[Congressional Record Volume 148, Number 137 (Thursday, October 17, 2002)]
[Senate]
[Pages S10699-S10705]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CARPER (for himself, Mr. Chafee, Mr. Breaux, and Mr. 
        Baucus):
  S. 3135. A bill to amend the Clean Air Act to establish a national 
uniform multiple air pollutant regulatory program for the electric 
generating sector; to the Committee on Environment and Public Works.
  Mr. CARPER. Mr. President, this past June, at an EPW Committee 
markup, I joined the majority of committee members in reporting out 
legislation to reduce harmful emissions from our Nation's power plants. 
At that time, I offered, and then withdrew an alternate, comprehensive, 
4-emission approach. Since then, along with representatives from 
electric generators who would be impacted by such legislation, and some 
leaders in the environmental community, I have worked to strengthen my 
amendment even further. The result is the Clean Air Planning Act. I 
rise today to introduce this bill, and am pleased to be joined by 
Senators Chafee, Beaux, and Baucus.
  The bill takes a market-based approach that would aggressively reduce 
emissions of sulfur dioxide, SO2, nitrogen oxides, 
NOX, carbon dioxide, CO2, and mercury from 
electrical power generators. This approach also would provide planning 
and regulatory certainty to electric generators, who are required to 
achieve these reductions. It is mindful of the fact that coal fuels 
approximately 50 percent of our Nation's electricity and contributes a 
disproportionate share of emissions, and will remain the leading source 
of reliable, affordable electricity for decades to come.
  The public health and environmental impacts of SO2, 
NOX, and mercury have been well documented. While there is 
bipartisan agreement that emissions of these three pollutants from 
power plants need further control, there is some disagreement over how 
much and how fast. The Clean Air Planning Act would establish 
significant caps on total emissions of these pollutants, but the caps 
would be phased in to provide the industry the time needed to meet the 
caps. In addition, the bill includes a flexible trading system to allow 
the caps to be attained most efficiently.
  There is also a growing consensus that greenhouse gases such as 
CO2 emissions from power plants are contributing to climate 
change. The time has come to set up mechanisms that will address these 
emissions without impeding economic growth. The Clean Air Planning Act 
establishes the modest goal of capping CO2 emissions from 
electrical generators at 2001 levels by 2012. Generators can meet that 
goal with a flexible system that allows both trading between 
generators.
  The bill also includes flexible options to reduce the costs of 
controlling carbon dioxide emissions through international projects and 
through forest and agricultural projects that can sequester carbon from 
the atmosphere while also providing additional environmental benefits. 
Part of the task ahead is to get better analysis that helps determine 
the right parameters for these flexibility provisions, so that the bill 
provides a smooth least-cost transition for the industry yet also 
delivers a meaningful incentive for improved efficiency and reduced 
emissions from power plants.
  In the context of comprehensive legislation that will achieve 
significant reductions in emissions from power plants, some existing 
regulatory requirements should be updated. This bill carefully updates 
some New Source Review requirements to eliminate redundancy while 
retaining strict environmental protections.
  I have heard from several experts in recent weeks who have studied 
provisions of this bill as it was being developed, and I plan to engage 
them in further discussions in the weeks and months ahead. I appreciate 
their willingness to help keep this important topic moving forward. 
This is a complex issue, one that should be of great importance to 
electric generators, environmental leaders, State and local regulators, 
and to each of us here in the Senate. There are numerous complicated 
issues in this legislation such as the proper extent of crediting off 
system carbon reductions, equitable allocation of allowances, 
appropriate regulatory streamlining, and prevention of local impacts, 
and we invite assistance from all who want to help us address these 
issues.
  Today, America's power plants will emit over 6 million tons of 
harmful emissions. They will also power the world's most productive 
economy. Reducing emissions while retaining affordable electricity is 
the goal of the Clean Air Planning Act, and I urge my colleagues to 
join me in this effort. I look forward to developing consensus within 
the Senate next year and passing strong, comprehensive legislation.
  Thank you, Mr. President. I ask unanimous consent that the text of 
this bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 3135

       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 2002''.
       (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.

[[Page S10700]]

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 2008 through 2011, 
     4,500,000 tons;
       ``(2) for each of calendar years 2012 through 2014, 
     3,500,000 tons; and
       ``(3) for calendar year 2015 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 2008 through 2011, 
     1,870,000 tons; and
       ``(2) for calendar year 2012 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--
       ``(A) for each of calendar years 2008 through 2011, 24 
     tons; and
       ``(B) for calendar year 2012 and each calendar year 
     thereafter, a percentage determined under paragraph (2) of 
     the total quantity of mercury present in delivered coal in 
     calendar year 1999 (as determined by the Administrator).
       ``(2) Determination of percentage.--The percentage referred 
     to in paragraph (1)(B) shall be--
       ``(A) not less than 7 nor more than 21 percent; and
       ``(B) determined by the Administrator not later than 
     January 1, 2004, based on the best scientific data available 
     concerning--
       ``(i) the reduction in emissions of mercury necessary to 
     protect public health and the environment; and
       ``(ii) the cost and performance of mercury control 
     technology.
       ``(3) Maximum emissions of mercury from each affected 
     unit.--
       ``(A) Calendar years 2008 through 2011.--For each of 
     calendar years 2008 through 2011, 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

[[Page S10701]]

       ``(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 2012 and thereafter.--For calendar year 
     2012 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 2008 through 2011, 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 2012 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, 2004, 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, 2004, the quantity of 
     nitrogen oxide allowances and mercury allowances required to 
     be held in reserve for new units for each of calendar years 
     2008 through 2012; 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, 2004, for calendar year 
     2008; and
       ``(B) not later than December 31 of calendar year 2005 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.

