Congressional Record, Volume 149 Issue 32 (Thursday, February 27, 2003)

[Congressional Record Volume 149, Number 32 (Thursday, February 27, 2003)]
[Senate]
[Pages S2922-S2975]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. NICKLES (for himself and Mr. Miller) (by request):
S. 2. A bill to amend the Internal Revenue Code of 1986 to provide
additional tax incentives to encourage economic growth; to the
Committee on Finance.
Mr. NICKLES. Mr. President, today I am sending to the desk a bill by
myself and Senator Miller to amend the IRS Code. It is a bill to
provide jobs and economic growth for our country.
The PRESIDING OFFICER. The bill will be received and appropriately
referred.
Mr. NICKLES. Mr. President, this bill Senator Miller and I are
introducing is the President's economic and growth package. This is a
package the President has put together that would help American
families. This is a package that is profamilial and progrowth. It is a
bill that will create jobs. It is a bill that will create an incentive
to invest. It is a bill to eliminate unfair punitive taxes on corporate
earnings that are distributed to the owners of the corporation. It is a
bill that will help stimulate and grow our economy.
I compliment the President for his work in proposing this. I am happy
to introduce it. Let me talk about a couple of the provisions of the
bill.
This bill will expand the 10-percent bracket. This is to help people
of all incomes. But the lowest income people will be the true
beneficiaries of this package. It will accelerate reductions in the
individual income tax rates that were passed in 2001. You might
remember the 2001 tax bill that we passed which had individual rate
reductions phased in over the years. There was a 1 percent reduction in
most of the rates in 2004, and another percent reduction in 2006. These
are accelerated to 2003.
It means that the maximum personal income tax bracket would be 35
percent instead of the present 38.6 percent. It means that individuals
would not have to pay taxes at rates greater than corporations. The
bulk of the benefit of this will come to individuals who are self-
employed, individuals who are sole proprietors, and individuals who own
or operate their own business. They will receive the bulk of the
benefit of this rate reduction. Some people may want to demagog some of
the estimates that benefit primarily the wealthy. I disagree.
We also might keep in perspective that when President Clinton was
elected, the maximum rate was 31 percent. He increased it to 39.4
percent. When we totally implement President Bush's tax reduction, the
maximum rate will be 35 percent, which is still significantly higher
than the 31 percent just 10 years ago.
The President's proposal that we are introducing today would also
accelerate the reduction in the marriage penalty. This is a very big
item to help married couples reduce their taxes. The net impact of this
is it would double the 15-percent bracket that individuals have for
couples.
To give you an example, individuals presently pay 15 percent, I
believe, on income up to about $28,000. But couples have to start
paying a 28-percent or 27-percent bracket when they have income above
$47,000. We say that instead of paying 27 percent for taxable income
above $47,000, no, that should be double the individual amount. So
couples don't have to pay above the 15-percent bracket unless their
income exceeds $56,000.
It is not very complicated. Couples should have for the 15-percent
bracket twice what individuals have. Individuals pay 15 percent up to
$28,000. So we doubled that amount for couples. The net impact of that
is you pay 15 percent instead of 27 percent for a total of about
$9,000. It saves couples a total of $1,022. If the couples have two
children, they would get additional child credit. We increase the child
credit, which is presently $600, to $1,000. That is an increase of $400
per child. If you have two children, that is $800 of tax credit--not
deductions, tax credit. It reduces your tax bill by $800.
If you have a taxable income of $56,000, you also get the $1,122 of
marriage penalty relief. You get $100 savings from the 10-percent
bracket expansion. Total tax relief for a family that has taxable
income of $56,800 totals over $2,000. Actually, it is $2,022. That is
about a 22-percent tax cut for middle-income families. That will help
thousands--millions--of families all across the country.

Also, this bill would eliminate the double taxation on corporate
earnings. Presently, in the United States, unfortunately, unbelievably,
we tax corporate earnings that are distributed to the owners more than
almost any other country in the world. Only one country, Japan, taxes
corporate earnings distributed to the owners higher than the United
States.
Our combined tax rate of 35 percent corporate and the individual tax
percentage, depending on the individual's income tax bracket--it could
be 15 percent, it could be 30 percent, it could be 38.6 percent--if you
add the 38.6 percent plus the 35 percent, it is over 70 percent. If it
is 30 percent for the individual rate, and the corporation rate is 35,
it is 65 percent. So for a corporation that makes $1,000 and wants to
distribute that to the owners, the Federal Government gets 65 percent;
and the beneficiary, the owner of the company, gets 35 percent. That is
absurd. That is embarrassing. That is indefensible. And countless
people--economists, the President, candidates and others--said we
should eliminate this unfair double taxation of dividends.
The President has come up with a proposal to do that. I am happy to
introduce it for him. I urge my colleagues--before they demagog it,
before they castigate it--to look at the facts.
Does it really make sense for us to be taxing corporate distributions
to all owners--incidently, the majority of owners are senior citizens--
does it really make sense for us to be taxing these proceeds higher
than any other country in the world but one? It makes no sense.
Does it really make sense to have the Tax Code skewed to where it
really is beneficial to go into debt because you can expense your
interest expense? But, oh, yes, if you go the equity route, you have to
pay taxes on anything that is generated in the company. And the
individual who receives the benefits pays taxes, so the Government gets
two-thirds of the money, two-thirds of the distribution. That does not
make sense. It discourages investment. It encourages debt. Not a good
corporate policy.
Present law encourages a lot of corporate shenanigans and corporate
games trying to get around taxes when they realize that such a great
percentage of the distribution to owners is going to be paid in taxes--
``Let's figure out other ways.'' Maybe they do it through bonuses, but
they might do it through all kinds of schemes. And we have seen some of
those.
This would be great corporate reform, very positive, well-needed
reform, and long overdue--long overdue.
In this package that the President has proposed, it also has
something I am very much in favor of: expensing for small business. I
used to have a small business. But it triples the amount a small
businessperson can expense from $25,000 to $75,000. In other words, if
they write a check for that amount, they can expense it in the year
that the check is written. That

