emission rate equal to or great-
er than 1.20 pounds per million British thermal units that became 
operational on or before December 31, 1965, and that is owned 
by a utility operating company with, as of December 31, 1989, a 
total fossil fuel steam-electric generating capacity of greater than 
250 and less than 450 megawatts electric that served fewer than 
78,000 electrical customers as of November 15, 1990, to exceed 
an annual sulfur dioxide emission tonnage limitation equal to— 
(i) the unit’s baseline; multiplied by 
(ii) the lesser of its actual 1985 sulfur dioxide emission 
rate or its allowable 1985 sulfur dioxide emission rate; di-
vided by 
(iii) 2,000. 
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(B) AFTER JANUARY 1, 2010.—After January 1, 2010, it shall 
be unlawful for a unit described in subparagraph (A) to exceed an 
annual emission tonnage limitation equal to— 
(i) its baseline; multiplied by 
(ii) an emission rate of 1.20 pounds per million British 
thermal units; divided by 
(iii) 2,000. 
(4) ADDITIONAL ALLOWANCES FOR CERTAIN UNITS WITH AN AC-
TUAL 1985 EMISSION RATE OF LESS THAN 2.50 POUNDS PER MILLION 
BRITISH THERMAL UNITS.—In addition to allowances allocated pursu-
ant to paragraph (1) and section 233103(a) of this title as basic Phase 
II allowance allocations, for each calendar year through 2009, the Ad-
ministrator shall allocate annually for each unit subject to the emission 
limitation requirements of paragraph (1) with an actual 1985 sulfur di-
oxide emission rate equal to or greater than 1.20 and less than 2.50 
pounds per million British thermal units and a baseline capacity factor 
of less than 60 percent allowances from the reserve created pursuant 
to subsection (a)(2) in an amount equal to— 
(A) 1.20 pounds per million British thermal units; multiplied by 
(B) 50 percent of the difference, on a British thermal unit 
basis, between— 
(i) the unit’s baseline; and 
(ii) the unit’s fuel consumption at a 60 percent capacity 
factor. 
(5) CERTAIN UNITS THAT ARE PART OF CERTAIN ELECTRIC UTILITY 
SYSTEMS.— 
(A) BEFORE JANUARY 2, 2010.— 
(i) IN GENERAL.—Unless the owner or operator of the ex-
isting utility unit holds for use allowances to emit not less 
than the unit’s total annual emissions, it shall be unlawful for 
any existing utility unit with a nameplate capacity below 75 
megawatts electric and an actual 1985 sulfur dioxide emission 
rate equal to or greater than 1.20 pounds per million British 
thermal units that is part of an electric utility system de-
scribed in clause (ii) to exceed an annual sulfur dioxide emis-
sions tonnage limitation equal to— 
(I) the unit’s baseline; multiplied by 
(II) an emission rate of 2.5 pounds per million British 
thermal units; divided by 
(III) 2,000. 
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487 
(ii) ELECTRIC UTILITY SYSTEMS DESCRIBED.—An electric 
utility system described in clause (i) is an electric utility sys-
tem that, as of November 15, 1990— 
(I) had at least 20 percent of its fossil-fuel capacity 
controlled by flue gas desulfurization devices; 
(II) had more than 10 percent of its fossil-fuel capac-
ity consisting of coal-fired units of less than 75 
megawatts electric; and 
(III) had units of greater than 400 megawatts electric 
all of which have difficult or very difficult FGD Retrofit 
Cost Factors (according to the Emissions and the FGD 
Retrofit Feasibility at the 200 Top Emitting Generating 
Stations, prepared for EPA on January 10, 1986). 
(B) AFTER JANUARY 1, 2010.—After January 1, 2010, it shall 
be unlawful for a unit described in subparagraph (A) to exceed an 
annual emission tonnage limitation equal to— 
(i) the unit’s baseline; multiplied by 
(ii) an emission rate of 1.20 pounds per million British 
thermal units; divided by 
(iii) 2,000. 
