Clear Skies Act of 2003

        [Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 999 Introduced in House (IH)]

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.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Clear Skies Act of
2003''.
(b) Table of Contents.--The table of contents of this Act is as
follows:

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

``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 NO<INF>X</INF> Budget Program

``Sec. 461. Definitions.
``Sec. 462. General Provisions.
``Sec. 463. Applicable Implementation Plan.
``Sec. 464. Termination of Federal Administration of
NO<INF>X</INF> 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.

SEC. 2. EMISSION REDUCTION PROGRAMS.

Title IV of the Clean Air Act (relating to acid deposition control)
(42 U.S.C. 7651, et seq.) is amended to read as follows:

``TITLE IV--EMISSION REDUCTION PROGRAMS

``PART A--GENERAL PROVISIONS

``SEC. 401. (RESERVED)

``SEC. 402. DEFINITIONS.

``As used in this title--
``(1) The term `affected EGU' shall have the meaning set
forth in section 421, 431, 451, or 471, as appropriate.
``(2) The term `affected facility' or `affected source'
means a facility or source that includes one or more affected
units.
``(3) The term `affected unit' means--
``(A) under this part, a unit that is subject to
emission reduction requirements or limitations under
part B, C, or D or, if applicable, under a specified
part or subpart; or
``(B) under subpart 1 of part B or subpart 1 of
part C, a unit that is subject to emission reduction
requirements or limitations under that subpart.
``(4) The term `allowance' means--
``(A) an authorization, by the Administrator under
this title, to emit one ton of sulfur dioxide, one ton
of nitrogen oxides, or one ounce of mercury; or
``(B) under subpart 1 of part B, an authorization
by the Administrator under this title, to emit one ton
of sulfur dioxide.
``(5)(A) The term `baseline heat input' means, except under
subpart 1 of part B and section 407, the average annual heat
input used by a unit during the 3 years in which the unit had
the highest heat input for the period 1998 through 2002.
``(B) Notwithstanding subparagraph (A), if a unit commenced
or commences operation during the period 2001 through 2004,
then `baseline heat input' means the manufacturer's design heat
input capacity for the unit multiplied by 80 percent for coal-
fired units, 50 percent for boilers that are not coal-fired, 50
percent for combustion turbines other than simple cycle
turbines, and 5 percent for simple cycle combustion turbines.
``(C) A unit's heat input for a year shall be the heat
input--
``(i) required to be reported under section 405 for
the unit, if the unit was required to report heat input
during the year under that section;
``(ii) reported to the Energy Information
Administration for the unit, if the unit was not
required to report heat input under section 405;
``(iii) based on data for the unit reported to the
State where the unit is located as required by State
law, if the unit was not required to report heat input
during the year under section 405 and did not report to
the Energy Information Administration; or
``(iv) based on fuel use and fuel heat content data
for the unit from fuel purchase or use records, if the
unit was not required to report heat input during the
year under section 405 and did not report to the Energy
Information Administration and the State.
``(D) Not later than 3 months after the enactment of the
Clear Skies Act of 2003, the Administrator shall promulgate
regulations, without notice and opportunity for comment,
specifying the format in which the information under
subparagraphs (B)(ii) and (C)(ii), (iii), or (iv) shall be
submitted. Not later than 9 months after the enactment of the
Clear Skies Act of 2003, the owner or operator of any unit
under subparagraph (B)(ii) or (C)(ii), (iii), or (iv) to which
allowances may be allocated under section 424, 434, 454, or 474
shall submit to the Administrator such information. The
Administrator is not required to allocate allowances under such
sections to a unit for which the owner or operator fails to
submit information in accordance with the regulations
promulgated under this subparagraph.
``(6) The term `clearing price' means the price at which
allowances are sold at an auction conducted by the
Administrator or, if allowances are sold at an auction
conducted by the Administrator at more than one price, the
lowest price at which allowances are sold at the auction.
``(7) The term `coal' means any solid fuel classified as
anthracite, bituminous, subbituminous, or lignite.
``(8) The term `coal-derived fuel' means any fuel (whether
in a solid, liquid, or gaseous state) produced by the
mechanical, thermal, or chemical processing of coal.
``(9) The term `coal-fired' with regard to a unit means,
except under subpart 1 of part B, subpart 1 of part C, and
sections 424 and 434, combusting coal or any coal-derived fuel
alone or in combination with any amount of any other fuel in
any year.
``(10) The term `cogeneration unit' means, except under
subpart 1 of part B and subpart 1 of part C, a unit that
produces through the sequential use of energy:
``(A) electricity; and
``(B) useful thermal energy (such as heat or steam)
for industrial, commercial, heating, or cooling
purposes.
``(11) The term `combustion turbine' means any combustion
turbine that is not self-propelled. The term includes, but is
not limited to, a simple cycle combustion turbine, a combined
cycle combustion turbine and any duct burner or heat recovery
device used to extract heat from the combustion turbine
exhaust, and a regenerative combustion turbine. The term does
not include a combined turbine in an integrated gasification
combined cycle plant.
``(12) The term `commence operation' with regard to a unit
means start up the unit's combustion chamber.
``(13) The term `compliance plan' means either--
``(A) a statement that the facility will comply
with all applicable requirements under this title, or
``(B) under subpart 1 of part B or subpart 1 of
part C, where applicable, a schedule and description of
the method or methods for compliance and certification
by the owner or operator that the facility is in
compliance with the requirements of that subpart.
``(14) The term `continuous emission monitoring system'
(CEMS) means the equipment as required by section 405, used to
sample, analyze, measure, and provide on a continuous basis a
permanent record of emissions and flow (expressed in pounds per
million British thermal units (lbs/mmBtu), pounds per hour
(lbs/hr) or such other form as the Administrator may prescribe
by regulations under section 405.
``(15) The term `designated representative' means a
responsible person or official authorized by the owner or
operator of a unit and the facility that includes the unit to
represent the owner or operator in matters pertaining to the
holding, transfer, or disposition of allowances, and the
submission of and compliance with permits, permit applications,
and compliance plans.
``(16) The term `duct burner' means a combustion device
that uses the exhaust from a combustion turbine to burn fuel
for heat recovery.
``(17) The term `facility' means all buildings, structures,
or installations located on one or more contiguous or adjacent
properties under common control of the same person or persons.
``(18) The term `fossil fuel' means natural gas, petroleum,
coal, or any form of solid, liquid, or gaseous fuel derived
from such material.
``(19) The term `fossil fuel-fired' with regard to a unit
means combusting fossil fuel, alone or in combination with any
amount of other fuel or material.
``(20) The term `fuel oil' means a petroleum-based fuel,
including diesel fuel or petroleum derivatives.
``(21) The term `gas-fired' with regard to a unit means,
except under subpart 1 of part B and subpart 1 of part C,
combusting only natural gas or fuel oil, with natural gas
comprising at least 90 percent, and fuel oil comprising no more
than 10 percent, of the unit's total heat input in any year.
``(22) The term `gasify' means to convert carbon-containing
material into a gas consisting primarily of carbon monoxide and
hydrogen.
``(23) The term `generator' means a device that produces
electricity and, under subpart 1 of part B and subpart 1 of
part C, that is reported as a generating unit pursuant to
Department of Energy Form 860.
``(24) The term `heat input' with regard to a specific
period of time means the product (in mmBtu/time) of the gross
calorific value of the fuel (in mmBtu/lb) and the fuel feed
rate into a unit (in lb of fuel/time) and does not include the
heat derived from preheated combustion air, recirculated flue
gases, or exhaust.
``(25) The term `integrated gasification combined cycle
plant' means any combination of equipment used to gasify fossil
fuels (with or without other material) and then burn the gas in
a combined cycle combustion turbine.
``(26) The term `oil-fired' with regard to a unit means,
except under section 424 and 434, combusting fuel oil for more
than 10 percent of the unit's total heat input, and combusting
no coal or coal-derived fuel, in any year.
``(27) The term `owner or operator' with regard to a unit
or facility means, except for subpart 1 of part B and subpart 1
of part C, any person who owns, leases, operates, controls, or
supervises the unit or the facility.
``(28) The term `permitting authority' means the
Administrator, or the State or local air pollution control
agency, with an approved permitting program under title V of
the Act.
``(29) The term `potential electrical output' with regard
to a generator means the nameplate capacity of the generator
multiplied by 8,760 hours.
``(30) The term `simple cycle combustion turbine' means a
combustion turbine that does not extract heat from the
combustion turbine exhaust gases.
``(31) The term `source' means, except for sections 410,
481, and 482, all buildings, structures, or installations
located on one or more contiguous or adjacent properties under
common control of the same person or persons.
``(32) The term `State' means--
``(A) one of the 48 contiguous States, Alaska,
Hawaii, the District of Columbia, the Commonwealth of
Puerto Rico, the Virgin Islands, Guam, American Samoa,
or the Commonwealth of the Northern Mariana Islands; or
``(B) under subpart 1 of part B and subpart 1 of
part C, one of the 48 contiguous States or the District
of Columbia.
``(33) The term `unit' means--
``(A) a fossil fuel-fired boiler, combustion
turbine, or integrated gasification combined cycle
plan; or
``(B) under subpart 1 of part B and subpart 1 of
part C, a fossil fuel-fired combustion device.
``(34) The term `utility unit' shall have the meaning set
forth in section 411.
``(35) The term `year' means calendar year.

``SEC. 403. ALLOWANCE SYSTEM.

``(a) Allocations in General.--
``(1) For the emission limitation programs under this
title, the Administrator shall allocate annual allowances for
an affected unit, to be held or distributed by the designated
representative of the owner or operator in accordance with this
title as follows--
``(A) sulfur dioxide allowances in an amount equal
to the annual tonnage emission limitation calculated
under section 413, 414, 415, or 416, except as
otherwise specifically provided elsewhere in subpart 1
of part B, or in an amount calculated under section 424
or 434,
``(B) nitrogen oxides allowances in an amount
calculated under section 454, and
``(C) mercury allowances in an amount calculated
under section 474.
``(2) Notwithstanding any other provision of law to the
contrary, the calculation of the allocation for any unit or
facility, and the determination of any values used in such
calculation, under sections 424, 434, 454, and 474 shall not be
subject to judicial review.
``(3) Allowances shall be allocated by the Administrator
without cost to the recipient, and shall be auctioned or sold
by the Administrator, in accordance with this title.
``(b) Allowance Transfer System.--Allowances allocated, auctioned,
or sold by the Administrator under this title may be transferred among
designated representatives of the owners or operators of affected
facilities under this title and any other person, as provided by the
allowance system regulations promulgated by the Administrator. With
regard to sulfur dioxide allowances, the Administrator shall implement
this subsection under 40 CFR part 73 (2002), amended as appropriate by
the Administrator. With regard to nitrogen oxides allowances and
mercury allowances, the Administrator shall implement this subsection
by promulgating regulations not later than 24 months after the date of
enactment of the Clear Skies Act of 2003. The regulations under this
subsection shall establish the allowance system prescribed under this
section, including, but not limited to, requirements for the
allocation, transfer, and use of allowances under this title. Such
regulations shall prohibit the use of any allowance prior to the
calendar year for which the allowance was allocated or auctioned and
shall provide, consistent with the purposes of this title, for the
identification of unused allowances, and for such unused allowances to
be carried forward and added to allowances allocated in subsequent
years, except as otherwise provided in section 425. Such regulations
shall provide, or shall be amended to provide, that transfers of
allowances shall not be effective until certification of the transfer,
signed by a responsible official of the transferor, is received and
recorded by the Administrator.
``(c) Allowance Tracking System.--The Administrator shall
promulgate regulations establishing a system for issuing, recording,
and tracking allowances, which shall specify all necessary procedures
and requirements for an orderly and competitive functioning of the
allowance system. Such system shall provide, not later than the
commencement date of the nitrogen oxides allowance requirement under
section 452, for one or more facility-wide accounts for holding sulfur
dioxide allowances, nitrogen oxides allowances, and, if applicable,
mercury allowances for all affected units at an affected facility. With
regard to sulfur dioxide allowances, the Administrator shall implement
this subsection under 40 CFR part 73 (2002), amended as appropriate by
the Administrator. With regard to nitrogen oxides allowances and
mercury allowances, the Administrator shall implement this subsection
by promulgating regulations not later than 24 months after the date of
enactment of the Clear Skies Act of 2002. All allowance allocations and
transfers shall, upon recording by the Administrator, be deemed a part
of each unit's or facility's permit requirements pursuant to section
404, without any further permit review and revision.
``(d) Nature of Allowances.--A sulfur dioxide allowance, nitrogen
oxides allowance, or mercury allowance allocated, auctioned, or sold by
the Administrator under this title is a limited authorization to emit
one ton of sulfur dioxide, one ton of nitrogen oxides, or one ounce of
mercury, as the case may be, in accordance with the provisions of this
title. Such allowance does not constitute a property right. Nothing in
this title or in any other provision of law shall be construed to limit
the authority of the United States to terminate or limit such
authorization. Nothing in this section relating to allowances shall be
construed as affecting the application of, or compliance with, any
other provision of this Act to an affected unit or facility, including
the provisions related to applicable National Ambient Air Quality
Standards and State implementation plans. Nothing in this section shall
be construed as requiring a change of any kind in any State law
regulating electric utility rates and charges or affecting any State
law regarding such State regulation or as limiting State regulation
(including any prudency review) under such a State law. Nothing in this
section shall be construed as modifying the Federal Power Act or as
affecting the authority of the Federal Energy Regulatory Commission
under that Act. Nothing in this title shall be construed to interfere
with or impair any program for competitive bidding for power supply in
a State in which such program is established. Allowances, once
allocated or auctioned to a person by the Administrator, may be
received, held, and temporarily or permanently transferred in
accordance with this title and the regulations of the Administrator
without regard to whether or not a permit is in effect under title V or
section 404 with respect to the unit for which such allowance was
originally allocated and recorded.
``(e) Prohibition.--
``(1) It shall be unlawful for any person to hold, use, or
transfer any allowance allocated, auctioned, or sold by the
Administrator under this title, except in accordance with
regulations promulgated by the Administrator.
``(2) It shall be unlawful for any affected unit or for the
affected units at a facility to emit sulfur dioxide, nitrogen
oxides, and mercury, as the case may be, during a year in
excess of the number of allowances held for that unit or
facility for that year by the owner or operator as provided in
sections 412(c), 422, 432, 452, and 472.
``(3) The owner or operator of a facility may purchase
allowances directly from the Administrator to be used only to
meet the requirements of sections 422, 432, 452, and 472, as
the case may be, for the year in which the purchase is made or
the prior year. Not later than 36 months after the date of
enactment of the Clear Skies Act of 2003, the Administrator
shall promulgate regulations providing for direct sales of
sulfur dioxide allowances, nitrogen oxides allowances, and
mercury allowances to an owner or operator of a facility. The
regulations shall provide that--
``(A) such allowances may be used only to meet the
requirements of section 422, 432, 452, and 472, as the
case may be, for such facility and for the year in
which the purchase is made or the prior year,
``(B) each such sulfur dioxide allowance shall be
sold for $4,000, each such nitrogen oxides allowance
shall be sold for $4,000, and each such mercury
allowance shall be sold for $2,187.50, with such prices
adjusted for inflation based on the Consumer Price
Index on the date of enactment of the Clear Skies Act
of 2003 and annually thereafter,
``(C) the proceeds from any sales of allowances
under subparagraph (B) shall be deposited in the United
States Treasury,
``(D) the allowances directly purchased for use for
the year specified in subparagraph (A) shall be taken
from, and reduce, the amount of sulfur dioxide
allowances, nitrogen oxides allowances, or mercury
allowances, as the case may be, that would otherwise be
auctioned under section 423, 453, or 473 starting for
the year after the specified year and continuing for
each subsequent year as necessary,
``(E) if an owner or operator does not use any such
allowance in accordance with paragraph (A)--
``(i) the owner or operator shall hold the
allowance for deduction by the Administrator,
and
``(ii) the Administrator shall deduct the
allowance, without refund or other form of
recompense, and offer it for sale in the
auction from which it was taken under
subparagraph (D) or a subsequent relevant
auction as necessary, and
``(F) if the direct sales of allowances result in
the removal of all sulfur dioxide allowances, nitrogen
oxides allowances, or mercury allowances, as the case
may be, from auctions under section 423, 453, or 473
for 3 consecutive years, the Administrator shall
conduct a study to determine whether revisions to the
relevant allowance trading program are necessary and
shall report the results to the Congress.
``(4) Allowances may not be used prior to the calendar year
for which they are allocated or auctioned. Nothing in this
section or in the allowance system regulations shall relieve
the Administrator of the Administrator's permitting, monitoring
and enforcement obligations under this Act, nor relieve
affected facilities of their requirements and liabilities under
the Act.
``(f) Competitive Bidding for Power Supply.--Nothing in this title
shall be construed to interfere with or impair any program for
competitive bidding for power supply in a State in which such program
is established.
``(g) Applicability of the Antitrust Laws.--(1) Nothing in this
section affects--
``(A) the applicability of the antitrust laws to the
transfer, use, or sale of allowances, or
``(B) the authority of the Federal Energy Regulatory
Commission under any provision of law respecting unfair methods
of competition or anticompetitive acts or practices.
``(2) As used in this section, `antitrust laws' means those Acts
set forth in section 1 of the Clayton Act (15 U.S.C. 12), as amended.
``(h) Public Utility Holding Company Act.--The acquisition or
disposition of allowances pursuant to this title including the issuance
of securities or the undertaking of any other financing transaction in
connection with such allowances shall not be subject to the provisions
of the Public Utility Holding Company Act of 1935.
``(i) Interpollutant Trading.--Not later than 6 years after the
enactment of the Clear Skies Act of 2003, the Administrator shall
furnish to the Congress a study evaluating the environmental and
economic consequences of amending this title to permit trading sulfur
dioxide allowances for nitrogen oxides allowances and nitrogen oxides
allowances for sulfur dioxide allowances.
``(j) International Trading.--Not later than 24 months after the
date of enactment of the Clear Skies Act of 2003, the Administrator
shall furnish to the Congress a study evaluating the feasibility of
international trading of sulfur dioxide allowances, nitrogen oxides
allowances, and mercury allowances.

``SEC. 404. PERMITS AND COMPLIANCE PLANS.

``(a) Permit Program.--The provisions of this title shall be
implemented, subject to section 403, by permits issued to units and
facilities subject to this title and enforced in accordance with the
provisions of title V, as modified by this title. Any such permit
issued by the Administrator, or by a State with an approved permit
program, shall prohibit--
``(1) annual emissions of sulfur dioxide, nitrogen oxides,
and mercury in excess of the number of allowances required to
be held in accordance with sections 412(c), 422, 432, 452, and
472,
``(2) exceeding applicable emissions rates under section
441,
``(3) the use of any allowance prior to the year for which
it was allocated or auctioned, and
``(4) contravention of any other provision of the permit.
No permit shall be issued that is inconsistent with the requirements of
this title, and title V as applicable.
``(b) Compliance Plan.--Each initial permit application shall be
accompanied by a compliance plan for the facility to comply with its
requirements under this title. Where an affected facility consists of
more than one affected unit, such plan shall cover all such units, and
such facility shall be considered a `facility' under section 502(c).
Nothing in this section regarding compliance plans or in title V shall
be construed as affecting allowances.
``(1) Submission of a statement by the owner or operator,
or the designated representative of the owners and operators,
of a unit subject to the emissions limitation requirements of
sections 412(c), 413, 414, and 441, that the unit will meet the
applicable emissions limitation requirements of such sections
in a timely manner or that, in the case of the emissions
limitation requirements of sections 412(c), 413, and 414, the
owners and operators will hold sulfur dioxide allowances in the
amount required by section 412(c), shall be deemed to meet the
proposed and approved compliance planning requirements of this
section and title V, except that, for any unit that will meet
the requirements of this title by means of an alternative
method of compliance authorized under section 413 (b), (c),
(d), or (f), section 416, and section 441 (d) or (e), the
proposed and approved compliance plan, permit application and
permit shall include, pursuant to regulations promulgated by
the Administrator, for each alternative method of compliance a
comprehensive description of the schedule and means by which
the unit will rely on one or more alternative methods of
compliance in the manner and time authorized under subpart 1 of
part B or subpart 1 of part C.
``(2) Submission of a statement by the owner or operator,
or the designated representative, of a facility that includes a
unit subject to the emissions limitation requirements of
sections 422, 432, 452, and 472 that the owner or operator will
hold sulfur dioxide allowances, nitrogen oxide allowances, and
mercury allowances, as the case may be, in the amount required
by such sections shall be deemed to meet the proposed and
approved compliance planning requirements of this section and
title V with regard to subparts A through D.
``(3) Recording by the Administrator of transfers of
allowances shall amend automatically all applicable proposed or
approved permit applications, compliance plans and permits.
``(c) Permits.--The owner or operator of each facility under this
title that includes an affected unit subject to title V shall submit a
permit application and compliance plan with regard to the applicable
requirements under sections 412(c), 422, 432, 441, 452, and 472 for
sulfur dioxide emissions, nitrogen oxide emissions, and mercury
emissions from such unit to the permitting authority in accordance with
the deadline for submission of permit applications and compliance plans
under title V. The permitting authority shall issue a permit to such
owner or operator, or the designated representative of such owner or
operator, that satisfies the requirements of title V and this title.
``(d) Amendment of Application and Compliance Plan.--At any time
after the submission of an application and compliance plan under this
section, the applicant may submit a revised application and compliance
plan, in accordance with the requirements of this section.
``(e) Prohibition.--
``(1) It shall be unlawful for an owner or operator, or
designated representative, required to submit a permit
application or compliance plan under this title to fail to
submit such application or plan in accordance with the
deadlines specified in this section or to otherwise fail to
comply with regulations implementing this section.
``(2) It shall be unlawful for any person to operate any
facility subject to this title except in compliance with the
terms and requirements of a permit application and compliance
plan (including amendments thereto) or permit issued by the
Administrator or a State with an approved permit program. For
purposes of this subsection, compliance, as provided in section
504(f), with a permit issued under title V which complies with
this title for facilities subject to this title shall be deemed
compliance with this subsection as well as section 502(a).
``(3) In order to ensure reliability of electric power,
nothing in this title or title V shall be construed as
requiring termination of operations of a unit serving a
generator for failure to have an approved permit or compliance
plan under this section, except that any such unit may be
subject to the applicable enforcement provisions of section
113.
``(f) Certificate of Representation.--No permit shall be issued
under this section to an affected unit or facility until the designated
representative of the owners or operators has filed a certificate of
representation with regard to matters under this title, including the
holding and distribution of allowances and the proceeds of transactions
involving allowances.

``SEC. 405. MONITORING, REPORTING, AND RECORDKEEPING REQUIREMENTS.

``(a) Applicability.--
``(1)(A) The owner and operator of any facility subject to
this title shall be required to install and operate CEMS on
each affected unit subject to subpart 1 of part B or subpart 1
of part C at the facility, and to quality assure the data, for
sulfur dioxide, nitrogen oxides, opacity, and volumetric flow
at each such unit.
``(B) The Administrator shall, by regulations, specify the
requirements for CEMS under subparagraph (A), for any
alternative monitoring system that is demonstrated as providing
information with the same precision, reliability,
accessibility, and time lines as that provided by CEMS, and for
recordkeeping and reporting of information from such systems.
Such regulations may include limitations on the use of
alternative compliance methods by units equipped with an
alternative monitoring system as may be necessary to preserve
the orderly functioning of the allowance system, and which will
ensure the emissions reductions contemplated by this title.
Where 2 or more units utilize a single stack, a separate CEMS
shall not be required for each unit, and for such units the
regulations shall require that the owner or operator collect
sufficient information to permit reliable compliance
determinations for each such unit.
``(2)(A) The owner and operator of any facility subject to
this title shall be required to install and operate CEMS to
monitor the emissions from each affected unit at the facility,
and to quality assure the data for--
``(i) sulfur dioxide, opacity, and volumetric flow
for all affected units subject to subpart 2 of part B
at the facility,
``(ii) nitrogen oxides for all affected units
subject to subpart 2 of part C at the facility, and
``(iii) mercury for all affected units subject to
part D at the facility.
``(B)(i) The Administrator shall, by regulations, specify
the requirements for CEMS under subparagraph (A), for any
alternative monitoring system that is demonstrated as providing
information with the same precision, reliability,
accessibility, and timeliness as that provided by CEMS, for
recordkeeping and reporting of information from such systems,
and if necessary under section 474, for monitoring,
recordkeeping, and reporting of the mercury content of fuel.
``(ii) Notwithstanding the requirements of clause (i), the
regulations under clause (i) may specify an alternative
monitoring system for determining mercury emissions to the
extent that the Administrator determines that CEMS for mercury
with appropriate vendor guarantees are not commercially
available.
``(iii) The regulations under clause (i) may include
limitation on the use of alternative compliance methods by
units equipped with an alternative monitoring system as may be
necessary to preserve the orderly functioning of the allowance
system, and which will ensure the emissions reductions
contemplated by this title.
``(iv) Except as provided in clause (v), the regulations
under clause (i) shall not require a separate CEMS for each
unit where two or more units utilize a single stack and shall
require that the owner or operator collect sufficient
information to permit reliable compliance determinations for
such units.
``(v) The regulations under clause (i) may require a
separate CEMS for each unit where two or more units utilize a
single stack and another provision of the Act requires data
under subparagraph (A) for an individual unit.
``(b) Deadlines.--
``(1) New utility units.--Upon commencement of commercial
operation of each new utility unit under subpart I of part B,
the unit shall comply with the requirements of subsection
(a)(1).
``(2) Deadline for affected units under subpart 2 of part b
for installation and operation of cems.--By the later of the
date 12 months before the commencement date of the sulfur
dioxide allowance requirement of section 422, or the date on
which the unit commences operation, the owner or operator of
each affected unit under subpart 2 of part B shall install and
operate CEMS, quality assure the data, and keep records and
reports in accordance with the regulations issued under
paragraph (a)(2) with regard to sulfur dioxide, opacity, and
volumetric flow.
``(3) Deadline for affected units under subpart 3 of part b
for installation and operation of cems.--By the later of
January 1 of the year before the first covered year or the date
on which the unit commences operation, the owner or operator of
each affected unit under subpart 3 of part B shall install and
operate CEMS, quality assure the data, and keep records and
reports in accordance with the regulations issued under
paragraph (a)(2) with regard to sulfur dioxide and volumetric
flow.
``(4) Deadline for affected units under subpart 2 of part c
for installation and operation of cems.--By the later of the
date 12 months before the commencement date of the nitrogen
oxides allowance requirement under section 452, or the date on
which the unit commences operation, the owner or operator of
each affected unit under subpart 2 of part C shall install and
operate CEMS, quality assure the data, and keep records and
reports in accordance with the regulations issued under
paragraph (a)(2) with regard to nitrogen oxides.
``(5) Deadline for affected units under part d for
installation and operation of cems.--By the later of the date
12 months before the commencement date of the mercury allowance
requirement of section 472, or the date on which the unit
commences operation, the owner or operator of each affected
unit under part D shall install and operate CEMS, quality
assure the data, and keep records and reports in accordance
with the regulations issued under paragraph (a)(2) with regard
to mercury.
``(c) Unavailability of Emissions Data.--If CEMS data or data from
an alternative monitoring system approved by the Administrator under
subsection (a) is not available for any affected unit during any period
of a calendar year in which such data is required under this title, and
the owner or operator cannot provide information, satisfactory to the
Administrator, on emissions during that period, the Administrator shall
deem the unit to be operating in an uncontrolled manner during the
entire period for which the data was not available and shall, by
regulation, prescribe means to calculate emissions for that period. The
owner or operator shall be liable for excess emissions fees and offsets
under section 406 in accordance with such regulations. Any fee due and
payable under this subsection shall not diminish the liability of the
unit's owner or operator for any fine, penalty, fee or assessment
against the unit for the same violation under any other section of this
Act.
``(d) Implementation.--With regard to sulfur dioxide, nitrogen
oxides, opacity, and volumetric flow, the Administrator shall implement
subsections (a) and (c) under 40 CFR part 75 (2002), amended as
appropriate by the Administrator. With regard to mercury, the
Administrator shall implement subsections (a) and (c) by issuing
proposed regulations not later than 36 months before the commencement
date of the mercury allowance requirement under section 472 and final
regulations not later than 24 months before that commencement date.
``(e) Prohibition.--It shall be unlawful for the owner or operator
of any facility subject to this title to operate a facility without
complying with the requirements of this section, and any regulations
implementing this section.