[[Page S2923]]

will greatly encourage investment because they get to recoup the
investment that is made in the same year the check is written--a very
positive, progrowth proposal. Most jobs are created in small
businesses, and this is a good, positive small business provision that
will create jobs.
So we reduce taxes on business owners, sole proprietors. They would
not have to pay taxes more than corporations. We would reduce taxes on
married couples. We would discontinue the present policy of penalizing
them for being married and filing joint returns. We would allow them to
keep more of their own money. We would allow them to keep more of their
own money if they have kids.

Certainly, if you have kids, it costs a lot of money to raise them.
We say you should have a $1,000 tax credit per child. So for every
child you have, you get to save $1,000 in taxes. I have four kids, so
that is $4,000 per year. A couple with four kids would get to save
$4,000 per year. That is significant. That is profamily. That is
positive. That allows people who really need the money raising families
to keep it.
One, we eliminate the marriage penalty, and, two, we allow them to
keep more for their own kids. Very significant benefits. When you add
all the benefits together, it really makes the income tax even more
progressive.
The upper income groups would still pay a greater percentage of
income tax, even after we pass this proposal. I can just envision
people saying: Well, this is class warfare. I hope they do not play
those arguments because this is very family friendly and also
investment friendly and will create jobs.
We need to do some things. Revenues have been declining for the last
2 years. We need to figure out ways to get revenues to grow. That means
a growing economy. It means the stock market needs to move up instead
of down.
This proposal will do that. This proposal is investment friendly. And
the main beneficiaries will not be just the owners, it will be the
people who get a job because the investment was not going to be made
without it.
So let's do some things that will create an incentive for investment,
for expensing, for people to go to work, and for people who are working
to be able to keep more of their own money so they can take care of
their families.
That is what the President's proposal is all about. So I am delighted
to introduce this today with my colleague and friend, Senator Zell
Miller of Georgia.
I ask unanimous consent to have printed in the Record two charts to
further explain the breakout of this proposal.
There being no objection, the material was ordered to be printed in
the Record, as follows:

PRESIDENT BUSH'S 2004 BUDGET TAX PROPOSALS
(Dollars in billions)
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal years
------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2004-2008 2004-2013
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Growth Package--Revenue Impact:
Accelerate 10% bracket expansion............................. -0.978 -7.782 -6.112 -6.117 -6.495 -4.275 -3.227 -3.283 -3.326 -3.294 -3.283 -30.781 -47.194
Accelerate reduction in marginal rates....................... -5.808 -35.693 -17.470 -4.939 -- -- -- -- -- -- -- -58.102 -58.102
Accelerate marriage penalty relief........................... -2.776 -27.134 -14.680 -7.642 -3.595 -1.735 -0.424 0.000 0.000 0.000 0.000 -54,786 -55,210
Accelerate increase in child credit.......................... -13.527 -5.060 -10.735 -8.534 -8.532 -8.502 -7.746 -4.197 0.000 0.000 0.000 -41.363 -53.306
Eliminate double taxation of dividends....................... -3.801 -24.874 -22.062 -28.218 -31.126 -33.952 -37.378 -40.842 -44.010 -47.246 -50.616 -140.232 -360.324
Increase the small business expensing limit.................. -1.023 -1.652 -1.776 -1.912 -1.601 -1.431 -1.256 -1.170 -1.235 -1.259 -1.291 -8.372 -14.583
AMT hold-harmless............................................ -3.141 -8.534 -10.353 -6.931 -- -- -- -- -- -- -- -25.818 -25.818
------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Growth Package Revenue Impact.............................. -31.054 -110.729 -83.188 -64.293 -51.349 -49.895 -50.031 -49.492 -48.571 -51.799 -55.190 -359.454 -614.537
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Jobs and Growth Tax Act of 2003--Tax Relief for Working Families

Example: Married couple with two children.
Taxable Income................................................$56,800
Total Tax Liability Under Current Law...........................9,042
With Enactment of The Jobs and Growth Tax Act of 2003:
Marriage Penalty Relief.........................................1,122
Relief from 10% Bracket Expansion.................................100
Relief From Child Credit Increase.................................800
__________

