‘‘(I) technologies, in use as of the 
date of the report, for incorporating 
mercury into products; and 
‘‘(II) potential technologies that 
might further minimize the release of 
mercury; and 
‘‘(ii)(I) address the adequacy of legal 
authorities and regulatory programs in ef-
fect as of the date of the report to protect 
public health and the environment from 
mercury in products described in subpara-
graph (A)(ii); and 
‘‘(II) to the extent necessary, make 
recommendations to improve those authori-
ties and programs. 
‘‘(b) NEW UNIT RESERVES.— 
‘‘(1) 
ESTABLISHMENT.—The 
Administrator 
shall establish by regulation a reserve of nitrogen 
oxide allowances and a reserve of mercury allow-
ances to be set aside for use by new units. 
‘‘(2) DETERMINATION OF QUANTITY.—The Ad-
ministrator, in consultation with the Secretary of 
Energy, shall determine, based on projections of 
electricity output for new units—
‘‘(A) not later than June 30, 2006, the 
quantity of nitrogen oxide allowances and mer-
cury allowances required to be held in reserve 
for new units for each of calendar years 2009 
through 2014; and 
‘‘(B) not later than June 30 of each fifth 
calendar year thereafter, the quantity of nitro-
gen oxide allowances and mercury allowances 
required to be held in reserve for new units for 
the following 5-calendar year period. 
‘‘(c) NITROGEN OXIDE AND MERCURY ALLOWANCE 
ALLOCATIONS.— 
‘‘(1) TIMING OF ALLOCATIONS.—The Adminis-
trator shall allocate nitrogen oxide allowances and 
mercury allowances to affected units— 
‘‘(A) not later than December 31, 2006, 
for calendar year 2010; and 
‘‘(B) not later than December 31 of cal-
endar year 2007 and each calendar year there-
after, for the fourth calendar year that begins 
after that December 31. 
‘‘(2) ALLOCATIONS TO AFFECTED UNITS THAT 
ARE NOT NEW UNITS.— 
‘‘(A) QUANTITY OF NITROGEN OXIDE AL-
LOWANCES
ALLOCATED.—The Administrator
shall allocate to each affected unit that is not 
a new unit a quantity of nitrogen oxide allow-
ances that is equal to the product obtained by 
multiplying— 
‘‘(i) 1.5 pounds of nitrogen oxides per 
megawatt hour; and 
‘‘(ii) the quotient obtained by divid-
ing— 
‘‘(I) the average annual net 
quantity of electricity generated by 
the affected unit during the most re-
cent 3-calendar year period for which 
data are available, measured in mega-
watt hours; by 
‘‘(II) 2,000 pounds of nitrogen 
oxides per ton. 
‘‘(B) QUANTITY
OF
MERCURY
ALLOW-
ANCES
ALLOCATED.—The Administrator shall 
allocate to each affected unit that is not a new 
unit a quantity of mercury allowances that is 
equal to the product obtained by multiplying— 
‘‘(i) 0.0000227 pounds of mercury per 
megawatt hour; and 
‘‘(ii) the average annual net quantity 
of electricity generated by the affected unit
during the most recent 3-calendar year pe-
riod for which data are available, measured 
in megawatt hours. 
‘‘(C) ADJUSTMENT OF ALLOCATIONS.— 
‘‘(i) IN
GENERAL.—If, for any cal-
endar year, the total quantity of allowances 
allocated under subparagraph (A) or (B) is 
not equal to the applicable quantity deter-
mined under clause (ii), the Administrator 
shall adjust the quantity of allowances allo-
cated to affected units that are not new 
units on a pro-rata basis so that the quan-
tity is equal to the applicable quantity de-
termined under clause (ii). 
‘‘(ii) APPLICABLE
QUANTITY.—The 
applicable quantity referred to in clause (i) 
is the difference between— 
‘‘(I) the applicable annual ton-
nage limitation for emissions from af-
fected units specified in subsection (b) 
or (c) of section 702 for the calendar 
year; and 
‘‘(II) the quantity of nitrogen 
oxide allowances or mercury allow-
ances, respectively, placed in the ap-
plicable new unit reserve established 
under subsection (b) for the calendar 
year. 
‘‘(3) ALLOCATION TO NEW UNITS.— 
‘‘(A) METHODOLOGY.—The Administrator 
shall promulgate regulations to establish a 
methodology for allocating nitrogen oxide allow-
ances and mercury allowances to new units. 
‘‘(B) QUANTITY OF NITROGEN OXIDE AL-
LOWANCES AND MERCURY ALLOWANCES ALLO-
CATED.—The Administrator shall determine the 
quantity of nitrogen oxide allowances and mer-
cury allowances to be allocated to each new unit 
based on the projected emissions from the new 
unit. 