``SEC. 406. EXCESS EMISSIONS PENALTY; GENERAL COMPLIANCE WITH OTHER
PROVISIONS; ENFORCEMENT.

``(a) Excess Emissions Penalty.--
``(1) Amount for oxides of nitrogen.--The owner or operator
of any unit subject to the requirements of section 441 that
emits nitrogen oxides for any calendar year in excess of the
unit's emissions limitation requirement shall be liable for the
payment of an excess emissions penalty, except where such
emission were authorized pursuant to section 110(f). That
penalty shall be calculated on the basis of the number of tons
emitted in excess of the unit's emissions limitation
requirement multiplied by $2,000.
``(2) Amount for sulfur dioxide before 2008.--The owner or
operator of any unit subject to the requirements of section
412(c) that emits sulfur dioxide for any calendar year before
2008 in excess of the sulfur dioxide allowances the owner or
operator holds for use for the unit for that calendar year
shall be liable for the payment of an excess emissions penalty,
except where such emissions were authorized pursuant to section
110(f). That penalty shall be calculated as follows:
``(A) the product of the unit's excess emissions
(in tons) multiplied by the clearing price of sulfur
dioxide allowances sold at the most recent auction
under section 417, if within thirty days after the date
on which the owner or operator was required to hold
sulfur dioxide allowances--
``(i) the owner or operator offsets the
excess emissions in accordance with paragraph
(b)(1); and
``(ii) the Administrator receives the
penalty required under this subparagraph.
``(B) if the requirements of clause (A)(i) or
(A)(ii) are not met, 300 percent of the product of the
unit's excess emissions (in tons) multiplied by the
clearing price of sulfur dioxide allowances sold at the
most recent auction under section 417.
``(3) Amount for sulfur dioxide after 2007.--If the units
at a facility that are subject to the requirements of section
412(c) emit sulfur dioxide for any calendar year after 2007 in
excess of the sulfur dioxide allowances that the owner or
operator of the facility holds for use for the facility for
that calendar year, the owner or operator shall be liable for
the payment of an excess emissions penalty, except where such
emissions were authorized pursuant to section 110(f). That
penalty shall be calculated under paragraph (4)(A) or (4)(B).
``(4) Units subject to sections 422, 432, 452, or 472.--If
the units at a facility that are subject to the requirements of
section 422, 432, 452, or 472 emit sulfur dioxide, nitrogen
oxides, or mercury for any calendar year in excess of the
sulfur dioxide allowances, nitrogen oxides allowances, or
mercury allowances, as the case may be, that the owner or
operator of the facility holds for use for the facility for
that calendar year, the owner or operator shall be liable for
the payment of an excess emissions penalty, except where such
emissions were authorized pursuant to section 110(f). That
penalty shall be calculated as follows:
``(A) the product of the units' excess emissions
(in tons or, for mercury emissions, in ounces)
multiplied by the clearing price of sulfur dioxide
allowances, nitrogen oxides allowances, or mercury
allowances, as the case may be, sold at the most recent
auction under section 423, 453, or 473, if within
thirty days after the date on which the owner or
operator was required to hold sulfur dioxide, nitrogen
oxides allowance, or mercury allowances as the case may
be--
``(i) the owner or operator offsets the
excess emissions in accordance with paragraph
(b)(2) or (b)(3), as applicable; and
``(ii) the Administrator receives the
penalty required under this subparagraph.
``(B) if the requirements of clause (A)(i) or
(A)(ii) are not met, 300 percent of the product of the
units' excess emissions (in tons or, for mercury
emissions, in ounces) multiplied by the clearing price
of sulfur dioxide allowances, nitrogen oxides
allowances, or mercury allowances, as the case may be,
sold at the most recent auction under section 423, 453,
or 473.
``(5) Payment.--Any penalty under paragraph 1, 2, 3, or 4
shall be due and payable without demand to the Administrator as
provided in regulations issued by the Administrator. With
regard to the penalty under paragraph 1, the Administrator
shall implement this paragraph under 40 CFR part 77 (2002),
amended as appropriate by the Administrator. With regard to the
penalty under paragraphs 2, 3, and 4, the Administrator shall
implement this paragraph by issuing regulations no later than
24 months after the date of enactment of the Clear Skies Act of
2003. Any such payment shall be deposited in the United States
Treasury. Any penalty due and payable under this section shall
not diminish the liability of the unit's owner or operator for
any fine, penalty or assessment against the unit for the same
violation under any other section of this Act.
``(b) Excess Emissions Offset.--
``(1) The owner or operator of any unit subject to the
requirements of section 412(c) that emits sulfur dioxide during
any calendar year before 2008 in excess of the sulfur dioxide
allowances held for the unit for the calendar year shall be
liable to offset the excess emissions by an equal tonnage
amount in the following calendar year, or such longer period as
the Administrator may prescribe. The Administrator shall deduct
sulfur dioxide allowances equal to the excess tonnage from
those held for the facility for the calendar year, or
succeeding years during which offsets are required, following
the year in which the excess emissions occurred.
``(2) If the units at a facility that are subject to the
requirements of section 412(c) emit sulfur dioxide for a year
after 2007 in excess of the sulfur dioxide allowances that the
owner or operator of the facility holds for use for the
facility for that calendar year, the owner or operator shall be
liable to offset the excess emissions by an equal amount of
tons in the following calendar year, or such longer period as
the Administrator may prescribe. The Administrator shall deduct
sulfur dioxide allowances equal to the excess emissions in tons
from those held for the facility for the year, or succeeding
years during which offsets are required, following the year in
which the excess emissions occurred.
``(3) If the units at a facility that are subject to the
requirements of section 422, 432, 452, or 472 emit sulfur
dioxide, nitrogen oxides, or mercury for any calendar year in
excess of the sulfur dioxide allowances, nitrogen oxides
allowances, or mercury allowances, as the case may be, that the
owner or operator of the facility holds for use for the
facility for that calendar year, the owner or operator shall be
liable to offset the excess emissions by an equal amount of
tons or, for mercury, ounces in the following calendar year, or
such longer period as the Administrator may prescribe. The
Administrator shall deduct sulfur dioxide allowances, nitrogen
oxide allowances, or mercury allowances, as the case may be,
equal to the excess emissions in tons or, for mercury, ounces
from those held for the facility for the year, or succeeding
years during which offsets are required, following the year in
which the excess emissions occurred.
``(c) Penalty Adjustment.--The Administrator shall, by regulation,
adjust the penalty specified in subsection (a)(1) for inflation, based
on the Consumer Price Index, on November 15, 1990, and annually
thereafter.
``(d) Prohibition.--It shall be unlawful for the owner or operator
of any unit or facility liable for a penalty and offset under this
section to fail--
``(1) to pay the penalty under subsection (a); or
``(2) to offset excess emissions as required by subsection
(b).
``(e) Savings Provision.--Nothing in this title shall limit or
otherwise affect the application of section 113, 114, 120, or 304
except as otherwise explicitly provided in this title.
``(f) Other Requirements.--Except as expressly provided, compliance
with the requirements of this title shall not exempt or exclude the
owner or operator of any facility subject to this title from compliance
with any other applicable requirements of this Act. Notwithstanding any
other provision of this Act, no State or political subdivision thereof
shall restrict or interfere with the transfer, sale, or purchase of
allowances under this title.
``(g) Violations.--Violation by any person subject to this title of
any prohibition of, requirement of, or regulation promulgated pursuant
to this title shall be a violation of this Act. In addition to the
other requirements and prohibitions provided for in this title, the
operation of any affected unit or the affected units at a facility to
emit sulfur dioxide, nitrogen oxides, or mercury in violation of
section 412(c), 422, 432, 452, and 472, as the case may be, shall be
deemed a violation, with each ton or, in the case of mercury, each
ounce emitted in excess of allowances held constituting a separate
violation.

``SEC. 407. ELECTION FOR ADDITIONAL UNITS.

``(a) Applicability.--The owner or operator of any unit that is not
an affected EGU under subpart 2 of part B and subpart 2 of part C and
whose emissions of sulfur dioxide and nitrogen oxides are vented only
through a stack or duct may elect to designate such unit as an affected
unit under subpart 2 of part B and subpart 2 of part C. If the owner or
operator elects to designate a unit that is coal-fired and emits
mercury vented only through a stack or duct, the owner or operator
shall also designate the unit as an affected unit under part D.
``(b) Application.--The owner or operator making an election under
subsection (a) shall submit an application for the election to the
Administrator for approval.
``(c) Approval.--If an application for an election under subsection
(b) meets the requirements of subsection (a), the Administrator shall
approve the designation as an affected unit under subpart 2 of part B
and subpart 2 of part C and, if applicable, under part D, subject to
the requirements in subsections (d) through (g).
``(d) Establishment of Baseline.--
``(1) After approval of the designation under subsection
(c), the owner or operator shall install and operate CEMS on
the unit, and shall quality assure the data, in accordance with
the requirements of paragraph (a)(2) and subsections (c)
through (e) of section 405, except that, where two or more
units utilize a single stack, separate monitoring shall be
required for each unit.
``(2) The baselines for heat input and sulfur dioxide,
nitrogen oxides, and mercury emission rates, as the case may
be, for the unit shall be the unit's heat input and the
emission rates of sulfur dioxide, nitrogen oxides, and mercury
for a year starting after approval of the designation under
subsection (c). The Administrator shall issue regulations
requiring all the unit's baselines to be based on the same year
and specifying minimum requirements concerning the percentage
of the unit's operating hours for which quality assured CEMS
data must be available during such year.
``(e) Emission Limitations.--After approval of the designation of
the unit under paragraph (c), the unit shall become:
``(1) an affected unit under subpart 2 of part B, and shall
be allocated sulfur dioxide allowances under paragraph (f),
starting the later of January 1, 2010, or January 1 of the year
after the year on which the unit's baselines are based under
subsection (d);
``(2) an affected unit under subpart 2 of part C, and shall
be allocated nitrogen oxides allowances under paragraph (f),
starting the later of January 1, 2008, or January 1 of the year
after the year on which the unit's baselines are based under
subsection (d); and
``(3) if applicable, an affected unit under part D, and
shall be allocated mercury allowances, starting the later of
January 1, 2010, or January 1 of the year after the year on
which the unit's baselines are based under subsection (d).
``(f) Allocations and Auction Amounts.--
``(1) The Administrator shall promulgate regulations
determining the allocations of sulfur dioxide allowances,
nitrogen oxides allowances, and, if applicable, mercury
allowances for each year during which a unit is an affected
unit under subsection (e). The regulations shall provide for
allocations equal to 50 percent of the following amounts, as
adjusted under paragraph (2)--
``(A) the lesser of the unit's baseline heat input
under subsection (d) or the unit's heat input for the
year before the year for which the Administrator is
determining the allocations; multiplied by
``(B) the lesser of--
``(i) the unit's baseline sulfur dioxide
emission rate, nitrogen oxides emission rate,
or mercury emission rate, as the case may be;
``(ii) the unit's sulfur dioxide emission
rate, nitrogen oxides emission rate, or mercury
emission rate, as the case may be, during 2002,
as determined by the Administrator based, to
the extent available, on information reported
to the State where the unit is located; or
``(iii) the unit's most stringent State or
Federal emission limitation for sulfur dioxide,
nitrogen oxides, or mercury applicable to the
year on which the unit's baseline heat input is
based under subsection (d).
``(2) The Administrator shall reduce the allocations under
paragraph (1) by 1.0 percent in the first year for which the
Administrator is allocating allowances to the unit, by an
additional 1.0 percent of the allocations under paragraph (1)
each year starting in the second year through the twentieth
year, and by an additional 2.5 percent of the allocations under
paragraph (1) each year starting in the 21 year and each year
thereafter. The Administrator shall make corresponding
increases in the amounts of allowances auctioned under sections
423, 453, and 473.
``(g) Withdrawal.--The Administrator shall promulgate regulations
withdrawing from the approved designation under subsection (c) any unit
that qualifies as an affected EGU under subpart 2 of part B, subpart 2
of part C, or part D after the approval of the designation of the unit
under subsection (c).
``(h) The Administrator shall promulgate regulations implementing
this section within 24 months of the date of enactment of the Clear
Skies Act of 2003.

``SEC. 408. CLEAN COAL TECHNOLOGY REGULATORY INCENTIVES.

``(a) Definition.--For purposes of this section, `clean coal
technology' means any technology, including technologies applied at the
precombustion, combustion, or post combustion stage, at a new or
existing facility which will achieve significant reductions in air
emissions of sulfur dioxide or oxides of nitrogen associated with the
utilization of coal in the generation of electricity, process steam, or
industrial products, which is not in widespread use as of the date of
enactment of this title.
``(b) Revised Regulations for Clean Coal Technology
Demonstrations.--
``(1) Applicability.--This subsection applies to physical
or operational changes to existing facilities for the sole
purpose of installation, operation, cessation, or removal of a
temporary or permanent clean coal technology demonstration
project. For the purposes of this section, a clean coal
technology demonstration project shall mean a project using
funds appropriated under the heading `Department of Energy--
Clean Coal Technology', up to a total amount of $2,500,000,000
for commercial demonstration of clean coal technology, or
similar projects funded through appropriations for the
Environmental Protection Agency. The Federal contribution for
qualifying project shall be at least 20 percent of the total
cost of the demonstration project.
``(2) Temporary projects.--Installation, operation,
cessation, or removal of a temporary clean coal technology
demonstration project that is operated for a period of 5 years
or less, and which complies with the State implementation plans
for the State in which the project is located and other
requirements necessary to attain and maintain the national
ambient air quality standards during and after the project is
terminated, shall not subject such facility to the requirements
of section 111 or part C or D of title I.
``(3) Permanent projects.--For permanent clean coal
technology demonstration projects that constitute repowering as
defined in section 411, any qualifying project shall not be
subject to standards of performance under section 111 or to the
review and permitting requirements of part C for any pollutant
the potential emissions of which will not increase as a result
of the demonstration project.
``(4) EPA regulations.--Not later than 12 months after
November 15, 1990, the Administrator shall promulgate
regulations or interpretive rulings to revise requirements
under section 111 and parts C and D, as appropriate, to
facilitate projects consistent in this subsection. With respect
to parts C and D, such regulations or rulings shall apply to
all areas in which EPA is the permitting authority. In those
instances in which the State is the permitting authority under
part C or D, any State may adopt and submit to the
Administrator for approval revisions to its implementation plan
to apply the regulations or rulings promulgated under this
subsection.
``(c) Exemption for Reactivation of Very Clean Units.--Physical
changes or changes in the method of operation associated with the
commencement of commercial operations by a coal-fired utility unit
after a period of discontinued operation shall not subject the unit to
the requirements of section 111 or part C of the Act where the unit--
``(1) has not been in operation for the two-year period
prior to November 15, 1990, and the emissions from such unit
continue to be carried in the permitting authority's emissions
inventory on November 15, 1990,
``(2) was equipped prior to shut-down with a continuous
system of emissions control that achieves a removal efficiency
for sulfur dioxide of no less than 85 percent and a removal
efficiency for particulates of no less than 98 percent,
``(3) is equipped with low-NO<INF>X</INF> burners prior to
the time of commencement, and
``(4) is otherwise in compliance with the requirements of
this Act.

``SEC. 409. AUCTIONS.

``(a) In General.--(1) Commencing in 2005 and in each year
thereafter, the Administrator shall conduct auctions, as required under
sections 423, 424, 426, 434, 453, 454, 473, and 474, at which
allowances shall be offered for sale in accordance with regulations
promulgated by the Administrator no later than 24 months after the date
of enactment of the Clear Skies Act of 2003.
``(2) Such regulations shall promote an efficient auction outcome
and a competitive market for allowances.
``(3) Such regulations may provide allowances to be offered for
sale before or during the year for which such allowances may be used to
meet the requirement to hold allowances under section 422, 432, 452,
and 472, as the case may be. Such regulations shall specify the
frequency and timing of auctions and may provide for more than one
auction of sulfur dioxide allowances, nitrogen oxides allowances, or
mercury allowances during a year. Allowances purchased at the auction
may be used for any purpose and at any time after the auction, subject
to the provisions of this title.
``(4) The regulations shall provide that each auction shall be open
to any person. A person wishing to bid for allowances in the auction
shall submit bids according to auction procedures, a bidding schedule,
a bidding means, and requirements for financial guarantees specified in
the regulations. Winning bids, and required payments, for allowances
shall be determined in accordance with the regulations. For any winning
bid, the Administrator shall record the allowances in the Allowance
Tracking System under section 403(c) only after the required payment
for such allowances is received.
``(b) Default Auction Procedures.--If the Administrator is required
to conduct an auction of allowances under subsection (a) before
regulations have been promulgated under that subsection, such auction
shall be conducted as follows:
``(1) The auction shall begin on the first business day in
October of the year in which the auction is required or, of the
year before the first year for which the allowances may be used
to meet the requirements of section 403(e)(2).
``(2) The auction shall be open to any person.
``(3) The auction shall be a multiple-round auction in
which sulfur dioxide allowances, nitrogen oxides allowances,
and mercury allowances are offered simultaneously.
``(4) In order to bid for allowances included in the
auction, a person shall submit, and the Administrator must
receive by the date three business days before the auction, one
or more initial bids to purchase a specified quantity of sulfur
dioxide allowances, nitrogen oxides allowances, and mercury
allowances, as the case may be, at a reserve price specified by
the Administrator. The bidder shall identify the account in the
Allowance Tracking System under section 403(c) in which the
such allowances that are purchased are to be recorded. Each bid
must be guaranteed by a certified check, a funds transfer, or,
in a form acceptable to the Administrator, a letter of credit
for such quantity multiplied by the reserve price payable to
the U.S. EPA.
``(5) The procedures in paragraph (4) shall constitute the
first round of the auction.
``(6) In each round of the auction, the Administrator
shall--
``(A) announce current round reserve prices for
sulfur dioxide allowances, nitrogen oxides allowances,
and mercury allowances;
``(B) receive bids comprising nonnegative
quantities for sulfur dioxide allowances, nitrogen
oxides allowances, and mercury allowances, as the case
may be;
``(C) determine whether bids are acceptable as
meeting auction requirements;
``(D) for sulfur dioxide allowances, nitrogen
oxides allowances, and mercury allowances, as the case
may be, determine whether the sum of the acceptable
bids exceeds the quantity of such allowances available
for auction;
``(E) if the sum of the acceptable bids for sulfur
dioxide allowances, nitrogen oxides allowances, and
mercury allowances, as the case may be, exceeds the
quantity of such allowances available for auction,
increase the reserve price for the next round based on
the amount by which the sum of such acceptable bids
exceeds the quantity of such allowances; and
``(F) if the sum of the acceptable bids for sulfur
dioxide allowances, nitrogen oxides allowances, and
mercury allowances, as the case may be, does not exceed
the quantity of such allowances available for auction,
declare that round the last round of the auction for
such allowances.
``(7) In the second and all subsequent rounds of the
auction, the Administrator shall require that, for sulfur
dioxide allowances, nitrogen oxides allowances, and mercury
allowances, as the case may be, a bidder's quantity bid may not
exceed the bidder's quantity bid for such allowances in the
first round of the auction.
``(8) After the auction, the Administrator shall publish
the names of winning and losing bidders, their quantities
awarded, and the final prices. The Administrator shall provide
the successful bidders notice of the allowances that they have
purchased within thirty days after payments equaling the
quantity awarded multiplied by the corresponding final reserve
price is collected by the Administrator. After the conclusion
of the auction, the Administrator shall return payment to
unsuccessful bidders and add any unsold allowances to the next
relevant auction.
``(9) The Administrator may specify by regulations, without
notice and opportunity for comment, the following auction
requirements and procedures:
``(A) reserve prices for sulfur dioxide allowances,
nitrogen oxides allowances, and mercury allowances, as
the case may be;
``(B) procedures for adjusting reserve prices in
each round;
``(C) procedures limiting a bidder's bids based on
his or her bids in previous rounds;
``(D) rationing procedures to treat tie bids;
``(E) procedures allowing bids at intermediate
prices between previous reserve prices and current
reserve prices;
``(F) procedures allowing bid withdrawals before
the final round of the auction;
``(G) anti-collusion rules;
``(H) market share limitations on a bidder or
associated bidders;
``(I) aggregate information made available to
bidders during the auction;
``(J) proxy bidding or procedures for facilitating
participation by small bidders;
``(K) levels and details of financial guarantees;
``(L) technical specifications for electronic
bidding; and
``(M) bidding schedules and other administrative
requirements and procedures of the auction.
``(c) Delegation or Contract.--The Administrator may by delegation
or contract provide for the conduct of auctions under the
Administrator's supervision by other departments or agencies of the
United States Government or by nongovernmental agencies, groups, or
organizations.
``(d) Proceeds.--The proceeds from any auction conducted under this
title shall be deposited in the United States Treasury.

``SEC. 410. EVALUATION OF LIMITATIONS ON TOTAL SULFUR DIOXIDE, NITROGEN
OXIDES, AND MERCURY EMISSIONS THAT START IN 2018.

``(a) Evaluation.--(1) The Administrator, in consultation with the
Secretary of Energy, shall study whether the limitations on the total
annual amounts of allowances available starting in 2018 for sulfur
dioxide under section 423, nitrogen oxides under section 453, and
mercury under section 473 should be adjusted.
``(2) In conducting the study, the Administrator shall include the
following analyses and evaluations concerning the pollutants under
paragraph (1) of subsection (a)(1):
``(A) An evaluation of the need for further emission
reductions from affected EGUs under subpart 2 of part B,
subpart 2 of part C, or part D and other sources to attain or
maintain the national ambient air quality standards.
``(B) A benefit-cost analysis to evaluate whether the
benefits of the limitations on the total annual amounts of
allowances available starting in 2018 justify the costs and
whether adjusting any of the limitations would provide
additional benefits which justify the costs of such adjustment,
taking into account both quantifiable and non-quantifiable
factors.
``(C) The marginal cost effectiveness of reducing emissions
for each pollutant.
``(D) The merits of allowing trading between nitrogen
oxides emissions and sulfur dioxide emissions.
``(E) An evaluation of the relative marginal cost
effectiveness of reducing sulfur dioxide and nitrogen oxide
emissions from affected EGUs under subpart 2 of part B and
subpart 2 of part C, as compared to the marginal cost
effectiveness of controls on other sources of sulfur dioxide,
nitrogen oxides and other pollutants that can be controlled to
attain or maintain national ambient air quality standards.
``(F) An evaluation of the feasibility of attaining the
limitations on the total annual amounts of allowances available
starting in 2018 given the available control technologies and
the ability to install control technologies by 2018, and the
feasibility of attaining alternative limitations on the total
annual amounts of allowances available starting in 2018 under
paragraph (1) of subsection (a) for each pollutant, including
the ability to achieve alternative limitations given the
available control technologies, and the feasibility of
installing the control technologies needed to meet the
alternative limitation by 2018.
``(G) An assessment of the results of the most current
research and development regarding technologies and strategies
to reduce the emissions of one or more of these pollutants from
affected EGUs under subpart 2 of part B, subpart 2 of part C,
or part D, as applicable and the results of the most current
research and development regarding technologies for other
sources of the same pollutants.
``(H) The projected impact of the limitations on the total
annual amounts of allowances available starting in 2018 and the
projected impact of adjusting any of the limitations on the
total annual amounts of allowances available starting in 2018
under paragraph (1) of subsection (a) on the safety and
reliability of affected EGUs under subpart 2 of part B, subpart
2 of part C, or part D and on fuel diversity within the power
generation section.
``(I) An assessment of the best available and most current
scientific information relating to emissions, transformation
and deposition of these pollutants, including studies
evaluating--
``(i) the role of emissions of affected EGUs under
subpart 2 of part B, subpart 2 of part C, or part D in
the atmospheric formation of pollutants for which
national ambient air quality standards exist;
``(ii) the transformation, transport, and fate of
these pollutants in the atmosphere, other media, and
biota;
``(iii) the extent to which effective control
programs in other countries would prevent air pollution
generated in those countries from contributing to
nonattainment, or interfering with the maintenance of
any national ambient air quality standards;
``(iv) whether the limitations starting in 2010 or
2018 will result in an increase in the level of any
other pollutant and the level of any such increase; and
``(v) speciated monitoring data for particulate
matter and the effect of various components of fine
particulate matter on public health.
``(J) An assessment of the best available and most current
scientific information relating to emissions, transformation
and deposition of mercury, including studies evaluating--
``(i) known and potential human health and
environmental effects of mercury;
``(ii) whether emissions of mercury from affected
EGUs under part D contribute significantly to elevated
levels of mercury in fish;
``(iii) human population exposure to mercury; and
``(iv) the relative marginal cost effectiveness of
reducing mercury emissions from affected EGUs under
part D, as compared to the marginal cost effectiveness
of controls on other sources of mercury.
``(K) A comparison of the extent to which sources of
mercury not located in the United States contributed to adverse
affects on terrestrial or aquatic systems as opposed to the
contribution from affected EGUs under part D, and the extent to
which effective mercury control programs in other countries
could minimize such impairment.
``(L) An analysis of the effectiveness and efficiency of
the sulfur dioxide allowance program under subpart 2 of part B,
the nitrogen oxides allowance program under subpart 2 of part
C, and the mercury allowance program under part D.
``(3) As part of the study, the Administrator shall take into
account the best available information pursuant to the review of the
air quality criteria for particulate matter under section 108.
``(b) Peer Review Procedures.--(1) The draft results of the study
under subsection (a), including the benefit-cost analysis, the risk
assessment, technological information and related technical documents
shall be subject to an independent and external peer review in
accordance with this section. Any documents that are to be considered
by the Administrator in the study shall be independently peer reviewed
no later than July 1, 2008. The peer review required under this section
shall not be subject to the Federal Advisory Committee Act (5 U.S.C.
App.).
``(2) The Administrator shall conduct the peer review in an open
manner. Such peer review shall--
``(A) be conducted through a formal panel that is broadly
representative and involves qualified specialists who--
``(i) are selected primarily on the basis of their
technical expertise relevant to the analyses required
under this section;
``(ii) disclose to the agency prior technical or
policy positions they have taken on the issues under
consideration; and
``(iii) disclose to the agency their sources of
personal and institutional funding from the private or
public sectors;
``(B) contain a balanced presentation of all
considerations, including minority reports;
``(C) provide adequate protections for confidential
business information and trade secrets, including requiring
panel members or participants to enter into confidentiality
agreements;
``(D) afford an opportunity for public comment; and
``(E) be complete by no later than January 1, 2009.
``(2) The Administrator shall respond, in writing, to all
significant peer review and public comments and certify that--
``(A) each peer review participant has the expertise and
independence required under this section; and
``(B) the agency has adequately responded to the peer
review comments as required under this section.
``(c) Recommendation to Congress.--The Administrator, in
consultation with the Secretary of Energy, should submit to Congress no
later than July 1, 2009, a recommendation whether to revise the
limitations on the total annual amounts of allowances available
starting in 2018 under paragraph (1) of subsection (a). The
recommendation shall include the final results of the study under
subsections (a) and (b) and shall address the factors described in
paragraph (2) of subsection (a). The Administrator may submit separate
recommendations addressing sulfur dioxide, nitrogen oxides, or mercury
at any time after the study has been completed under paragraph (2) of
subsection (a) and the peer review process has been completed under
subsection (b).