Total Tax Relief in 2003......................................2,022
Tax savings of 22 percent.
Mr. NICKLES. I urge my colleagues to seriously consider this
proposal. And I welcome their support of it.
I yield the floor.
______

By Mr. REID (for himself, Mr. Smith Ms. Snowe, Ms. Cantwell, Mr.
Harkin, Mr. Lieberman, Mrs. Feinstein, Mr. Jeffords, Mr. Wyden,
and Mr. Coleman):
S. 464. A bill to amend the Internal Revenue Code of 1986 to modify
and expand the credit for electricity produced from renewable resources
and waste products, and for other purposes; to the Committee on
Finance.
Mr. REID. Mr. President, faced with uncertainties in electricity
energy markets, turmoil in the Mideast, the need to cut back on the
fossil fuel emissions linked to global warming, air pollution that
contributes to high rates of asthma and fills even our national parks
with smog, the United States must diversify its energy supply by
promoting the growth of renewable energy.
Since 1999, Las Vegas electricity rates have increased by 60 percent.
In the same period, natural gas prices across Nevada have doubled. We
need to change the energy equation. We need to diversify the Nation's
energy supply to reduce volatility and ensure a stable supply of
electricity. We must harness the brilliance of the sun, the strength of
the wind, and the heat of the Earth to provide clean, renewable energy
for our nation.
I rise today to introduce a bill with Senators Smith, Snowe,
Cantwell, Harkin, Liberman, Feinstein, Jeffords, and Wyden expands the
existing Section 45 production tax credit for renewable energy
resources to cover all renewable energy resources. Our legislation
accomplishes this by adding geothermal, incremental geothermal, solar,
open-loop biomass, incremental hydropower, landfill gas, and animal
waste to the list of renewable energy resources that would quality for
a production tax credit.
Our legislation also makes the production tax credit permanent to
signal America's long-term commitment to renewable energy resources.
The existing production tax credit that covers wind energy, poultry
waste, and closed-look biomass will expire at the end of 2003! Since it
inception in 1992, the production tax credit has expired and been
renewed twice; in 1999 and 2001. Development of wind energy has closely
mirrored these renewal cycles. Clearly, the private investment
necessary to develop renewable energy resources requires the business
certainly afforded a long-term extension of the production tax credit.
Our bill allows for co-production credits to encourage blending of
renewable energy with traditional fuels and provides a credit for
renewable facilities on native American and native Alaskan lands. In
northern Nevada, the Pyramid Lake Paiute Tribe is working with Advanced
Thermal Systems to develop geothermal resources on Indian lands that
will spur economic development by creating business opportunities and
jobs for tribal members.

This legislation also provides production incentives to not-for-
profit public power utilities and rural electric cooperatives, which
serve 25 percent of the Nation's power customers, by allowing them to
transfer of their credits to taxable entities.
The good news is that the production tax credit for renewable energy
resources really works to promote the growth of renewable energy. In
1990, the cost of wind energy was 22.5 cents per kilowatt hour and,
today, with new technology and the help of a modest

[[Page S2924]]

production tax credit, wind is a competitive energy source at 3 to 4
cents per kilowatt hour. In the last 5 years, wind energy has
experience a 30 percent growth rate. This year, Nevada utilities have
signed contracts for more then 130 MW of wind energy.
The production tax credit provides 1.8 cents for every kilowatt-hour
of electricity produced. Similar to wind energy, this credit will allow
geothermal energy, incremental hydropower, and landfill gas to
immediately compete with fossil fuels, while biomass will follow
closely behind. The Department of Energy estimates that we would
increase our geothermal energy production almost ten fold, supplying
ten percent of the energy needs of the West. As fantastic as it sounds,
enough sunlight falls on a 100 mile by 100 miles of southern Nevada
that--if covered with solar panels--could power the entire Nation.
Let's never lose sight of the fact that renewable energy resources
are domestic sources of energy, and using them instead of foreign
sources contributes to our energy security. Renewables provide fuel
diversify and price stability. After all, the fuel--the wind, the sun,
heat from the core of the earth--costs nothing. And they provide jobs,
especially in rural areas that have been largely left out of American
recent economic growth.
The production tax credit for renewable energy resources is a
powerful, fast acting stimulus to the economy. According to the Western
Government Association, the Department of Energy's Initiative to deploy
1,000 MWs of concentrated solar power in the Southwestern area of the
United States by the year 2006 would create approximately 10,0000 jobs
and estimated expenditures of more than 3.7 billion over 14
years. Nevada has already developed 200 Megawatts of geothermal power,
with a longer-term potential of more than 2,500 Megawatts. This
development will provide billions of private investment and create
thousands of jobs. Our production tax credit means immediate economic
development and jobs!