(d) COAL-FIRED UNITS BELOW 1.20 POUNDS PER MILLION BRITISH 
THERMAL UNITS.— 
(1) LESS
THAN
0.60
POUND
PER
MILLION
BRITISH
THERMAL 
UNITS.—Unless the owner or operator of the unit holds allowances to 
emit not less than the unit’s total annual emissions, it shall be unlawful 
for any coal-fired existing utility unit the lesser of whose actual 1985 
sulfur dioxide emission rate or allowable 1985 sulfur dioxide emission 
rate is less than 0.60 pound per million British thermal units to exceed 
an annual sulfur dioxide tonnage emission limitation equal to— 
(A) the unit’s baseline; multiplied by 
(B) the lesser of 0.60 pound per million British thermal units 
or the unit’s allowable 1985 sulfur dioxide emission rate; multi-
plied by 
(C) 120 percent; divided by 
(D) 2,000. 
(2) EQUAL TO OR GREATER THAN 0.60 POUND PER MILLION BRITISH 
THERMAL UNITS.—Unless the owner or operator of the unit holds al-
lowances to emit not less than the unit’s total annual emissions, it shall 
be unlawful for any coal-fired existing utility unit the lesser of whose 
actual 1985 sulfur dioxide emission rate or allowable 1985 sulfur diox-
ide emission rate is equal to or greater than 0.60 and less than 1.20 
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489 
(ii) the number of allowances allocated for the unit pursu-
ant to paragraph (2) and section 233103(a) of this title as 
basic Phase II allowance allocations. 
(C) ELECTION.—An operating company with units subject to 
the emission limitation requirements of this subsection may elect 
the allocation of allowances as provided under subparagraphs (A) 
and (B). Such an election shall apply to the annual allowance allo-
cation for each unit in the operating company subject to the emis-
sion limitation requirements of this subsection. The Administrator 
shall allocate allowances pursuant to subparagraphs (A) and (B) 
only in accordance with this subparagraph. 
(4) ALTERNATIVE ALLOCATION.—Notwithstanding any other provi-
sion of this section, at the election of the owner or operator, the Ad-
ministrator shall allocate, in lieu of allocation pursuant to paragraph 
(1), (2), (3), or (5), allowances for a unit subject to the emission limi-
tation requirements of this subsection that commenced commercial op-
eration on or after January 1, 1981, and before December 31, 1985, 
that was subject to, and in compliance with, section 211111 of this title 
in an amount equal to— 
(A) the unit’s annual fuel consumption, on a British thermal 
unit basis, at a 65 percent capacity factor; multiplied by 
(B) the unit’s allowable 1985 sulfur dioxide emission rate; di-
vided by 
(C) 2,000. 
(5) ALLOWANCES FOR OIL- OR GAS-FIRED UNITS AWARDED A CLEAN 
COAL TECHNOLOGY DEMONSTRATION GRANT.—For the purposes of this 
section, in the case of an oil- or gas-fired unit that was awarded a 
clean coal technology demonstration grant as of January 1, 1991, by 
EPA, the Administrator shall allocate for the oil- or gas-fired unit al-
lowances in an amount equal to— 
(A) the unit’s baseline; multiplied by 
(B) 1.20 pounds per million British thermal units; divided by 
(C) 2,000. 
(e) OIL- OR GAS-FIRED EXISTING UTILITY UNITS EQUAL TO OR GREAT-
ER THAN 0.60 AND LESS THAN 1.20 POUNDS PER MILLION BRITISH 
THERMAL UNITS.—Unless the owner or operator of the unit holds allow-
ances to emit not less than the unit’s total annual emissions, it shall be un-
lawful for any oil- or gas-fired existing utility unit the lesser of whose actual 
1985 sulfur dioxide emission rate or allowable 1985 sulfur dioxide emission 
rate is equal to or greater than 0.60 but less than 1.20 pounds per million 
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British thermal units to exceed an annual sulfur dioxide tonnage limitation 
equal to— 
(1) the unit’s baseline; multiplied by 
(2) the lesser of the unit’s allowable 1985 sulfur dioxide emission 
rate or its actual 1985 sulfur dioxide emission rate; multiplied by 
(3) 120 percent; divided by 
(4) 2,000. 