``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.

``(a) Evaluation.--(1) The Administrator, in consultation with the
Secretary of Energy, shall study whether the limitations on the total
annual amounts of allowances available starting in 2018 for sulfur
dioxide under section 423, nitrogen oxides under section 453, and
mercury under section 473 should be adjusted.
``(2) In conducting the study, the Administrator shall include the
following analyses and evaluations concerning the pollutants under
paragraph (a)(1):
``(A) an evaluation of the need for further emission
reductions from affected EGUs under subpart 2 of part B,
subpart 2 of part C, or part D and other sources to attain or
maintain the national ambient air quality standards;
``(B) a benefit-cost analysis to evaluate whether the
benefits of the limitations on the total annual amounts of
allowances available starting in 2018 justify the costs and
whether adjusting any of the limitations would provide
additional benefits which justify the costs of such adjustment,
taking into account both quantifiable and non-quantifiable
factors;
``(C) the marginal cost effectiveness of reducing emissions
for each pollutant;
``(D) the merits of allowing trading between NO<INF>X</INF>
and SO<INF>2</INF> limitations;
``(E) an evaluation of the relative marginal cost
effectiveness of reducing sulfur dioxide and nitrogen oxide
emissions from affected EGUs under sub-part 2 of part B and
subpart 2 of part C, as compared to the marginal cost
effectiveness of controls on other sources of sulfur dioxide,
nitrogen oxides and other pollutants that can be controlled to
attain or maintain national ambient air quality standard;
``(F) an evaluation of the feasibility of attaining the
limitations on the total annual amounts of allowances available
starting in 2018 given the available control technologies and
the ability to install control technologies by 2018, and the
feasibility of attaining alternative limitations on the total
annual amounts of allowances available starting in 2018 under
paragraph (a)(1) for each pollutant, including the ability to
achieve alternative limitations given the available control
technologies, and the feasibility of installing the control
technologies needed to meet the alternative limitation by 2018;
``(G) an assessment of the results of the most current
research and development regarding technologies and strategies
to reduce the emissions of one or more of these pollutants from
affected EGUs under subpart 2 of part B, subpart 2 of part C,
or part D, as applicable and the results of the most current
research and development regarding technologies for other
sources of the same pollutants;
``(H) the projected impact of the limitations on the total
annual amounts of allowances available starting in 2018 and the
projected impact of adjusting any of the limitations on the
total annual amounts of allowances available starting in 2018
under paragraph (a)(1) on the safety and reliability of
affected EGUs under subpart 2 of part B, subpart 2 of part C,
or part D and on fuel diversity within the power generation
section;
``(I) an assessment of the best available and most current
scientific information relating to emissions, transformation
and deposition of these pollutants, including studies
evaluating--
``(i) the role of emissions of affected EGUs under
subpart 2 of part B, subpart 2 of part C, or part D in
the atmospheric formation of pollutants for which
national ambient air quality standards exist;
``(ii) the transformation, transport, and fate of
these pollutants in the atmosphere, other media, and
biota;
``(iii) the extent to which effective control
programs in other countries would prevent air pollution
generated in those countries from contributing to
nonattainment, or interfering with the maintenance of
any national ambient air quality standards;
``(iv) whether the limitations starting in 2010 or
2018 will result in an increase in the level of any
other pollutant and the level of any such increase; and
``(v) speciated monitoring data for particulate
matter and the effect of various elements of fine
particulate matter on public health;
``(J) an assessment of the best available and most current
scientific information relating to emissions, transformation
and deposition of mercury, including studies evaluating--
``(i) known and potential human health and
environmental effects of mercury;
``(ii) whether emissions of mercury from affected
EGUs under part D contribute significantly to elevated
levels of mercury in fish;
``(iii) human population exposure to mercury; and
``(iv) the relative marginal cost effectiveness of
reducing mercury emissions from affected EGUs under
part D, as compared to the marginal cost effectiveness
of controls on other sources of mercury;
``(K) a comparison of the extent to which sources of
mercury not located in the United States contributed to adverse
affects on terrestrial or aquatic systems as opposed to the
contribution from affected EGUs under part D, and the extent to
which effective mercury control programs in other countries
could minimize such impairment; and
``(L) an analysis of the effectiveness and efficiency of
the sulfur dioxide allowance program under subpart 2 of part B,
the nitrogen oxides allowance program under subpart 2 of part
C, and the mercury allowance program under part D.
``(3) As part of the study, the Administrator shall take into
account the best available information pursuant to the review of the
air quality criteria for particulate matter under section 108.
``(b) Peer Review Procedures.--(1) The draft results of the study
under subsection (a) shall be subject to an independent and external
peer review in accordance with this section. Any documents that are to
be considered by the Administrator in the study shall be independently
peer reviewed no later than July 1, 2008. The peer review required
under this section shall not be subject to the Federal Advisory
Committee Act (5 U.S.C. App.).
``(2) The Administrator shall conduct the peer review in an open
and rigorous manner. Such peer review shall--
``(A) be conducted through a formal panel that is broadly
representative of the relevant scientific and technical views
and involves qualified specialists who--
``(i) are selected primarily on the basis of their
technical expertise relevant to the analyses required
under this section;
``(ii) disclose to the agency prior technical or
policy positions they have taken on the issues under
consideration; and
``(iii) disclose to the agency their sources of
personal and institutional funding from the private or
public sectors;
``(B) contain a balanced presentation of all
considerations, including minority reports;
``(C) provide adequate protections for confidential
business information and trade secrets, including requiring
panel members or participants to enter into confidentiality
agreements;
``(D) afford an opportunity for public comment; and
``(E) be complete by no later than January 1, 2009.
``(3) The Administrator shall respond, in writing, to all
significant peer review and public comments; and
``(4) The Administrator shall certify that--
``(A) each peer review participant has the expertise an
independence required under this section; and
``(B) the agency has adequately responded to the peer
review comments as required under this section.
``(c) Recommendation to Congress.--The Administrator, in
consultation with the Secretary of Energy, shall submit to Congress no
later than July 1, 2009, a recommendation whether to revise the
limitations on the total annual amounts of allowances available
starting in 2018 under paragraph (a)(1). The recommendation shall
include the final results of the study under subsections (a) and (b)
and shall address the factors described in paragraph (2) of subsection
(a). The Administrator may submit separate recommendations addressing
sulfur dioxide, nitrogen oxides, or mercury at any time after the study
has been completed under paragraph (2) of subsection (a) and the peer
review process has been completed under subsection (b).

``SEC. 411. DEFINITIONS.

``For purposes of this subpart and subpart 1 of part B:
``(1) The term `actual 1985 emission rate', for electric
utility units means the annual sulfur dioxide or nitrogen
oxides emission rate in pounds per million Btu as reported in
the NAPAP Emissions Inventory, Version, 2 National Utility
reference File. For nonutility units, the term `actual 1985
emission rate' means the annual sulfur dioxide or nitrogen
oxides emission rate in pounds per million Btu as reported in
the NAPAP Emission Inventory, Version 2.
``(2) The term `allowable 1985 emissions rate' means a
federally enforceable emissions limitation for sulfur dioxide
or oxides of nitrogen, applicable to the unit in 1985 or the
limitation applicable in such other subsequent year as
determined by the Administrator if such a limitation for 1985
does not exist. Where the emissions limitation for a unit is
not expressed in pounds of emissions per million Btu, or the
averaging period of that emissions limitation is not expressed
on an annual basis, the Administrator shall calculate the
annual equivalent of that emissions.
``(3) The term `alternative method of compliance' means a
method of compliance in accordance with one or more of the
following authorities--
``(A) a substitution plan submitted and approved in
accordance with subsections 413(b) and (c); or
``(B) a Phase I extension plan approved by the
Administrator under section 413(d), using qualifying
phase I technology as determined by the Administrator
in accordance with that section.
``(4) The term `baseline' means the annual quantity of
fossil fuel consumed by an affected unit, measured in millions
of British Thermal Units (`mmBtu's'), calculated as follows:
``(A) For each utility unit that was in commercial
operation prior to January 1, 1985, the baseline shall
be the annual average quantity of mmBtu's consumed in
fuel during calendar years 1985, 1986, and 1987, as
recorded by the Department of Energy pursuant to Form
767. For any utility unit for which such form was not
filed, the baseline shall be the level specified for
such unit in the 1985 National Acid Precipitation
Assessment Program (NAPAP) Emissions Inventory, Version
2, National Utility Reference File (NURF) or in a
corrected data base as established by the Administrator
pursuant to paragraph (3). For non-utility units, the
baseline in the NAPAP Emissions Inventory, Version 2.
The Administrator, in the Administrator's sole
discretion, may exclude periods during which a unit is
shutdown for a continuous period of 4 calendar months
or longer, and make appropriate adjustments under this
paragraph. Upon petition of the owner or operator of
any unit, the Administrator may make appropriate
baseline adjustments for accidents that caused
prolonged outages.
``(B) For any other nonutility unit that is not
included in the NAPAP Emissions Inventory, Version 2,
or a corrected data base as established by the
Administrator pursuant to paragraph (3), the baseline
shall be the annual average quantity, in mmBtu consumed
in fuel by that unit, as calculated pursuant to a
method which the Administrator shall prescribe by
regulation to be promulgated not later than 18 months
after November 15, 1990.
``(C) The Administrator shall, upon application or
on his own motion, by December 31, 1991, supplement
data needed in support of this subpart and correct any
factual errors in data from which affected Phase II
units' baselines or actual 1985 emission rates have
been calculated. Corrected data shall be used for
purposes of issuing allowances under this subpart. Such
corrections shall not be subject to judicial review,
nor shall the failure of the Administrator to correct
an alleged factual error in such reports be subject to
judicial review.
``(5) The term `basic Phase II allowance allocations'
means:
``(A) For calendar years 2000 through 2009
inclusive, allocations of allowances made by the
Administrator pursuant to section 412 and subsections
(b)(1), (3), and (4); (c)(1), (2), (3), and (5);
(d)(1), (2), (4), and (5); (e); (f); (g)(1), (2), (3),
(4), and (5); (h)(1); (i) and (j) of section 414.
``(B) For each calendar year beginning in 2010,
allocations of allowances made by the Administrator
pursuant to section 412 and subsections (b)(1), (3),
and (4); (c)(1), (2), (3), and (5); (d)(1), (2), (4)
and (5); (e); (f); (g)(1), (2), (3), (4), and (5);
(h)(1) and (3); (i) and (j) of section 414.
``(6) The term `capacity factor' means the ratio between
the actual electric output from a unit and the potential
electric output from that unit.
``(7) The term `commenced' as applied to construction of
any new electric utility unit means that an owner or operator
has undertaken a continuous program of construction or that an
owner or operator has entered into a contractual obligation to
undertake and complete, within a reasonable time, a continuous
program of construction.
``(8) The term `commenced commercial operation' means to
have begun to generate electricity for sale.
``(9) The term `construction' means fabrication, erection,
or installation of an affected unit.
``(10) The term `existing unit' means a unit (including
units subject to section 111) that commenced commercial
operation before November 15, 1990. Any unit that commenced
commercial operation before November 15, 1990 which is
modified, reconstructed, or repowered after November 15, 1990
shall continue to be an existing unit for the purposes of this
subpart. For the purposes of this subpart, existing units shall
not include simple combustion turbines, or units which serve a
generator with a nameplate capacity of 25 MWe or less.
``(11) The term `independent power producer' means any
person who owns or operates, in whole or in part, one or more
new independent power production facilities.
``(12) The term `new independent power production facility'
means a facility that--
``(A) is used for the generation of electric
energy, 80 percent or more of which is sold at
wholesale;
``(B) in nonrecourse project-financed (as such term
is defined by the Secretary of Energy within 3 months
of the date of the enactment of the Clean Air Act
Amendments of 1990); and
``(C) is a new unit required to hold allowances
under this subpart.
``(13) The term `industrial source' means a unit that does
not serve a generator that produces electricity, a `non-utility
unit' as defined in this section, or a process source.
``(14) The term `life-of-the-unit, firm power contractual
arrangement' means a unit participation power sales agreement
under which a utility or industrial customer reserves, or is
entitled to receive, a specified amount or percentage of
capacity and associated energy generated by a specified
generating unit (or units) and pays its proportional amount of
such unit's total costs, pursuant to a contract either--
``(A) for the life of the unit;
``(B) for a cumulative term of no less than 30
years, including contracts that permit an election for
early termination; or
``(C) for a period equal to or greater than 25
years or 70 percent of the economic useful life of the
unit determined as of the time the unit was built, with
option rights to purchase or release some portion of
the capacity and associated energy generated by the
unit (or units) at the end of the period.
``(15) The term `new unit' means a unit that commences
commercial operation on or after November 15, 1990.
``(16) The term `nonutility unit' means a unit other than a
utility unit.
``(17) The term `Phase II bonus allowance allocations'
means, for calendar year 2000 through 2009, inclusive, and only
for such years, allocations made by the Administrator pursuant
to section 412, subsections (a)(2), (b)(2), (c)(4), (d)(3)
(except as otherwise provided therein), and (h)(2) of section
414, and section 415.
``(18) The term `qualifying phase I technology' means a
technological system of continuous emission reduction which
achieves a 90 percent reduction in emissions of sulfur dioxide
from the emissions that would have resulted from the use of
fuels which were not subject to treatment prior to combustion.
``(19) The term `repowering' means replacement of an
existing coal-fired boiler with one of the following clean coal
technologies: atmospheric or pressurized fluidized bed
combustion, integrated gasification combined cycle, magneto-
hydrodynamics, direct and indirect coal-fired turbines,
integrated gasification fuel cells, or as determined by the
Administrator, in consultation with the Secretary of Energy, a
derivative of one or more of these technologies, and any other
technology capable of controlling multiple combustion emissions
simultaneously with improved boiler or generation efficiency
and with significantly greater waste reduction relative to the
performance of technology in widespread commercial use as of
November 15, 1990.
``(20) The term `reserve' means any bank of allowances
established by the Administrator under this subpart.
``(21)(A) The term `utility unit' means--
``(i) a unit that serves a generator in any State
that produces electricity for sale, or
``(ii) a unit that, during 1985, served a generator
in any State that produced electricity for sale.
``(B) Notwithstanding subparagraph (A), a unit described in
subparagraph (A) that--
``(i) was in commercial operations during 1985, but
``(ii) did not during 1985, serve a generator in
any State that produced electricity for sale shall not
be a utility unit for purposes of this subpart.
``(C) A unit that cogenerates steam and electricity is not
a `utility unit' for purposes of this subpart unless the unit
is constructed for the purpose of supplying, or commences
construction after November 15, 1990 and supplies more than
one-third of its potential electric output capacity of more
than 25 megawatts electrical output to any utility power
distribution system for sale.

``SEC. 412. ALLOWANCE ALLOCATION.

``(a) Except as provided in sections 414(a)(2), 415(a)(3), and 416,
beginning January 1, 2000, the Administrator shall not allocate annual
missions of sulfur dioxide from utility units in excess of 8.90 million
tons except that the Administrator shall not to take into account
unused allowances carried forward by owners and operators of affected
units or by other persons holding such allowances, following the year
for which they were allocated. If necessary to meeting he restrictions
imposed in the preceding sentence, the Administrator shall reduce, pro
rata, the basic Phase II allowance allocations for each unit subject to
the requirements of section 414. Subject to the provisions of section
417, the Administrator shall allocate allowances for each affected
until at an affected source annually, as provided in paragraphs (2)
and(3) and section 404. Except as provided in sections 416, the removal
of an existing affected unit or source from commercial operation at any
time after November 15, 1990 (whether before or after January 1, 1995,
or January 1, 2000), shall not terminate or otherwise affect the
allocation of allowances pursuant to section 413 or 414 to which the
unit is entitled. Prior to June 1, 1998, the Administrator shall
publish a revised final statement of allowance allocations, subject to
the provisions of section 414(a)(2).
``(b) New Utility Units.--
``(1) After January 1, 2000 and through December 31, 2007,
it shall be unlawful for a new utility unit to emit an annual
tonnage of sulfur dioxide in excess of the number of allowances
to emit held for the unit by the unit's owner or operator.
``(2) Starting January 1, 2008, a new utility unit shall be
subject to the prohibition in subsection (c)(3).
``(3) New utility units shall not be eligible for an
allocation of sulfur dioxide allowances under subsection
(a)(1), unless the unit is subject to the provisions of
subsection (g)(2) or (3) of section 414. New utility units may
obtain allowances from any person, in accordance with this
title. The owner or operator of any new utility unit in
violation of subsection (b)(1) or subsection(c)(3) shall be
liable for fulfilling the obligations specified in section 406.
``(c) Prohibitions.--
``(1) It shall be unlawful for any person to hold, use, or
transfer any allowance allocated under this subpart, except in
accordance with regulations promulgated by the Administrator.
``(2) For any year 1995 through 2007, it shall be unlawful
for any affected unit to emit sulfur dioxide in excess of the
number of allowances held for that unit for that year by the
owner or operator of the unit.
``(3) Starting January 1, 2008, it shall be unlawful for
the affected units at a source to emit a total amount of sulfur
dioxide during the year in excess of the number of allowances
held for the source for that year by the owner or operator of
the source.
``(4) Upon the allocation of allowances under this subpart,
the prohibition in paragraphs (2) and (3) shall supersede any
other emission limitation applicable under this subpart to the
units for which such allowances are allocated.
``(d) In order to insure electric reliability, regulations
establishing a system for issuing, recording, and tracking allowances
under section 403(b) and this subpart shall not prohibit or affect
temporary increases and decreases in emissions within utility systems,
power pools, or utilities entering into allowance pool agreements, that
result from their operations, including emergencies and central
dispatch, and such temporary emissions increases and decreases shall
not require transfer of allowances among units nor shall it require
recording. The owners or operators of such units shall act through a
designated representative. Notwithstanding the preceding sentence, the
total tonnage of emissions in any calendar year (calculated at the end
thereof) from all units in such a utility system, power pool, or
allowance pool agreements shall not exceed the total allowances for
such units for the calendar year concerned, including for calendar
years after 2007, allowances held for such units by the owner or
operator of the sources where the units are located.
``(e) Where there are multiple holders of a legal or equitable
title to, or a leasehold interest in, an affected unit, or where a
utility or industrial customer purchases power from an affected unit
(or units) under life-of-the-unit, firm power contractual arrangements,
the certificate of representation required under section 404(f) shall
state--
``(1) that allowances under this subpart and the proceeds
of transactions involving such allowances will be deemed to be
held or distributed in proportion to each holder's legal,
equitable, leasehold, or contractual reservation or
entitlement, or
``(2) if such multiple holders have expressly provided for
a different distribution of allowances by contract, that
allowances under this subpart and the proceeds of transactions
involving such allowances will be deemed to be held or
distributed in accordance with the contract.
A passive lessor, or a person who has an equitable interest through
such lessor, whose rental payments are not based, either directly or
indirectly, upon the revenues or income from the affected unit shall
not be deemed to be a holder of a legal, equitable, leasehold, or
contractual interest for the purpose of holding or distributing
allowances as provided in this subsection, during either the term of
such leasehold or thereafter, unless expressly provided for in the
leasehold agreement. Except as otherwise provided in this subsection,
where all legal or equitable title to or interest in an affected unit
is held by a single person, the certification shall state that all
allowances under this subpart received by the unit are deemed to be
held for that person.

``SEC. 413. PHASE I SULFUR DIOXIDE REQUIREMENTS.