In the U.S. today, we get less than 3 percent of our electricity from
renewable energy sources like wind, solar, geothermal, and biomass. But
the potential for much greater supply is here. For example, Nevada is
considered the Saudi Arabia of geothermal. My state could use
geothermal energy to meet one-third of its electricity needs, but today
this source of energy only supplies 2.3 percent. I'm proud to say that
Nevada has adopted one of the most aggressive Renewable Portfolio
Standard in the Nation, requiring that 5 percent of the State's
electricity needs be met by renewable energy resources in 2003, which
then grows to 15 percent by 2013.
After pouring billions of dollars into oil and gas, we need to invest
in a clean energy future. Fossil fuel plants pump over 11 million tons
of pollutants into our air each year. Federal energy policy must
promote reductions in greenhouse gas emissions. By including landfill
gas in this legislation, we systematically reduce the largest single
human source of methane emissions in the United States, effectively
eliminating the greenhouse gas equivalent of 223 million tons of carbon
dioxide.
An article in The Journal of the American Medical Association
revealed an alarming link between soot particles from power plants and
motor vehicles and lung cancer and heart disease. The adverse health
effects of power plant and vehicle emissions cost Americans billions of
dollars in medical care, and our cost in human suffering is
immeasurable. Simply put, the human cost of dirty air is staggering. If
we factor in environmental and health effects, the real cost of energy
becomes apparent, and renewable energy become the fuel of choice.
America's abundant and untapped renewable resources can fuel our
journey into a more prosperous and safer tomorrow without compromising
air and water quality.
Renewable energy is the cornerstone of a successful, forward looking,
and secure energy policy for the 21st Century.
______

By Mrs. HUTCHISON (for herself, Ms. Cantwell, Mr. Frist, Mr.
Cornyn, Mr. Cochran, Mr. Thomas, and Mr. Alexander):
S. 467. A bill to amend the Internal Revenue Code of 1986 to allow a
deduction for State and local sales taxes in lieu of State and local
income taxes and to allow the State and local income tax deduction
against the alternative minimum tax; to the Committee on Finance.
Mrs. HUTCHISON. Mr. President, I am pleased to introduce a bill to
correct an injustice in the tax code that harms citizens in every state
of this great Nation.
State and local governments have various alternatives for raising
revenue. Some levy income taxes, some use sales taxes, and others use a
combination of the two. The citizens who pay State and local income
taxes are able to offset some of what they pay by receiving a deduction
on their Federal taxes. Before 1986, taxpayers also had the ability to
deduct their sales taxes.
The philosophy behind these deductions is simple: people should not
have to pay taxes on their taxes. The money that people must give to
one level of government should not also be taxed by another level of
government.
Unfortunately, these common sense deductions have slowly been eroded
over the years. First, the deduction for State and local sales tax was
eliminated in the 1986 tax reform legislation. Second, the alternative
minimum tax has reduced the benefit of the income tax deduction for
many.
The elimination of the sales tax deduction discriminates against
those living in states, such as my home State of Texas, with no income
taxes. It is important to remember the lack of an income tax does not
mean citizens in these States do not pay State taxes; revenues are
simply collected differently.
It is unfair to give citizens from some States a deduction for the
revenue they provide their State and local governments, while not doing
the same for citizens from other States. Federal tax law should not
treat people differently on the basis of State residence and differing
tax collection methods.
This discrepancy has a significant impact on Texas. According to the
Texas Comptroller, if taxpayers could deduct their sales taxes, more
than $700 million would stay in the hands of Texans. This could lead to
the creation of more than 16,000 new jobs and add almost $900 million
in economic activity. The impact of this growth would be particularly
beneficial during this period when many States are facing record-
breaking deficits. At the same time, such a tax change would cost the
Federal Government less than one percent of what the current State and
local income tax deduction costs.
For those in states with income taxes, their tax deduction benefit
has been diminished by the alternative minimum tax, AMT. People can
deduct their state and local income taxes when calculating their
regular taxes, but not when determining the AMT. The difference often
is the reason people must pay the higher alternative tax.
In fact, state and local taxes account for 54 percent of the
difference between the AMT and the regular tax calculation. This
particularly hurts the 60 percent of AMT payers who are from states
with higher income tax rates. Eliminating this discrepancy would go a
long way toward reducing the number of people affected by the AMT.
The legislation I am offering today will fix these problems. First,
it will provide all taxpayers with the option of deducting State and
local sales taxes, instead of income taxes, when calculating their
Federal tax. This will end the discrimination suffered by my fellow
Texans and citizens of other states who do not have the option of an
income tax deduction. It will also allow people from states with both a
sales and an income tax to choose the most advantageous deduction.
My bill will also provide for a State and local income and sales tax
deduction in the AMT. This is an important step in reducing the
ballooning growth of the AMT, which will impact almost a third of all
taxpayers by 2010.
The legislation I am introducing today is about reestablishing equity
to the tax code and defending the important principle of eliminating
taxes on taxes. I hope my fellow Senators will support this effort.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

[[Page S2925]]

S. 467

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``State Sales and Income Tax
Deduction Fairness Act of 2003''.

SEC. 2. DEDUCTION OF STATE AND LOCAL GENERAL SALES TAXES IN
LIEU OF STATE AND LOCAL INCOME TAXES.