(f) OIL- OR GAS-FIRED UNITS LESS THAN 0.60 POUND PER MILLION 
BRITISH THERMAL UNITS.— 
(1) EMISSION LIMITATION.—Unless the owner or operator of the 
unit holds allowances to emit not less than the unit’s total annual emis-
sions, it shall be unlawful for any oil- or gas-fired existing utility unit 
the lesser of whose actual 1985 sulfur dioxide emission rate or allow-
able 1985 sulfur dioxide emission rate is less than 0.60 pound per mil-
lion British thermal units and whose average annual fuel consumption 
during the period 1980 to 1989 on a British thermal unit basis was 
90 percent or less in the form of natural gas to exceed an annual sulfur 
dioxide tonnage emission limitation equal to— 
(A) the unit’s baseline; multiplied by 
(B) the lesser of 0.60 pound per million British thermal units 
or the unit’s allowable 1985 emissions; multiplied by 
(C) 120 percent; divided by 
(D) 2,000. 
(2) ADDITIONAL ALLOWANCES.— 
(A) IN GENERAL.—In addition to allowances allocated pursuant 
to paragraph (1) as basic Phase II allowance allocations and sec-
tion 233103(a) of this title, the Administrator shall allocate— 
(i) for each unit described in subparagraph (B)(i) its pro 
rata share of 7,000 allowances; and 
(ii) for each unit described in subparagraph (B)(ii) its pro 
rata share of 2,000 allowances. 
(B) UNIT DESCRIPTION.—A unit referred to in subparagraph 
(A) is— 
(i) any unit operated by a utility that furnishes electricity, 
electric energy, steam, and natural gas within an area con-
sisting of a city and 1 contiguous county; and 
(ii) any unit owned by a State authority, the output of 
which unit is furnished within that same area consisting of 
a city and 1 contiguous county. 
(g) UNITS THAT COMMENCED OPERATION BETWEEN 1986 AND DECEM-
BER 31, 1995.— 
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(1) EMISSION LIMITATION.—Unless the owner or operator of the 
utility unit holds allowances to emit not less than the unit’s total an-
nual emissions, it shall be unlawful for a utility unit that commenced 
commercial operation on or after January 1, 1986, but not later than 
September 30, 1990, to exceed an annual tonnage emission limitation 
equal to— 
(A) the unit’s annual fuel consumption, on a British thermal 
unit basis, at a 65 percent capacity factor; multiplied by 
(B) the unit’s allowable 1985 sulfur dioxide emission rate (con-
verted, if necessary, to pounds per million British thermal units); 
divided by 
(C) 2,000. 
(2) ADDITIONAL ALLOWANCES FOR CERTAIN UNITS.— 
(A) IN GENERAL.—The Administrator shall allocate allowances 
pursuant to section 233103 of this title to each unit that is listed 
in table B in an annual amount equal to the amount specified 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 
(B) ALLOWANCES
UNDER
OTHER
PARAGRAPHS.—Notwith-
standing any other paragraph of this subsection, for units subject 
to this paragraph, the Administrator shall not allocate allowances 
pursuant to any other paragraph of this subsection, except that 
the owner or operator of a unit listed in table B may elect an allo-
cation of allowances under another paragraph of this subsection in 
lieu of an allocation under this paragraph. 
(3) ALLOWANCES FOR UNITS THAT COMMENCED COMMERCIAL OPER-
ATION ON OR AFTER OCTOBER 1, 1990, BUT NOT LATER THAN DECEM-
BER 31, 1992.—The Administrator shall allocate to the owner or oper-
ator of a utility unit that commenced commercial operation on or after 
October 1, 1990, but not later than December 31, 1992, allowances in 
an amount equal to— 
(A) the unit’s annual fuel consumption, on a British thermal 
unit basis, at a 65 percent capacity factor; multiplied by 
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(B) the lesser of 0.30 pound per million British thermal units 
or the unit’s allowable sulfur dioxide emission rate (converted, if 
necessary, to pounds per million British thermal units); divided by 
(C) 2,000. 
(4) ALLOWANCES FOR UNITS THAT COMMENCED CONSTRUCTION BE-
FORE DECEMBER 31, 1990, AND COMMENCED COMMERCIAL OPERATION 
BETWEEN JANUARY 1, 1993, AND DECEMBER 31, 1995.—The Adminis-
trator shall allocate to the owner or operator of any utility unit that 
commenced construction before December 31, 1990, and commenced 
commercial operation between January 1, 1993, and December 31, 
1995, allowances in an amount equal to— 
(A) the unit’s annual fuel consumption, on a British thermal 
unit basis, at a 65 percent capacity factor; multiplied by 
(B) the lesser of 0.30 pound per million British thermal units 
or the unit’s allowable sulfur dioxide emission rate (converted, if 
necessary, to pounds per million British thermal units); divided by 
(C) 2,000. 