``(a) Emission Limitations.--
``(1) After January 1, 1995, each source that includes one
or more affected units listed in table A is an affected source
under this section. After January 1, 1995, it shall be unlawful
for any affected unit (other than an eligible phase I unit
under section 413(d)(2)) to emit sulfur dioxide in excess of
the tonnage limitation stated as a total number of allowances
in table A for phase I, unless--
``(A) the emissions reduction requirements
applicable to such unit have been achieved pursuant to
subsection (b) or (d), or
``(B) the owner or operator of such unit holds
allowances to emit not less than the unit's total
annual emissions, except that, after January 1, 2000,
the emissions limitations established in this section
shall be superseded by those established in section
414. The owner or operator of any unit in violation of
this section be fully liable for such violation
including, but not limited to, liability for fulfilling
the obligations specified in section 406.
``(2) Not later than December 31, 1991, the Administrator
shall determine the total tonnage of reductions in the
emissions of sulfur dioxide from all utility units in calendar
year 1995 that will occur as a result of compliance with the
emissions limitation requirements of this section, and shall
establish a reserve of allowances equal in amount to the number
of tons determined thereby not to exceed a total of 3.50
million tons. In making such a determination, the Administrator
shall compute for each unit subject to the emissions limitation
requirements of this section the difference between--
``(A) the product of its baseline multiplied by the
lesser of each unit's allowable 1985 emissions rate and
its actual 1985 emissions rate, divided by 2,000, and
``(B) the product of each unit's baseline
multiplied by 2.50 lbs/mmBtu divided by 2,000, and sum
the computations. The Administrator shall adjust the
foregoing calculation to reflect projected calendar
year 1995 utilization of the units subject to the
emissions limitations of this subpart that the
Administrator finds would have occurred in the absence
of the imposition of such requirements. Pursuant to
subsection (d), the Administrator shall allocate
allowances from the reserve established hereunder until
the earlier of such time as all such allowances in the
reserve are allocated or December 31, 1999.
``(3) In addition to allowances allocated pursuant to
paragraph (1), in each calendar year beginning in 1995 and
ending in 1999, inclusive, the Administrator shall allocate for
each unit on Table A that is located in the States of Illinois,
Indiana, or Ohio (other than units at Kyger Creek, Clifty Creek
and Joppa Steam), allowances in an amount equal to 200,000
multiplied by the unit's pro rata share of the total number of
allowances allocated for all units on Table A in the 3 States
(other than units at Kyger Creek, Clifty Creek, and Joppa
Steam) pursuant to paragraph (1). Such allowances shall be
excluded from the calculation of the reserve under paragraph
(2).
``(b) Substitutions.--The owner or operator of an affected unit
under subsection (a) may include in its section 404 permit application
and proposed compliance plan a proposal to reassign, in whole or in
part, the affected unit's sulfur dioxide reduction requirements to any
other unit(s) under the control of such owner or operator. Such
proposal shall specify--
``(1) the designation of the substitute unit or units to
which any part of the reduction obligations of subsection (a)
shall be required, in addition to, or in lieu of, any original
affected units designated under such subsection;
``(2) the original affected unit's baseline, the actual and
allowable 1985 emissions rate for sulfur dioxide, and the
authorized annual allowance allocation stated in table A;
``(3) calculation of the annual average tonnage for
calendar years 1985, 1986, and 1987, emitted by the substitute
unit or units, based on the baseline for each unit, as defined
in section 411(4), multiplied by the lesser of the unit's
actual or allowable 1985 emissions rate;
``(4) the emissions rates and tonnage limitations that
would be applicable to the original and substitute affected
units under the substitution proposal;
``(5) documentation, to the satisfaction of the
Administrator, that the reassigned tonnage limits will, in
total, achieve the same or greater emissions reduction than
would have been achieved by the original affected unit and the
substitute unit or units without such substitution; and
``(6) such other information as the Administrator may
require.
``(c) Administrator's Action on Substitution Proposals.--
``(1) The Administrator shall take final action on such
substitution proposal in accordance with section 404(c) if the
substitution proposal fulfills the requirements of this
subsection. The Administrator may approve a substitution
proposal in whole or in part and with such modifications or
conditions as may be consistent with the orderly functioning of
the allowance system and which will ensure the emissions
reductions contemplated by this title. If a proposal does not
meet the requirements of subsection (b), the Administrator
shall disapprove it. The owner or operator of a unit listed in
table A shall not substitute another unit or units without the
prior approval of the Administrator.
``(2) Upon approval of a substitution proposal, each
substitute unit, and each source with such unit, shall be
deemed affected under this title, and the Administrator shall
issue a permit to the original and substitute affected source
and unit in accordance with the approved substitution plan and
section 404. The Administrator shall allocate allowances for
the original and substitute affected units in accordance with
the approved substitution proposal pursuant to section 412. It
shall be unlawful for any source or unit that is allocated
allowances pursuant to this section to emit sulfur dioxide in
excess of the emissions limitation provided for in the approved
substitution permit and plan unless the owner or operator of
each unit governed by the permit and approved substitution plan
holds allowances to emit not less than the unit's total annual
emissions. The owner or operator of any original or substitute
affected unit operated in violation of this subsection shall be
fully liable for such violation, including liability for
fulfilling the obligations specified in section 406. If a
substitution proposal is disapproved, the Administrator shall
allocate allowances to the original affected unit or units in
accordance with subsection (a).
``(d) Eligible Phase I Extension Units.--
``(1) The owner or operator of any affected unit subject to
an emissions limitation requirement under this section may
petition the Administrator in its permit application under
section 404 for an extension of 2 years of the deadline for
meeting such requirement, provided that the owner or operator
of any such unit holds allowances to emit not less than the
unit's total annual emissions for each of the 2 years of the
period of extension. To qualify for such an extension, the
affected unit must either employ a qualifying phase I
technology, or transfer its phase I emissions reduction
obligation to a unit employing a qualifying phase I technology.
Such transfer shall be accomplished in accordance with a
compliance plan, submitted and approved under section 404, that
shall govern operations at all units included in the transfer,
and that specifies the emissions reduction requirements imposed
pursuant to this title.
``(2) Such extension proposal shall--
``(A) specify the unit or units proposed for
designation as an eligible phase I extension unit;
``(B) provide a copy of an executed contract, which
may be contingent upon the Administrator approving the
proposal, for the design engineering, and construction
of the qualifying phase I technology for the extension
unit, or for the unit or units to which the extension
unit's emission reduction obligation is to be
transferred;
``(C) specify the unit's or units' baseline, actual
1985 emissions rate, allowable 1985 emissions rate, and
projected utilization for calendar years 1995 through
1999;
``(D) require CEMS on both the eligible phase I
extension unit or units and the transfer unit or units
beginning no later than January 1, 1995; and
``(E) specify the emission limitation and number of
allowances expected to be necessary for annual
operation after the qualifying phase I technology has
been installed.
``(3) The Administrator shall review and take final action
on each extension proposal in order of receipt, consistent with
section 404, and for an approved proposal shall designate the
unit or units as an eligible phase I extension unit. The
Administrator may approve an extension proposal in whole or in
part, and with such modifications or conditions as may be
necessary, consistent with the orderly functioning of the
allowance system, and to ensure the emissions reductions
contemplated by the subpart.
``(4) In order to determine the number of proposals
eligible for allocations from the reserve under subsection
(a)(2) and the number of the allowances remaining available
after each proposal is acted upon, the Administrator shall
reduce the total number of allowances remaining available in
the reserve by the number of allowances calculated according to
subparagraph (A), (B) and (C) until either no allowances remain
available in the reserve for further allocation or all approved
proposals have been acted upon. If no allowances remain
available in the reserve for further allocation before all
proposals have been acted upon by the Administrator, any
pending proposals shall be disapproved. The Administrator shall
calculate allowances equal to--
``(A) the difference between the lesser of the
average annual emissions in calendar years 1988 and
1989 or the projected emissions tonnage for calendar
year 1995 of each eligible phase I extension unit, as
designated under paragraph (3), and the product of the
unit's baseline multiplied by an emission rate of 2.50
lbs/mmBtu, divided by 2,000;
``(B) the difference between the lesser of the
average annual emissions in calendar years 1988 and
1989 or the projected emissions tonnage for calendar
year 1996 of each eligible phase I extension unit, as
designated under paragraph (3), and the product of the
unit's baseline multiplied by an emission rate of 2.50
lbs/mmBtu, divided by 2,000; and
``(C) the amount by which (i) the product of each
unit's baseline multiplied by an emission rate of 1.20
lbs/mmBtu, divided by 2,000, exceeds (ii) the tonnage
level specified under subparagraph (E) of paragraph (2)
of this subsection multiplied by a factor of 3.
``(5) Each eligible Phase I extension unit shall receive
allowances determined under subsection (a)(1) or (c) of this
section. In addition, for calendar year 1995, the Administrator
shall allocate to each eligible Phase I extension unit, from
the allowance reserve created pursuant to subsection (a)(2),
allowances equal to the difference between the lesser of the
average annual emissions in calendar years 1988 and 1989 or its
projected emission tonnage for calendar year 1995 and the
product of the unit's baseline multiplied by an emission rate
of 2.50 lbs/mmBtu, divided by 2,000. In calendar year 1996, the
Administrator shall allocate for each eligible unit, from the
allowance reserve created pursuant to subsection (a)(2),
allowances equal to the difference between the lesser of the
average annual emissions in calendar years 1988 and 1989 or its
projected emissions tonnage for calendar year 1996 and the
product of the unit's baseline multiplied by an emission rate
of 2.50 lbs/mmBtu, divided by 2,000. It shall be unlawful for
any source or unit subject to an approved extension plan under
this subsection to emit sulfur dioxide in excess of the
emissions limitations provided for in the permit and approved
extension plan, unless the owner or operator of each unit
governed by the permit and approved plan holds allowances to
emit not less than the unit's total annual emissions.
``(6) In addition to allowances specified in paragraph (4),
the Administrator shall allocate for each eligible Phase I
extension unit employing qualifying Phase I technology, for
calendar years 1997, 1998, and 1999, additional allowances,
from any remaining allowances in the reserve created pursuant
to subsection (a)(2), following the reduction in the reserve
provided for in paragraph (4), not to exceed the amount by
which (A) the product of each eligible unit's baseline times an
emission rate of 1.20 lbs/mmBtu, divided by 2,000 exceeds (B)
the tonnage level specified under subparagraph (E) of paragraph
(2) of this subsection.
``(7) After January 1, 1997, in addition to any liability
under this Act, including under section 406, if any eligible
phase I extension unit employing qualifying phase I technology
or any transfer unit under this subsection emits sulfur dioxide
in excess of the annual tonnage limitation specified in the
extension plan, as approved in paragraph (2) of this
subsection, the Administrator shall, in the calendar year
following such excess, deduct allowances equal to the amount of
such excess from such unit's annual allowance allocation.
``(e)(1) In the case of a unit that receives authorization from the
Governor of the State in which such unit is located to make reductions
in the emissions of sulfur dioxide prior to calendar year 1995 and that
is part of a utility system that meets the following requirements--
``(A) the total coal-fired generation within the utility
system as a percentage of total system generation decreased by
more than 20 percent between January 1, 1980, and December 31,
1985; and
``(B) the weighted capacity factor of all coal-fired units
within the utility system averaged over the period from January
1, 1985, through December 31, 1987, was below 50 percent, the
Administrator shall allocate allowances under this paragraph
for the unit pursuant to this subsection. The Administrator
shall allocate allowances for a unit that is an affected unit
pursuant to section 414 (but is not also an affected unit under
this section) and part of a utility system that includes 1 or
more affected units under section 414 for reductions in the
emissions of sulfur dioxide made during the period 1995-1999 if
the unit meets the requirements of this subsection and the
requirements of the preceding sentence, except that for the
purposes of applying this subsection to any such unit, the
prior year concerned as specified below, shall be any year
after January 1, 1995 but prior to January 1, 2000.
``(2) In the case of an affected unit under this section described
in subparagraph (A), the allowances allocated under this subsection for
early reductions in any prior year may not exceed the amount which (A)
the product of the unit's baseline multiplied by the unit's 1985 actual
sulfur dioxide emission rate (in lbs. per mmBtu), divided by 2,000
exceeds (B) the allowances specified for such unit in Table A. In the
case of an affected unit under section 414 described in subparagraph
(A), the allowances awarded under this subsection for early reductions
in any prior year may not exceed the amount by which (i) the product of
the quality of fossil fuel consumed by the unit (in mmBtu) in the prior
year multiplied by the lesser of 2.50 or the most stringent emission
rate (in lbs. per mmBtu) applicable to the unit under the applicable
implementation plan, divided by 2,000 exceeds (ii) the unit's actual
tonnage of sulfur dioxide emission for the prior year concerned.
Allowances allocated under this subsection for units referred to in
subparagraph (A) may be allocated only for emission reductions achieved
as a result of physical changes or changes in the method of operation
made after November 15, 1990, including changes in the type or quality
of fossil fuel consumed.
``(3) In no event shall the provisions of this paragraph be
interpreted as an event of force majeure or a commercial
impracticability or in any other way as a basis for excused
nonperformance by a utility system under a coal sales contract in
effect before November 15, 1990.

``TABLE A.--AFFECTED SOURCES AND UNITS IN PHASE I AND THEIR SULFUR DIOXIDE ALLOWANCES (TONS)
----------------------------------------------------------------------------------------------------------------
Phase I
State                                    Plant name                 Generator    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
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
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
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
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
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
8       15,790
----------------------------------------------------------------------------------------------------------------

``(f) Energy Conservation and Renewable Energy.--
``(1) Definitions.--As used in this subsection:
``(A) Qualified energy conservation measure.--The
term `qualified energy conservation measure' means a
cost effective measure, as identified by the
Administrator in consultation with the Secretary of
Energy, that increases the efficiency of the use of
electricity provided by an electric utility to its
customers.
``(B) Qualified renewable energy.--The term
`qualified renewable energy' means energy derived from
biomass, solar, geothermal, or wind as identified by
the Administrator in consultation with the Secretary of
Energy.
``(C) Electric utility.--The term `electric
utility' means any person, State agency, or Federal
agency, which sells electric energy.
``(2) Allowances for emissions avoided through energy
conservation and renewable energy.--
``(A) In general.--The regulations under paragraph
(4) of this subsection shall provide that for each ton
of sulfur dioxide emissions avoided by an electric
utility, during the applicable period, through the use
of qualified energy conservation measures or qualified
renewable energy, the Administrator shall allocate a
single allowance to such electric utility, on a first-
come-first-served basis from the Conservation and
Renewable Energy Reserve established under subsection
(g), up to a total of 300,000 allowances for allocation
from such Reserve.
``(B) Requirements for issuance.--The Administrator
shall allocate allowances to an electric utility under
this subsection only if all of the following
requirements are met:
``(i) Such electric utility is paying for
the qualified energy conservation measures or
qualified renewable energy directly or through
purchase from another person.
``(ii) The emissions of sulfur dioxide
avoided through the use of qualified energy
conservation measures or qualified renewable
energy are quantified in accordance with
regulations promulgated by the Administrator
under this subsection.
``(iii)(I) Such electric utility has
adopted and is implementing a least cost energy
conservation and electric power plan which
evaluates a range of resources, including new
power supplies, energy conservation, and
renewable energy resources, in order to meet
expected future demand at the lowest system
cost.
``(II) The qualified energy conservation
measures or qualified renewable energy, or
both, are consistent with that plan.
``(III) Electric utilities subject to the
jurisdiction of a State regulatory authority
must have such plan approved by such authority.
For electric utilities not subject to the
jurisdiction of a State regulatory authority
such plan shall be approved by the entity with
rate-making authority for such utility.
``(iv) In the case of qualified energy
conservation measures undertaken by a State
regulated electric utility, the Secretary of
Energy certifies that the State regulatory
authority with jurisdiction over the electric
rates of such electric utility has established
rates and charges which ensure that the net
income of such electric utility after
implementation of specific cost effective
energy conservation measures is at least as
high as such net income would have been if the
energy conservation measures had not been
implemented. Upon the date of any such
certification by the Secretary of Energy, all
allowances which, but for this paragraph, would
have been allocated under subparagraph (B)
before such date, shall be allocated to the
electric utility. This clause is not a
requirement for qualified renewable energy.
``(v) Such utility or any subsidiary of the
utility's holding company owns or operates at
least one affected unit.
``(C) Period of applicability.--Allowances under
this subsection shall be allocated only with respect to
kilowatt hours of electric energy saved by qualified
energy conservation measures or generated by qualified
renewable energy after January 1, 1992, and before the
earlier of (i) December 31, 2000, or (ii) the date on
which any electric utility steam generating unit owned
or operated by the electric utility to which the
allowances are allocated becomes subject to this
subpart (including those sources that elect to become
affected by this title, pursuant to section 417).
``(D) Determination of avoided emissions.--
``(i) Application.--In order to receive
allowances under this subsection, an electric
utility shall make an application which--
``(I) designates the qualified
energy conservation measures
implemented and the qualified renewable
energy sources used for purposes of
avoiding emissions;
``(II) calculates, in accordance
with subparagraphs (F) and (G), the
number of tons of emissions avoided by
reason of the implementation of such
measures or the use of such renewable
energy sources; and
``(III) demonstrates that the
requirements of subparagraph (B) have
been met. Such application for
allowances by a State-regulated
electric utility shall require approval
by the State regulatory authority with
jurisdiction over such electric
utility. The authority shall review the
application for accuracy and compliance
with this subsection and the rules
under this subsection. Electric
utilities whose retail rates are not
subject to the jurisdiction of a State
regulatory authority shall apply
directly to the Administrator for such
approval.
``(E) Avoided emissions from qualified energy
conservation measures.--For the purposes of this
subsection, the emission tonnage deemed avoided by
reason of the implementation of qualified energy
conservation measures for any calendar year shall be a
tonnage equal to the product of multiplying--
``(i) the kilowatt hours that would
otherwise have been supplied by the utility
during such year in the absence of such
qualified energy conservation measures, by
``(ii) 0.004, and dividing by 2,000.
``(F) Avoided emissions from the use of qualified
renewable energy.--The emissions tonnage deemed avoided
by reason of the use of qualified renewable energy by
an electric utility for any calendar year shall be a
tonnage equal to the product of multiplying--(i) the
actual kilowatt hours generated by, or purchased from,
qualified renewable energy, by (ii) 0.004, and dividing
by 2,000.
``(G) Prohibitions.--
``(i) No allowances shall be allocated
under this subsection for the implementation of
programs that are exclusively informational or
educational in nature.
``(ii) No allowances shall be allocated for
energy conservation measures or renewable
energy that were operational before January 1,
1992.
``(3) Savings provision.--Nothing in this subsection
precludes a State or State regulatory authority from providing
additional incentives to utilities to encourage investment in
demand-side resources.
``(4) Regulations.--The Administrator shall implement this
subsection under 40 CFR part 73 (2002), amended as appropriate
by the Administrator. Such regulations shall list energy
conservation measures and renewable energy sources which may be
treated as qualified energy conservation measures and qualified
renewable energy for purposes of this subsection. Allowances
shall only be allocated if all requirements of this subsection
and the rules promulgated to implement this subsection are
complied with. The Administrator shall review the
determinations of each State regulatory authority under this
subsection to encourage consistency from electric utility and
from State-to-State in accordance with the Administrator's
rules. The Administrator shall publish the findings of this
review no less than annually.
``(g) Conservation and Renewable Energy Reserve.--The Administrator
shall establish a Conservation and Renewable Energy Reserve under this
subsection. Beginning on January 1, 1995, the Administrator may
allocate from the Conservation and Renewable Energy Reserve an amount
equal to a total of 300,000 allowances for emissions of sulfur dioxide
pursuant to section 411. In order to provide 300,000 allowances for
such reserve, in each year beginning in calendar year 2000 and until
calendar year 2009, inclusive, the Administrator shall reduce each
unit's basic Phase II allowance allocation on the basis of its pro rata
share of 30,000 allowances. Notwithstanding the prior sentence, if
allowances remain in the reserve one year after the date of enactment
of the Clear Skies Act of 2003, the Administrator shall allocate such
allowances for affected units under section 414 on a pro rata basis.
For purposes of this subsection, for any unit subject to the emissions
limitation requirements of section 414, the term `pro rata basis'
refers to the ratio which the reductions made in such unit's allowances
in order to establish the reserve under this subsection bears to the
total of such reductions for all such units.
``(h) Alternative Allowance Allocation for Units in Certain Utility
Systems With Optional Baseline.--
``(1) Optional baseline for units in certain systems.--In
the case of a unit subject to the emissions limitation
requirements of this section which (as of November 15, 1990)--
``(A) has an emission rate below 1.0 lbs/mmBtu,
``(B) has decreased its sulfur dioxide emissions
rate by 60 percent or greater since 1980, and
``(C) is part of a utility system which has a
weighted average sulfur dioxide emissions rate for all
fossil fueled-fired units below 1.0 lbs/mmBtu, at the
election to the owner or operator of such unit, the
unit's baseline may be calculated--
``(i) as provided under section 411, or
``(ii) by utilizing the unit's average
annual fuel consumption at a 60 percent
capacity factor. Such election shall be made no
later than March 1, 1991.
``(2) Allowance allocation.--Whenever a unit referred to in
paragraph (1) elects to calculate its baseline as provided in
clause (ii) of paragraph (1), the Administrator shall allocate
allowances for the unit pursuant to section 412(a), this
section, and section 414 (as Basic Phase II allowance
allocations) in an amount equal to the baseline selected
multiplied by the lower of the average annual emission rate for
such unit in 1989, or 1.0 lbs./mmBtu. Such allowance allocation
shall be in lieu of any allocation of allowances under this
section and section 414.

``SEC. 414. PHASE II SULFUR DIOXIDE REQUIREMENTS.

