42 U.S.C. § 7651c. Phase I sulfur dioxide requirements

  1. (a)
    (a)

    Emission limitations

    1. (1)
      (a)(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 subsection (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annual emissions, except that, after January 1, 2000, the emissions limitations established in this section shall be superseded by those established in section 7651d of this title. The owner or operator of any unit in violation of this section shall be fully liable for such violation including, but not limited to, liability for fulfilling the obligations specified in section 7651j of this title.
    2. (2)
      (a)(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:

      1. (A)
        (a)(2)(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
      2. (B)
        (a)(2)(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 subchapter 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 hereinunder until the earlier of such time as all such allowances in the reserve are allocated or December 31, 1999.
    3. (3)
      (a)(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).
  2. (b)
    (b)

    Substitutions

    The owner or operator of an affected unit under subsection (a) may include in its section 7651g of this title 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. (1)
      (b)(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. (2)
      (b)(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. (3)
      (b)(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 7651a(d) 1 of this title, multiplied by the lesser of the unit’s actual or allowable 1985 emissions rate;
    4. (4)
      (b)(4)the emissions rates and tonnage limitations that would be applicable to the original and substitute affected units under the substitution proposal;
    5. (5)
      (b)(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. (6)
      (b)(6)such other information as the Administrator may require.
  3. (c)
    (c)

    Administrator’s action on substitution proposals

    1. (1)
      (c)(1)The Administrator shall take final action on such substitution proposal in accordance with section 7651g(c) of this title 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 subchapter. 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. (2)
      (c)(2)Upon approval of a substitution proposal, each substitute unit, and each source with such unit, shall be deemed affected under this subchapter, 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 7651g of this title. The Administrator shall allocate allowances for the original and substitute affected units in accordance with the approved substitution proposal pursuant to section 7651b of this title. 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 units 2 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 7651j of this title. If a substitution proposal is disapproved, the Administrator shall allocate allowances to the original affected unit or units in accordance with subsection (a).
  4. (d)
    (d)

    Eligible phase I extension units

    1. (1)
      (d)(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 7651g of this title 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 7651g of this title, that shall govern operations at all units included in the transfer, and that specifies the emissions reduction requirements imposed pursuant to this subchapter.
    2. (2)
      (d)(2)

      Such extension proposal shall—

      1. (A)
        (d)(2)(A)specify the unit or units proposed for designation as an eligible phase I extension unit;
      2. (B)
        (d)(2)(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;
      3. (C)
        (d)(2)(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;
      4. (D)
        (d)(2)(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
      5. (E)
        (d)(2)(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. (3)
      (d)(3)The Administrator shall review and take final action on each extension proposal in order of receipt, consistent with section 7651g of this title, 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 3 subchapter.
    4. (4)
      (d)(4)

      In order to determine the number of proposals eligible for allocations from the reserve under subsection (a)(2) and the number of 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 subparagraphs (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—

      1. (A)
        (d)(4)(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;
      2. (B)
        (d)(4)(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
      3. (C)
        (d)(4)(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. (5)
      (d)(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 emissions 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) of this section, 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. (6)
      (d)(6)In addition to allowances specified in paragraph (5), 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. (7)
      (d)(7)After January 1, 1997, in addition to any liability under this chapter, including under section 7651j of this title, 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 (3) 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.
  5. (e)
    (e)