(a) In General.--Subsection (b) of section 164 of the
Internal Revenue Code of 1986 (relating to definitions and
special rules) is amended by adding at the end the following
new paragraph:
``(5) General sales taxes.--For purposes of subsection
(a)--
``(A) Election to deduct state and local sales taxes in
lieu of state and local income taxes.--
``(i) In general.--At the election of the taxpayer for the
taxable year, subsection (a) shall be applied--

``(I) without regard to the reference to State and local
income taxes,
``(II) as if State and local general sales taxes were
referred to in a paragraph thereof, and
``(III) without regard to the last sentence.

``(B) Definition of general sales tax.--The term `general
sales tax' means a tax imposed at one rate with respect to
the sale at retail of a broad range of classes of items.
``(C) Special rules for food, etc.--In the case of items of
food, clothing, medical supplies, and motor vehicles--
``(i) the fact that the tax does not apply with respect to
some or all of such items shall not be taken into account in
determining whether the tax applies with respect to a broad
range of classes of items, and
``(ii) the fact that the rate of tax applicable with
respect to some or all of such items is lower than the
general rate of tax shall not be taken into account in
determining whether the tax is imposed at one rate.
``(D) Items taxed at different rates.--Except in the case
of a lower rate of tax applicable with respect to an item
described in subparagraph (C), no deduction shall be allowed
under this paragraph for any general sales tax imposed with
respect to an item at a rate other than the general rate of
tax.
``(E) Compensating use taxes.--A compensating use tax with
respect to an item shall be treated as a general sales tax.
For purposes of the preceding sentence, the term
`compensating use tax' means, with respect to any item, a tax
which--
``(i) is imposed on the use, storage, or consumption of
such item, and
``(ii) is complementary to a general sales tax, but only if
a deduction is allowable under this paragraph with respect to
items sold at retail in the taxing jurisdiction which are
similar to such item.
``(F) Special rule for motor vehicles.--In the case of
motor vehicles, if the rate of tax exceeds the general rate,
such excess shall be disregarded and the general rate shall
be treated as the rate of tax.
``(G) Separately stated general sales taxes.--If the amount
of any general sales tax is separately stated, then, to the
extent that the amount so stated is paid by the consumer
(other than in connection with the consumer's trade or
business) to the seller, such amount shall be treated as a
tax imposed on, and paid by, such consumer.
``(H) Amount of deduction to be determined under tables.--
``(i) In general.--The amount of the deduction allowed
under this paragraph shall be determined under tables
prescribed by the Secretary.
``(ii) Requirements for tables.--The tables prescribed
under clause (i) shall reflect the provisions of this
paragraph and shall be based on the average consumption by
taxpayers on a State-by-State basis, as determined by the
Secretary, taking into account filing status, number of
dependents, adjusted gross income, and rates of State and
local general sales taxation.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

SEC. 3. ALLOWANCE OF STATE AND LOCAL INCOME TAXES AGAINST
ALTERNATIVE MINIMUM TAX.

(a) In General.--Section 56(b)(1)(A)(ii) of the Internal
Revenue Code of 1986 (relating to limitation on deductions)
is amended by inserting ``(other than State and local income
taxes or general sales taxes)'' before the period.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
______