``(a) Applicability.--
``(1) After January 1, 2000, each existing utility unit as
provided below is subject to the limitations or requirements of
this section. Each utility unit subject to an annual sulfur
dioxide tonnage emission limitation under this section is an
affected unit under this subpart. Each source that includes one
or more affected units is an affected source. 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. The owner or operator of any unit operated in
violation of this section shall be fully liable under this Act
for fulfilling the obligations specified in section 406.
``(2) In addition to basic Phase II allowance allocations,
in each year beginning in calendar year 2000 and ending in
calendar year 2009, inclusive, the Administrator shall allocate
up to 530,000 Phase II bonus allowances pursuant to subsections
(b)(2),(c)(4), (d)(3)(A) and (B), and (h)(2) of this section
and section 415.
``(3) In addition to basic Phase II allowances allocations
and Phase II bonus allowance allocations, beginning January 1,
2000, the Administrator shall allocate for each unit listed on
Table A in section 413 (other than units at Kyger Creek, Clifty
Creek, and Joppa Stream) and located in the States of Illinois,
Indiana, Ohio, Georgia, Alabama, Missouri, Pennsylvania, West
Virginia, Kentucky, or Tennessee allowances in an amount equal
to 50,000 multiplied by the unit's pro rata share of the total
number of basic allowances allocated for all units listed on
Table A (other than units at Kyger Creek, Clifty Creek, and
Joppa Stream). Allowances allocated pursuant to this paragraph
shall not be subject to the 8,900,000 ton limitation in section
412(a).
``(b) Units Equal to, or Above, 75 MWe and 1.20 lbs/mmBtu.--
``(1) Except as otherwise provided in paragraph (3), after
January 1, 2000, it shall be unlawful for any existing utility
unit that serves a generator with nameplate capacity equal to,
or greater, than 75 MWe and an actual 1985 emission rate equal
to or greater than 1.20 lbs/mmBtu to exceed an annual sulfur
dioxide tonnage emission limitation equal to the product of the
unit's baseline multiplied by an emission rate equal to 1.20
lbs/mmBtu, divided by 2,000, unless the owner or operator of
such unit holds allowances to emit not less than the unit's
total annual emissions or, for a year after 2007, unless the
owner or operator of the source that includes such unit holds
allowances to emit not less than the total annual emissions of
all affected units at the source.
``(2) In addition to allowances allocated pursuant to
paragraph (1) and section 412(a) as basic Phase II allowance
allocations, beginning January 1, 2000, and for each calendar
year thereafter until and including 2009, the Administrator
shall allocate annually for each unit subject to the emissions
limitation requirements of paragraph (1) with an actual 1985
emissions rate greater than 1.20 lbs/mmBtu and less than 2.50
lbs/mmBtu 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 1.20 lbs/mmBtu
multiplied by 50 percent of the difference, on a Btu basis,
between the unit's baseline and the unit's fuel consumption at
a 60 percent capacity factor.
``(3) After January 1, 2000, it shall be unlawful for any
existing utility unit with an actual 1985 emissions rate equal
to or greater than 1.20 lbs/mmBtu whose annual average fuel
consumption during 1985, 1986, and 1987 on a Btu basis exceeded
90 percent in the form of lignite coal which is located in a
State in which, as of July 1, 1989, no county or portion of a
county was designated nonattainment under section 107 of this
Act for any pollutant subject to the requirements of section
109 of this Act to exceed an annual sulfur dioxide tonnage
limitation equal to the product of the unit's baseline
multiplied by the lesser of the unit's actual 1985 emissions
rate or its allowable 1985 emissions rate, divided by 2,000,
unless the owner or operator of such unit holds allowances to
emit not less than the unit's total annual emissions or, for a
year after 2007, unless the owner or operator of the source
that includes such unit holds allowances to emit not less than
the total annual emissions of all affected units at the source.
``(4) After January 1, 2000, the Administrator shall
allocate annually for each unit, subject to the emissions
limitation requirements of paragraph (1), which is located in a
State with an installed electrical generating capacity of more
than 30,000,000 kw in 1988 and for which was issued a
prohibition order or a proposed prohibition order (from burning
oil), which unit subsequently converted to coal between January
1, 1980 and December 31, 1985, allowances equal to the
difference between (A) the product of the unit's annual fuel
consumption, on a Btu basis, at a 65 percent capacity factor
multiplied by the lesser of its actual or allowable emissions
rate during the first full calendar year after conversion,
divided by 2,000, and (B) the number of allowances allocated
for the unit pursuant to paragraph (1): Provided, That the
number of allowances allocated pursuant to this paragraph shall
not exceed an annual total of five thousand. If necessary to
meeting the restriction imposed in the preceding sentence the
Administrator shall reduce, pro rata, the annual allowances
allocated for each unit under this paragraph.
``(c) Coal or Oil-Fired Units Below 75 MWe and Above 1.20 lbs/
mmBtu.--
``(1) Except as otherwise provided in paragraph (3), after
January 1, 2000, it shall be unlawful for a coal or oil-fired
existing utility unit that serves a generator with nameplate
capacity of less than 75 MWe and an actual 1985 emission rate
equal to, or greater than, 1.20 lbs/mmBtu and which is a unit
owned by a utility operating company whose aggregate nameplate
fossil fuel steam-electric capacity is, as of December 31,
1989, equal to, or greater than, 250 MWe to exceed an annual
sulfur dioxide emissions limitation equal to the product of the
unit's baseline multiplied by an emission rate equal to 1.20
lbs/mmBtu, divided by 2,000 unless the owner or operator of
such unit holds allowances to emit not less than the unit's
total annual emissions or, for a year after 2007, unless the
owner or operator of the source that includes such unit holds
allowances to emit not less than the total annual emissions of
all affected units at the source.
``(2) After January 1, 2000, it shall be unlawful for a
coal or oil-fired existing utility unit that serves a generator
with nameplate capacity of less than 75 MWe and an actual 1985
emission rate equal to, or greater than, 1.20 lbs/mmBtu
(excluding units subject to section 111 of the Act or to a
federally enforceable emissions limitation for sulfur dioxide
equivalent to an annual rate of less than 1.20 lbs/mmBtu) and
which is a unit owned by a utility operating company whose
aggregate nameplate fossil fuel steam-electric capacity is, as
of December 31, 1989, less than 250 MWe, to exceed an annual
sulfur dioxide tonnage emissions limitation equal to the
product of the unit's baseline multiplied by the lesser of its
actual 1985 emissions rate or its allowable 1985 emissions
rate, divided by 2,000, unless the owner or operator of such
unit holds allowances to emit not less than the unit's total
annual emissions or, for a year after 2007, unless the owner or
operator of the source that includes such unit holds allowances
to emit not less than the total annual emissions of all
affected units at the source.
``(3) After January 1, 2000 it shall be unlawful for any
existing utility unit with a nameplate capacity below 75 MWe
and an actual 1985 emissions rate equal to, or greater than,
1.20 lbs/mmBtu which became operational on or before December
31, 1965, which is owned by a utility operating company with,
as of December 31, 1989, a total fossil fuel steam-electric
generating capacity greater than 250 MWe, and less than 450 MWe
which serves fewer than 78,000 electrical customers as of
November 15, 1990, to exceed an annual sulfur dioxide emissions
tonnage limitation equal to the product of its baseline
multiplied by the lesser of its actual or allowable 1985
emission rate, divided by 2,000, unless the owner or operator
holds allowances to emit not less than the units total annual
emissions or, for a year after 2007, unless the owner or
operator of the source that includes such unit holds allowances
to emit not less than the total annual emissions of all
affected units at the source. After January 1, 2010, it shall
be unlawful for each unit subject to the emissions limitation
requirements of this paragraph to exceed an annual emissions
tonnage limitation equal to the product of its baseline
multiplied by an emissions rate of 1.20 lbs/mmBtu, divided by
2,000, unless the owner or operator holds allowances to emit
not less than the unit's total annual emissions or, for a year
after 2007, unless the owner or operator of the source that
includes such unit holds allowances to emit not less than the
total annual emissions of all affected units at the source.
``(4) In addition to allowances allocated pursuant to
paragraph (1) and section 412(a) as basic Phase II allowance
allocations, beginning January 1, 2000, and for each calendar
year thereafter until and including 2009, inclusive, the
Administrator shall allocate annually for each unit subject to
the emissions limitation requirements of paragraph (1) with an
actual 1985 emissions rate equal to, or greater than, 1.20 lbs/
mmBtu and less than 2.50 lbs/mmBtu 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
1.20 lbs/mmBtu multiplied by 50 percent of the difference, on a
Btu basis, between the unit's baseline and the unit's fuel
consumption at a 60 percent capacity factor.
``(5) After January 1, 2000, is shall be unlawful for any
existing unit with a nameplate capacity below 75 MWe and an
actual 1985 emissions rate equal to, or greater than, 1.20 lbs/
mmBtu which is part of an electric utility system which, as of
November 15, 1990--
``(A) has at least 20 percent of its fossil-fuel
capacity controlled by flue gas desulfurization
devices,
``(B) has more than 10 percent of its fossil-fuel
capacity consisting of coal-fired unites of less than
75 MWe, and
``(C) has large units (greater than 400 MWe) 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 the United States Environmental
Protection Agency on January 10, 1986) to exceed an
annual sulfur dioxide emissions tonnage limitation
equal to the product of its baseline multiplied by an
emissions rate of 2.5 lbs/mmBtu, divided by 2,000,
unless the owner or operator holds allowances to emit
not less than the unit's total annual emissions or, for
a year after 2007, unless the owner or operator of the
source that includes such unit holds allowances to emit
not less than the total annual emissions of all
affected units at the source. After January 1, 2010, it
shall be unlawful for each unit subject to the
emissions limitation requirements of this paragraph to
exceed an annual emissions tonnage limitation equal to
the project of its baseline multiplied by an emissions
rate of 1.20 lbs/mmBtu, divided by 2,000, unless the
owner or operator holds for use allowances to emit not
less than the unit's total annual emissions or, for a
year after 2007, unless the owner or operator of the
source that includes such unit holds allowances to emit
not less than the total annual emissions of all
affected units at the source.
``(d) Coal-Fired Units Below 1.20 lbs/mmBtu.--
``(1) After January 1, 2000, it shall be unlawful for any
existing coal-fired utility unit the lesser of whose actual or
allowable 1985 sulfur dioxide emissions rate is less than 0.60
lbs/mmBtu to exceed an annual sulfur dioxide tonnage emission
limitation equal to the product of the unit's baseline
multiplied by--
``(A) the lesser of 0.60 lbs/mmBtu or the unit's
allowable 1985 emissions rate, and
``(B) a numerical factor of 120 percent, divided by
2,000, unless the owner or operator of such unit holds
allowances to emit not less than the unit's total
annual emissions or, for a year after 2007, unless the
owner or operator of the source that includes such unit
holds allowances to emit not less than the total annual
emissions of all affected units at the source.
``(2) After January 1, 2000, it shall be unlawful for any
existing coal-fired utility unit the lesser of whose actual or
allowable 1985 sulfur dioxide emissions rate is equal to, or
greater than, 0.60 lbs/mmBtu and less than 1.20 lbs/mmBtu to
exceed an annual sulfur dioxide tonnage emissions limitation
equal to the product of the unit's baseline multiplied by (A)
the lesser of its actual 1985 emissions rate or its allowable
1985 emissions rate, and (B) a numerical factor of 120 percent,
divided by 2,000, unless the owner or operator of such unit
holds allowances to emit not less than the unit's total annual
emissions or, for a year after 2007, unless the owner or
operator of the source that includes such unit holds allowances
to emit not less than the total annual emissions of all
affected units at the source.
``(3)(A) In addition to allowances allocated pursuant to
paragraph (1) and section 412(a) as basic Phase II allowance
allocations, at the election of the designated representative
of the operating company, beginning January 1, 2000, and for
each calendar year thereafter until and including 2009, the
Administrator shall allocate annually for each unit subject to
the emissions limitation requirements of paragraph (1)
allowances from the reserve created pursuant to subsection
(a)(2) in an amount equal to the amount by which--
``(i) the product of the lesser of 0.60 lbs.mmBtu
or the unit's allowable 1985 emissions rate multiplied
by the unit's baseline adjusted to reflect operation at
a 60 percent capacity factor, divided by 2,000, exceeds
``(ii) the number of allowances allocated for the
unit pursuant to paragraph (1) and section 403(a)(1) as
basic Phase II allowance allocations.
``(B) In addition to allowances allocated pursuant to
paragraph (2) and section 412(a) as basic Phase II allowance
allocations, at the election of the designated representative
of the operating company, beginning January 1, 2000, and for
each calendar year thereafter until and including 2009, the
Administrator shall allocate annually for each unit subject to
the emissions limitation requirements of paragraph (2)
allowances from the reserve created pursuant to subsection
(a)(2) in an amount equal to the amount by which--
``(i) the product of the lesser of the unit's
actual 1985 emissions rate or its allowable 1985
emissions rate multiplied by the unit's baseline
adjusted to reflect operation at a 60 percent capacity
factor, divided by 2,000, exceeds
``(ii) the number of allowances allocated for the
unit pursuant to paragraph (2) and section 412(a) as
basic Phase II allowance allocations.
``(C) An operating company with units subject to the
emissions limitation requirements of this subsection may elect
the allocation of allowances as provided under subparagraphs
(A) and (B). Such election shall apply to the annual allowance
allocation for each and every unit in the operating company
subject to the emissions limitation requirements of this
subsection. The Administrator shall allocate allowances
pursuant to subparagraphs (A) and (B) only in accordance with
this subparagraph.
``(4) Notwithstanding any other provision of this section,
at the election of the owner or operator, after January 1,
2000, the Administrator shall allocate in lieu of allocation,
pursuant to paragraph (1), (2), (3), (5), or (6), allowances
for a unit subject to the emissions limitation requirements of
this subsection which commenced commercial operation on or
after January 1, 1981 and before December 31, 1985, which was
subject to, and in compliance with, section 111 of the Act in
an amount equal to the unit's annual fuel consumption, on a Btu
basis, at a 65 percent capacity factor multiplied by the unit's
allowable 1985 emissions rate, divided by 2,000.
``(5) For the purposes of this section, in the case of an
oil- and gas-fired unit which has been awarded a clean coal
technology demonstration grant as of January 1, 1991, by the
United States Department of Energy, beginning January 1, 2002,
the Administrator shall allocate for the unit allowances in an
amount equal to the unit's baseline multiplied by 1.20 lbs/
mmBtu, divided by 2,000.
``(e) Oil and Gas-Fired Units Equal to or Greater Than 0.60 lbs/
mmBtu and Less Than 1.20 lbs/mmBtu.--After January 1, 2000, it shall be
unlawful for any existing oil and gas-fired utility unit the lesser of
whose actual or allowable 1985 sulfur dioxide emission rate is equal
to, or greater than, 0.60 lbs/mmBtu, but less than 1.20 lbs/mmBtu to
exceed an annual sulfur dioxide tonnage limitation equal to the product
of the unit's baseline multiplied by (A) the lesser of the unit's
allowable 1985 emissions rate or its actual 1985 emissions rate and (B)
a numerical factor of 120 percent divided by 2,000, unless the owner or
operator of such unit holds allowances to emit not less than the unit's
total annual emissions or, for a year after 2007, unless the owner or
operator of the source that includes such unit holds allowances to emit
not less than the total annual emissions of all affected units at the
source.
``(f) Oil and Gas-Fired Units Less Than 0.60 lbs/mmBtu.--
``(1) After January 1, 2000, it shall be unlawful for any
oil and gas-fired existing utility unit the lesser of whose
actual or allowance 1985 emission rate is less than 0.60 lbs/
mmBtu and whose average annual fuel consumption during the
period 1980 through 1989 on a Btu basis was 90 percent or less
in the form of natural gas to exceed an annual sulfur dioxide
tonnage emissions limitation equal to the product of the unit's
baseline multiplied by--
``(A) the lesser of 0.60 lbs/mmBtu or the unit's
allowance 1985 emissions, and
``(B) a numerical factor of 120 percent, divided by
2,000, unless the owner or operator of such unit holds
allowances to emit not less than the unit's total
annual emissions or, for a year after 2007,
unless the owner or operator of the source that includes such
unit holds allowances to emit not less than the total annual
emissions of all affected units at the source.
``(2) In addition to allowances allocated pursuant to
paragraph (1) as basic Phase II allowance allocations and
section 412(a), beginning January 1, 2000, the Administrator
shall, in the case of any unit operated by a utility that
furnishes electricity, electric energy, steam, and natural gas
within an area consisting of a city and 1 contiguous county,
and in the case of 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, the Administrator
shall allocate for each unit in the utility its pro rata share
of 7,000 allowances and for each unit in the State authority
its pro rata share of 2,000 allowances.
``(g) Units That Commence Operation Between 1986 and December 31,
1995.--
``(1) After January 1, 2000, it shall be unlawful for any
utility unit that has 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 the
product of the unit's annual fuel consumption, on a Btu basis,
at a 65 percent capacity factor multiplied by the unit's
allowance 1985 sulfur dioxide emission rate (converted, if
necessary, to pounds per mmBtu), divided by 2,000 unless the
owner or operator of such unit holds allowances to emit not
less than the unit's total annual emissions or, for a year
after 2007, unless the owner or operator of the source that
includes such unit holds allowances to emit not less than the
total annual emissions of all affected units at the source.
``(2) After January 1, 2000, the Administrator shall
allocate allowances pursuant to section 411 to each unit which
is listed in table B of this paragraph 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
Notwithstanding 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, provided that the owner or operator of a unit
listed on Table B may elect an allocation of allowances under
another paragraph of this subsection in lieu of an allocation
under this paragraph.
``(3) Beginning January 1, 2000, the Administrator shall
allocate to the owner or operator of any utility unit that
commences commercial operation, or has commenced commercial
operation, on or after October 1, 1990, but not later than
December 31, 1992 allowances in an amount equal to the product
of the unit's annual fuel consumption, on a Btu basis, at a 65
percent capacity factor multiplied by the lesser of 0.30 lbs/
mmBtu or the unit's allowable sulfur dioxide emission rate
(converted, if necessary, to pounds per mmBtu), divided by
2,000.
``(4) Beginning January 1, 2000, the Administrator shall
allocate to the owner or operator of any utility unit that has
commenced construction before December 31, 1990 and that
commences commercial operation between January 1, 1993 and
December 31, 1995, allowances in an amount equal to the product
of the unit's annual fuel consumption, on a Btu basis, at a 65
percent capacity factor multiplied by the lesser of 0.30 lbs/
mmBtu or the unit's allowable sulfur dioxide emission rate
(converted, if necessary, to pounds per mmBtu), divided by
2,000.
``(5) After January 1, 2000, it shall be unlawful for any
existing utility unit that has completed conversion from
predominantly gas fired existing operation to coal fired
operation between January 1, 1985 and December 31, 1987, for
which there has been allocated a proposed or final prohibition
order pursuant to section 301(b) of the Powerplant and
Industrial Fuel Use Act of 1978 (42 U.S.C. 8301 et seq,
repealed 1987) to exceed an annual sulfur dioxide tonnage
emissions limitation equal to the product of the unit's annual
fuel consumption, on a Btu basis, at a 65 percent capacity
factor multiplied by the lesser of 1.20 lbs/mmBtu or the unit's
allowable 1987 sulfur dioxide emissions rate, divided by 2,000,
unless the owner or operator of such unit has obtained
allowances equal to its actual emissions or, for a year after
2007, unless the owner or operator of the source that includes
such unit holds allowances to emit not less than the total
annual emissions of all affected units at the source.
``(6) Unless the Administrator has approved a designation
of such facility under section 417, the provisions of this
subpart shall not apply to a `qualifying small power production
facility' or `qualifying cogeneration facility' (within the
meaning of section 3(17)(C) or 3(18)(B) of the Federal Power
Act) or to a `new independent power production facility' if, as
of November 15, 1990--
``(A) an applicable power sales agreement has been
executed;
``(B) the facility is the subject of a State
regulatory authority order requiring an electric
utility to enter into a power sales agreement with,
purchase capacity from, or (for purposes of
establishing terms and conditions of the electric
utility's purchase of power) enter into arbitration
concerning, the facility;
``(C) an electric utility has issued a letter of
intent or similar instrument committing to purchase
power from the facility at a previously offered or
lower price and a power sales agreement is executed
within a reasonable period of time; or
``(D) the facility has been selected as a winning
bidder in a utility competitive bid solicitation.
``(h) Oil and Gas-Fired Units Less Than 10 Percent Oil Consumed.--
``(1) After January 1, 2000, it shall be unlawful for any
oil- and gas-fired utility unit whose average annual fuel
consumption during the period 1980 through 1989 on a Btu basis
exceeded 90 percent in the form of natural gas to exceed an
annual sulfur dioxide tonnage limitation equal to the product
of the unit's baseline multiplied by the unit's actual 1985
emissions rate divided by 2,000 unless the owner or operator of
such unit holds allowances to emit not less than the unit's
total annual emissions or, for a year after 2007, unless the
owner or operator of the source that includes such unit holds
allowances to emit not less than the total annual emissions of
all affected units at the source.
``(2) In addition to allowances allocated pursuant to
paragraph (1) and section 412(a) as basic Phase II allowance
allocations, beginning January 1, 2000, and for each calendar
year thereafter until and including 2009, the Administrator
shall allocate annually for each unit subject to the emissions
limitation requirements of paragraph (1) allowances from the
reserve created pursuant to subsection (a)(2) in an amount
equal to the unit's baseline multiplied by 0.050 lbs/mmBtu,
divided by 2,000.
``(3) In addition to allowances allocated pursuant to
paragraph (1) and section 412(a), beginning January 1, 2010,
the Administrator shall allocate annually for each unit subject
to the emissions limitation requirements of paragraph (1)
allowances in an amount equal to the unit's baseline multiplied
by 0.050 lbs/mmBtu, divided by 2,000.
``(i) Units in High Growth States.--
``(1) In addition to allowances allocated pursuant to this
section and section 412(a) as basic Phase II allowance
allocations, beginning January 1, 2000, the Administrator shall
allocate annually allowances for each unit, subject to an
emissions limitation requirement under this section, and
located in a State that--
``(A) has experienced a growth in population in
excess of 25 percent between 1980 and 1988 according to
State Population and Household Estimates, With Age,
Sex, and Components of Change: 1981-1988 allocated by
the United States Department of Commerce, and
``(B) had an installed electrical generating
capacity of more than 30,000,000 kw in 1988, in an
amount equal to the difference between (A) the number
of allowances that would be allocated for the unit
pursuant to the emissions limitation requirements of
this section applicable to the unit adjusted to reflect
the unit's annual average fuel consumption on a Btu
basis of any three consecutive calendar years between
1980 and 1989 (inclusive) as elected by the owner or
operator and (B) the number of allowances allocated for
the unit pursuant to the emissions limitation
requirements of this section: Provided, That the number
of allowances allocated pursuant to this subsection
shall not exceed an annual total of 40,000. If
necessary to meeting the 40,000 allowance restriction
imposed under this subsection the Administrator shall
reduce, pro rata, the additional annual allowances
allocated to each unit under this subsection.
``(2) Beginning January 1, 2000, in addition to allowances
allocated pursuant to this section and section 403(a)(1) as
basic Phase II allowance allocations, the Administrator shall
allocate annually for each unit subject to the emissions
limitation requirements of subsection (b)(1)--
``(A) the lesser of whose actual or allowable 1980
emissions rate has declined by 50 percent or more as of
November 15, 1990,
``(B) whose actual emissions rate is less than 1.2
lbs/mmBtu as of January 1, 2000,
``(C) which commenced operation after January 1,
1970,
``(D) which is owned by a utility company whose
combined commercial and industrial kilowatt-hour sales
have increased by more than 20 percent between calendar
year 1980 and November 15, 1990, and
``(E) whose company-wide fossil-fuel sulfur dioxide
emissions rate has declined 40 percent or more from
1980 to 1988, allowances in an amount equal to the
difference between--
``(i) the number of allowances that would
be allocated for the unit pursuant to the
emissions limitation requirements of subsection
(b)(1) adjusted to reflect the unit's annual
average fuel consumption on a Btu basis for any
three consecutive years between 1980 and 1989
(inclusive) as elected by the owner or
operator, and
``(ii) the number of allowances allocated
for the unit pursuant to the emissions
limitation requirements of subsection (b)(1):
Provided, That the number of allowances
allocated pursuant to this paragraph shall not
exceed an annual total of 5,000. If necessary
to meeting the 5,000 allowance restriction
imposed in the last clause of the preceding
sentence the Administrator shall reduce, pro
rata, the additional allowances allocated to
each unit pursuant to this paragraph.
``(j) Certain Municipally Owned Power Plants.--Beginning January 1,
2000, in addition to allowances allocated pursuant to this section and
section 412(a) as basic Phase II allowance allocations, the
Administrator shall allocate annually for each existing municipally
owned oil and gas-fired utility unit with nameplate capacity equal to,
or less than, 40 MWe, the lesser of whose actual or allowable 1985
sulfur dioxide emission rate is less than 1.20 lbs/mmBtu, allowances in
an amount equal to the product of the unit's annual fuel consumption on
a Btu basis at a 60 percent capacity factor multiplied by the lesser of
its allowable 1985 emission rate or its actual 1985 emission rate,
divided by 2,000.

``SEC. 415. ALLOWANCES FOR STATES WITH EMISSIONS RATES AT OR BELOW 0.80
LBS/MMBTU.

``(a) Election of Governor.--In addition to basic Phase II
allowance allocations, upon the election of the Governor of any State,
with a 1985 statewide annual sulfur dioxide emissions rate equal to or
less than, 0.80 lbs/mmBtu, averaged over all fossil fuel-fired utility
steam generating units, beginning January 1, 2000, and for each
calendar year thereafter until and including 2009, the Administrator
shall allocate, in lieu of other Phase II bonus allowance allocations,
allowances from the reserve created pursuant to section 414(a)(2) to
all such units in the State in an amount equal to 125,000 multiplied by
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 412(a),
each Governor of a State eligible to make an election under paragraph
(a) shall notify the Administrator of such election. In the event that
the Governor of any such State fails to notify the Administrator of the
Governor's elections, the Administrator shall allocate allowances
pursuant to section 414.
``(c) Allowances After January 1, 2010.--After January 1, 2010, the
Administrator shall allocate allowances to units subject to the
provisions of this section pursuant to section 414.

``SEC. 416. ELECTION FOR ADDITIONAL SOURCES.

``(a) Applicability.--The owner or operator of any unit that is
not, nor will become, an affected unit under section 412(b), 413, or
414, that emits sulfur dioxide, may elect to designate that unit or
source to become an affected unit and to receive allowances under this
subpart. An election shall be submitted to the Administrator for
approval, along with a permit application and proposed compliance plan
in accordance with section 404. The Administrator shall approve a
designation that meets the requirements of this section, and such
designated unit shall be allocated allowances, and be an affected unit
for purposes of this subpart.
``(b) Establishment of Baseline.--The baseline for a unit
designated under this section shall be established by the Administrator
by regulation, based on fuel consumption and operating data for the
unit for calendar years 1985, 1986, and 1987, or if such data is not
available, the Administrator may prescribe a baseline based on
alternative representative data.
``(c) Emission Limitations.--
``(1) For a unit for which an election, along with a permit
application and compliance plan, is submitted to the
Administrator under paragraph (a) before January 1, 2002,
annual emissions limitations for sulfur dioxide shall be equal
to the product of the baseline multiplied by the lesser of the
unit's 1985 actual or allowable emission rate in lbs/mmBtu, or
if the unit did not operate in 1985, by the lesser of the
unit's actual or allowable emission rate for a calendar year
after 1985 (as determined by the Administrator), divided by
2,000.
``(2) For a unit for which an election, along with a permit
application and compliance plan, is submitted to the
Administrator under paragraph (a) on or after January 1, 2002,
annual emissions limitations for sulfur dioxide shall be equal
to the product of the baseline multiplied by the lesser of the
unit's 1985 actual or allowable emission rate in lbs/mmBtu, or,
if the unit did not operate in 1985, by the lesser of the
unit's actual or allowable emission rate for a calendar year
after 1985 (as determined by the Administrator), divided by
4,000.
``(d) Allowances and Permits.--The Administrator shall issue
allowances to an affected unit under this section in an amount equal to
the emissions limitation calculated under subsection (c), in accordance
with section 412. Such allowance may be used in accordance with, and
shall be subject to, the provisions of section 412. Affected sources
under this section shall be subject to the requirements of sections
404, 405, 406, and 412.
``(e) Limitation.--Any unit designated under this section shall not
transfer or bank allowances produced as a result of reduced utilization
or shutdown, except that, such allowances may be transferred or carried
forward for use in subsequent years to the extent that the reduced
utilization or shutdown results from the replacement of thermal energy
from the unit designated under this section, with thermal energy
generated by any other unit or units subject to the requirements of
this subpart, and the designated unit's allowances are transferred or
carried forward for use at such other replacement unit or units. In no
case may the Administrator allocate to a source designated under this
section allowances in an amount greater than the emissions resulting
from operation of the source in full compliance with the requirements
of this Act. No such allowances shall authorize operation of a unit in
violation of any other requirements of this Act.
``(f) Implementation.--The Administrator shall implement this
section under 40 CFR part 74 (2002), amended as appropriate by the
Administrator.

``SEC. 417. AUCTIONS, RESERVE.

``(a) Special Reserve of Allowances.--For purposes of establishing
the Special Allowance Reserve, the Administrator shall withhold--
``(1) 2.8 percent of the allocation of allowances for each
year from 1995 through 1999 inclusive; and
``(2) 2.8 percent of the basic Phase II allowance
allocation of allowances for each year beginning in the year
2000--
which would (but for this subsection) be issued for each affected unit
at an affected source. The Administrator shall record such withholding
for purposes of transferring the proceeds of the allowance sales under
this subsection. The allowances so withheld shall be deposited in the
Reserve under this section.
``(b) Auction Sales.--
``(1) Subaccount for auctions.--The Administrator shall
establish an Auction Subaccount in the Special Reserve
established under this section. The Auction Subaccount shall
contain allowances to be sold at auction under this section in
the amount of 150,000 tons per year for each year from 1995
through 1999, inclusive and 250,000 tons per year for each year
from 2000 through 2009, inclusive.
``(2) Annual auctions.--Commencing in 1993 and in each year
thereafter until 2010, the Administrator shall conduct auctions
at which the allowances referred to in paragraph (1) shall be
offered for sale in accordance with regulations promulgated by
the Administrator. The allowances referred to in paragraph (1)
shall be offered for sale at auction in the amounts specified
in table C. The auction shall be open to any person. A person
wishing to bid for such allowances shall submit (by a date set
by the Administrator) to the Administrator (on a sealed bid
schedule provided by the Administrator) offers to purchase
specified numbers of allowance sat specified prices. Such
regulations shall specify that the auctioned allowances shall
be allocated and sold on the basis of bid price, starting with
the highest-priced bid and continuing until all allowances for
sale at such auction have been allocated. The regulations shall
not permit that a minimum price be set for the purchase of
withheld allowances. Allowances purchased at the auction may be
used for any purpose and at any time after the auction, subject
to the provisions of this subpart and subpart 2.

``TABLE C.--NUMBER OF ALLOWANCES AVAILABLE FOR AUCTION
------------------------------------------------------------------------
Spot auction       Advance
Year of sale                  (same year)       auction
------------------------------------------------------------------------
1993....................................         50,000*         100,000
1994....................................         50,000*         100,000
1995....................................         50,000*         100,000
1996....................................         150,000         100,000
1997....................................         150,000         100,000
1998....................................         150,000         100,000
1999....................................         150,000         100,000
2000....................................         125,000         125,000
2001....................................         125,000         125,000
2002....................................         125,000         125,000
2003....................................         125,000               0
2004-2009...............................         125,000               0
------------------------------------------------------------------------
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).

``(3) Proceeds.--
``(A) Transfer.--Notwithstanding section 3302 of
title 31 of the United States Code or any other
provision of law, within 90 days of receipt, the
Administrator shall transfer the proceeds from the
auction under this section, on a pro rata basis, to the
owners or operators of the affected units at an
affected source from whom allowances were withheld
under subsection (b). No funds transferred from a
purchaser to a seller of allowances under this
paragraph shall be held by any officer or employee of
the United States or treated for any purpose as revenue
to the United States or the Administrator.
``(B) Return.--At the end of each year, any
allowances offered for sale but not sold at the auction
shall be returned without charge, on a pro rata basis,
to the owner or operator of the affected units from
whose allocation the allowances were withheld. With 170
days after the date of enactment of the Clear Skies Act
of 2003, any allowance withheld under paragraph (a)(2)
but not offered for sale at an auction shall be
returned without charge, on a pro rata basis, to the
owner or operator of the affected units from whose
allocation the allowances were withheld.
``(4) Recording by epa.--The Administrator shall record and
publicly report the nature, prices and results of each auction
under this subsection, including the prices of successful bids,
and shall record the transfers of allowances as a result of
each auction in accordance with the requirements of this
section. The transfer of allowances at such auction shall be
recorded in accordance with the regulations promulgated by the
Administrator under this subpart.
``(c) Changes in Auctions and Withholding.--Pursuant to rulemaking
after public notice and comment the Administrator may at any time after
the year 1998 (in the case of advance auctions) and 2005 (in the case
of spot auctions) decrease the number of allowances withheld and sold
under this section.
``(d) Termination of Auctions.--Not later than the commencement
date of the sulfur dioxide allowance requirement under section 422, the
Administrator shall terminate the withholding of allowances and the
auction sales under this section. Pursuant to regulations under this
section, the Administrator may by delegation or contract provide for
the conduct of sales or auctions under the Administrator's supervision
by other departments or agencies of the United States Government or by
nongovernmental agencies, groups, or organizations.
``(e) The Administrator shall implement this section under 40 CFR
part 73 (2002), amended as appropriate by the Administrator.

``SEC. 418. INDUSTRIAL SO<INF>2 EMISSIONS.

``(a) Report.--Not later than January 1, 1995 and every 5 years
thereafter, the Administrator shall transmit to the Congress a report
containing an inventory of national annual sulfur dioxide emissions
from industrial sources (as defined in section 411(11)), including
units subject to section 414(g)(2), for all years for which data are
available, as well as the likely trend in such emission over the
following twenty-year period. The reports shall also contain estimates
of the actual emission reduction in each year resulting from
promulgation of the diesel fuel desulfurization regulations under
section 214.
``(b) 5.60 Million Ton Cap.--Whenever the inventory required by
this section indicates that sulfur dioxide emissions from industrial
sources, including units subject to section 414(g)(2), and may
reasonably be expected to reach levels greater than 5.60 million tons
per year, the Administrator shall take such actions under the Act as
may be appropriate to ensure that such emissions do not exceed 5.60
million tons per year. Such actions may include the promulgation of new
and revised standards of performance for new sources, including units
subject to section 414(g)(2), under section 111(b), as well as
promulgation of standards of performance for existing sources,
including units subject to section 414(g)(2), under authority of this
section. For an existing source regulated under this section, `standard
of performance' means a standard which the Administrator determines is
applicable to that source and which reflects the degree of emission
reduction achievable through the application of the best system of
continuous emission reduction which (taking into consideration the cost
of achieving such emission reduction, and any nonair quality health and
environmental impact and energy requirements) the Administrator
determines has been adequately demonstrated for that category of
sources.
``(c) Election.--Regulations promulgated under section 414(b) shall
not prohibit a source from electing to become an affected unit under
section 417.

``SEC. 419. TERMINATION.

``Starting January 1, 2010, the owners or operators of affected
units and affected facilities under sections 412(b) and (c) and 416 and
shall no longer be subject to the requirements of sections 412 through
417.

``Subpart 2--Clear Skies Sulfur Dioxide Allowance Program

``SEC. 421. DEFINITIONS.

