Establishes national pollutant tonnage limitations for sulphur dioxide, nitrogen oxides, mercury, and carbon dioxide.
Provides for review and revision of annual tonnage limitations.
Directs the Administrator of the Environmental Protection Agency (EPA) to establish trading programs for nitrogen oxide and mercury allowances.
Directs the Administrator to establish reserves of nitrogen oxide and mercury allowances as set asides for new units.
Establishes a nitrogen oxide and mercury allowance transfer system.
Directs the Administrator to establish a carbon dioxide allowance trading program.
Makes allowances available to projects certified by a newly established independent review board. Permits the trading of allowances under any U.S. or internationally recognized carbon dioxide reduction program.
Establishes a carbon dioxide allowance transfer system.
Revises the new source review program to cover unit changes after 2008 and to permit the lowest achievable emission rate standard to take cost into account.
Revises the sulfur dioxide allowance program to establish an allowance reserve for new units and to establish maximum emissions for states in the Western Regional Air Partnership.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3093 Introduced in House (IH)]
108th CONGRESS
1st Session
H. R. 3093
To amend the Clean Air Act to establish a national uniform multiple air
pollutant regulatory program for the electric generating sector.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 16, 2003
Mr. Bass (for himself, Mr. Davis of Florida, Mr. Cooper, and Mr.
Bradley of New Hampshire) introduced the following bill; which was
referred to the Committee on Energy and Commerce
_______________________________________________________________________
A BILL
To amend the Clean Air Act to establish a national uniform multiple air
pollutant regulatory program for the electric generating sector.
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 ``Clean Air Planning
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. Findings and purposes.
Sec. 3. Integrated air quality planning for the electric generating
sector.
Sec. 4. New source review program.
Sec. 5. Revisions to sulfur dioxide allowance program.
Sec. 6. Relationship to other law.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--Congress finds that--
(1) fossil fuel-fired electric generating facilities,
consisting of facilities fueled by coal, fuel oil, and natural
gas, produce nearly \2/3\ of the electricity generated in the
United States;
(2) fossil fuel-fired electric generating facilities
produce approximately \2/3\ of the total sulfur dioxide
emissions, \1/3\ of the total nitrogen oxides emissions, \1/3\
of the total carbon dioxide emissions, and \1/3\ of the total
mercury emissions, in the United States;
(3)(A) many electric generating facilities have been exempt
from the emission limitations applicable to new units based on
the expectation that over time the units would be retired or
updated with new pollution control equipment; but
(B) many of the exempted units continue to operate and emit
pollutants at relatively high rates;
(4) pollution from existing electric generating facilities
can be reduced through adoption of modern technologies and
practices;
(5) the electric generating industry is being restructured
with the objective of providing lower electricity rates and
higher quality service to consumers;
(6) the full benefits of competition will not be realized
if the environmental impacts of generation of electricity are
not uniformly internalized; and
(7) the ability of owners of electric generating facilities
to effectively plan for the future is impeded by the
uncertainties surrounding future environmental regulatory
requirements that are imposed inefficiently on a piecemeal
basis.
(b) Purposes.--The purposes of this Act are--
(1) to protect and preserve the environment and safeguard
public health by ensuring that substantial emission reductions
are achieved at fossil fuel-fired electric generating
facilities;
(2) to significantly reduce the quantities of mercury,
carbon dioxide, sulfur dioxide, and nitrogen oxides that enter
the environment as a result of the combustion of fossil fuels;
(3) to encourage the development and use of renewable
energy;
(4) to internalize the cost of protecting the values of
public health, air, land, and water quality in the context of a
competitive market in electricity;
(5) to ensure fair competition among participants in the
competitive market in electricity that will result from fully
restructuring the electric generating industry;
(6) to provide a period of environmental regulatory
stability for owners and operators of electric generating
facilities so as to promote improved management of existing
assets and new capital investments; and
(7) to achieve emission reductions from electric generating
facilities in a cost-effective manner.
SEC. 3. INTEGRATED AIR QUALITY PLANNING FOR THE ELECTRIC GENERATING
SECTOR.
The Clean Air Act (42 U.S.C. 7401 et seq.) is amended by adding at
the end the following:
``TITLE VII--INTEGRATED AIR QUALITY PLANNING FOR THE ELECTRIC
GENERATING SECTOR
``Sec. 701. Definitions.
``Sec. 702. National pollutant tonnage limitations.
``Sec. 703. Nitrogen oxide and mercury allowance trading programs.
``Sec. 704. Carbon dioxide allowance trading program.
``SEC. 701. DEFINITIONS.
``In this title:
``(1) Affected unit.--
``(A) Mercury.--The term `affected unit', with
respect to mercury, means a coal-fired electric
generating facility (including a cogenerating facility)
that--
``(i) has a nameplate capacity greater than
25 megawatts; and
``(ii) generates electricity for sale.
``(B) Nitrogen oxides and carbon dioxide.--The term
`affected unit', with respect to nitrogen oxides and
carbon dioxide, means a fossil fuel-fired electric
generating facility (including a cogenerating facility)
that--
``(i) has a nameplate capacity greater than
25 megawatts; and
``(ii) generates electricity for sale.
``(C) Sulfur dioxide.--The term `affected unit',
with respect to sulfur dioxide, has the meaning given
the term in section 402.
``(2) Carbon dioxide allowance.--The term `carbon dioxide
allowance' means an authorization allocated by the
Administrator under this title to emit 1 ton of carbon dioxide
during or after a specified calendar year.
``(3) Covered unit.--The term `covered unit' means--
``(A) an affected unit;
``(B) a nuclear generating unit with respect to
incremental nuclear generation; and
``(C) a renewable energy unit.
``(4) Greenhouse gas.--The term `greenhouse gas' means--
``(A) carbon dioxide;
``(B) methane;
``(C) nitrous oxide;
``(D) hydrofluorocarbons;
``(E) perfluorocarbons; and
``(F) sulfur hexafluoride.