    Allocation of allowances

    1. (1)
      (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 7651d of this title (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 7651d of this title 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. (2)
      (e)(2)In the case of an affected unit under this section described in subparagraph (A),4 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 7651d of this title 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 quantity 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. (3)
      (e)(3)In no event shall the provisions of this paragraph 5 be interpreted as an event of force majeur 6 or a commercial impractibility 7 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)
      State
      Plant Name
      Generator
      Phase I Allowances
      Alabama
      Colbert
      1
      2
      3
      4
      5
      13,570
      15,310
      15,400
      15,410
      37,180
      E.C. Gaston
      1
      2
      3
      4
      5
      18,100
      18,540
      18,310
      19,280
      59,840
      Florida
      Big Bend
      1
      2
      3
      28,410
      27,100
      26,740
      Crist
      6
      7
      19,200
      31,680
      Georgia
      Bowen
      1
      2
      3
      4
      56,320
      54,770
      71,750
      71,740
      Hammond
      1
      2
      3
      4
      8,780
      9,220
      8,910
      37,640
      J. McDonough
      1
      2
      19,910
      20,600
      Wansley
      1
      2
      70,770
      65,430
      Yates
      1
      2
      3
      4
      5
      6
      7
      7,210
      7,040
      6,950
      8,910
      9,410
      24,760
      21,480
      Illinois
      Baldwin
      1
      2
      3
      42,010
      44,420
      42,550
      Coffeen
      1
      2
      11,790
      35,670
      Grand Tower
      4
      5,910
      Hennepin
      2
      18,410
      Joppa Steam
      1
      2
      3
      4
      5
      6
      12,590
      10,770
      12,270
      11,360
      11,420
      10,620
      Kincaid
      1
      2
      31,530
      33,810
      Meredosia
      3
      13,890
      Vermilion
      2
      8,880
      Indiana
      Bailly
      7
      8
      11,180
      15,630
      Breed
      1
      18,500
      Cayuga
      1
      2
      33,370
      34,130
      Clifty Creek
      1
      2
      3
      4
      5
      6
      20,150
      19,810
      20,410
      20,080
      19,360
      20,380
      E. W. Stout
      5
      6
      7
      3,880
      4,770
      23,610
      F. B. Culley
      2
      3
      4,290
      16,970
      F. E. Ratts
      1
      2
      8,330
      8,480
      Gibson
      1
      2
      3
      4
      40,400
      41,010
      41,080
      40,320
      H. T. Pritchard
      6
      5,770
      Michigan City
      12
      23,310
      Petersburg
      1
      2
      16,430
      32,380
      R. Gallagher
      1
      2
      3
      4
      6,490
      7,280
      6,530
      7,650
      Tanners Creek
      4
      24,820
      Wabash River
      1
      2
      3
      5
      6
      4,000
      2,860
      3,750
      3,670
      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
      2
      3
      11,250
      12,840
      12,340
      Cooper
      1
      2
      7,450
      15,320
      E.W. Brown
      1
      2
      3
      7,110
      10,910
      26,100
      Elmer Smith
      1
      2
      6,520
      14,410
      Ghent
      1
      28,410
      Green River
      4
      7,820
      H.L. Spurlock
      1
      22,780
      Henderson II
      1
      2
      13,340
      12,310
      Paradise
      3
      59,170
      Shawnee
      10
      10,170
      Maryland
      Chalk Point
      1
      2
      21,910
      24,330
      C. P. Crane
      1
      2
      10,330
      9,230
      Morgantown
      1
      2
      35,260
      38,480
      Michigan
      J. H. Campbell
      1
      2
      19,280
      23,060
      Minnesota
      High Bridge
      6
      4,270
      Mississippi
      Jack Watson
      4
      5
      17,910
      36,700
      Missouri
      Asbury
      1
      16,190
      James River
      5
      4,850
      Labadie
      1
      2
      3
      4
      40,110
      37,710
      40,310
      35,940
      Montrose
      1
      2
      3
      7,390
      8,200
      10,090
      New Madrid
      1
      2
      28,240
      32,480
      Sibley
      3
      15,580
      Sioux
      1
      2
      22,570
      23,690
      Thomas Hill
      1
      2
      10,250
      19,390
      New Hampshire
      Merrimack
      1
      2
      10,190
      22,000
      New Jersey
      B.L. England
      1
      2
      9,060
      11,720
      New York
      Dunkirk
      3
      4
      12,600
      14,060
      Greenidge
      4
      7,540
      Milliken
      1
      2
      11,170
      12,410
      Northport
      1
      2
      3
      19,810
      24,110
      26,480
      Port Jefferson
      3
      4
      10,470
      12,330
      Ohio
      Ashtabula
      5
      16,740
      Avon Lake
      8
      9
      11,650
      30,480
      Cardinal
      1
      2
      34,270
      38,320
      Conesville
      1
      2
      3
      4
      4,210
      4,890
      5,500
      48,770
      Eastlake
      1
      2
      3
      4
      5
      7,800
      8,640
      10,020
      14,510
      34,070
      Edgewater
      4
      5,050
      Gen. J.M. Gavin
      1
      2
      79,080
      80,560
      Kyger Creek
      1
      2
      3
      4
      5
      19,280
      18,560
      17,910
      18,710
      18,740
      Miami Fort
      5
      6
      7
      760
      11,380
      38,510
      Muskingum River
      1
      2
      3
      4
      5
      14,880
      14,170
      13,950
      11,780
      40,470
      Niles
      1
      2
      6,940
      9,100
      Picway
      5
      4,930
      R.E. Burger
      3
      4
      5
      6,150
      10,780
      12,430
      W.H. Sammis
      5
      6
      7
      24,170
      39,930
      43,220
      W.C. Beckjord
      5
      6
      8,950
      23,020
      Pennsylvania
      Armstrong
      1
      2
      14,410
      15,430
      Brunner Island
      1
      2
      3
      27,760
      31,100
      53,820
      Cheswick
      1
      39,170
      Conemaugh
      1
      2
      59,790
      66,450
      Hatfield’s Ferry
      1
      2
      3
      37,830
      37,320
      40,270
      Martins Creek
      1
      2
      12,660
      12,820
      Portland
      1
      2
      5,940
      10,230
      Shawville
      1
      2
      3
      4
      10,320
      10,320
      14,220
      14,070
      Sunbury
      3
      4
      8,760
      11,450
      Tennessee
      Allen
      1
      2
      3
      15,320
      16,770
      15,670
      Cumberland
      1
      2
      86,700
      94,840
      Gallatin
      1
      2
      3
      4
      17,870
      17,310
      20,020
      21,260
      Johnsonville
      1
      2
      3
      4
      5
      6
      7
      8
      9
      10
      7,790
      8,040
      8,410
      7,990
      8,240
      7,890
      8,980
      8,700
      7,080
      7,550
      West Virginia
      Albright
      3
      12,000
      Fort Martin
      1
      2
      41,590
      41,200
      Harrison
      1
      2
      3
      48,620
      46,150
      41,500
      Kammer
      1
      2
      3
      18,740
      19,460
      17,390
      Mitchell
      1
      2
      43,980
      45,510
      Mount Storm
      1
      2
      3
      43,720
      35,580
      42,430
      Wisconsin
      Edgewater
      4
      24,750
      La Crosse/Genoa
      3
      22,700
      Nelson Dewey
      1
      2
      6,010
      6,680
      N. Oak Creek
      1
      2
      3
      4
      5,220
      5,140
      5,370
      6,320
      Pulliam
      8
      7,510
      S. Oak Creek
      5
      6
      7
      8
      9,670
      12,040
      16,180
      15,790
  6. (f)
    (f)