``For purposes of this subpart--
``(1) The term `affected EGU' means--
``(A) for a unit serving a generator before the
date of enactment of the Clear Skies Act of 2003, a
unit in a State serving a generator with a nameplate
capacity of greater than 25 megawatts that produced or
produces electricity for sale during 2002 or any year
thereafter, except for a cogeneration unit that
produced or produces electricity for sale equal to or
less than one-third of the potential electrical output
of the generator that it served or serves during 2002
and each year thereafter; and
``(B) for a unit commencing service of a generator
on or after the date of enactment of the Clear Skies
Act of 2003, a unit in a State serving a generator that
produces electricity for sale during any year starting
with the year the unit commences service of a
generator, except for a gas-fired unit serving one or
more generators with total nameplate capacity of 25
megawatts or less, or a cogeneration unit that produces
electricity for sale equal to or less than one-third of
the potential electrical output of the generator that
it serves, during each year starting with the year the
unit commences services of a generator.
Notwithstanding paragraphs (A) and (B), the term `affected EGU'
does not include a solid waste incineration unit subject to
section 129 or a unit for the treatment, storage, or disposal
of hazardous waste subject to section 3005 of the Solid Waste
Disposal Act.
``(2) The term `coal-fired' with regard to a unit means,
for purposes of section 424, combusting coal or any coal-
derived fuel alone or in combination with any amount of any
other fuel in any year during 1998 through 2002 or, for a unit
that commenced operation during 2001-2004, a unit designed to
combust coal or any coal-derived fuel alone or in combination
with any other fuel.
``(3) The term `Eastern bituminous' means bituminous that
is from a mine located in a State east of the Mississippi
River.
``(4) The term `general account' means an account in the
Allowance Tracking System under section 403(c) established by
the Administrator for any person under 40 CFR Sec. 73.31(c)
(2002), amended as appropriate by the Administrator.
``(5) The term `oil-fired' with regard to a unit means, for
purposes of section 424, combusting fuel oil for more than 10
percent of the unit's total heat input, and combusting no coal
or coal-derived fuel, in any year during 1998 through 2002 or,
for a unit that commenced operation during 2001-2004, a unit
designed to combust oil for more than 10 percent of the unit's
total heat input and not to combust any coal or coal-derived
fuel coal.
``(6) The term `unit account' means an account in the
Allowance Tracking System under section 403(c) established by
the Administrator for any unit under 40 CFR Sec. 73.31(a) and
(b) (2002), amended as appropriate by the Administrator.

``SEC. 422. APPLICABILITY.

``(a) Prohibition.--Starting January 1, 2010, it shall be unlawful
for the affected EGUs at a facility to emit a total amount of sulfur
dioxide during the year in excess of the number of sulfur dioxide
allowances held for such facility for that year by the owner or
operator of the facility.
``(b) Allowances Held.--Only sulfur dioxide allowances under
section 423 shall be held in order to meet the requirements of
subsection (a), except as provided under section 425.

``SEC. 423. LIMITATIONS ON TOTAL EMISSIONS.

``For affected EGUs for 2010 and each year thereafter, the
Administrator shall allocate sulfur dioxide allowances under section
424, and shall conduct auctions of sulfur dioxide allowances under
section 409, in the amounts in Table A.

``TABLE A.--TOTAL SO<INF>2</INF> ALLOWANCES ALLOCATED OR AUCTIONED FOR EGUS
------------------------------------------------------------------------
SO<INF>2</INF> allowances  SO<INF>2</INF> allowances
Year                       allocated       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
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
------------------------------------------------------------------------

``SEC. 424. EGU ALLOCATIONS.

``(a) In General.--Not later than 24 months before the commencement
date of the sulfur dioxide allowance requirement of section 422, the
Administrator shall promulgate regulations determining allocations of
sulfur dioxide allowances for affected EGUs for each year during 2010
through 2060. The regulations shall provide that:
``(1)(A) 95 percent of the total amount of sulfur dioxide
allowances allocated each year under section 423 shall be
allocated based on the sulfur dioxide allowances that were
allocated under subpart 1 for 2010 or thereafter and are held
in unit accounts and general accounts in the Allowance Tracking
System under section 403(c).
``(B) The Administrator shall allocate sulfur dioxide
allowances to each facility's account and each general account
in the Allowance Tracking System under section 403(c) as
follows:
``(i) For each unit account and each general
account in the Allowance Tracking System, the
Administrator shall determine the total amount of
sulfur dioxide allowances allocated under subpart 1 for
2010 and thereafter that are recorded, as of 12:00
noon, Eastern Standard time, on the date 180 days after
enactment of the Clear Skies Act of 2003. The
Administrator shall determine this amount in accordance
with 40 CFR part 73 (2002), amended as appropriate by
the Administrator, except that the Administrator shall
apply a discount rate of 7 percent for each year after
2010 to the amounts of sulfur dioxide allowances
allocated for 2011 or later.
``(ii) For each unit account and each general
account in the Allowance Tracking System, the
Administrator shall determine an amount of sulfur
dioxide allowances equal to the allocation amount under
subparagraph (A) multiplied by the ratio of the amount
of sulfur dioxide allowances determined to be recorded
in that account under clause (i) to the total amount of
sulfur dioxide allowances determined to be recorded in
all unit accounts and general accounts in the Allowance
Tracking System under clause (i).
``(iii) The Administrator shall allocate to each
facility's account in the Allowance Tracking System an
amount of sulfur dioxide allowances equal to the total
amount of sulfur dioxide allowances determined under
clause (ii) for the unit accounts of the units at the
facility and shall allocate to each general account in
the Allowance Tracking System the amount of sulfur
dioxide allowances determined under clause (ii) for
that general account.
``(2)(A) 3\1/2\ percent of the total amount of sulfur
dioxide allowances allocated each year under section 423 shall
be allocated for units at a facility that are affected EGUs as
of December 31, 2004, that commenced operation before January
1, 2001, and that are not allocated any sulfur dioxide
allowances under subpart 1.
``(B) The Administrator shall allocate each year for the
units under subparagraph (A) an amount of sulfur dioxide
allowances determined by:
``(i) For such units at the facility that are coal-
fired, multiplying 0.40 lb/mmBtu by the total baseline
heat input of such units and converting to tons.
``(ii) For such units at the facility that are oil-
fired, multiplying 0.20 lb/mmBtu by the total baseline
heat input of such units and converting to tons.
``(iii) For all such other units at the facility
that are not covered by clause (i) or (ii), multiplying
0.05 lb/mmBtu by the total baseline heat input of such
units and converting to tons.
``(iv) If the total of the amounts for all
facilities under clauses (i), (ii), and (iii) exceeds
the allocation amount under subparagraph (A),
multiplying the allocation amount under subparagraph
(A) by the ratio of the total of the amounts for the
facility under clauses (i), (ii), and (iii) to the
total of the amounts for all facilities under clause
(i), (ii), and (iii).
``(v) Allocating to each facility the lesser of the
total of the amounts for the facility under clauses
(i), (ii), and (iii) or, if the total of the amounts
for all facilities under clauses (i), (ii), and (iii)
exceeds the allocation amount under subparagraph (A),
the amount under clause (iv). The Administrator shall
add to the amount of sulfur dioxide allowances
allocated under paragraph (3) any unallocated
allowances under this paragraph.
``(3)(A) 1\1/2\ percent of the total amount of sulfur
dioxide allowances allocated each year under section 423 shall
be allocated for units that are affected EGUs as of December
31, 2004, that commence operation on or after January 1, 2001
and before January 1, 2005, and that are not allocated any
sulfur dioxide allowances under subpart 1.
``(B) The Administrator shall allocate each year for the
units under subparagraph (A) an amount of sulfur dioxide
allowances determined by:
``(i) For such units at the facility that are coal-
fired or oil-fired, multiplying 0.19 lb/mmBtu by the
total baseline heat input of such units and converting
to tons.
``(ii) For all such other units at the facility
that are not covered by clause (i), multiplying 0.02
lb/mmBtu by the total baseline heat input of such units
and converting to tons.
``(iii) If the total of the amounts for all
facilities under clauses (i) and (ii) exceeds the
allocation amount under subparagraph (A), multiplying
the allocation amount under subparagraph (A) by the
ratio of the total of the amounts for the facility
under clauses (i) and (ii) to the total of the amounts
for all facilities under clauses (i) and (ii).
``(iv) Allocating to each facility the lesser of
the total of the amounts for the facility under clauses
(i) and (ii) or, if the total of the amounts for all
facilities under clauses (i) and (ii) exceeds the
allocation amount under subparagraph (A), the amount
under clause (iv). The Administrator shall allocate to
the facilities under paragraphs (1) and (2) on a pro
rata basis (based on the allocations under those
paragraphs) any unallocated allowances under this
paragraph.
``(b) Failure To Promulgate.--(1) If, by the date 18 months before
January 1 of each year 2010 through 2060, the Administrator has signed
proposed regulations, but has not promulgated final regulations,
determining allocations under subsection (a), the Administrator shall
allocate, for such year, for each facility where an affected EGU is
located, and for each general account, the amount of sulfur dioxide
allowances specified for that facility and the general account in such
proposed regulations.
``(2) If, by the date 18 months before January 1 of each year 2010
through 2060, the Administrator has not signed proposed regulations
determining allocations under subsection (a), the Administrator shall--
``(A) determine, for such year, for each unit with coal as
its primary or secondary fuel or residual oil as its primary
fuel listed in the Administrator's Emissions Scorecard 2001,
Appendix B, Table B1 an amount of sulfur dioxide allowances by
multiplying 95 percent of the allocation amount under section
423 by the ratio of such unit's heat input in the Emissions
Scorecard 2001, Appendix B, Table B1 to the total of the heat
input in the Emissions Scorecard 2001, Appendix B, Table B1 for
all units with coal as their primary or secondary fuel or
residual oil as their primary fuel;
``(B) allocate, for such year, for each facility where a
unit under subparagraph (A) is located the total of the amounts
of sulfur dioxide allowances for the units at such facility
determined under subparagraph (A); and
``(C) auction an amount of sulfur dioxide allowances equal
to 5 percent of the allocation amount under section 423 and
conduct the auction on the first business day in October
following the respective promulgation deadline under paragraph
(1) and in accordance with section 409.

``SEC. 425. DISPOSITION OF SULFUR DIOXIDE ALLOWANCES ALLOCATED UNDER
SUBPART 1.

``(a) Removal From Accounts.--After allocating allowances under
section 424(a)(1), the Administrator shall remove from the unit
accounts and general accounts in the Allowance Tracking System under
section 403(c) and from the Special Allowances Reserve under section
418 all sulfur dioxide allowances allocated or deposited under subpart
1 for 2010 or later.
``(b) Regulations.--The Administrator shall promulgate regulations
as necessary to assure that the requirement to hold allowances under
section 422 may be met using sulfur dioxide allowances allocated under
subpart 1 for 1995 through 2009.

``SEC. 426. INCENTIVES FOR SULFUR DIOXIDE EMISSION CONTROL TECHNOLOGY.

``(a) Reserve.--The Administrator shall establish a reserve of
250,000 sulfur dioxide allowances comprising 83,334 sulfur dioxide
allowances for 2010, 83,333 sulfur dioxide allowances for 2011, and
83,333 sulfur dioxide allowances for 2012.
``(b) Application.--Not later than 18 months after the enactment of
the Clear Skies Act of 2003, an owner or operator of an affected EGU
that commenced operation before 2001 and that during 2001 combusted
Eastern bituminous may submit an application to the Administrator for
sulfur dioxide allowances from the reserve under subsection (a). The
application shall include each of the following:
``(1) A statement that the owner or operator will install
and commence operation of specified sulfur dioxide control
technology at the unit within 24 months after approval of the
application under subsection (c) if the unit is allocated the
sulfur dioxide allowances requested under paragraph (4). The
owner or operator shall provide description of the control
technology.
``(2) A statement that, during the period starting with the
commencement of operation of sulfur dioxide technology under
paragraph (1) through 2009, the unit will combust Eastern
bituminous at a percentage of the unit's total heat input equal
to or exceeding the percentage of total heat input combusted by
the unit in 2001 if the unit is allocated the sulfur dioxide
allowances requested under paragraph (4).
``(3) A demonstration that the unit will achieve, while
combusting fuel in accordance with paragraph (2) and operating
the sulfur dioxide control technology specified in paragraph
(1), a specified tonnage of sulfur dioxide emission reductions
during the period starting with the commencement of operation
of sulfur dioxide control technology under subparagraph (1)
through 2009. The tonnage of emission reductions shall be the
difference between emissions monitored at a location at the
unit upstream of the control technology described in paragraph
(1) and emissions monitored at a location at the unit
downstream of such control technology, while the unit is
combusting fuel in accordance with paragraph (2).
``(4) A request that EPA allocate for the unit a specified
number of sulfur dioxide allowances from the reserve under
subsection (a) for the period starting with the commencement of
operation of the sulfur dioxide technology under paragraph (1)
through 2009.
``(5) A statement of the ratio of the number of sulfur
dioxide allowances requested under paragraph (4) to the tonnage
of sulfur dioxide emissions reductions under paragraph (3).
``(c) Approval or Disapproval.--By order subject to notice and
opportunity for comment, the Administrator shall--
``(1) determine whether each application meets the
requirements of subsection (b);
``(2) list the applications meeting the requirements of
subsection (b) and their respective allowance-to-emission-
reduction ratios under paragraph (b)(5) in order, from lowest
to highest, of such ratios;
``(3) for each application listed under paragraph (2),
multiply the amount of sulfur dioxide emission reductions
requested by each allowance-to-emission-reduction ratio on the
list that equals or is less than the ratio for the application;
``(4) sum, for each allowance-to-emission-reduction ratio
in the list under paragraph (2), the amounts of sulfur dioxide
allowances determined under paragraph (3);
``(5) based on the calculations in paragraph (4), determine
which allowance-to-emission-reduction ratio on the list under
paragraph (2) results in the highest total amount of allowances
that does not exceed 250,000 allowances; and
``(6) approve each application listed under paragraph (2)
with a ratio equal to or less than the allowance-to-emission-
reduction ratio determined under paragraph (5) and disapprove
all the other applications.
``(d) Monitoring.--An owner or operator whose application is
approved under subsection (c) shall install, and quality assure data
from, a CEMS for sulfur dioxide located upstream of the sulfur dioxide
control technology under paragraph (b)(1) at the unit and a CEMS for
sulfur dioxide located downstream of such control technology at the
unit during the period starting with the commencement of operation of
such control technology through 2009. The installation of the CEMS and
the quality assurance of data shall be in accordance with subparagraph
(a)(2)(B) and subsections (c) through (e) of section 405, except that,
where two or more units utilize a single stock, separate monitoring
shall be required for each unit.
``(e) Allocations.--Not later than 6 months after the
commencement date of the sulfur dioxide allowance requirement of
section 422, for the units for which applications are approved under
subsection (c), the Administrator shall allocate sulfur dioxide
allowances as follows:
``(1) For each unit, the Administrator shall multiply the
allowance-to-emission-reduction ratio of the last application
that EPA approved under subsection (c) by the lesser of--
``(A) the total tonnage of sulfur dioxide emissions
reductions achieved by the unit, during the period
starting with the commencement of operation of the
sulfur dioxide control technology under subparagraph
(b)(1) through 2009, through use of such control
technology; or
``(B) the tonnage of sulfur dioxide emission
reductions under paragraph (b)(3).
``(2) If the total amount of sulfur dioxide allowances
determined for all units under paragraph (1) exceeds 250,000
sulfur dioxide allowances, the Administrator shall multiply
250,000 sulfur dioxide allowances by the ratio of the amount of
sulfur dioxide allowances determined for each unit under
paragraph (1) to the total amount of sulfur dioxide allowances
determined for all units under paragraph (1).
``(3) The Administrator shall allocate to each unit the
lesser of the amount determined for that unit under paragraph
(1) or, if the total amount of sulfur dioxide allowances
determined for all units under paragraph (1) exceeds 250,000
sulfur dioxide allowances, under paragraph (2). The
Administrator shall auction any unallocated allowances from the
reserve under this section and conduct the auction by the first
business day in October 2010 and in accordance with section
409.

``Subpart 3--Western Regional Air Partnership

``SEC. 431. DEFINITIONS.

``For purposes of this subpart--
``(1) The term `adjusted baseline heat input' means the
average annual heat input used by a unit during the three years
in which the unit had the highest heat input for the period
from the eighth through the fourth year before the first
covered year.
``(A) Notwithstanding paragraph (1), if a unit
commences operation during such period and--
``(i) on or after January 1 of the fifth
year before the first covered year, then
`adjusted baseline heat input' shall mean the
average annual heat input used by the unit
during the fifth and fourth years before the
first covered year; and
``(ii) on or after January 1 of the fourth
year before the first covered year, then
`adjusted baseline heat input' shall mean the
annual heat input used by the unit during the
fourth year before the first covered year.
``(B) A unit's heat input for a year shall be the
heat input--
``(i) required to be reported under section
405 for the unit, if the unit was required to
report heat input during the year under that
section;
``(ii) reported to the Energy Information
Administrator for the unit, if the unit was not
required to report heat input under section
405;
``(iii) based on data for the unit reported
to the WRAP State where the unit is located as
required by State law, if the unit was not
required to report heat input during the year
under section 405 and did not report to the
Energy Information Administration; or
``(iv) based on fuel use and fuel heat
content data for the unit from fuel purchase or
use records, if the unit was not required to
report heat input during the year under section
405 and did not report to the Energy
Information Administration and the WRAP State.
``(2) The term `affected EGU' means an affected EGU under
subpart 2 that is in a WRAP State and that--
``(A) in 2000, emitted 100 tons or more of sulfur
dioxide and was used to produce electricity for sale;
or
``(B) in any year after 2000, emits 100 tons or
more of sulfur dioxide and is used to produce
electricity for sale.
``(3) The term `coal-fired' with regard to a unit means,
for purposes of section 434, a unit combusting coal or any
coal-derived fuel alone or in combination with any amount of
any other fuel in any year during the period from the eighth
through the fourth year before the first covered year.
``(4) The term `covered year' means--
``(A)(i) the third year after the year 2018 or
later when the total annual sulfur dioxide emissions of
all affected EGUs in the WRAP States first exceed
271,000 tons; or
``(ii) the third year after the year 2013 or later
when the Administrator determines by regulation that
the total annual sulfur dioxide emissions of all
affected EGUs in the WRAP States are reasonably
projected to exceed 271,000 tons in 2018 or any year
thereafter. The Administrator may make such
determination only if all the WRAP States submit to the
Administrator a petition requesting that the
Administrator issue such determination and make all
affected EGUs in the WRAP States subject to the
requirements of sections 432 through 434; and
``(B) each year after the `covered year' under
subparagraph (A).
``(5) The term `oil-fired' with regard to a unit means, for
purposes of section 434, a unit combusting fuel oil for more
than 10 percent of the unit's total heat input, and combusting
no coal or coal-derived fuel, and any year during the period
from the eighth through the fourth year before the first
covered year.
``(6) The term `WRAP State' means Arizona, California,
Colorado, Idaho, Nevada, New Mexico, Oregon, Utah, and Wyoming.

``SEC. 432. APPLICABILITY.

``(a) Prohibition.--Starting January 1 of the first covered year,
it shall be unlawful for the affected EGUs at a facility to emit a
total amount of sulfur dioxide during the year in excess of the number
of sulfur dioxide allowances held for such facility for that year by
the owner or operator of the facility.
``(b) Allowances Held.--Only sulfur dioxide allowances under
section 433 shall be held in order to meet the requirements of
subsection (a).

``SEC. 433. LIMITATIONS ON TOTAL EMISSIONS.

``For affected EGUs, the total amount of sulfur dioxide allowances
that the Administrator shall allocate for each covered year under
section 434 shall equal 271,000 tons.

``SEC. 434. EGU ALLOCATIONS.

``(a) In General.--By January 1 of the year before the first
covered year, the Administrator shall promulgate regulations
determining, for each covered year, the allocations of sulfur dioxide
allowances for the units at a facility that are affected EGUs as of
December 31 of the fourth year before the covered year by--
``(1) for such units at the facility that are coal-fired,
multiplying 0.40 lb/mmBtu by the total adjusted baseline heat
input of such units and converting to tons;
``(2) for such units at the facility that are oil-fired,
multiplying 0.20 lb/mmBtu by the total adjusted baseline heat
input of such units and converting to tons;
``(3) for all such other units at the facility that are not
covered by paragraph (1) or (2) multiplying 0.05 lb/mmBtu by
the total adjusted baseline heat input of such units and
converting to tons; and
``(4) multiplying the allocation amount under section 433
by the ratio of the total of the amounts for the facility under
paragraphs (1), (2), and (3) to the total of the amounts for
all facilities under paragraphs (1), (2), and (3).
``(b) Failure to Promulgate.--(1) For each covered year, if, by the
date 18 months before January 1 of such year, the Administrator has
signed proposed regulations but has not promulgated final regulations
determining allocations under paragraph (a), then the Administrator
shall allocate, for such year, for each facility where an affected EGU
is located the amount of sulfur dioxide allowances specified for that
facility in such proposed regulations.
``(2) For each covered year, if, by the date 18 months before
January 1 of such year, the Administrator has not signed proposed
regulations determining allocations under subsection (a), the
Administrator shall--
``(A) determine, for such year, for each affected EGU with
coal as its primary or secondary fuel or residual oil as its
primary fuel listed in the Administrator's Emissions Scorecard
2001, Appendix B, Table B1 an amount of sulfur dioxide
allowances by multiplying 95 percent of the allocation amount
under section 433 by the ratio of such unit's heat input in the
Emissions Scorecard 2001, Appendix B, Table B1 to the total of
the heat input in the Emissions Scorecard 2001, Appendix B,
Table B1 for all affected EGUs with coal as their primary or
secondary fuel or residual oil as their primary fuel;
``(B) allocate, for such year, for each facility where a
unit under subparagraph (A) is located the total amounts of
sulfur dioxide allowances for the units at such facility
determined under subparagraph (A); and
``(C) auction an amount of sulfur dioxide allowances equal
to 5 percent of the allocation amount under section 433 and
conduct the auction on the first business day in October
following the respective promulgation deadline under paragraph
(1) and in accordance with section 409.

``PART C--NITROGEN OXIDES CLEAR SKIES EMISSION REDUCTIONS

``Subpart 1--Acid Rain Program

``SEC. 441. NITROGEN OXIDES EMISSION REDUCTION PROGRAM.

``(a) Applicability.--On the date that a coal-fired utility unit
becomes an affected unit pursuant to sections 413 or 414, or on the
date a unit subject to the provisions of section 413(d), must meet the
SO<INF>2</INF> reduction requirements, each such unit shall become an
affected unit for purposes of this section and shall be subject to the
emission limitations for nitrogen oxides set forth herein.
``(b) Emission Limitations.--(1) The Administrator shall by
regulation establish annual allowable emission limitations for nitrogen
oxides for the types of utility boilers listed below, which limitations
shall not exceed the rates listed below: Provided, That 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 NO<INF>X</INF> burner
technology. The Administrator shall implement this paragraph under 40
CFR Sec. 76.5 (2002). The maximum allowable emission rates are as
follows:
``(A) for tangentially fired boilers, 0.45 lb/mmBtu; and
``(B) for dry bottom wall-fired boilers (other than units
applying cell burner technology), 0.50 lb/mmBtu. After January
1, 1995, it shall be unlawful for any unit that is an affected
unit on that date 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) The Administrator shall, by regulation, establish allowable
emission limitations on a lb/mmBtu, annual average basis, for nitrogen
oxides for the following types of utility boilers:
``(A) wet bottom wall-fired boilers;
``(B) cyclones;
``(C) units applying cell burner technology; and
``(D) all other types of utility boilers.
The Administrator shall base such rates on the degree 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; and which is
comparable to the costs of nitrogen oxides controls set pursuant to
subsection (b)(1). The Administrator may revise the applicable emission
limitations for tangentially fired and dry bottom, wall-fired boilers
(other than cell burners) to be more stringent if the Administrator
determines that more effective low NO<INF>X</INF> burned technology is
available: Provided, That, no unit that is an affected unit pursuant to
section 413 and that is subject to the requirements of subsection
(b)(1), shall be subject to the revised emission limitations, if any.
The Administrator shall implement that paragraph under 40 CFR
Sec. Sec. 76.6 and 76.7 (2002).
``(c) Alternative Emission Limitations.--(1) The permitting
authority shall, upon request of an owner or operator of a unit subject
to this section, authorize an emission limitation less stringent than
the applicable limitation established under subsection (b)(1) or (b)(2)
upon a determination that--
``(A) a unit subject to subsection (b)(1) cannot meet the
applicable limitation using low NO<INF>X</INF> burner
technology; or
``(B) a unit subject to subsection (b)(2) cannot meet the
applicable rate using the technology on which the Administrator
based the applicable emission limitation.
``(2) The permitting authority shall base such determination upon a
showing satisfactory to the permitting authority, in accordance with
regulations established by the Administrator, that the owner or
operator--
``(A) has properly installed appropriate control equipment
designed to meet the applicable emission rate;
``(B) has properly operated such equipment for a period of
15 months (or such other period of time as the Administrator
determines through the regulations), and provides operating and
monitoring data for such period demonstrating that the unit
cannot meet the applicable emission rate; and
``(C) has specified an emission rate that such unit can
meet on an annual average basis. The permitting authority shall
issue an operating permit for the unit in question, in
accordance with section 404 and title V--
``(i) that permits the unit during the
demonstration period referred to in subparagraph (B),
to emit at a rate in excess of the applicable emission
rate;
``(ii) at the conclusion of the demonstration
period to revise the operating permit to reflect the
alternative emission rate demonstrated in subparagraphs
(B) and (C).
``(3) Units subject to subsection (b)(1) for which an alternative
emission limitation is established shall not be required to install any
additional control technology beyond low NO<INF>X</INF> burners.
Nothing in this section shall preclude an owner or operator from
installing and operating an alternative NO<INF>X</INF> control
technology capable of achieving the applicable emission limitation. The
Administrator shall implement this subsection under 40 CFR part 76
(2002), amended as appropriate by the Administrator.
``(d) Emissions Averaging.--(1) In lieu of complying with the
applicable emission limitations under subsection (b)(1), (2), or (c),
the owner or operator of two or more units subject to one or more of
the applicable emission limitations set pursuant to these sections, may
petition the permitting authority for alternative contemporaneous
annual emission limitations for such units that ensure that--
``(A) the actual annual emission rate in pounds of nitrogen
oxides per million Btu averaged over the units in question is a
rate that is less than or equal to
``(B) the Btu-weighted average annual emission rate for the
same units if they had been operated, during the same period of
time, in compliance with limitations set in accordance with the
applicable emission rates set pursuant to subsections (b)(1)
and (2).
``(2) If the permitting authority determines, in accordance with
regulations issued by the Administrator that the conditions in
paragraph (1) can be met, the permitting authority shall issue
operating permits for such units, in accordance with section 404 and
title V, that allow alternative contemporaneous annual emission
limitations. Such emission limitations shall only remain in effect
while both units continue operation under the conditions specified in
their respective operating permits. The Administrator shall implement
this subsection under 40 CFR part 76 (2002), amended as appropriate by
the Administrator.