``(5) Incremental nuclear generation.--The term
`incremental nuclear generation' means the difference between--
``(A) the quantity of electricity generated by a
nuclear generating unit in a calendar year; and
``(B) the quantity of electricity generated by the
nuclear generating unit in calendar year 1990;
as determined by the Administrator and measured in megawatt
hours.
``(6) Mercury allowance.--The term `mercury allowance'
means an authorization allocated by the Administrator under
this title to emit 1 pound of mercury during or after a
specified calendar year.
``(7) New renewable energy unit.--The term `new renewable
energy unit' means a renewable energy unit that has operated
for a period of not more than 3 years.
``(8) New unit.--The term `new unit' means an affected unit
that has operated for not more than 3 years and is not eligible
to receive--
``(A) sulfur dioxide allowances under section
417(b);
``(B) nitrogen oxide allowances or mercury
allowances under section 703(c)(2); or
``(C) carbon dioxide allowances under section
704(c)(2).
``(9) Nitrogen oxide allowance.--The term `nitrogen oxide
allowance' means an authorization allocated by the
Administrator under this title to emit 1 ton of nitrogen oxides
during or after a specified calendar year.
``(10) Nuclear generating unit.--The term `nuclear
generating unit' means an electric generating facility that--
``(A) uses nuclear energy to supply electricity to
the electric power grid; and
``(B) commenced operation in calendar year 1990 or
earlier.
``(11) Renewable energy.--The term `renewable energy' means
electricity generated from--
``(A) wind;
``(B) organic waste (excluding incinerated
municipal solid waste);
``(C) biomass (including anaerobic digestion from
farm systems and landfill gas recovery);
``(D) fuel cells; or
``(E) a hydroelectric, geothermal, solar thermal,
photovoltaic, or other nonfossil fuel, nonnuclear
source.
``(12) Renewable energy unit.--The term `renewable energy
unit' means an electric generating facility that uses
exclusively renewable energy to supply electricity to the
electric power grid.
``(13) Sequestration.--The term `sequestration' means the
action of sequestering carbon by--
``(A) enhancing a natural carbon sink (such as
through afforestation); or
``(B)(i) capturing the carbon dioxide emitted from
a fossil fuel-based energy system; and
``(ii)(I) storing the carbon in a geologic
formation or in a deep area of an ocean; or
``(II) converting the carbon to a benign solid
material through a biological or chemical process.
``(14) Sulfur dioxide allowance.--The term `sulfur dioxide
allowance' has the meaning given the term `allowance' in
section 402.
``SEC. 702. NATIONAL POLLUTANT TONNAGE LIMITATIONS.
``(a) Sulfur Dioxide.--The annual tonnage limitation for emissions
of sulfur dioxide from affected units in the United States shall be
equal to--
``(1) for each of calendar years 2009 through 2012,
4,500,000 tons;
``(2) for each of calendar years 2013 through 2015,
3,500,000 tons; and
``(3) for calendar year 2016 and each calendar year
thereafter, 2,250,000 tons.
``(b) Nitrogen Oxides.--The annual tonnage limitation for emissions
of nitrogen oxides from affected units in the United States shall be
equal to--
``(1) for each of calendar years 2009 through 2012,
1,870,000 tons; and
``(2) for calendar year 2013 and each calendar year
thereafter, 1,700,000 tons.
``(c) Mercury.--
``(1) In general.--The annual tonnage limitation for
emissions of mercury from affected units in the United States
shall be equal to the following:
``(A) For each of calendar years 2009 through 2012,
24 tons.
``(B) For calendar year 2013 and each calendar year
thereafter, 10 tons.
``(2) Maximum emissions of mercury from each affected
unit.--
``(A) Calendar years 2009 through 2012.--For each
of calendar years 2009 through 2012, the emissions of
mercury from each affected unit shall not exceed
either, at the option of the operator of the affected
unit--
``(i) 50 percent of the total quantity of
mercury present in the coal delivered to the
affected unit in the calendar year; or
``(ii) an annual output-based emission rate
for mercury that shall be determined by the
Administrator based on an input-based rate of 4
pounds per trillion British thermal units.
``(B) Calendar year 2013 and thereafter.--For
calendar year 2013 and each calendar year thereafter,
the emissions of mercury from each affected unit shall
not exceed--
``(i) 30 percent of the total quantity of
mercury present in the coal delivered to the
affected unit in the calendar year; or
``(ii) an annual output-based emission rate
for mercury that shall be determined by the
Administrator.
``(d) Carbon Dioxide.--Subject to section 704(d), the annual
tonnage limitation for emissions of carbon dioxide from covered units
in the United States shall be equal to--
``(1) for each of calendar years 2009 through 2012, the
quantity of emissions projected to be emitted from affected
units in calendar year 2005, as determined by the Energy
Information Administration of the Department of Energy based on
the projections of the Administration the publication of which
most closely precedes the date of enactment of this title; and
``(2) for calendar year 2013 and each calendar year
thereafter, the quantity of emissions emitted from affected
units in calendar year 2001, as determined by the Energy
Information Administration of the Department of Energy.
``(e) Review of Annual Tonnage Limitations.--
``(1) Period of effectiveness.--The annual tonnage
limitations established under subsections (a) through (d) shall
remain in effect until the date that is 20 years after the date
of enactment of this title.
``(2) Determination by administrator.--Not later than 15
years after the date of enactment of this title, the
Administrator, after considering impacts on human health, the
environment, the economy, and costs, shall determine whether 1
or more of the annual tonnage limitations should be revised.
``(3) Determination not to revise.--If the Administrator
determines under paragraph (2) that none of the annual tonnage
limitations should be revised, the Administrator shall publish
in the Federal Register a notice of the determination and the
reasons for the determination.
``(4) Determination to revise.--
``(A) In general.--If the Administrator determines
under paragraph (2) that 1 or more of the annual
tonnage limitations should be revised, the
Administrator shall publish in the Federal Register--
``(i) not later than 15 years and 180 days
after the date of enactment of this title,
proposed regulations implementing the
revisions; and
``(ii) not later than 16 years and 180 days
after the date of enactment of this title,
final regulations implementing the revisions.