    Energy conservation and renewable energy

    1. (1)
      (f)(1)

      Definitions

      As used in this subsection:

      1. (A)
        (f)(1)(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.
      2. (B)
        (f)(1)(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.
      3. (C)
        (f)(1)(C)

        Electric utility

        The term “electric utility” means any person, State agency, or Federal agency, which sells electric energy.
    2. (2)
      (f)(2)

      Allowances for emissions avoided through energy conservation and renewable energy

      1. (A)
        (f)(2)(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.
      2. (B)
        (f)(2)(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:

        1. (i)
          (f)(2)(B)(i)Such electric utility is paying for the qualified energy conservation measures or qualified renewable energy directly or through purchase from another person.
        2. (ii)
          (f)(2)(B)(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.
        3. (iii)
          (f)(2)(B)(iii)
          1. (I)
            (f)(2)(B)(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.
          2. (II)
            (f)(2)(B)(iii)(II)The qualified energy conservation measures or qualified renewable energy, or both, are consistent with that plan.
          3. (III)
            (f)(2)(B)(iii)(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.
        4. (iv)
          (f)(2)(B)(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 (A) before such date, shall be allocated to the electric utility. This clause is not a requirement for qualified renewable energy.
        5. (v)
          (f)(2)(B)(v)Such utility or any subsidiary of the utility’s holding company owns or operates at least one affected unit.
      3. (C)
        (f)(2)(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 subchapter (including those sources that elect to become affected by this subchapter, pursuant to section 7651i of this title).
      4. (D)
        (f)(2)(D)

        Determination of avoided emissions

        1. (i)
          (f)(2)(D)(i)

          8 Application

          In order to receive allowances under this subsection, an electric utility shall make an application which—

          1. (I)
            (f)(2)(D)(i)(I)designates the qualified energy conservation measures implemented and the qualified renewable energy sources used for purposes of avoiding emissions,9
          2. (II)
            (f)(2)(D)(i)(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
          3. (III)
            (f)(2)(D)(i)(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.
      5. (E)
        (f)(2)(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—

        1. (i)
          (f)(2)(E)(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
        2. (ii)
          (f)(2)(E)(ii)0.004,
        and dividing by 2,000.
      6. (F)
        (f)(2)(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—

        1. (i)
          (f)(2)(F)(i)the actual kilowatt hours generated by, or purchased from, qualified renewable energy, by
        2. (ii)
          (f)(2)(F)(ii)0.004,
        and dividing by 2,000.
      7. (G)
        (f)(2)(G)

        Prohibitions

        1. (i)
          (f)(2)(G)(i)No allowances shall be allocated under this subsection for the implementation of programs that are exclusively informational or educational in nature.
        2. (ii)
          (f)(2)(G)(ii)No allowances shall be allocated for energy conservation measures or renewable energy that were operational before January 1, 1992.
    3. (3)
      (f)(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. (4)
      (f)(4)

      Regulations

      Not later than 18 months after November 15, 1990, and in conjunction with the regulations required to be promulgated under subsections (b) and (c), the Administrator shall, in consultation with the Secretary of Energy, promulgate regulations under this subsection. 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 to 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.
  7. (g)
    (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 7651b of this title. 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. If allowances remain in the reserve after January 2, 2010, the Administrator shall allocate such allowances for affected units under section 7651d of this title on a pro rata basis. For purposes of this subsection, for any unit subject to the emissions limitation requirements of section 7651d of this title, 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.
  8. (h)
    (h)

    Alternative allowance allocation for units in certain utility systems with optional baseline

    1. (1)
      (h)(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)—

      1. (A)
        (h)(1)(A)has an emission rate below 1.0 lbs/mmBtu,
      2. (B)
        (h)(1)(B)has decreased its sulfur dioxide emissions rate by 60 percent or greater since 1980, and
      3. (C)
        (h)(1)(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 of the owner or operator of such unit, the unit’s baseline may be calculated (i) as provided under section 7651a(d) 10 of this title, 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. (2)
      (h)(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 7651b(a)(1) of this title, this section, and section 7651d of this title (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 7651d of this title.
(July 14, 1955, ch. 360, title IV, § 404, as added Pub. L. 101–549, title IV, § 401, Nov. 15, 1990, 104 Stat. 2592.)