(5) CERTAIN EXISTING UTILITY UNITS THAT COMPLETED CONVER-
SION
FROM
PREDOMINANTLY
GAS-FIRED
EXISTING
OPERATION
TO 
COAL-FIRED OPERATION BETWEEN JANUARY 1, 1985, AND DECEMBER 
31, 1987.—Unless the owner or operator of the unit holds allowances 
equal to its actual emissions, it shall be unlawful for any existing utility 
unit that completed conversion from predominantly gas-fired existing 
operation to coal-fired operation between January 1, 1985, and Decem-
ber 31, 1987, for which there has been allocated a proposed or final 
prohibition order pursuant to section 301(b) of the Powerplant and In-
dustrial Fuel Use Act of 1978 (42 U.S.C. 8341(b)) to exceed an an-
nual sulfur dioxide tonnage emission limitation equal to— 
(A) the unit’s annual fuel consumption, on a British thermal 
unit basis, at a 65 percent capacity factor; multiplied by 
(B) the lesser of 1.20 pounds per million British thermal units 
or the unit’s allowable 1987 sulfur dioxide emission rate; divided 
by 
(C) 2,000. 
(6) INAPPLICABILITY TO CERTAIN FACILITIES.—Unless the Adminis-
trator has approved a designation of the facility under section 233109 
of this title, this subdivision shall not apply to— 
(A) a qualifying small power production facility or qualifying co-
generation facility (within the meaning of section 3 of the Federal 
Power Act (16 U.S.C. 796)); or 
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(B) a new independent power production facility (as defined in 
section 
233115(a) 
of 
this 
title) 
except 
that 
section 
233115(a)(4)(C) of this title shall not apply for purposes of this 
paragraph if, as of November 15, 1990— 
(i) an applicable power sales agreement had been executed; 
(ii) the facility was the subject of a State regulatory au-
thority order requiring an electric utility to enter into a power 
sales agreement with, purchase capacity from, or (for pur-
poses of establishing terms and conditions of the electric util-
ity’s purchase of power) enter into arbitration concerning, the 
facility; 
(iii) an electric utility had issued a letter of intent or simi-
lar instrument committing to purchase power from the facility 
at a previously offered or lower price and a power sales agree-
ment was executed within a reasonable period of time; or 
(iv) the facility had been selected as a winning bidder in 
a utility competitive bid solicitation)). 
(h) OIL- OR GAS-FIRED UNITS WHOSE FUEL CONSUMPTION DURING 
THE PERIOD 1980 TO 1989 EXCEEDED 90 PERCENT IN THE FORM OF 
NATURAL GAS.— 
(1) EMISSION LIMITATION.—Unless the owner or operator of the 
unit holds allowances to emit not less than the oil- or gas-fired utility 
unit’s total annual emissions, it shall be unlawful for any oil- or gas- 
fired utility unit whose average annual fuel consumption during the pe-
riod 1980 to 1989 on a British thermal unit basis exceeded 90 percent 
in the form of natural gas to exceed an annual sulfur dioxide tonnage 
limitation equal to— 
(A) the unit’s baseline; multiplied by 
(B) the unit’s actual 1985 sulfur dioxide emission rate; divided 
by 
(C) 2,000. 
(2) ADDITIONAL ALLOWANCES.— 
(A) THROUGH 2009.—In addition to allowances allocated pursu-
ant to paragraph (1) and section 233103(a) of this title as basic 
Phase II allowance allocations, for each calendar year through 
2009, the Administrator shall allocate annually for each unit sub-
ject to the emission limitation requirements of paragraph (1) al-
lowances from the reserve created pursuant to subsection (a)(2) in 
an amount equal to— 
(i) the unit’s baseline; multiplied by 
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(ii) 0.050 pound per million British thermal units; divided 
by 
(iii) 2,000. 
(B) BEGINNING JANUARY 1, 2010.—In addition to allowances al-
located pursuant to paragraph (1) and section 233103(a) of this 
title, beginning January 1, 2010, the Administrator shall allocate 
annually for each unit subject to the emission limitation require-
ments of paragraph (1) allowances in an amount equal to— 
(i) the unit’s baseline; multiplied by 
(ii) 0.050 pound per million British thermal units; divided 
by 
(iii) 2,000. 