By Mr. KOHL (for himself, Mr. DeWine, Mrs. Feinstein, Mr.
Schumer, Mr. Reed, Ms. Mikulski, Mr. Corzine, and Mr. Levin).
S. 469. A bill to amend chapter 44 of title 18, United States Code,
to require ballistics testing of all firearms manufactured and all
firearms in custody of Federal agencies; to the Committee on the
Judiciary.
Mr. KOHL. Mr. President, I rise today with my colleagues Senator
DeWine, Senator Feinstein, Senator Schumer, Senator Reed, Senator
Mikulski, Senator Corzine, and Senator Levin to reintroduce the
``Technological Resource to Assist Criminal Enforcement'' ``TRACE''
Act, a bill to require ballistics testing of all firearms manufactured
or imported in the United States.
The science of ballistics testing has given police the ability to
solve multiple crimes simply by comparing bullets and shell casings
found at the scene of a crime to a gun seized in a seemingly unrelated
incident. This comparison is possible because every gun has a unique
``fingerprint'' it leaves on spent shell casings and bullets after it
is fired. Just as human fingerprints can be grouped into general
classifications such as loops and whorls, but still possess individual
characteristics and then analyzed for its unique characteristics,
firearms evidence can be similarly grouped and then analyzed by trained
technicians for unique identifying characteristics.
Let me explain more specifically how this technology works. Today,
ballistics technology equipment allows firearms technicians to acquire
digital images of the images of the markings made by a firearm on
bullets and cartridge casings; the images then undergo an automated
initial comparison. If a high confidence match emerges, experts compare
the original evidence to confirm a match. Once a match is found, law
enforcement can begin tracing that weapon from its original sale to the
person who used it to commit the crime.
Microscopic comparison of bullets and shell casings has been in
practice for many years, even before formal databases were established.
However, in the past 15 years, through the use of computer databases,
ballistics technology described above has developed into a systematic
tool for law enforcement to solve gun crimes. Since the early 1990's,
more than 250 crime labs and law enforcement agencies in more than 40
States have been operating independent ballistics systems maintained by
either the Bureau of Alcohol, Tobacco, Firearms, and Explosives
``ATFE'', or the Federal Bureau of Investigation. Together, ATFE's
Integrated Ballistics Identification System, ``IBIS'', and the FBI's
DRUGFIRE system have been responsible for linking 5,700 guns to two or
more crimes where corroborating evidence was otherwise lacking. These
links have helped law enforcement and prosecutors bring thousands of
dangerous criminals to justice.
Never before have the tremendous law enforcement benefits of
ballistics testing been so apparent. I would like to take the
opportunity to describe a few instances where ballistics technology
helped solve otherwise unsolvable crimes.
Last fall, law enforcement officials used ballistics testing to match
the bullets and shell casings found at the scenes of the sniper
shootings in the Nation's Capital region, and later to other deadly
shootings across the country. The bullets and casings were also linked
to the gun that the accused assailants had in their possession when
they were arrested. This ballistics information has provided vital
evidence to prosecutors and will help keep the snipers behind bars.
In another example, the only evidence at the scene of a brutal
homicide in Milwaukee was 9 millimeter cartridge casings--there were no
other clues. But 4 months later, when a teenage male was arrested on an
unrelated charge, he was found to be in possession of the firearm that
had discharged those casings. Ballistics linked the two cases.
Prosecutors successfully prosecuted three adult suspects for the
homicide and convicted the teen in juvenile court.
On September 9, 2000, several suspects were arrested in Boston for
the illegal possession of three handguns. Each of the guns was test
fired, and the ballistics information was compared to evidence found at
other crime scenes. The police quickly found that the three guns were
used in the commission of 15 felonies in Massachusetts and Rhode
Island. This routine arrest for illegal possession of firearms provided
police with new leads in the investigation of 15 unsolved crimes.
Without the ballistics testing, these crimes would not have been linked
and might have never been solved.
As you can see, ballistics technology helps law enforcement
exponentially in their efforts to solve gun crimes. But while success
stories are increasingly frequent, the full potential of ballistics

[[Page S2926]]

testing is still untapped. One way that the Bureau of Alcohol, Tobacco,
Firearms and Explosives is making ballistics testing more accessible to
state and local law enforcement is through the installation of a new
network of ballistics imaging machines. The final introduction of the
machines across the country is almost complete and, once it is, the
computers will be able to access each other and search for a greater
number of images. The National Integrated Ballistics Information
Network, better know as ``NIBIN,'' will be a regional network of
databases that will permit law enforcement in one locality access to
information stored in other gun crime databases around the entire
country. According to the ATFE, ``the NIBIN program is a key element to
ATFE's efforts [to remove violent offenders from America's streets].''
But ballistics testing is only as useful as the number of images in
the database. Today, almost all jurisdictions are limited to images of
bullets and cartridge casings that come from guns used in crimes. The
TRACE Act would dramatically expand the scope of that database by
mandating that all guns manufactured or imported be test fired before
being placed into the stream of commerce. The images collected from the
test firing would then be collected and accessible to law enforcement--
and law enforcement only--for the purpose of investigating and
prosecuting gun crimes.
Recently, studies done about ballistics testing and ballistics
databases have been in the news. Concern has been expressed by some
about the size and practicality of a large database. However, it is
important to point out that this bill would merely expand upon the
existing network of 16 multi-state regional databases, rather than
create a single large national database. In addition, accusations that
systems would be log-jammed with too many entries has been refuted by
ATFE ballistics experts. Since its inception, the speed and efficiency
of ballistics databases has substantially increased. For example, from
1994 to 1999 the IBIS correlation speed for cartridge casings dropped
from 35 seconds to 1.7 seconds, and correlation speed for bullets
dropped from 4 seconds to 0.3 seconds. The conversion to NIBIN is
expected to yield an even faster return of correlation results,
regardless of an increase in entries.
Of course no investigative tool is perfect or effective in every
single situation, not even fingerprints. However, ATFE maintains that
the availability of an open-case file of many thousands of exhibits,
searchable within minutes, provides invaluable information to law
enforcement authorities. TRACE would enhance the current ballistics
databases by giving federal, state, and local law enforcement access to
even more evidence that will help them solve more gun crimes and make
our communities safer.
Today, police can find out more about a human being than they can
about a gun used in a crime. Law enforcement can use DNA testing, take
fingerprints and blood samples, search a person's health records,
peruse bank records and credit card statements, obtain phone records
and get a list of book purchases to link a suspect to a crime. Yet, the
bullets found at the scene of a crime often cannot be traced back to
the gun used because our ballistics images database is not
comprehensive. Many of those on the front lines of the fight against
crime are in favor of ballistics testing. In fact, in my home state of
Wisconsin, over 75 percent of police chiefs surveyed are supportive of
the use of ballistics technology.
The burden on manufacturers is minimal--we authorize funds to
underwrite the cost of testing--and the assistance to law enforcement
is considerable. And don't take our word for it, ask the gun
manufacturers and the police. Listen to what Paul Januzzo, the vice-
president of the gun manufacturer Glock, said in reference to
ballistics testing, ``Our mantra has been that the issue is crime
control, not gun control . . . it would be two-faced of us not to want
this.'' In their agreement with the Department of Housing and Urban
Development, Smith & Wesson agreed to perform ballistics testing on all
new handguns. And Ben Wilson, the chief of the firearms section at
ATFE, emphasized the importance of ballistics testing as a
investigative device, ``This [ballistics] allows you literally to find
a needle in a haystack.''
To be sure, we are sensitive to the notion that law abiding hunters
and sportsmen need to be protected from any misuse of the ballistics
database by government. The TRACE Act explicitly prohibits ballistics
information from being used for any purpose unless it is necessary for
the investigation of a gun crime.
The TRACE Act will enhance a revolutionary new technology that helps
solve crime. The technology is becoming more and more advanced to
accommodate high volume-usage, and it is expected to continue to get
better and better. Ballistics testing will help solve more gun crimes,
prosecute more criminals, and ensure that more communities are
protected from violence. TRACE is a worthwhile piece of crime control
legislation and I hope that the Senate will move quickly to pass it.
I ask unanimous consent that the text of the legislation be printed
in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 469