``(B) Effective date of revisions.--Any revisions
to the annual tonnage limitations under subparagraph
(A) shall take effect on the date that is 20 years
after the date of enactment of this title.
``(f) Reduction of Emissions From Specified Affected Units.--
Subject to the requirements of this Act concerning national ambient air
quality standards established under part A of title I, notwithstanding
the annual tonnage limitations established under this section, the
Federal Government or a State government may require that emissions
from a specified affected unit be reduced to address a local air
quality problem.
``SEC. 703. NITROGEN OXIDE AND MERCURY ALLOWANCE TRADING PROGRAMS.
``(a) Regulations.--
``(1) Promulgation.--
``(A) In general.--Not later than January 1, 2005,
the Administrator shall promulgate regulations to
establish for affected units in the United States--
``(i) a nitrogen oxide allowance trading
program; and
``(ii) a mercury allowance trading program.
``(B) Requirements.--Regulations promulgated under
subparagraph (A) shall establish requirements for the
allowance trading programs under this section,
including requirements concerning--
``(i)(I) the generation, allocation,
issuance, recording, tracking, transfer, and
use of nitrogen oxide allowances and mercury
allowances; and
``(II) the public availability of all
information concerning the activities described
in subclause (I) that is not confidential;
``(ii) compliance with subsection (e)(1);
``(iii) the monitoring and reporting of
emissions under paragraphs (2) and (3) of
subsection (e); and
``(iv) excess emission penalties under
subsection (e)(4).
``(2) Mixed fuel, co-generation facilities and combined
heat and power facilities.--The Administrator shall promulgate
such regulations as are necessary to ensure the equitable
issuance of allowances to--
``(A) facilities that use more than 1 energy source
to produce electricity; and
``(B) facilities that produce electricity in
addition to another service or product.
``(3) Report to congress on use of captured or recovered
mercury.--
``(A) In general.--Not later than 18 months after
the date of enactment of this title, the Administrator
shall submit to Congress a report on the public health
and environmental impacts from mercury that is or may
be--
``(i) captured or recovered by air
pollution control technology; and
``(ii) incorporated into products such as
soil amendments and cement.
``(B) Required elements.--The report shall--
``(i) review--
``(I) technologies, in use as of
the date of the report, for
incorporating mercury into products;
and
``(II) potential technologies that
might further minimize the release of
mercury; and
``(ii)(I) address the adequacy of legal
authorities and regulatory programs in effect
as of the date of the report to protect public
health and the environment from mercury in
products described in subparagraph (A)(ii); and
``(II) to the extent necessary, make
recommendations to improve those authorities
and programs.
``(b) New Unit Reserves.--
``(1) Establishment.--The Administrator shall establish by
regulation a reserve of nitrogen oxide allowances and a reserve
of mercury allowances to be set aside for use by new units.
``(2) Determination of quantity.--The Administrator, in
consultation with the Secretary of Energy, shall determine,
based on projections of electricity output for new units--
``(A) not later than June 30, 2005, the quantity of
nitrogen oxide allowances and mercury allowances
required to be held in reserve for new units for each
of calendar years 2009 through 2013; and
``(B) not later than June 30 of each fifth calendar
year thereafter, the quantity of nitrogen oxide
allowances and mercury allowances required to be held
in reserve for new units for the following 5-calendar
year period.
``(c) Nitrogen Oxide and Mercury Allowance Allocations.--
``(1) Timing of allocations.--The Administrator shall
allocate nitrogen oxide allowances and mercury allowances to
affected units--
``(A) not later than December 31, 2005, for
calendar year 2009; and
``(B) not later than December 31 of calendar year
2006 and each calendar year thereafter, for the fourth
calendar year that begins after that December 31.
``(2) Allocations to affected units that are not new
units.--
``(A) Quantity of nitrogen oxide allowances
allocated.--The Administrator shall allocate to each
affected unit that is not a new unit a quantity of
nitrogen oxide allowances that is equal to the product
obtained by multiplying--
``(i) 1.5 pounds of nitrogen oxides per
megawatt hour; and
``(ii) the quotient obtained by dividing--
``(I) the average annual net
quantity of electricity generated by
the affected unit during the most
recent 3-calendar year period for which
data are available, measured in
megawatt hours; by
``(II) 2,000 pounds of nitrogen
oxides per ton.
``(B) Quantity of mercury allowances allocated.--
The Administrator shall allocate to each affected unit
that is not a new unit a quantity of mercury allowances
that is equal to the product obtained by multiplying--
``(i) 0.0000227 pounds of mercury per
megawatt hour; and
``(ii) the average annual net quantity of
electricity generated by the affected unit
during the most recent 3-calendar year period
for which data are available, measured in
megawatt hours.
``(C) Adjustment of allocations.--
``(i) In general.--If, for any calendar
year, the total quantity of allowances
allocated under subparagraph (A) or (B) is not
equal to the applicable quantity determined
under clause (ii), the Administrator shall
adjust the quantity of allowances allocated to
affected units that are not new units on a pro-
rata basis so that the quantity is equal to the
applicable quantity determined under clause
(ii).
``(ii) Applicable quantity.--The applicable
quantity referred to in clause (i) is the
difference between--
``(I) the applicable annual tonnage
limitation for emissions from affected
units specified in subsection (b) or
(c) of section 702 for the calendar
year; and
``(II) the quantity of nitrogen
oxide allowances or mercury allowances,
respectively, placed in the applicable
new unit reserve established under
subsection (b) for the calendar year.
``(3) Allocation to new units.--
``(A) Methodology.--The Administrator shall
promulgate regulations to establish a methodology for
allocating nitrogen oxide allowances and mercury
allowances to new units.
``(B) Quantity of nitrogen oxide allowances and
mercury allowances allocated.--The Administrator shall
determine the quantity of nitrogen oxide allowances and
mercury allowances to be allocated to each new unit
based on the projected emissions from the new unit.
``(4) Allowance not a property right.--A nitrogen oxide
allowance or mercury allowance--
``(A) is not a property right; and
``(B) may be terminated or limited by the
Administrator.
``(5) No judicial review.--An allocation of nitrogen
allowances or mercury allowances by the Administrator under
this subsection shall not be subject to judicial review.