``SEC. 442. TERMINATION.

``Starting January 1, 2008, owner or operator of affected units and
affected facilities under section 441 shall no longer be subject to the
requirements of that section.

``Subpart 2--Clear Skies Nitrogen Oxides Allowance Program

``SEC. 451. DEFINITIONS.

``For purposes of this subpart:
``(1) The term `affected EGU' means--
``(A) for a unit serving a generator before the
date of enactment of the Clear Skies Act of 2003, a
unit in a State serving a generator with a nameplate
capacity of greater than 25 megawatts that produced or
produces electricity for sale during 2002 or any year
thereafter, except for a cogeneration unit that
produced or produces electricity for sale equal to or
less than one-third of the potential electrical output
of the generator that it served or serves during 2002
and each year thereafter; and
``(B) for a unit commencing service of a generator
on or after the date of enactment of the Clear Skies
Act of 2003, a unit in a State serving a generator that
produces electricity for sale during any year starting
with the year the unit commences service of a
generator, except for a gas-fired unit serving one or
more generators with total nameplate capacity of 25
megawatts or less, or a cogeneration unit that produces
electricity for sale equal to or less than one-third of
the potential electrical output of the generator that
it serves, during each year starting with the unit
commences service of a generator.
``(C) Notwithstanding paragraphs (A) and (B), the
term `affected EGU' does not include a solid waste
incineration unit subject to section 129 or a unit for
the treatment, storage, or disposal of hazardous waste
subject to section 3005 of the Solid Waste Disposal
Act.
``(2) The term `Zone 1 State' means Alabama, Arkansas,
Connecticut, Delaware, the District of Columbia, Florida,
Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine,
Maryland, Massachusetts, Michigan, Minnesota, Mississippi,
Missouri, New Hampshire, New Jersey, New York, North Carolina,
Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee,
Texas east of Interstate 35, Vermont, Virginia, West Virginia,
and Wisconsin.
``(3) The term `Zone 2 State' means Alaska, American Samoa,
Arizona, California, Colorado, the Commonwealth of Northern
Mariana Islands, the Commonwealth of Puerto Rico, Guam, Hawaii,
Idaho, Kansas, Montana, Nebraska, North Dakota, New Mexico,
Nevada, Oklahoma, Oregon, South Dakota, Texas west of
Interstate 35, Utah, the Virgin Islands, Washington, and
Wyoming.

``SEC. 452. APPLICABILITY.

``(a) Zone 1 Prohibition.--(1) Starting January 1, 2008, it shall
be unlawful for the affected EGUs at a facility in a Zone 1 State to
emit a total amount of nitrogen oxides during a year in excess of the
number of nitrogen oxides allowances held for such facility for that
year by the owner or operator of the facility.
``(2) Only nitrogen oxides allowances under section 453(a) shall be
held in order to meet the requirements of paragraph (1), except as
provided under section 465.
``(b) Zone 2 Prohibition.--(1) Starting January 1, 2008, it shall
be unlawful for the affected EGUs at a facility in a Zone 2 State to
emit a total amount of nitrogen oxides during a year in excess of the
number of nitrogen oxides allowances held for such facility for that
year by the owner or operator of the facility.
``(2) Only nitrogen oxides allowances under section 453(b) shall be
held in order to meet the requirements of paragraph (1).

``SEC. 453. LIMITATIONS ON TOTAL EMISSIONS.

``(a) Zone 1 Allocations.--For affected EGUs in the Zone 1 States
for 2008 and each year thereafter, the Administrator shall allocate
nitrogen oxides allowances under section 454(a), and conduct auctions
of nitrogen oxides allowances under section 409, in the amounts in
Table A.

``TABLE A.--TOTAL NO<INF>X</INF> ALLOWANCES ALLOCATED OR AUCTIONED FOR EGUS IN ZONE
1
------------------------------------------------------------------------
NO<INF>X</INF> allowances  NO<INF>X</INF> allowances
Year                       allocated       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
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
------------------------------------------------------------------------

``(b) Zone 2 Allocations.--For affected EGUs in the Zone 2 States
for 2008 and each year thereafter, the Administrator shall allocate
nitrogen oxides allowances under section 454(b), and conduct auctions
of nitrogen oxides allowances under section 409, in the amounts in
Table B.

``TABLE B.--TOTAL NO<INF>X</INF> ALLOWANCES ALLOCATED FOR EGUS IN ZONE 2
------------------------------------------------------------------------
NO<INF>X</INF> allowance   NO<INF>X</INF> allowance
Year                       allocated       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
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
------------------------------------------------------------------------

``SEC. 454. EGU ALLOCATIONS.

``(a) EGU Allocations in the Zone 1 States.--
``(1) EPA regulations.--Not later than 18 months before the
commencement date of the nitrogen oxides allowance requirement
of section 452, the Administrator shall promulgate regulations
determining the allocation of nitrogen oxides allowances for
each year during 2008 through 2058 for units at a facility in a
Zone 1 State that commence operation by and are affected EGUs
as of December 31, 2004. The regulations shall determine the
allocation for such units for each year by multiplying the
allocation amount under section 453(a) by the ratio of the
total amount of baseline heat input of such units at the
facility to the total amount of baseline heat input of all
affected EGUs in the Zone 1 States.
``(2) Failure to regulate.--(A) For each year 2008 through
2058, if, by the date 18 months before January 1 of such year,
the Administrator--
``(i) has promulgated regulations under section
403(b) providing for the transfer of nitrogen oxides
allowances and section 403(c) establishing the
Allowance Tracking System for nitrogen oxides
allowances; and
``(ii) has signed proposed regulations but has not
promulgated final regulations determining allocations
under paragraph (1),
the Administrator shall allocate, for such year, for each
facility where an affected EGU is located in the Zone 1 States
the amount of nitrogen oxides allowances specified for that
facility in such proposed regulations.
``(B) For each year 2008 through 2058, if, by the date 18
months before January 1 of such year, the Administrator--
``(i) has promulgated regulations under section
403(b) providing for the transfer of nitrogen oxides
allowances and section 403(c) establishing the
Allowance Tracking System for nitrogen oxides
allowances; and
``(ii) has not signed proposed regulations
determining allocations under paragraph (1),
the Administrator shall make allocations, for such year, for
each unit in the Zone 1 States listed in the Administrator's
Emissions Scorecard 2001, Appendix B, Table B1 as provided in
subparagraph (C).
``(C) Allocations of nitrogen oxides allowances for a unit
under this subparagraph shall be determined by multiplying 95
percent of the allocation amount under section 453(a) by the
ratio of such unit's heat input in the Emissions Scorecard
2001, Appendix B, Table B1 to the total of the heat input in
the Emissions Scorecard 2001, Appendix B, Table B1 for all
units in the Zone 1 States.
``(D) When the Administrator makes an allocation under
subparagraph (C), the Administrator shall--
``(i) allocate for each facility where a unit
referred to in subparagraph (C) is located the total of
the amounts of nitrogen oxides allowances for the units
at such facility, and
``(ii) auction an amount of nitrogen oxides
allowances equal to 5 percent of the allocation amount
under section 453(a) and conduct the auction on the
first business day in October following the respective
promulgation deadline referred to in subparagraph (A)
and in accordance with section 409.
``(E) For each year 2008 through 2058, if the Administrator
has not signed proposed regulations referred to in subparagraph
(A) and has not promulgated the regulations under section
403(b) providing for the transfer of nitrogen oxides allowances
and section 403(c) establishing the Allowance Tracking System
for nitrogen oxides allowances, by the date 18 months before
January 1 of such year, then it shall be unlawful for an
affected EGU in the Zone 1 States to emit nitrogen oxides
during such year in excess of 0.14 lb/mmBtu.
``(b) EGU Allocations in the Zone 2 States.--
``(1) EPA regulations.--Not later than 18 months before the
commencement date of the nitrogen oxides allowance requirement
of section 452, the Administrator shall promulgate regulations
determining the allocation of nitrogen oxides allowances for
each year during 2008 through 2058 for units at a facility in a
Zone 2 State that commence operation by and are affected EGUs
as of December 31, 2004. The regulations shall determine the
allocation for such units for each year by multiplying the
allocation amount under section 453(b) by the ratio of the
total amount of baseline heat input of such units at the
facility to the total amount of baseline heat input of all
affected EGUs in the Zone 2 States.
``(2) Failure to regulate.--(A) For each year 2008 through
2058, if, by the date 18 months before January 1 of such year,
the Administrator--
``(i) has promulgated regulations under section
403(b) providing for the transfer of nitrogen oxides
allowances and section 403(c) establishing the
Allowance Tracking System for nitrogen oxides
allowances; and
``(ii) has signed proposed regulations but has not
promulgated final regulations determining allocations
under paragraph (1),
the Administrator shall allocate, for such year, for each
facility where an affected EGU is located in the Zone 2 States
the amount of nitrogen oxides allowances specified for that
facility in such proposed regulations.
``(B) For each year 2008 through 2058, if, by the date 18
months before January 1 of such year, the Administrator--
``(i) has promulgated regulations under section
403(b) providing for the transfer of nitrogen oxides
allowances and section 403(c) establishing the
Allowance Tracking System for nitrogen oxides
allowances; and
``(ii) has not signed proposed regulations
determining allocations under paragraph (1),
the Administrator shall make allocations, for such year, for
each unit in the Zone 2 States listed in the Administrator's
Emissions Scorecard 2001, Appendix B, Table B1 as provided in
subparagraph (C).
``(C) Allocations of nitrogen oxides allowances for a unit
under this subparagraph shall be determined by multiplying 95
percent of the allocation amount under section 453(b) by the
ratio of such unit's heat input in the Emissions Scorecard
2001, Appendix B, Table B1 to the total of the heat input in
the Emissions Scorecard 2001, Appendix B, Table B1 for all
units in the Zone 2 States.
``(D) When the Administrator make an allocation under
subparagraph (C), the Administrator shall--
``(i) allocate for each facility where a unit
referred to in subparagraph (C) is located the total of
the amounts of nitrogen oxides allowances for the units
at such facility, and
``(ii) auction an amount of nitrogen oxides
allowances equal to 5 percent of the allocation amount
under section 453(b) and conduct the auction on the
first business day in October following the respective
promulgation deadline referred to in subparagraph (A)
and in accordance with section 409.
``(E) For each year 2008 through 2058, if the Administrator
has not signed proposed regulations referred to in subparagraph
(A) and has not promulgated the regulations under section
403(b) providing for the transfer of nitrogen oxides allowances
and section 403(c) establishing the Allowance Tracking System
for nitrogen oxides allowances, by the date 18 months before
January 1 of such year, then it shall be unlawful for an
affected EGU in the Zone 2 States to emit nitrogen oxides
during such year in excess of 0.25 lb/mmBtu.

``Subpart 3--Ozone Season No<INF>x</INF> Budget Program

``SEC. 461. DEFINITIONS.

``For purposes of this subpart:
``(1) The term `ozone season' means--
``(A) with regard to Connecticut, Delaware, the
District of Columbia, Maryland, Massachusetts, New
Jersey, New York, Pennsylvania, and Rhode Island, the
period May 1 through September 30 for each year
starting in 2003; and
``(B) with regard to all other States, the period
May 30, 2004 through September 30, 2004 and the period
May 1 through September 30 for each year thereafter.
``(2) The term `NO<INF>X</INF> SIP Call State' means
Connecticut, Delaware, the District of Columbia, Illinois,
Indiana, Kennedy, Maryland, Massachusetts, New Jersey, New
York, North Carolina, Ohio, Pennsylvania, Rhode Island, South
Carolina, Tennessee, Virginia, and West Virginia and the fine
grid portions of Alabama, Georgia, Michigan, and Missouri.
``(3) The term `fine grid portions of Alabama, Georgia,
Michigan, and Missouri' means the areas in Alabama, Georgia,
Michigan, and Missouri subject to 40 CFR Sec. 51.121 (2001), as
it would be amended in the notice of proposed rulemaking at 67
Federal Register 8396 (February 22, 2002).

``SEC. 462. GENERAL PROVISIONS.

``The provisions of sections 402 through 406 and section 409 shall
not apply to this subpart.

``SEC. 463. APPLICABLE IMPLEMENTATION PLAN.

``(a) SIPs.--Except as provided in subsection (b), the applicable
implementation plan for each NO<INF>X</INF> SIP Call State shall be
consistent with the requirements, including the NO<INF>X</INF> SIP Call
State's nitrogen oxides budget and compliance supplement pool, in 40
CFR Sec. Sec. 51.121 and 51.122 (2001), as it would be amended in the
notice of proposed rulemaking at 67 Federal Register 8396 (February 22,
2002).
``(b) Requirements.--Notwithstanding any provision to the contrary
in 40 CFR Sec. Sec. 51.121 and 51.122 (2001), as it would be amended in
the notice of proposed rulemaking at 67 Federal Register 8396 (February
22, 2002)--
``(1) the applicable implementation plan for each
NO<INF>X</INF> SIP Call State shall require full implementation
of the required emission control measures starting no later
than the first ozone season; and
``(2) starting January 1, 2008--
``(A) the owners and operators of a boiler,
combustion turbine, or integrated gasification combined
cycle plant subject to emission reduction requirements
or limitations under part B, C, or D shall not longer
be subject to the requirements in a NO<INF>X</INF> SIP
Call State's applicable implementation plan that meet
the requirements of subsection (a) and paragraph (1);
and
``(B) notwithstanding subparagraph (A), if the
Administrator determines, by December 31, 2007, that a
NO<INF>X</INF> SIP Call State's applicable
implementation plan meets the requirements of
subsection (a) and paragraph (1), such applicable
implementation plan shall be deemed to continue to meet
such requirements; and
``(3)(A) The owner or operator of a boiler, combustion
turbine, or combined cycle system may submit to the
Administrator a petition to allow use of nitrogen oxides
allowances allocated for 2005 to meet the applicable
requirement to hold nitrogen oxides allowances at least equal
to 2004 ozone season emissions of such boiler, combustion
turbine, or combined cycle system.
``(B) A petition under this paragraph shall be submitted to
the Administrator by February 1, 2004.
``(C) The petition shall demonstrate that the owner or
operator made reasonable efforts to install, at the boiler,
combustion turbine, or combined cycle system, nitrogen oxides
control technology designed to allow the owner or operator to
meet such requirement to hold nitrogen oxides allowances.
``(D) The petition shall demonstrate that there is an undue
risk for the reliability of electricity supply (taking into
account the feasibility of purchasing electricity or nitrogen
oxides allowances) because--
``(i) the owner or operator is not likely to be
able to install and operate the technology under
subparagraph (C) on a timely basis; or
``(ii) the technology under subparagraph (C) is not
likely to be able to achieve its design control level
on a timely basis.
``(E) The petition shall include a statement by the
NO<INF>X</INF> SIP Call State where the boiler, combustion
turbine, or combined cycle system is located that the
NO<INF>X</INF> SIP Call State does not object to the petition.
``(F) By May 30, 2004, by order, the Administrator shall
approve the petition if it meets the requirements of
subparagraphs (B) through (E).
``(c) Savings Provision.--Nothing in this section or section 464
shall preclude or deny the right of any State or political subdivision
thereof to adopt or enforce any regulation, requirement, limitation, or
standard, relating to a boiler, combustion turbine, or integrated
gasification combined cycle plant subject to emission reduction
requirements or limitations under part B, C, or D, that is more
stringent than a regulation, requirement, limitation, or standard in
effect under this section or under any other provision of this Act.

``SEC. 464. TERMINATION OF FEDERAL ADMINISTRATION OF NO<INF>X</INF>
TRADING PROGRAM FOR EGUS.

``Starting January 1, 2008, with regard to any boiler, combustion
turbine, or integrated gasification combined cycle plant subject to
emission reduction requirements or limitations under part B, C, or D,
the Administrator shall not administer any nitrogen oxides trading
program included in any NO<INF>X</INF> SIP Call State's applicable
implementation plan and meeting the requirements of section 463(a) and
(b)(1).

``SEC. 465. CARRYFORWARD OF PRE-2008 NITROGEN OXIDES ALLOWANCES.

``The Administrator shall promulgate regulations as necessary to
assure that the requirement to hold allowances under section 452(a)(1)
may be met using nitrogen oxides allowances allocated for an ozone
season before 2008 under a nitrogen oxides trading program that the
Administrator administers, is included in a NO<INF>X</INF> SIP Call
State's applicable implementation plan, and meets the requirements of
section 463(a) and (b)(1).

``PART D--MERCURY EMISSIONS REDUCTIONS

``SEC. 471. DEFINITIONS.

``For purposes of this subpart:
``(1) The term `adjusted baseline heat input' with regard
to a unit means the unit's baseline heat input multiplied by--
``(A) 1.0, for the portion of the baseline heat
input that is the unit's average annual combustion of
bituminous during the years on which the unit's
baseline heat input is based;
``(B) 3.0, for the portion of the baseline heat
input that is the unit's average annual combustion of
lignite during the years on which the unit's baseline
heat input is based;
``(C) 1.25, for the portion of the baseline heat
input that is the unit's average annual combustion of
subbituminous during the years on which the unit's
baseline heat input is based; and
``(D) 1.0, for the portion of the baseline heat
input that is not covered by subparagraph (A), (B), or
(C) or for the entire baseline heat input if such
baseline heat input is not based on the unit's heat
input in specified years.
``(2) The term `affected EGU' means--
``(A) for a unit serving a generator before the
date of enactment of the Clear Skies Act of 2003, a
coal-fired unit in a State serving a generator with a
nameplate capacity of greater than 25 megawatts that
produced or produces electricity for sale during 2002
or any year thereafter, except for a cogeneration unit
that produced or produces electricity for sale equal to
or less than one-third of the potential electrical
output of the generator that it served or serves during
2002 and each year thereafter; and
``(B) for a unit commencing service of a generator
on or after the date of enactment of the Clear Skies
Act of 2003, a coal-fired unit in a State serving a
generator that produces electricity for sale during any
year starting with the year the unit commences service
of a generator, except for a cogeneration unit that
produces electricity for sale equal to or less than
one-third of the potential electrical output of the
generator that it serves, during each year starting
with the year the unit commences service of a
generator.
``(C) Notwithstanding paragraphs (A) and (B), the
term `affected EGU' does not include a solid waste
incineration unit subject to section 129 or a unit for
the treatment, storage, or disposal of hazardous waste
subject to section 3005 of the Solid Waste Disposal
Act.

``SEC. 472. APPLICABILITY.

``Starting January 1, 2010, it shall be unlawful for the affected
EGUs at a facility in a State to emit a total amount of mercury during
the year in excess of the number of mercury allowances held for such
facility for that year by the owner or operator of the facility.

``SEC. 473. LIMITATIONS ON TOTAL EMISSIONS.

``For affected EGUs for 2010 and each year thereafter, the
Administrator shall allocate mercury allowances under section 474, and
conduct auctions of mercury allowances under section 409, in the
amounts in Table A.

``TABLE A.--TOTAL MERCURY ALLOWANCES ALLOCATED OR AUCTIONED FOR EGUS
------------------------------------------------------------------------
Mercury         Mercury
Year                      allowances      allowances
allocated       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
2059....................................          24,000         456,000
2060....................................          12,000         468,000
2061....................................               0         480,000
------------------------------------------------------------------------

``SEC. 474. EGU ALLOCATIONS.

``(a) In General.--Not later than 24 months before the commencement
date of the mercury allowance requirement of section 472, the
Administrator shall promulgate regulations determining allocations of
mercury allowances for each year during 2010 through 2060 for units at
a facility that commence operation by and are affected EGUs as of
December 31, 2004. The regulations shall provide that the Administrator
shall allocate each year for such units an amount determined by
multiplying the allocation amount in section 473 by the ratio of the
total amount of the adjusted baseline heat input of such units at the
facility to the total amount of adjusted baseline heat input of all
affected EGUs.
``(b) Failure To Promulgate.--(1) For each year 2010 through 2060,
if, by the date 18 months before January 1 of such year, the
Administrator--
``(A) has promulgated regulations under section 403(b)
providing for the transfer of mercury allowances and section
403(c) establishing the Allowance Tracking System for mercury
allowances; and
``(B) has signed proposed regulations but has not
promulgated final regulations determining allocations under
subsection (a),
the Administrator shall allocate, for such year, for each facility
where an affected EGU is located the amount of mercury allowances
specified for that facility in such proposed regulations.
``(2) If, by the date 18 months before January 1 of each year 2010
through 2060, the Administrator has not signed proposed regulations
determining allocations under subsection (a), the Administrator shall:
``(A) determine, for such year, for each unit with coal as
its primary or secondary fuel listed in the Administrator's
Emissions Scorecard 2001, Appendix B, Table B1 an amount of
mercury allowances by multiplying 95 percent of the allocation
amount under section 473 by the ratio of such unit's heat input
in the Emissions Scorecard 2001, Appendix B, Table B1 to the
total of the heat input in the Emissions Scorecard 2001,
Appendix B, Table B1 for all units with coal as their primary
or secondary fuel;
``(B) allocate, for such year, for each facility where a
unit under subparagraph (A) is located the total of the amounts
of mercury allowances for the units at such facility determined
under subparagraph (A); and
``(C) auction an amount of mercury allowances equal to 5
percent of the allocation amount under section 473 and conduct
the auction on the first business day in October following the
respective promulgation deadline under paragraph (1) and in
accordance with section 409.
``(3) For each year 2010 through 2060, if the Administrator has not
signed proposed regulations under subsection (a), and has not
promulgated the regulations under section 403(b) providing for the
transfer of mercury allowances and section 403(c) establishing the
Allowance Tracking System for mercury allowances, by the date 18 months
before January 1 of such year, then it shall be unlawful for any
affected EGU to emit mercury during such year in excess of 30 percent
of the mercury content (in ounces per mmBtu) of the coal and coal-
derived fuel combusted by the unit.

``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.