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Technological Resource to
Assist Criminal Enforcement Act'' or the ``TRACE Act''.

SEC. 2. PURPOSES.

The purposes of this Act are--
(1) to increase public safety by assisting law enforcement
in solving more gun-related crimes and offering prosecutors
evidence to link felons to gun crimes through ballistics
technology;
(2) to provide for ballistics testing of all new firearms
for sale to assist in the identification of firearms used in
crimes;
(3) to require ballistics testing of all firearms in
custody of Federal agencies to assist in the identification
of firearms used in crimes; and
(4) to add ballistics testing to existing firearms
enforcement programs.

SEC. 3. DEFINITION OF BALLISTICS.

Section 921(a) of title 18, United States Code, is amended
by adding at the end the following:
``(36) Ballistics.--The term `ballistics' means a
comparative analysis of fired bullets and cartridge casings
to identify the firearm from which bullets and cartridge
casings were discharged, through identification of the unique
markings that each firearm imprints on bullets and cartridge
casings.''.

SEC. 4. TEST FIRING AND AUTOMATED STORAGE OF BALLISTICS
RECORDS.

(a) Amendment.--Section 923 of title 18, United States
Code, is amended by adding at the end the following:
``(m)(1) In addition to the other licensing requirements
under this section, a licensed manufacturer or licensed
importer shall--
``(A) test fire firearms manufactured or imported by such
licensees as specified by the Attorney General by regulation;
``(B) prepare ballistics images of the fired bullet and
cartridge casings from the test fire;
``(C) make the records available to the Attorney General
for entry into the electronic database established under
paragraph (3)(B); and
``(D) store the fired bullet and cartridge casings in such
a manner and for such a period as specified by the Attorney
General by regulation.
``(2) Nothing in this subsection creates a cause of action
against any Federal firearms licensee or any other person for
any civil liability except for imposition of a civil penalty
under this section.
``(3)(A) The Attorney General shall assist firearm
manufacturers and importers in complying with paragraph (1)
by--
``(i) acquiring, installing, and upgrading ballistics
equipment and bullet and cartridge casing recovery equipment
to be placed at locations readily accessible to licensed
manufacturers and importers;
``(ii) hiring or designating sufficient personnel to
develop and maintain a database of ballistics images of fired
bullets and cartridge casings, research, and evaluation;
``(iii) providing education about the role of ballistics as
part of a comprehensive firearm crime reduction strategy;
``(iv) providing for the coordination among Federal, State,
and local law enforcement and regulatory agencies and the
firearm industry to curb firearm-related crime and illegal
firearm trafficking; and
``(v) taking other necessary steps to make ballistics
testing effective.
``(B) The Attorney General shall--
``(i) establish an electronic database--
``(I) through which State and local law enforcement
agencies can promptly access the ballistics records stored
under this subsection, as soon as such capability is
available; and
``(II) that shall not include any identifying information
regarding dealers, collectors, or purchasers of firearms; and

[[Page S2927]]

``(ii) require training for all ballistics examiners.
``(4) The Attorney General shall conduct mandatory
ballistics testing of all firearms obtained or in the
possession of their respective agencies.
``(5) Not later than 3 years after the date of enactment of
this subsection, and annually thereafter, the Attorney
General shall submit to the Committees on the Judiciary of
the Senate and the House of Representatives a report
regarding the implementation of this section, including--
``(A) the number of Federal and State criminal
investigations, arrests, indictments, and prosecutions of all
cases in which access to ballistics records, provided under
the system established under this section and under similar
systems operated by any State, served as a valuable
investigative tool in the prosecution of gun crimes;
``(B) the extent to which ballistics records are accessible
across jurisdictions; and
``(C) a statistical evaluation of the test programs
conducted pursuant to paragraph (4).
``(6) There are authorized to be appropriated to the
Department of Justice $20,000,000 for each of the fiscal
years 2004 through 2007 to carry out this subsection, to be
used to--
``(A) install ballistics equipment and bullet and cartridge
casing recovery equipment;
``(B) establish sites for ballistics testing;
``(C) pay salaries and expenses of necessary personnel; and
``(D) conduct related research and evaluation.''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraphs (2) and
(3), the amendment made by subsection (a) shall take effect
on the date on which the Attorney General, in consultation
with the Board of the National Integrated Ballistics
Information Network, certifies that the ballistics system
used by the Department of Justice is sufficiently developed
to support mandatory ballistics testing of new firearms.
(2) Ballistics testing.--Section 923(m)(1) of title 18,
United States Code, as added by subsection (a), shall take
effect 2 years after the date of enactment of this Act.
(3) Effective on date of enactment.--Section 923(m)(4) of
title 18, United States Code, as added by subsection (a),
shall take effect on the date of enactment of this Act.