[[Page S10702]]

       ``(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 2008 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, 2004, 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, 2004, 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 2008 through 2012; 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, 2004, for calendar year 
     2008; and
       ``(B) not later than December 31 of calendar year 2005 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

[[Page S10703]]

     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 2008 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, 2004; and
       ``(II) with respect to projects described in paragraph 
     (3)(B), not later than January 1, 2005.

       ``(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 
     2007.--
       ``(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, 2008; 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 2008 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 2008 or any calendar year thereafter.
       ``(B) Projects carried out in calendar year 2008 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, 2008; 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 2008 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

[[Page S10704]]

       ``(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.--The regulations shall revise 
     the applicability criteria under the new source review 
     program for covered units so that, beginning January 1, 2008, 
     a physical change or a change in the method of operation at a 
     covered unit shall be subject to the regulations under the 
     new source review program and subject to approval by the 
     Administrator only if--
       ``(A)(i) the change involves the replacement of 1 or more 
     components of the covered unit; and
       ``(ii) the amount of the fixed capital costs of the 
     replacement exceeds 50 percent of the amount of the fixed 
     capital costs of construction of a comparable new covered 
     unit; or
       ``(B) the change results in any increase in the rate of 
     emissions from the covered unit of air pollutants regulated 
     under the new source review program (measured in pounds per 
     megawatt hour).
       ``(4) 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, 2008, 
     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--
       ``(A) is determined by the Administrator; but
       ``(B) does not exceed twice the amount of the cost 
     guideline for best available control technology established 
     under subsection (a)(4).
       ``(5) Emission offsets.--A new source within the electric 
     generating sector that locates in a nonattainment area after 
     December 31, 2007, shall not be required to obtain offsets 
     for emissions of air pollutants.
       ``(6) 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.''.

     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, 2004, the quantity of 
     allowances required to be held in reserve for new units for 
     each of calendar years 2008 through 2012; 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, 2004, for calendar year 
     2008; and
       ``(B) not later than December 31 of calendar year 2005 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).

[[Page S10705]]

       ``(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:

``Sec. 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.
  Mr. CHAFEE. Mr. President, I am pleased to join with Senator Carper 
today to introduce the Clean Air Planning Act of 2002. Congress needs 
to advance four pollutant legislation that offers the best chance for 
broad bipartisan support, and I believe this bill meets that test. The 
testimony received through hearings in the Environment and Public Works 
Committee over the past several years has clearly outlined the need for 
controlling the major emissions from power plants, sulfur dioxide, 
nitrogen oxide, mercury and carbon dioxide, while at the same time 
recognizing the added costs of these new controls. We know through 
experience that we will only be successful at passing legislation if we 
find middle ground.
  The relationship of fossil fuels to global warming is clear and 
scientifically validated. The release of the ``U.S. Climate Action 
Report 2002'' by the Administration in May tells us we need to take 
real actions toward solving the problem. The longer we wait, the harder 
this problem will be to solve. The Rio Convention is a perfect example 
of why waiting is not reasonable. In 1992, we agreed to voluntarily 
reduce harmful emissions to 1990 levels. It didn't happen. Now, in 2002 
we are told that reductions to 1990 levels will stall the economy. If 
we wait much longer before taking any action, imagine how much harder 
it will be to achieve real reductions without harming the economy.
  I am a co-sponsor of Senator Jeffords' bill, S. 556, and I voted for 
it in the Environment and Public Works Committee. However, I believe 
that Carper-Chafee will ultimately enjoy broader support. Our bill 
would achieve significant reductions in a more cost effective way than 
other proposals. For sulfur dioxide, nitrogen oxide, and mercury, we 
will establish emission caps that are superior to reductions that can 
be achieved under the existing Clean Air Act. In addition, for the 
first time, we will ensure that we achieve real reductions of carbon 
dioxide emissions.
  Many predicted that the passage of S. 556 from the Committee would 
create a stalemate on this important issue. I believe that the Carper-
Chafee bill offers a real opportunity to break the stalemate and begin 
an honest debate that will eventually lead to enactment of strong 
legislation. I look forward to working with all of my colleagues as we 
move forward to pass a bill that enjoys the broadest support and 
adequately addresses the serious health, environmental, and economic 
issues facing the nation.
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