``(d) Nitrogen Oxide Allowance and Mercury Allowance Transfer
System.--
``(1) Use of allowances.--The regulations promulgated under
subsection (a)(1)(A) shall--
``(A) prohibit the use (but not the transfer in
accordance with paragraph (3)) of any nitrogen oxide
allowance or mercury allowance before the calendar year
for which the allowance is allocated;
``(B) provide that unused nitrogen oxide allowances
and mercury allowances may be carried forward and added
to nitrogen oxide allowances and mercury allowances,
respectively, allocated for subsequent years; and
``(C) provide that unused nitrogen oxide allowances
and mercury allowances may be transferred by--
``(i) the person to which the allowances
are allocated; or
``(ii) any person to which the allowances
are transferred.
``(2) Use by persons to which allowances are transferred.--
Any person to which nitrogen oxide allowances or mercury
allowances are transferred under paragraph (1)(C)--
``(A) may use the nitrogen oxide allowances or
mercury allowances in the calendar year for which the
nitrogen oxide allowances or mercury allowances were
allocated, or in a subsequent calendar year, to
demonstrate compliance with subsection (e)(1); or
``(B) may transfer the nitrogen oxide allowances or
mercury allowances to any other person for the purpose
of demonstration of that compliance.
``(3) Certification of transfer.--A transfer of a nitrogen
oxide allowance or mercury allowance shall not take effect
until a written certification of the transfer, authorized by a
responsible official of the person making the transfer, is
received and recorded by the Administrator.
``(4) Permit requirements.--An allocation or transfer of
nitrogen oxide allowances or mercury allowances to an affected
unit shall, after recording by the Administrator, be considered
to be part of the federally enforceable permit of the affected
unit under this Act, without a requirement for any further
review or revision of the permit.
``(e) Compliance and Enforcement.--
``(1) In general.--For calendar year 2009 and each calendar
year thereafter, the operator of each affected unit shall
surrender to the Administrator--
``(A) a quantity of nitrogen oxide allowances that
is equal to the total tons of nitrogen oxides emitted
by the affected unit during the calendar year; and
``(B) a quantity of mercury allowances that is
equal to the total pounds of mercury emitted by the
affected unit during the calendar year.
``(2) Monitoring system.--The Administrator shall
promulgate regulations requiring the accurate monitoring of the
quantities of nitrogen oxides and mercury that are emitted at
each affected unit.
``(3) Reporting.--
``(A) In general.--Not less often than quarterly,
the owner or operator of an affected unit shall submit
to the Administrator a report on the monitoring of
emissions of nitrogen oxides and mercury carried out by
the owner or operator in accordance with the
regulations promulgated under paragraph (2).
``(B) Authorization.--Each report submitted under
subparagraph (A) shall be authorized by a responsible
official of the affected unit, who shall certify the
accuracy of the report.
``(C) Public reporting.--The Administrator shall
make available to the public, through 1 or more
published reports and 1 or more forms of electronic
media, data concerning the emissions of nitrogen oxides
and mercury from each affected unit.
``(4) Excess emissions.--
``(A) In general.--The owner or operator of an
affected unit that emits nitrogen oxides or mercury in
excess of the nitrogen oxide allowances or mercury
allowances that the owner or operator holds for use for
the affected unit for the calendar year shall--
``(i) pay an excess emissions penalty
determined under subparagraph (B); and
``(ii) offset the excess emissions by an
equal quantity in the following calendar year
or such other period as the Administrator shall
prescribe.
``(B) Determination of excess emissions penalty.--
``(i) Nitrogen oxides.--The excess
emissions penalty for nitrogen oxides shall be
equal to the product obtained by multiplying--
``(I) the number of tons of
nitrogen oxides emitted in excess of
the total quantity of nitrogen oxide
allowances held; and
``(II) $5,000, adjusted (in
accordance with regulations promulgated
by the Administrator) for changes in
the Consumer Price Index for All-Urban
Consumers published by the Department
of Labor.
``(ii) Mercury.--The excess emissions
penalty for mercury shall be equal to the
product obtained by multiplying--
``(I) the number of pounds of
mercury emitted in excess of the total
quantity of mercury allowances held;
and
``(II) $10,000, adjusted (in
accordance with regulations promulgated
by the Administrator) for changes in
the Consumer Price Index for All-Urban
Consumers published by the Department
of Labor.
``SEC. 704. CARBON DIOXIDE ALLOWANCE TRADING PROGRAM.
``(a) Regulations.--
``(1) In general.--Not later than January 1, 2005, the
Administrator shall promulgate regulations to establish a
carbon dioxide allowance trading program for covered units in
the United States.
``(2) Required elements.--Regulations promulgated under
paragraph (1) shall establish requirements for the carbon
dioxide allowance trading program under this section, including
requirements concerning--
``(A)(i) the generation, allocation, issuance,
recording, tracking, transfer, and use of carbon
dioxide allowances; and
``(ii) the public availability of all information
concerning the activities described in clause (i) that
is not confidential;
``(B) compliance with subsection (f)(1);
``(C) the monitoring and reporting of emissions
under paragraphs (2) and (3) of subsection (f);
``(D) excess emission penalties under subsection
(f)(4); and
``(E) standards, guidelines, and procedures
concerning the generation, certification, and use of
additional carbon dioxide allowances made available
under subsection (d).
``(b) New Unit Reserve.--
``(1) Establishment.--The Administrator shall establish by
regulation a reserve of carbon dioxide allowances to be set
aside for use by new units and new renewable energy units.
``(2) Determination of quantity.--The Administrator, in
consultation with the Secretary of Energy, shall determine,
based on projections of electricity output for new units and
new renewable energy units--
``(A) not later than June 30, 2005, the quantity of
carbon dioxide allowances required to be held in
reserve for new units and new renewable energy units
for each of calendar years 2009 through 2013; and
``(B) not later than June 30 of each fifth calendar
year thereafter, the quantity of carbon dioxide
allowances required to be held in reserve for new units
and renewable energy units for the following 5-calendar
year period.