‘‘(4) ALLOWANCE NOT A PROPERTY RIGHT.—A 
nitrogen oxide allowance or mercury allowance— 
‘‘(A) is not a property right; and 
‘‘(B) may be terminated or limited by the 
Administrator. 
‘‘(5) NO JUDICIAL REVIEW.—An allocation of 
nitrogen allowances or mercury allowances by the 
Administrator under this subsection shall not be 
subject to judicial review.
‘‘(d) NITROGEN OXIDE ALLOWANCE AND MERCURY 
ALLOWANCE TRANSFER SYSTEM.— 
‘‘(1) USE OF ALLOWANCES.—The regulations 
promulgated under subsection (a)(1)(A) shall— 
‘‘(A) prohibit the use (but not the transfer 
in accordance with paragraph (3)) of any nitro-
gen oxide allowance or mercury allowance be-
fore the calendar year for which the allowance 
is allocated; 
‘‘(B) provide that unused nitrogen oxide 
allowances and mercury allowances may be car-
ried forward and added to nitrogen oxide allow-
ances and mercury allowances, respectively, al-
located for subsequent years; and 
‘‘(C) provide that unused nitrogen oxide al-
lowances and mercury allowances may be trans-
ferred by— 
‘‘(i) the person to which the allow-
ances are allocated; or 
‘‘(ii) any person to which the allow-
ances are transferred. 
‘‘(2) USE BY PERSONS TO WHICH ALLOWANCES 
ARE TRANSFERRED.—Any person to which nitrogen 
oxide allowances or mercury allowances are trans-
ferred under paragraph (1)(C)—
‘‘(A) may use the nitrogen oxide allow-
ances or mercury allowances in the calendar 
year for which the nitrogen oxide allowances or 
mercury allowances were allocated, or in a sub-
sequent calendar year, to demonstrate compli-
ance with subsection (e)(1); or 
‘‘(B) may transfer the nitrogen oxide al-
lowances or mercury allowances to any other 
person for the purpose of demonstration of that 
compliance. 
‘‘(3) CERTIFICATION OF TRANSFER.—A trans-
fer of a nitrogen oxide allowance or mercury allow-
ance shall not take effect until a written certification 
of the transfer, authorized by a responsible official 
of the person making the transfer, is received and 
recorded by the Administrator. 
‘‘(4) PERMIT
REQUIREMENTS.—An allocation 
or transfer of nitrogen oxide allowances or mercury 
allowances to an affected unit shall, after recording 
by the Administrator, be considered to be part of the 
federally enforceable permit of the affected unit 
under this Act, without a requirement for any fur-
ther review or revision of the permit. 
‘‘(e) COMPLIANCE AND ENFORCEMENT.—
‘‘(1) IN
GENERAL.—For calendar year 2009 
and each calendar year thereafter, the operator of 
each affected unit shall surrender to the Adminis-
trator— 
‘‘(A) a quantity of nitrogen oxide allow-
ances that is equal to the total tons of nitrogen 
oxides emitted by the affected unit during the 
calendar year; and 
‘‘(B) a quantity of mercury allowances that 
is equal to the total pounds of mercury emitted 
by the affected unit during the calendar year. 
‘‘(2) MONITORING SYSTEM.—The Administrator 
shall promulgate regulations requiring the accurate 
monitoring of the quantities of nitrogen oxides and 
mercury that are emitted at each affected unit. 
‘‘(3) REPORTING.— 
‘‘(A) IN GENERAL.—Not less often than 
quarterly, the owner or operator of an affected 
unit shall submit to the Administrator a report 
on the monitoring of emissions of nitrogen ox-
ides and mercury carried out by the owner or 
operator in accordance with the regulations pro-
mulgated under paragraph (2). 
‘‘(B) AUTHORIZATION.—Each report sub-
mitted under subparagraph (A) shall be author-
ized by a responsible official of the affected 
unit, who shall certify the accuracy of the re-
port. 
‘‘(C) PUBLIC REPORTING.—The Adminis-
trator shall make available to the public, 
through 1 or more published reports and 1 or 
more forms of electronic media, data concerning 
the emissions of nitrogen oxides and mercury 
from each affected unit. 
‘‘(4) EXCESS EMISSIONS.— 
‘‘(A) IN GENERAL.—The owner or operator 
of an affected unit that emits nitrogen oxides or 
mercury in excess of the nitrogen oxide allow-
ances or mercury allowances that the owner or 
operator holds for use for the affected unit for 
the calendar year shall— 
‘‘(i) pay an excess emissions penalty 
determined under subparagraph (B); and 
‘‘(ii) offset the excess emissions by an 
equal quantity in the following calendar 
year or such other period as the Adminis-
trator shall prescribe. 
‘‘(B) DETERMINATION
OF
EXCESS
EMIS-
SIONS PENALTY.—