``(a) Definitions.--For purposes of this section:
``(1) The term `commenced', with regard to construction,
means that an owner or operator has either undertaken a
continuous program of construction or has entered into a
contractual obligation to undertake and complete, within a
reasonable time, a continuous program of construction. For
boilers and integrated gasification combined cycle plants, this
term does not include undertaking such a program or entering
into such an obligation more than 36 months prior to the date
on which the unit begins operation. For combustion turbines,
this term does not include undertaking such a program or
entering into such an obligation more than 18 months prior to
the date on which the unit begins operation.
``(2) The term `construction' means fabrication, erection,
or installation of an affected unit.
``(3) The term `affected unit' means any unit that is
subject to emission limitations under subpart 2 of part B,
subpart 2 of part C, or part D.
``(4) The term `existing affected unit' means any affected
unit that is not a new affected unit.
``(5) The term `new affected unit' means any affected unit,
the construction or reconstruction of which is commenced after
the date of enactment of the Clear Skies Act of 2003, except
that for the purpose of any revision of a standard pursuant to
subsection (e), `new affected unit' means any affected unit,
the construction or reconstruction of which is commenced after
the public of regulations (or, if earlier, proposed
regulations) prescribing a standard under this section that
will apply to such unit.
``(6) The term `reconstruction' means the replacement of
components of a unit to such an extent that--
``(A) the fixed capital cost of the new components
exceeds 50 percent of the fixed capital cost that would
be required to construct a comparable entirely new
unit; and
``(B) it is technologically and economically
feasible to meet the applicable standards set forth in
this section.
``(b) Emission Standards.--
``(1) In general.--No later than 12 months after the date
of enactment of the Clear Skies Act of 2003, the Administrator
shall promulgate regulations prescribing the standards in
subsections (c) through (d) for the specified affected units
and establishing requirements to ensure compliance with these
standards, including monitoring, recordkeeping, and reporting
requirements.
``(2) Monitoring.--(A) The owner or operator of any
affected unit subject to the standards for sulfur dioxide,
nitrogen oxides, or mercury under this section shall meet the
requirements of section 405, except that, where two or more
units utilize a single stack, separate monitoring shall be
required for each affected unit for the pollutants for which
the unit is subject to such standards.
``(B) The Administrator shall, by regulation, require--
``(i) the owner or operator of any affected unit
subject to the standards for sulfur dioxide, nitrogen
oxides, or mercury under this section to--
``(I) install and operate CEMS for
monitoring output, including electricity and
useful thermal energy, on the affected unit and
to quality assure the data; and
``(II) comply with recordkeeping and
reporting requirements, including provisions
for reporting output data in megawatt hours.
``(ii) the owner or operator of any affected unit
subject to the standards for particulate matter under
this section to--
``(I) install and operate CEMS for
monitoring particulate matter on the affected
unit and to quality assure the data;
``(II) comply with recordkeeping and
reporting requirements; and
``(III) comply with alternative monitoring,
quality assurance, recordkeeping, and reporting
requirements for any period of time for which
the Administrator determines that CEMS with
appropriate vendor guarantees are not
commercially available for particulate matter.
``(3) Compliance.--For boilers, integrated gasification
combined cycle plants, and combustion turbines that are gas-
fired or coal fired, the Administrator shall require that the
owner or operator demonstrate compliance with the standards
daily, using a 30-day rolling average, except that in the case
of mercury, the compliance period shall be the calendar year.
For combustion turbines that are not gas-fired or coal-fired,
the Administrator shall require that the owner or operator
demonstrate compliance with the standards hourly, using a 4-
hour rolling average.
``(c) Boilers and Integrated Gasification Combined Cycle Plants.--
``(1) After the effective date of standards promulgated
under subsection (b), no owner or operator shall cause any
boiler or integrated gasification combined cycle plant that is
a new affected unit to discharge into the atmosphere any gases
which contain--
``(A) sulfur dioxide in excess of 2.0 lb/MWh;
``(B) nitrogen oxides in excess of 1.0 lb/MWh;
``(C) particulate matter in excess of 0.20 lb/MWh;
or
``(D) if the unit is coal-fired, mercury in excess
of 0.015 lb/GWh, unless--
``(i) mercury emissions from the unit,
determined assuming no use of on-site or off-
site pre-combustion treatment of coal and no
use of technology that captures mercury, are
reduced by 80 percent;
``(ii) flue gas desulfurization (FGD) and
selective catalytic reduction (SCR) are applied
to the unit and are operated so as to optimize
capture of mercury; or
``(iii) a technology is applied to the unit
and operated so as to optimize capture of
mercury, and the permitting authority
determines that the technology is equivalent in
terms of mercury capture to the application of
FGD and SCR.
``(2) Notwithstanding paragraph (1)(D), integrated
gasification combined cycle plants with a combined capacity of
less than 5 GW are exempt from the mercury requirement under
subparagraph (1)(D) if they are constructed as part of a
demonstration project under the Secretary of Energy that will
include a demonstration of removal of significant amounts of
mercury as determined by the Secretary of Energy in conjunction
with the Administrator as part of the solicitation process.
``(3) After the effective date of standards promulgated
under subsection (b), no owner or operator shall cause any oil-
fired boiler that is an existing affected unit to discharge
into the atmosphere any gases which contain particulate matter
in excess of 0.30 lb/MWh.
``(d) Combustion Turbines.--
``(1) After the effective date of standards promulgated
under subsection (b), no owner or operator shall cause any gas-
fired combustion turbine that is a new affected unit to
discharge into the atmosphere any gases which contain nitrogen
oxides in excess of--
``(A) 0.56 lb/MWh (15 ppm at 15 percent oxygen), if
the unit is a simple cycle combustion turbine;
``(B) 0.084 lb/MWh (3.5 ppm at 15 percent oxygen),
if the unit is not a simple cycle combustion turbine
and either uses add-on controls or is located within 50
km of a class I area; or
``(C) 0.21 lb/MWh (9 ppm at 15 percent oxygen), if
the unit is not a simple cycle turbine and neither uses
add-on controls nor is located within 50 km of a class
I area.
``(2) After the effective date of standards promulgated
under subsection (b), no owner or operator shall cause any
coal-fired combustion turbine that is a new affected unit to
discharge into the atmosphere any gases which contain sulfur
dioxide, nitrogen oxides, particulate matter, or mercury in
excess of the emission limits under subparagraphs (c)(1) (A)
through (D).
``(3) After the effective date of standards promulgated
under subsection (b), no owner or operator shall cause any
combustion turbine that is not gas-fired or coal-fired and that
is a new affected unit to discharge into the atmosphere any
gases which contain--
``(A) sulfur dioxide in excess of 2.0lb/MWh;
``(B) nitrogen oxides in excess of--
``(i) 0.289 lb/MWh (12 ppm at 15 percent
oxygen), if the unit is not a simple cycle
combustion turbine, is dual-fuel capable, and
uses add-on controls; or is not a simple cycle
combustion turbine and is located within 50 km
of a class I area;
``(ii) 1.01 lb/MWh (42 ppm at 15 percent
oxygen), if the unit is a simple cycle
combustion turbine; is not a simple cycle
combustion turbine and is not dual-fuel
capable; or is not a simple cycle combustion
turbine, is dual-fuel capable, and does not use
add-on controls.
``(C) particulate matter in excess of 0.20 lb/MWh.
``(e) Periodic Review and Revision.--
``(1) The Administrator shall, at least every 8 years
following the promulgation of standards under subsection (b),
review and, if appropriate, revise such standards to reflect
the degree of emission limitation achievable through the
application of the best system of emission reduction which
(taking into account the cost of achieving such reduction and
any nonair quality health and environmental impacts and energy
requirements) the Administrator determines has been adequately
demonstrated. When implementation and enforcement of any
requirement of this Act indicate that emission limitations and
percent reductions beyond those required by the standards
promulgated under this section are achieved in practice, the
Administrator shall, when revising standards promulgated under
this section, consider the emission limitations and percent
reductions achieved in practice.
``(2) Notwithstanding the requirements of paragraph (1) the
Administrator need not review any standard promulgated under
subsection (b) if the Administrator determines that such review
is not appropriate in light of readily available information on
the efficacy of such standard.
``(f) Effective Date.--Standard promulgated pursuant to this
section shall become effective upon promulgation.
``(g) Delegation.--
``(1) Each State may develop and submit to the
Administration a procedure for implementing and enforcing
standards promulgated under this section for affected units
located in such State. If the Administrator finds the State
procedure is adequate, the Administrator shall delegate to such
State any authority the Administrator has under this Act to
implement and enforce such standards.
``(2) Nothing in this subsection shall prohibit the
Administrator from enforcing any applicable standard under this
section.
``(h) Violations.--After the effective date of standards
promulgated under this section, it shall be unlawful for any owner or
operator of any affected unit to operate such unit in violation of any
standard applicable to such unit.
``(i) Coordination With Other Authorities.--For purposes of
sections 111(e), 113, 114, 116, 120, 303, 304, 307 and other provisions
for the enforcement of this Act, each standard established pursuant to
this section shall be treated in the same manner as a standard of
performance under section 111, and each affected unit subject to
standards under this section shall be treated in the same manner as a
stationary source under section 111.
``(j) State Authority.--Nothing in this section shall preclude or
deny the right of any State or political subdivision thereof to adopt
or enforce any regulation, requirement, limitation, or standard
relating to affected units that is more stringent than a regulation,
requirement, limitation, or standard in effect under this section or
under any other provision of this Act.
``(k) Other Authority Under This Act.--Nothing in this section
shall diminish the authority of the Administrator or a State to
establish any other requirements applicable to affected units under any
other authority of law, including the authority to establish for any
air pollutant a national ambient air quality standard, except that no
new affected unit subject to standards under this section shall be
subject to standards under section 111 of this Act.

``SEC. 482. RESEARCH, ENVIRONMENTAL MONITORING, AND ASSESSMENT.

``(a) Purposes.--The Administrator, in collaboration with the
Secretary of Energy and the Secretary of the Interior, shall conduct a
comprehensive program of research, environmental monitoring, and
assessment to enhance scientific understanding of the human health and
environmental effects of particulate matter and mercury and to
demonstrate the efficacy of emission reductions under this title. The
purposes of such a program are to--
``(1) expand current research and knowledge of the
contribution of emissions from electricity generation to
exposure and health effects associated with particulate matter
and mercury;
``(2) enhance current research and development of promising
multi-pollutant control strategies and CEMS for mercury;
``(3) produce peer-reviewed scientific and technology
information to inform the review of emissions levels under
section 410;
``(4) improve environmental monitoring and assessment of
sulfur dioxide, nitrogen oxides and mercury, and their
transformation products, to track changes in human health and
the environment attributable to emission reductions under this
title; and
``(5) periodically provide peer-reviewed reports on the
costs, benefits, and effectiveness of emission reductions
achieved under this title.
``(b) Research.--The Administrator shall enhance planned and
ongoing laboratory and field research and modeling analyses, and
conduct new research and analyses to produce peer-reviewed information
concerning the human health and environmental effects of mercury and
particulate matter and the contribution of United States electrical
generating units to those effects. Such information shall be included
in the report under subsection (d). In addition, such research and
analyses shall--
``(1) improve understanding of the rates and processes
governing chemical and physical transformations of mercury in
the atmosphere, including speciation of emissions from
electricity generation and the transport of these species;
``(2) improve understanding of the contribution of mercury
emissions from electricity generation to mercury in fish and
other biota, including--
``(A) the response of and contribution to mercury
in the biota owing to atmospheric deposition of mercury
from U.S. electricity generation on both local and
regional scales;
``(B) long-term contributions of mercury from U.S.
electricity generation on mercury accumulations in
ecosystems, and the effects of mercury reductions in
that sector on the environment and public health;
``(C) the role and contribution of mercury, from
U.S. electricity generating facilities and
anthropogenic and natural sources to fish contamination
and to human exposure, particularly with respect to
sensitive populations;
``(D) the contribution of U.S. electricity
generation to population exposure to mercury in
freshwater fish and seafood and quantification of
linkages between U.S. mercury emissions and domestic
mercury exposure and its health effects; and
``(E) the contribution of mercury from U.S.
electricity generation in the context of other domestic
and international sources of mercury, including
transport of global anthropogenic and natural
background levels;
``(3) improve understanding of the health effects of fine
particulate matter components related to electricity generation
emissions (as distinct from other fine particle fractions and
indoor air exposures) and the contribution of U.S. electrical
generating units to those effects including--
``(A) the chronic effects of fine particulate
matter from electricity generation in sensitive
population groups; and
``(B) personal exposure to fine particulate matter
from electricity generation; and
``(4) improve understanding, by way of a review of the
literature, of methods for valuing human health and
environmental benefits associated with fine particulate matter
and mercury.
``(c) Innovative Control Technologies.--The Administrator shall
collaborate with the Secretary of Energy to enhance research and
development, and conduct new research that facilitates research into
and development of innovative technologies to control sulfur dioxide,
nitrogen oxides, mercury, and particulate matter at a lower cost than
existing technologies. Such research and development shall provide
updated information on the cost and feasibility of technologies. Such
information shall be included in the report under subsection (d). In
addition, the research and development shall--
``(1) upgrade cost and performance models to include
results from ongoing and future electricity generation and
pollution control demonstrations by the Administrator and the
Secretary of Energy;
``(2) evaluate the overall environmental implications of
the various technologies tested including the impact on the
characteristics of coal combustion residues;
``(3) evaluate the impact of the use of selective catalytic
reduction on mercury emissions from the combustion of all coal
types;
``(4) evaluate the potential of integrated gasification
combined cycle to adequately control mercury;
``(5) expand current programs by the Administrator to
conduct research and promote, lower cost CEMS capable of
providing real-time measurements of both speciated and total
mercury and integrated compact CEMS that provide cost-effective
real-time measurements of sulfur dioxide, nitrogen oxides, and
mercury;
``(6) expand lab- and pilot-scale mercury and multi-
pollutant control programs by the Secretary of Energy and the
Administrator, including development of enhanced sorbents and
scrubbers for use on all coal types;
``(7) characterize mercury emissions from low-rank coals,
for a range of traditional control technologies, like scrubbers
and selective catalytic reduction; and
``(8) improve low cost combustion modifications and
controls for dry-bottom boilers.
``(d) Emissions Levels Evaluation Report.--Not later than January
1, 2008, the Administrator, in consultation with the Secretary of
Energy, shall prepare a peer reviewed report to inform review of the
emissions levels under section 410. The report shall be based on the
best available peer-reviewed scientific and technology information. It
shall address cost, feasibility, human health and ecological effects,
and net benefits associated with emissions levels under this title.
``(e) Environmental Accountability.--
``(1) Monitoring and assessment.--The Administrator shall
conduct a program of environmental monitoring and assessment to
track on a continuing basis, changes in human health and the
environment attributable to the emission reductions required
under this title. Such a program shall--
``(A) develop and employ methods to routinely
monitor, collect, and compile data on the status and
trends of mercury and its transformation products in
emissions from affected facilities, atmospheric
deposition, surface water quality, and biological
systems. Emphasis shall be placed on those methods
that--
``(i) improve the ability to routinely
measure mercury in dry deposition processes;
``(ii) improve understanding of the spatial
and temporal distribution of mercury deposition
in order to determine source-receptor
relationships and patterns of long-range,
regional, and local deposition;
``(iii) improve understanding of aggregate
exposures and additive effects of methylmercury
and other pollutants; and
``(iv) improve understanding of the
effectiveness and cost of mercury emissions
controls;
``(B) modernize and enhance the national air
quality and atmospheric deposition monitoring networks
in order to cost-effectively expand and integrate,
where appropriate, monitoring capabilities for sulfur,
nitrogen, and mercury to meet the assessment and
reporting requirements of this section;
``(C) perform and enhance long-term monitoring of
sulfur, nitrogen, and mercury, and parameters related
to acidification, nutrient enrichment, and mercury
bioaccumulation in freshwater and marine biota;
``(D) maintain and upgrade models that describe the
interactions of emissions with the atmosphere and
resulting air quality implications and models that
describe the response of ecosystems to atmospheric
deposition; and
``(E) assess indicators of ecosystems health
related to sulfur, nitrogen, and mercury, including
characterization of the causes and effects of episodic
exposure to air pollutants and evaluation of recovery.
``(2) Reporting requirements.--Not later than January 1,
2008, and not later than every 4 years thereafter, the
Administrator shall provide a peer reviewed report to the
Congress on the costs, benefits, and effectiveness of emission
reduction programs under this title. The report shall address
the relative contribution of emission reductions from U.S.
electricity generation under this title compared to the
emission reductions achieved under other titles of the Clean
Air Act with respect to--
``(A) actual and projected emissions of sulfur
dioxide, nitrogen oxides, and mercury;
``(B) average ambient concentrations of sulfur
dioxide and nitrogen oxides transformation products,
related air quality parameters, and indicators of
reductions in human exposure;
``(C) status and trends in total atmospheric
deposition of sulfur, nitrogen, and mercury, including
regional estimates of total atmospheric deposition;
``(D) status and trends in visibility;
``(E) status of terrestrial and aquatic ecosystems
(including forests and forested watersheds, streams,
lakes, rivers, estuaries, and near-coastal waters);
``(F) status of mercury and its transformation
products in fish;
``(G) causes and effects of atmospheric deposition,
including changes in surface water quality, forest and
soil conditions;
``(H) occurrence and effects of coastal
eutrophication and episodic acidification, particularly
with respect to high elevation watersheds; and
``(I) reduction in atmospheric deposition rates
that should be achieved to prevent or reduce adverse
ecological effects.

``SEC. 483. EXEMPTION FROM MAJOR SOURCE PRECONSTRUCTION REVIEW
REQUIREMENTS AND BEST AVAILABLE RETROFIT CONTROL
TECHNOLOGY REQUIREMENTS.

``(a) Major Source Exemption.--An affected unit shall not be
considered a major emitting facility or major stationary source, or a
part of a major emitting facility or major stationary source for
purposes of compliance with the requirements of parts C and part D of
title I. This exemption only applies to units that are either subject
to the performance standards of section 481 or meet the following
requirements within 3 years after the date of enactment of the Clear
Skies Act of 2003:
``(1) The owner or operator of the affected unit properly
operates, maintains and repairs pollution control equipment to
limit emissions of particulate matter, or the owner or operator
of the affected unit is subject to an enforceable permit issued
pursuant to title V or a permit program approved or promulgated
as part of an applicable implementation plan to limit the
emissions of particular matter from the affected unit to 0.03
lb/mmBtu within 8 years after the date of enactment of the
Clear Skies Act of 2003, and
``(2) The owner or operator of the affected unit uses good
combustion practices to minimize emissions of carbon monoxide.
``(b) Class I Area Protections.--Notwithstanding the exemption in
subsection (a), an affected unit located within 50 km of a Class I area
on which construction commences after the date of enactment of the
Clear Skies Act of 2003 is subject to those provisions under part C of
title I pertaining to the review of a new or modified major stationary
source's impact on a Class I area.
``(c) Preconstruction Requirements.--Each State shall include in
its plan under section 110, as program to provide for the regulation of
the construction of an affected unit that ensures that the following
requirements are met prior to the commencement of construction of an
affected unit--
``(1) in an area designated as attainment or unclassifiable
under section 107(d), the owner or operator of the affected
unit must demonstrate to the State that the emissions increase
from the construction or operation of such unit will not cause,
or contribute to, air pollution in excess of any national
ambient air quality standard;
``(2) in an area designated as nonattainment under section
107(d), the State must determine that the emissions increase
from the construction or operation of such unit will not
interfere with any program to assure that the national ambient
air quality standards are achieved;
``(3) for a modified unit, the unit must comply prior to
beginning operation with either the performance standards of
section 481 or best available control technology as defined in
part C of title I for the pollutants whose hourly emissions
will increase at the unit's maximum capacity; and
``(4) the State must provide for an opportunity for
interested persons to comment on the Class I area protections
and preconstruction requirements as set forth in this section.
``(d) Definitions.--For purposes of this section:
``(1) The term `affected unit' means any unit that is
subject to emission limitations under subpart 2 of part B,
subpart 2 of part C, or part D.
``(2) The term `construction' includes the construction of
a new affected unit and the modification of any affected unit.
``(3) The term `modification' means any physical change in,
or change in the method of operation of, an affected unit that
increases the maximum hourly emissions of any pollutant
regulated under this Act above the maximum hourly emissions
achievable at that unit during the 5 years prior to the change
or that results in the emission of any pollutant regulated
under this Act and not previously emitted.
``(e) Savings Clause.--Nothing in this section shall preclude or
deny the right of any State or political subdivision thereof to adopt
to enforce any regulation, requirements, limitation, or standard
relating to affected units that is more stringent than a regulation,
requirement, limitation, or standard in effect under this section or
under any other provision of this Act.''.

SEC. 3. OTHER AMENDMENTS.

(a) Title I of the Clean Air Act is amended as follows:
(1) In section 103 by repealing subparagraphs (E) and (F).
(2) In section 107--
(A) By amending subparagraph (A) of subsection
(d)(1) as follows:
(i) strike ``or'' at the end of clause
(ii);
(ii) strike the period at the end of clause
(iii) and insert ``, or'';
(iii) add the following clause (iv) after
clause (iii):
``(iv) notwithstanding clauses (i) through
(iii), an area may be designated transitional
for the PM 2.5 national primary or secondary
ambient air quality standards or the 8-hour
ozone national primary or secondary ambient air
quality standard if the Administrator has
performed air quality modeling and, in the case
of an area that needs additional local control
measures, the State has performed supplemental
air quality modeling, demonstrating that the
area will attain the applicable standard or
standards no later than December 31, 2015, and
such modeling demonstration and all necessary
local controls have been approved into the
State implementation plan no later than
December 31, 2004.''.
(iv) add at the end a sentence to read as
follows: ``For purposes of the PM 2.5 national
primary or secondary ambient air quality
standards, the time period for the State to
submit the designations shall be extended to no
later than December 31, 2003.''.
(B) By amending clause (i) of subsection (d)(1)(B)
by adding at the end a sentence to read as follows:
``The Administrator shall not be required to designate
areas for the revised PM 2.5 national primary or
secondary ambient air quality standards prior to 6
months after the States are required to submit
recommendations under section 107(d)(1)(A), but in no
event shall the period for designating such areas be
extended beyond December 31, 2004.''.
(3) In section 110 as follows:
(A) By amending clause (i) of subsection (a)(2)(D)
by inserting ``except as provided in subsection (q),''
before the word ``prohibiting''.
(B) By adding the following new subsections at the
end thereof:
``(q) Review of Certain Plans.--(1) The Administrator shall, in
reviewing, under clause (i) of subsection (a)(2)(D), any plan with
respect to affected units, within the meaning of section 126(d)(1)--
``(A) consider, among other relevant factors, emissions
reductions required to occur by the attainment date or dates of
any relevant nonattainment areas in the other State or States;
``(B) not require submission of plan provisions mandating
emissions reductions from such affected units, unless the
Administrator determines that--
``(i) emissions from such units may be reduced at
least as cost-effectively as emissions from each other
principal category of sources of sulfur dioxide or
nitrogen oxides, including industrial boilers, on-road
mobile sources, and off-road mobile sources, and any
other category of sources that the Administrator may
identify, and
``(ii) reductions in such emissions will improve
air quality in the other State's or States'
nonattainment areas at least as cost-effectively as
reductions in emissions from each other principal
category of sources of sulfur dioxide or nitrogen
oxides, to the maximum extent that a methodology is
reasonably available to make such a determination;
``(C) develop and appropriate peer reviewed methodology for
making determinations under subparagraph (B) by December 31,
2006; and
``(D) not require submission of plan provisions subjecting
affected units, within the meaning of section 126(d)(1), to
requirements with an effective date prior to January 1, 2012.
``(2) In making the determination under clause (ii) of subparagraph
(B) of paragraph (1), the Administrator will use the best available
peer- reviewed models and methodology that consider the proximity of
the source or sources to the other State or States and incorporate
other source characteristics.
``(3) Nothing in paragraph (1) shall be interpreted to require
revisions to the provisions of 40 CFR 51.121 and 51.122 (2001), as
would be amended in the notice of proposed rulemaking at 67 Federal
Register 8396 (February 22, 2002)''.
``(r) Transitional Areas.--
``(1) Maintenance.--(A) By December 31, 2010, each area
designated as transitional pursuant to section 107(d)(1) shall
submit an updated emission inventory and an analysis of whether
growth in emissions, including growth in vehicle miles
traveled, will interfere with attainment by December 31, 2015.
``(B) No later than December 31, 2011, the Administrator
shall review each transitional area's maintenance analysis,
and, if the Administrator determines that growth in emissions
will interfere with attainment by December 31, 2015, the
Administrator shall consult with the State and determine what
action, if any, is necessary to assure that attainment will be
achieved by 2015.
``(2) Prevention of significant deterioration.--Each area
designated as transitional pursuant to section 107(d)(1) shall
be treated as an attainment or unclassifiable area for purposes
of the prevention of significant deterioration provisions of
part C of this title.
``(3) Consequences of failure to attain by 2015.--No later
than June 30, 2016, the Administrator shall determine whether
each area designated as transitional for the 8-hour ozone
standard or for the PM 2.5 standard has attained that standard.
If the Administrator determines that a transitional area has
not attained the standard, the area shall be redesignated as
nonattainment within 1 year of the determination and the State
shall be required to submit a State implementation plan
revision satisfying the provisions of section 172 within 3
years of redesignation as nonattainment.''.
(4) By adding to section 111(b)(1) a new subparagraph (C)
to read as follows:
``(C) No standards of performance promulgated under
this section shall apply to units subject to
regulations promulgated pursuant to section 481.''.
(5) By amending section 112 as follows:
(A) Paragraph (1) of subsection (c) is amended to
read as follows:
``(1) In general.--Not later than 12 months after November
15, 1990, the Administrator shall publish, and shall from time
to time, but not less often than every 8 years, revise, if
appropriate, in response to public comment or new information,
a list of all categories and subcategories of major sources and
area sources (listed under paragraph (3)) of the air pollutants
listed pursuant to subsection (b). Electric utility steam
generating units not subject to section 3005 of the Solid Waste
Disposal Act shall not be included in any category or
subcategory listed under this subsection. The Administrator
shall have the authority to regulate the emission of hazardous
air pollutants listed under section 112(b), other than mercury
compounds, by electric utility steam generating units in
accordance with the regime set forth in section 112(f)(2)
through (4). Any such regulations shall be promulgated within,
and shall not take effect before, the date 8 years after the
commencement date of the mercury allowance requirement of
section 472. To the extent practicable, the categories and
subcategories listed under this subsection shall be consistent
with the list of source categories established pursuant to
section 111 and part C. Nothing in the preceding sentence
limits the Administrator's authority to establish subcategories
under this section, as appropriate.''.
(B) Subparagraph (A) of subsection (n)(1) is
amended to read as follows:
``(A) The Administrator shall perform a study of
the hazards to public health reasonably anticipated to
occur as a result of emissions by electric utility
steam generating units of pollutants listed under
subsection (b) after imposition of the requirements of
this Act. The Administrator shall report the results of
this study to the Congress within 3 years after
November 15, 1990.''.
(6) Section 126 is amended as follows:
(A) By replacing ``section 110(a)(2)(D)(ii) or this
section'' in subsection (b) with ``section
110(a)(2)(D)(i)''.
(B) By replacing ``this section and the prohibition
of section 110(a)(2)(D)(ii)'' in subsection (e)(1) with
``the prohibition of section 110(a)(2)(D)(i)''.
(C) In the flush language at end of subsection (c)
by striking ``section 110(a)(2)(D)(ii)'' and inserting
``section 110(a)(2)(D)(i)'' and deleting the last
sentence.
(D) By amending subsection (d) to read as follows:
``(d)(1) For purposes of this subsection, the term `affected unit'
means any unit that is subject to emission limitations under subpart 2
of part B, subpart 2 of part C, or part D.
``(2) To the extent that any petition submitted under subsection
(b) after the date of enactment of the Clear Skies Act of 2003 seeks a
finding for any affected unit, then, notwithstanding any provision in
subsections (a) through (c) to the contrary--
``(A) in determining whether to make a finding under
subsection (b) for any affected unit, the Administrator shall
consider, among other relevant factors, emissions reductions
required to occur by the attainment date or dates of any
relevant nonattainment areas in the petitioning State or
political subdivision;
``(B) the Administrator may not determine that affected
units emit, or would emit, any air pollutant in violation of
the prohibition of section 110(a)(2)(D)(i) unless that
Administrator determines that--
``(i) such emissions may be reduced at least as
cost-effectively as emissions from each other principal
category of sources of sulfur dioxide or nitrogen
oxides, including industrial boilers, on-road mobile
sources, and off-road mobile sources, and any other
category of sources that the Administrator may
identify; and
``(ii) reductions in such emissions will improve
air quality in the petitioning State's nonattainment
area or areas at least as cost-effectively as
reductions in emissions from each other principal
category of sources of sulfur dioxide or nitrogen
oxides to the maximum extent that a methodology is
reasonably available to make such a determination.
In making the determination under clause (ii), the
Administrator shall use the best available peer-reviewed models
and methodology that consider the proximity of the source or
sources to the petitioning State or political subdivision and
incorporate other sources characteristics.
``(C) The Administrator shall develop an appropriate peer
reviewed methodology for making determinations under
subparagraph (B) by December 31, 2006.
``(D) The Administrator shall not make any findings with
respect to an affected unit under this section prior to January
1, 2009. For any petition submitted prior to January 1, 2007,
the Administrator shall make a finding or deny the petition by
the January 31, 2009.
``(E) The Administrator, by rulemaking, shall extend the
compliance and implementation deadlines in subsection (c) to
the extent necessary to assure that no affected unit shall be
subject to any such deadline prior to January 1, 2012.''.
(b) Title III.--Section 307(d)(1)(G) of title III of the Clean Air
Act is amended to read as follows:
``(G) the promulgation or revision of any
regulation under title IV,''.
(c) Noise Pollution.--Title IV of the Clean Air Act (relating to
noise pollution) (42 U.S.C. 7641 et seq.) is redesignated as title VII
and amended by renumbering sections 401 through 403 as sections 701
through 703, respectively.
(d) Section 406.--Title IV of the Clean Air Act Amendments of 1990
(relating to acid deposition control) is amended by repealing section
406 (industrial SO<INF>2</INF> emissions).
(e) Monitoring.--Section 821(a) of title VIII of the Clean Air Act
Amendments of 1990 (miscellaneous provisions) is amended by modifying
section 821(a) to read as follows:
``(a) Monitoring.--The Administrator of the Environmental
Protection Agency shall promulgate regulations within 18 months after
November 15, 1990, to require that all affected sources subject to
subpart 1 of part B of title IV of the Clean Air Act as of December 31,
2009, shall also monitor carbon dioxide emissions according to the same
timetable as in section 405(b). The regulations shall require that such
data be reported to the Administrator. The provisions of section 405(e)
of title IV of the Clean Air Act shall apply for purposes of this
section in the same manner and to the same extent as such provision
applies to the monitoring and data referred to in section 405. The
Administrator shall implement this subsection under 40 CFR part 75
(2002), amended as appropriate by the Administrator.''.
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