``(c) Carbon Dioxide Allowance Allocation.--
``(1) Timing of allocations.--The Administrator shall
allocate carbon dioxide allowances to covered units--
``(A) not later than December 31, 2005, for
calendar year 2009; and
``(B) not later than December 31 of calendar year
2006 and each calendar year thereafter, for the fourth
calendar year that begins after that December 31.
``(2) Allocations to covered units that are not new
units.--
``(A) In general.--The Administrator shall allocate
to each affected unit that is not a new unit, to each
nuclear generating unit with respect to incremental
nuclear generation, and to each renewable energy unit
that is not a new renewable energy unit, a quantity of
carbon dioxide allowances that is equal to the product
obtained by multiplying--
``(i) the quantity of carbon dioxide
allowances available for allocation under
subparagraph (B); and
``(ii) the quotient obtained by dividing--
``(I) the average net quantity of
electricity generated by the unit in a
calendar year during the most recent 3-
calendar year period for which data are
available, measured in megawatt hours;
and
``(II) the total of the average net
quantities described in subclause (I)
with respect to all such units.
``(B) Quantity to be allocated.--For each calendar
year, the quantity of carbon dioxide allowances
allocated under subparagraph (A) shall be equal to the
difference between--
``(i) the annual tonnage limitation for
emissions of carbon dioxide from affected units
specified in section 702(d) for the calendar
year; and
``(ii) the quantity of carbon dioxide
allowances placed in the new unit reserve
established under subsection (b) for the
calendar year.
``(3) Allocation to new units and new renewable energy
units.--
``(A) Methodology.--The Administrator shall
promulgate regulations to establish a methodology for
allocating carbon dioxide allowances to new units and
new renewable energy units.
``(B) Quantity of carbon dioxide allowances
allocated.--The Administrator shall determine the
quantity of carbon dioxide allowances to be allocated
to each new unit and each new renewable energy unit
based on the unit's projected share of the total
electric power generation attributable to covered
units.
``(d) Issuance and Use of Additional Carbon Dioxide Allowances.--
``(1) In general.--
``(A) Allowances for projects certified by
independent review board.--In addition to carbon
dioxide allowances allocated under subsection (c), the
Administrator shall make carbon dioxide allowances
available to projects that are certified, in accordance
with paragraph (3), by the independent review board
established under paragraph (2) as eligible to receive
the carbon dioxide allowances.
``(B) Allowances obtained under other programs.--
The regulations promulgated under subsection (a)(1)
shall--
``(i) allow covered units to comply with
subsection (f)(1) by purchasing and using
carbon dioxide allowances that are traded under
any other United States or internationally
recognized carbon dioxide reduction program
that is specified under clause (ii);
``(ii) specify, for the purpose of clause
(i), programs that meet the goals of this
section; and
``(iii) apply such conditions to the use of
carbon dioxide allowances traded under programs
specified under clause (ii) as are necessary to
achieve the goals of this section.
``(2) Independent review board.--
``(A) In general.--
``(i) Establishment.--The Administrator
shall establish an independent review board to
assist the Administrator in certifying projects
as eligible for carbon dioxide allowances made
available under paragraph (1)(A).
``(ii) Review and approval.--Each
certification by the independent review board
of a project shall be subject to the review and
approval of the Administrator.
``(iii) Requirements.--Subject to this
subsection, requirements relating to the
creation, composition, duties,
responsibilities, and other aspects of the
independent review board shall be included in
the regulations promulgated by the
Administrator under subsection (a).
``(B) Membership.--The independent review board
shall be composed of 12 members, of whom--
``(i) 10 members shall be appointed by the
Administrator, of whom--
``(I) 1 member shall represent the
Environmental Protection Agency (who
shall serve as chairperson of the
independent review board);
``(II) 3 members shall represent
State governments;
``(III) 3 members shall represent
the electric generating sector; and
``(IV) 3 members shall represent
environmental organizations;
``(ii) 1 member shall be appointed by the
Secretary of Energy to represent the Department
of Energy; and
``(iii) 1 member shall be appointed by the
Secretary of Agriculture to represent the
Department of Agriculture.
``(C) Staff and other resources.--The Administrator
shall provide such staff and other resources to the
independent review board as the Administrator
determines to be necessary.
``(D) Development of guidelines.--
``(i) In general.--The independent review
board shall develop guidelines for certifying
projects in accordance with paragraph (3),
including--
``(I) criteria that address the
validity of claims that projects result
in the generation of carbon dioxide
allowances;
``(II) guidelines for certifying
incremental carbon sequestration in
accordance with clause (ii); and
``(III) guidelines for certifying
geological sequestration of carbon
dioxide in accordance with clause
(iii).
``(ii) Guidelines for certifying
incremental carbon sequestration.--The
guidelines for certifying incremental carbon
sequestration in forests, agricultural soil,
rangeland, or grassland shall include
development, reporting, monitoring, and
verification guidelines, to be used in
quantifying net carbon sequestration from land
use projects, that are based on--
``(I) measurement of increases in
carbon storage in excess of the carbon
storage that would have occurred in the
absence of such a project;
``(II) comprehensive carbon
accounting that--
``(aa) reflects net
increases in carbon reservoirs;
and
``(bb) takes into account
any carbon emissions resulting
from disturbance of carbon
reservoirs in existence as of
the date of commencement of the
project;
``(III) adjustments to account
for--
``(aa) emissions of carbon
that may result at other
locations as a result of the
impact of the project on timber
supplies; or
``(bb) potential
displacement of carbon
emissions to other land owned
by the entity that carries out
the project; and
``(IV) adjustments to reflect the
expected carbon storage over various
time periods, taking into account the
likely duration of the storage of the
carbon stored in a carbon reservoir.
``(iii) Guidelines for certifying
geological sequestration of carbon dioxide.--
The guidelines for certifying geological
sequestration of carbon dioxide produced by a
covered unit shall--
``(I) provide that a project shall
be certified only to the extent that
the geological sequestration of carbon
dioxide produced by a covered unit is
in addition to any carbon dioxide used
by the covered unit in 2009 for
enhanced oil recovery; and
``(II) include requirements for
development, reporting, monitoring, and
verification for quantifying net carbon
sequestration--
``(aa) to ensure the
permanence of the
sequestration; and
``(bb) to ensure that the
sequestration will not cause or
contribute to significant
adverse effects on the
environment.