(i) UNITS IN HIGH GROWTH STATES.— 
(1) UNITS LOCATED IN A STATE THAT EXPERIENCED A GROWTH IN 
POPULATION IN EXCESS OF 25 PERCENT BETWEEN 1980 AND 1988 AND 
HAD
AN
INSTALLED
ELECTRICAL
GENERATING
CAPACITY
OF
MORE 
THAN 30,000,000 KILOWATTS IN 1988.— 
(A) IN GENERAL.—In addition to allowances allocated pursuant 
to this section and section 233103(a) of this title as basic Phase 
II allowance allocations, the Administrator shall allocate annually 
allowances for each unit described in subparagraph (B) in an 
amount equal to the difference between— 
(i) the number of allowances that would be allocated for the 
unit pursuant to the emission limitation requirements of this 
section applicable to the unit adjusted to reflect the unit’s an-
nual average fuel consumption on a British thermal unit basis 
of any 3 consecutive calendar years between 1980 and 1989 
(inclusive) as elected by the owner or operator; and 
(ii) the number of allowances allocated for the unit pursu-
ant to the emission limitation requirements of this section. 
(B) UNITS.—A unit referred to in subparagraph (A) is a unit 
that is subject to an emission limitation requirement under this 
section and is located in a State that— 
(i) experienced a growth in population in excess of 25 per-
cent between 1980 and 1988 according to State Population 
and Household Estimates, With Age, Sex, and Components of 
Change: 1981–1988 allocated by the Secretary of Commerce; 
and 
(ii) had an installed electrical generating capacity of more 
than 30,000,000 kilowatts in 1988. 
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(C) LIMITATION.—The number of allowances allocated pursuant 
to this paragraph shall not exceed an annual total of 40,000. If 
necessary to meet the 40,000 allowance restriction, the Adminis-
trator shall reduce pro rata the additional annual allowances allo-
cated to each unit under this paragraph. 
(2) CERTAIN UNITS THE LESSER OF WHOSE ACTUAL 1980 EMISSION 
RATE OR ALLOWABLE 1980 EMISSION RATE HAD DECLINED BY 50 PER-
CENT OR MORE AS OF NOVEMBER 15, 1990.— 
(A) IN GENERAL.—In addition to allowances allocated pursuant 
to this section and section 233103(a) of this title as basic Phase 
II allowance allocations, the Administrator shall allocate annually 
for each unit described in subparagraph (B) allowances in an 
amount equal to the difference between— 
(i) the number of allowances that would be allocated for the 
unit pursuant to the emission limitation requirements of sub-
section (b)(1) adjusted to reflect the unit’s annual average 
fuel consumption on a British thermal unit basis for any 3 
consecutive years between 1980 and 1989 (inclusive), as 
elected by the owner or operator; and 
(ii) the number of allowances allocated for the unit pursu-
ant to the emission limitation requirements of subsection 
(b)(1). 
(B) UNITS.—A unit referred to in subparagraph (A) is a unit 
subject to the emission limitation requirements of subsection 
(b)(1)— 
(i) the lesser of whose actual 1980 emission rate or allow-
able 1980 emission rate had declined by 50 percent or more 
as of November 15, 1990; 
(ii) whose actual emission rate was less than 1.2 pounds 
per million British thermal units as of January 1, 2000; 
(iii) that commenced operation after January 1, 1970; 
(iv) that is owned by a utility company whose combined 
commercial and industrial kilowatt-hour sales increased by 
more than 20 percent between calendar year 1980 and No-
vember 15, 1990; and 
(v) whose company-wide fossil-fuel sulfur dioxide emission 
rate declined 40 percent or more from 1980 to 1988. 
(C) LIMITATION.—The number of allowances allocated pursuant 
to this paragraph shall not exceed an annual total of 5,000. If nec-
essary to meet the 5,000 allowance restriction, the Administrator 
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shall reduce pro rata the additional allowances allocated to each 
unit pursuant to this paragraph. 