``(iv) Deadlines for development.--The
guidelines under clause (i) shall be
developed--
``(I) with respect to projects
described in paragraph (3)(A), not
later than January 1, 2005; and
``(II) with respect to projects
described in paragraph (3)(B), not
later than January 1, 2006.
``(v) Updating of guidelines.--The
independent review board shall periodically
update the guidelines as the independent review
board determines to be appropriate.
``(E) Certification of projects.--
``(i) In general.--Subject to clause (ii),
subparagraph (A)(ii), and paragraph (3), the
independent review board shall certify projects
as eligible for additional carbon dioxide
allowances.
``(ii) Limitation.--The independent review
board shall not certify a project under this
subsection if the carbon dioxide emission
reductions achieved by the project will be used
to satisfy any requirement imposed on any
foreign country or any industrial sector to
reduce the quantity of greenhouse gases emitted
by the foreign country or industrial sector.
``(3) Projects eligible for additional carbon dioxide
allowances.--
``(A) Projects carried out in calendar years 1990
through 2008.--
``(i) In general.--The independent review
board may certify as eligible for carbon
dioxide allowances a project that--
``(I) is carried out on or after
January 1, 1990, and before January 1,
2009; and
``(II) consists of--
``(aa) a carbon
sequestration project carried
out in the United States or a
foreign country;
``(bb) a project reported
under section 1605(b) of the
Energy Policy Act of 1992 (42
U.S.C. 13385(b)); or
``(cc) any other project to
reduce emissions of greenhouse
gases that is carried out in
the United States or a foreign
country.
``(ii) Maximum quantity of additional
carbon dioxide allowances.--The Administrator
may make available to projects certified under
clause (i) a quantity of allowances that is not
greater than 10 percent of the tonnage
limitation for calendar year 2009 for emissions
of carbon dioxide from affected units specified
in section 702(d)(1).
``(iii) Use of allowances.--Allowances made
available under clause (ii) may be used to
comply with subsection (f)(1) in calendar year
2009 or any calendar year thereafter.
``(B) Projects carried out in calendar year 2009
and thereafter.--The independent review board may
certify as eligible for carbon dioxide allowances a
project that--
``(i) is carried out on or after January 1,
2009; and
``(ii) consists of--
``(I) a carbon sequestration
project carried out in the United
States or a foreign country; or
``(II) a project to reduce the
greenhouse gas emissions (on a carbon
dioxide equivalency basis determined by
the independent review board) of a
source of greenhouse gases that is not
an affected unit.
``(e) Carbon Dioxide Allowance Transfer System.--
``(1) Use of allowances.--The regulations promulgated under
subsection (a)(1) shall--
``(A) prohibit the use (but not the transfer in
accordance with paragraph (3)) of any carbon dioxide
allowance before the calendar year for which the carbon
dioxide allowance is allocated;
``(B) provide that unused carbon dioxide allowances
may be carried forward and added to carbon dioxide
allowances allocated for subsequent years;
``(C) provide that unused carbon dioxide allowances
may be transferred by--
``(i) the person to which the carbon
dioxide allowances are allocated; or
``(ii) any person to which the carbon
dioxide allowances are transferred; and
``(D) provide that carbon dioxide allowances
allocated and transferred under this section may be
transferred into any other market-based carbon dioxide
emission trading program that is--
``(i) approved by the President; and
``(ii) implemented in accordance with
regulations developed by the Administrator or
the head of any other Federal agency.
``(2) Use by persons to which carbon dioxide allowances are
transferred.--Any person to which carbon dioxide allowances are
transferred under paragraph (1)(C)--
``(A) may use the carbon dioxide allowances in the
calendar year for which the carbon dioxide allowances
were allocated, or in a subsequent calendar year, to
demonstrate compliance with subsection (f)(1); or
``(B) may transfer the carbon dioxide allowances to
any other person for the purpose of demonstration of
that compliance.
``(3) Certification of transfer.--A transfer of a carbon
dioxide allowance shall not take effect until a written
certification of the transfer, authorized by a responsible
official of the person making the transfer, is received and
recorded by the Administrator.
``(4) Permit requirements.--An allocation or transfer of
carbon dioxide allowances to a covered unit, or for a project
carried out on behalf of a covered unit, under subsection (c)
or (d) shall, after recording by the Administrator, be
considered to be part of the federally enforceable permit of
the covered unit under this Act, without a requirement for any
further review or revision of the permit.
``(f) Compliance and Enforcement.--
``(1) In general.--For calendar year 2009 and each calendar
year thereafter--
``(A) the operator of each affected unit and each
renewable energy unit shall surrender to the
Administrator a quantity of carbon dioxide allowances
that is equal to the total tons of carbon dioxide
emitted by the affected unit or renewable energy unit
during the calendar year; and
``(B) the operator of each nuclear generating unit
that has incremental nuclear generation shall surrender
to the Administrator a quantity of carbon dioxide
allowances that is equal to the total tons of carbon
dioxide emitted by the nuclear generating unit during
the calendar year from incremental nuclear generation.
``(2) Monitoring system.--The Administrator shall
promulgate regulations requiring the accurate monitoring of the
quantity of carbon dioxide that is emitted at each covered
unit.
``(3) Reporting.--
``(A) In general.--Not less often than quarterly,
the owner or operator of a covered unit, or a person
that carries out a project certified under subsection
(d) on behalf of a covered unit, shall submit to the
Administrator a report on the monitoring of carbon
dioxide emissions carried out at the covered unit in
accordance with the regulations promulgated under
paragraph (2).
``(B) Authorization.--Each report submitted under
subparagraph (A) shall be authorized by a responsible
official of the covered unit, who shall certify the
accuracy of the report.
``(C) Public reporting.--The Administrator shall
make available to the public, through 1 or more
published reports and 1 or more forms of electronic
media, data concerning the emissions of carbon dioxide
from each covered unit.