(j) CERTAIN MUNICIPALLY OWNED POWERPLANTS.— 
(1) ADDITIONAL ALLOWANCES.—In addition to allowances allocated 
pursuant to this section and section 233103(a) of this title as basic 
Phase II allowance allocations, the Administrator shall allocate annu-
ally for each unit described in paragraph (2) allowances in an amount 
equal to— 
(A) the unit’s annual fuel consumption on a British thermal 
unit basis at a 60 percent capacity factor; multiplied by 
(B) the lesser of its allowable 1985 sulfur dioxide emission rate 
or its actual 1985 sulfur dioxide emission rate; divided by 
(C) 2,000. 
(2) UNITS.—A unit referred to in paragraph (1) is a municipally 
owned oil- or gas-fired existing utility unit with nameplate capacity 
equal to or less than 40 megawatts electric the lesser of whose actual 
1985 sulfur dioxide emission rate or allowable 1985 sulfur dioxide 
emission rate is less than 1.20 pounds per million British thermal 
units. 
§ 233106. Allowances for States with emission rates at or 
below 0.80 pound per million British thermal units 
(a) ELECTION OF GOVERNOR.—In addition to basic Phase II allowance 
allocations, on the election of the Governor of any State with a statewide 
1985 sulfur dioxide emission rate equal to or less than 0.80 pound per mil-
lion British thermal units averaged over all fossil fuel-fired utility steam 
generating units, for each calendar year through 2009, the Administrator 
shall allocate, in lieu of other Phase II bonus allowance allocations, allow-
ances from the reserve created pursuant to section 233105(a)(2) of this title 
to all such units in the State in an amount equal to— 
(1) 125,000; multiplied by 
(2) the unit’s pro rata share of electricity generated in calendar year 
1985 at fossil fuel-fired utility steam units in all States eligible for the 
election. 
(b) NOTIFICATION OF ADMINISTRATOR.—Pursuant to section 233103(a) 
of this title, each Governor of a State eligible to make an election under 
subsection (a) shall notify the Administrator of the election. If the Governor 
of any such State fails to notify the Administrator of the Governor’s elec-
tion, the Administrator shall allocate allowances pursuant to section 233105 
of this title. 
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(c) ALLOWANCES AFTER JANUARY 1, 2010.—After January 1, 2010, the 
Administrator shall allocate allowances to units subject this section pursu-
ant to section 233105 of this title. 
§ 233107. Nitrogen oxide emission reduction program 
(a) APPLICABILITY.—A coal-fired utility unit that is an affected unit pur-
suant to section 233105 of this title is an affected unit for purposes of this 
section and shall be subject to the emission limitations for nitrogen oxides 
established under subsection (b). 
(b) EMISSION LIMITATIONS.— 
(1) ANNUAL ALLOWABLE EMISSION LIMITATIONS.— 
(A) IN GENERAL.—The Administrator shall by regulation estab-
lish annual allowable emission limitations for nitrogen oxides for 
the types of utility boilers listed below, which limitations shall not 
exceed— 
(i) for tangentially fired boilers, 0.45 pound per million 
British thermal units; or 
(ii) for dry bottom wall-fired boilers (other than units ap-
plying cell burner technology), 0.50 pound per million British 
thermal units. 
(B) HIGHER RATE.—The Administrator may set a rate higher 
than that listed for any type of utility boiler if the Administrator 
finds that the maximum listed rate for that boiler type cannot be 
achieved using low nitrogen oxide burner technology. 
(C) PROHIBITION.—It shall be unlawful for any unit that is an 
affected unit on January 1, 1995, and is of the type listed in this 
paragraph to emit nitrogen oxides in excess of the emission rates 
set by the Administrator pursuant to this paragraph. 
(2) ALLOWABLE EMISSION LIMITATIONS ON A POUND PER MILLION 
BRITISH THERMAL UNIT, ANNUAL AVERAGE BASIS.— 
(A) IN GENERAL.—The Administrator shall by regulation estab-
lish allowable emission limitations on a pound per million British 
thermal unit, annual average basis, for nitrogen oxides for the fol-
lowing types of utility boilers: 
(i) Wet bottom wall-fired boilers. 
(ii) Cyclones. 
(iii) Units applying cell burner technology. 
(iv) All other types of utility boilers. 
(B) BASIS.—The Administrator shall base such rates on the de-
gree of reduction achievable through the retrofit application of the 
best system of continuous emission reduction, taking into account 
available technology, costs, and energy and environmental impacts, 
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