``(4) Excess emissions.--
``(A) In general.--The owner or operator of a
covered unit that emits carbon dioxide in excess of the
carbon dioxide allowances that the owner or operator
holds for use for the covered unit for the calendar
year shall--
``(i) pay an excess emissions penalty
determined under subparagraph (B); and
``(ii) offset the excess emissions by an
equal quantity in the following calendar year
or such other period as the Administrator shall
prescribe.
``(B) Determination of excess emissions penalty.--
The excess emissions penalty shall be equal to the
product obtained by multiplying--
``(i) the number of tons of carbon dioxide
emitted in excess of the total quantity of
carbon dioxide allowances held; and
``(ii) $100, adjusted (in accordance with
regulations promulgated by the Administrator)
for changes in the Consumer Price Index for
All-Urban Consumers published by the Department
of Labor.
``(g) Allowance not a Property Right.--A carbon dioxide allowance--
``(1) is not a property right; and
``(2) may be terminated or limited by the Administrator.
``(h) No Judicial Review.--An allocation of carbon dioxide
allowances by the Administrator under subsection (c) or (d) shall not
be subject to judicial review.''.
SEC. 4. NEW SOURCE REVIEW PROGRAM.
Section 165 of the Clean Air Act (42 U.S.C. 7475) is amended by
adding at the end the following:
``(f) Revisions to New Source Review Program.--
``(1) Definitions.--In this subsection:
``(A) Covered unit.--The term `covered unit' has
the meaning given the term in section 701.
``(B) New source review program.--The term `new
source review program' means the program to carry out
section 111 and this part.
``(2) Regulations.--In accordance with this subsection, the
Administrator shall promulgate revisions to the new source
review program.
``(3) Applicability criteria.--Beginning January 1, 2009,
the new source review program shall apply only to--
``(A) construction of a new covered unit, which
shall include the replacement of an existing boiler;
and
``(B) activities that result in any increase in the
maximum hourly rate of emissions from a covered unit of
air pollutants regulated under the new source review
program (measured in pounds per megawatt hour), after
netting among covered units at a source.
``(4) Performance standards.--Beginning in 2020, all
affected units, as that term is defined under section 701 for
nitrogen oxides and carbon dioxide, on which construction
commenced before August 17, 1971, shall meet the following
performance standards:
``(A) 4.5 lbs/MWh for sulfur dioxide; and
``(B) 2.5 lbs/MWh for nitrogen oxides.
``(5) Bi-annual definition of best available control
technology and lowest achievable emission rate.--The
definitions of `best available control technology' under
section 169 and of `lowest achievable emission rate' under
section 171 shall be revised to require the Administrator to
define on a bi-annual basis best available control technology
and lowest achievable emission rate as those terms apply to
covered units.
``(6) Lowest achievable emission rate.--The regulations
shall revise the definition of `lowest achievable emission
rate' under section 171, with respect to technology required to
be installed by the electric generating sector, to allow costs
to be considered in the determination of the lowest achievable
emission rate, so that, beginning January 1, 2009, a covered
unit (as defined in section 701) shall not be required to
install technology required to meet a lowest achievable
emission rate if the cost of the technology exceeds a maximum
amount (in dollars per ton) that is determined by the
Administrator. In no event shall such cost be more than twice
the amount of the applicable cost guideline for best available
control technology.
``(7) Emission offsets.--No source within the electric
generating sector that locates in a non-attainment area after
December 31, 2008, shall be required to obtain offsets for
emissions of air pollutants.
``(8) No effect on other requirements.--Nothing in this
subsection affects the obligation of any State or local
government to comply with the requirements established under
this section concerning--
``(A) national ambient air quality standards;
``(B) maximum allowable air pollutant increases or
maximum allowable air pollutant concentrations; or
``(C) protection of visibility and other air
quality-related values in areas designated as class I
areas under part C of title I. Additionally, States are
required to identify areas with adverse local air
quality impacts and to impose such facility-specific
and other measures as are necessary to remedy such
impacts in light of the national pollutant tonnage
limitations in section 702.''.
SEC. 5. REVISIONS TO SULFUR DIOXIDE ALLOWANCE PROGRAM.
(a) In General.--Title IV of the Clean Air Act (relating to acid
deposition control) (42 U.S.C. 7651 et seq.) is amended by adding at
the end the following:
``SEC. 417. REVISIONS TO SULFUR DIOXIDE ALLOWANCE PROGRAM.
``(a) Definitions.--In this section, the terms `affected unit' and
`new unit' have the meanings given the terms in section 701.
``(b) Regulations.--Not later than January 1, 2004, the
Administrator shall promulgate such revisions to the regulations to
implement this title as the Administrator determines to be necessary to
implement section 702(a).
``(c) New Unit Reserve.--
``(1) Establishment.--Subject to the annual tonnage
limitation for emissions of sulfur dioxide from affected units
specified in section 702(a), the Administrator shall establish
by regulation a reserve of allowances to be set aside for use
by new units.
``(2) Determination of quantity.--The Administrator, in
consultation with the Secretary of Energy, shall determine,
based on projections of electricity output for new units--
``(A) not later than June 30, 2005, the quantity of
allowances required to be held in reserve for new units
for each of calendar years 2009 through 2013; and
``(B) not later than June 30 of each fifth calendar
year thereafter, the quantity of allowances required to
be held in reserve for new units for the following 5-
calendar year period.
``(3) Allocation.--
``(A) Regulations.--The Administrator shall
promulgate regulations to establish a methodology for
allocating allowances to new units.
``(B) No judicial review.--An allocation of
allowances by the Administrator under this subsection
shall not be subject to judicial review.
``(d) Existing Units.--
``(1) Allocation.--
``(A) Regulations.--Subject to the annual tonnage
limitation for emissions of sulfur dioxide from
affected units specified in section 702(a), and subject
to the reserve of allowances for new units under
subsection (c), the Administrator shall promulgate
regulations to govern the allocation of allowances to
affected units that are not new units.
``(B) Required elements.--The regulations shall
provide for--
``(i) the allocation of allowances on a
fair and equitable basis between affected units
that received allowances under section 405 and
affected units that are not new units and that
did not receive allowances under that section,
using for both categories of units the same or
similar allocation methodology as was used
under section 405; and
``(ii) the pro-rata distribution of
allowances to all units described in clause
(i), subject to the annual tonnage limitation
for emissions of sulfur dioxide from affected
units specified in section 702(a).
``(2) Timing of allocations.--The Administrator shall
allocate allowances to affected units--
``(A) not later than December 31, 2005, for
calendar year 2009; and
``(B) not later than December 31 of calendar year
2006 and each calendar year thereafter, for the fourth
calendar year that begins after that December 31.
``(3) No judicial review.--An allocation of allowances by
the Administrator under this subsection shall not be subject to
judicial review.
``(e) Western Regional Air Partnership.--
``(1) Definitions.--In this subsection:
``(A) Covered state.--The term `covered State'
means each of the States of Arizona, California,
Colorado, Idaho, Nevada, New Mexico, Oregon, Utah, and
Wyoming.
``(B) Covered year.--The term `covered year'
means--
``(i)(I)(aa) the third calendar year after
the first calendar year in which the
Administrator determines by regulation that the
total of the annual emissions of sulfur dioxide
from all affected units in the covered States
is projected to exceed 271,000 tons in calendar
year 2018 or any calendar year thereafter; but
``(bb) not earlier than calendar year 2016;
or
``(II) if the Administrator does not make
the determination described in subclause
(I)(aa)--
``(aa) the third calendar year
after the first calendar year with
respect to which the total of the
annual emissions of sulfur dioxide from
all affected units in the covered
States first exceeds 271,000 tons; but
``(bb) not earlier than calendar
year 2021; and
``(ii) each calendar year after the
calendar year determined under clause (i).
``(2) Maximum emissions of sulfur dioxide from each
affected unit.--In each covered year, the emissions of sulfur
dioxide from each affected unit in a covered State shall not
exceed the number of allowances that are allocated under
paragraph (3) and held by the affected unit for the covered
year.
``(3) Allocation of allowances.--
``(A) In general.--Not later than January 1, 2013,
the Administrator shall promulgate regulations to
establish--
``(i) a methodology for allocating
allowances to affected units in covered States
under this subsection; and
``(ii) the timing of the allocations.
``(B) No judicial review.--An allocation of
allowances by the Administrator under this paragraph
shall not be subject to judicial review.''.
(b) Definition of Allowance.--Section 402 of the Clean Air Act
(relating to acid deposition control) (42 U.S.C. 7651a) is amended by
striking paragraph (3) and inserting the following:
``(3) Allowance.--The term `allowance' means an
authorization, allocated by the Administrator to an affected
unit under this title, to emit, during or after a specified
calendar year, a quantity of sulfur dioxide determined by the
Administrator and specified in the regulations promulgated
under section 417(b).''.
(c) Technical Amendments.--
(1) Title IV of the Clean Air Act (relating to noise
pollution) (42 U.S.C. 7641 et seq.)--
(A) is amended by redesignating sections 401
through 403 as sections 801 through 803, respectively;
and
(B) is redesignated as title VIII and moved to
appear at the end of that Act.
(2) The table of contents for title IV of the Clean Air Act
(relating to acid deposition control) (42 U.S.C. prec. 7651) is
amended by adding at the end the following:
``417. Revisions to sulfur dioxide allowance program.''.
SEC. 6. RELATIONSHIP TO OTHER LAW.
(a) Exemption From Hazardous Air Pollutant Requirements Relating to
Mercury.--Section 112 of the Clean Air Act (42 U.S.C. 7412) is
amended--
(1) in subsection (f), by adding at the end the following:
``(7) Mercury emitted from certain affected units.--Not
later than 8 years after the date of enactment of this
paragraph, the Administrator shall carry out the duties of the
Administrator under this subsection with respect to mercury
emitted from affected units (as defined in section 701).''; and
(2) in subsection (n)(1)(A)--
(A) by striking ``(A) The Administrator'' and
inserting the following:
``(A) Study, report, and regulations.--
``(i) Study and report to congress.--The
Administrator'';
(B) by striking ``The Administrator'' in the fourth
sentence and inserting the following:
``(ii) Regulations.--
``(I) In general.--The
Administrator''; and
(C) in clause (ii) (as designated by subparagraph
(B)), by adding at the end the following:
``(II) Exemption for certain
affected units relating to mercury.--An
affected unit (as defined in section
701) that would otherwise be subject to
mercury emission standards under
subclause (I) shall not be subject to
mercury emission standards under
subclause (I) or subsection (c).''.
(b) Temporary Exemption From Visibility Protection Requirements.--
Section 169A(c) of the Clean Air Act (42 U.S.C. 7491(c)) is amended--
(1) in paragraph (3), by striking ``this subsection'' and
inserting ``paragraph (1)''; and
(2) by adding at the end the following:
``(4) Temporary exemption for certain affected units.--An
affected unit (as defined in section 701) shall not be subject
to subsection (b)(2)(A) during the period--
``(A) beginning on the date of enactment of this
paragraph; and
``(B) ending on the date that is 20 years after the
date of enactment of this paragraph.''.
(c) No Effect on Other Federal and State Requirements.--Except as
otherwise specifically provided in this Act, nothing in this Act or an
amendment made by this Act--
(1) affects any permitting, monitoring, or enforcement
obligation of the Administrator of the Environmental Protection
Agency under the Clean Air Act (42 U.S.C. 7401 et seq.) or any
remedy provided under that Act;
(2) affects any requirement applicable to, or liability of,
an electric generating facility under that Act;
(3) requires a change in, affects, or limits any State law
that regulates electric utility rates or charges, including
prudency review under State law; or
(4) precludes a State or political subdivision of a State
from adopting and enforcing any requirement for the control or
abatement of air pollution, except that a State or political
subdivision may not adopt or enforce any emission standard or
limitation that is less stringent than the requirements imposed
under that Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Energy and Commerce.
Referred to the Subcommittee on Energy and Air Quality.
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