SEC. 5. PRIVACY RIGHTS OF LAW ABIDING CITIZENS.

Ballistics information of individual guns in any form or
database established by this Act may not be used for
prosecutorial purposes unless law enforcement officials have
a reasonable belief that a crime has been committed and that
ballistics information would assist in the investigation of
that crime.
______

By Mr. SARBANES (for himself, Mr. Warner, Ms. Mikulski, Mr.
Lugar, and Mr. Durbin):
S. 470. A bill to extend the authority for the construction of a
memorial to Martin Luther King, Jr; to the Committee on Energy and
Natural Resources.
Mr. SARBANES. Mr. President, I am pleased to join today with Senators
Warner, Lugar, Mikulski and Durbin in introducing legislation that
would extend the legislative authority for the Martin Luther King, Jr.
Memorial for an additional three years. The monument to Martin Luther
King, Jr., which will be built on the Mall, will honor one of this
Nation's most treasured citizens. Dr. King challenged us to live by the
principles set forth at this Nation's inception, and forever changed
the fabric of this country.
Despite the enormous dedication of the Martin Luther King, Jr.
National Memorial Project Foundation, Inc., additional time is
necessary for the Foundation to erect a fitting tribute to Dr. King.
The Commemorative Works Act currently requires that construction of the
Memorial begin by November 2003. However, meeting the administrative
procedures and fundraising requirements of the Act has been a very slow
process.
On November 12, 1996, legislation was enacted authorizing
construction of the Memorial within a seven-year period. It then took
Congress another two years to pass legislation authorizing placement of
the Memorial in Area I of the Capital. Then the Foundation worked with
the National Capital Planning Commission and the Commission for Fine
Arts for over a year to locate an appropriate site for the Memorial
within Area I. As a result, the Foundation was unable to select a
design for the Memorial until September 2000.
This consultative process has been challenging, but it has resulted
in a design for a Memorial on the Tidal Basin that will fittingly
reflect the legacy of the greatest civil rights leader of our time.
Initial estimates indicate that the construction costs of the Memorial
alone could be as much as $60 million, and the Foundation is actively
engaged in fundraising for the Memorial. However, it does not expect to
have the necessary funds to receive the construction permit by the
deadline of November 2003 as dictated by the Commemorative Works Act.
One hundred percent of the funding must be privately financed, and the
total cost of the project could near $100 million. Our legislation
would give the Foundation an additional three years to raise the
necessary funds to obtain the construction permit, and would ensure
that work on the Memorial is completed. This extension of legislative
authority has been done before for other memorials, given the length of
time it usually takes to embark on a project of this magnitude, and it
should be done for the Martin Luther King, Jr. Memorial.
Dr. King serves as a reminder that change is brought about most
powerfully when it is done by non-violent means. This country owes much
to Dr. King, most notably his legacy of non-violent protest that has
informed and influenced subsequent rights campaigns in our nation.
Visitors will come to the Memorial from every part of this country and
indeed the world, to be inspired anew by Dr. King's words and deeds,
and the extraordinary story of his life. Mr. President, I ask my
colleagues to support this important legislation and grant the
Foundation the additional time it needs to complete this significant
monument.
I ask unanimous consent that the text of the legislation be printed
in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 470

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

SECTION 1. MEMORIAL TO MARTIN LUTHER KING, JR.

Section 508(b) of the Omnibus Parks and Public Lands
Management Act of 1996 (110 Stat. 4157) is amended--
(1) by striking ``The establishment'' and all that follows
through the period at the end and inserting the following:
``(1) In general.--Except as provided in paragraph (2), the
establishment of the memorial shall be in accordance with
chapter 89 of title 40, United States Code.''; and
(2) by inserting after paragraph (1) (as designated by
paragraph (1)) the following:
``(2) Exception.--Notwithstanding section 8903(e) of title
40, United States Code, the authority provided by this
section terminates on November 12, 2006.''.
______

By Mr. FEINGOLD (for himself, Mrs. Boxer, Mr. Jeffords, and Mr.
Lieberman):
S. 473. A bill to amend the Federal Water Pollution Control Act to
clarify the jurisdiction of the United States over waters of the United
States; to the Committee on Environment and Public Works.
Mr. FEINGOLD. Mr. President, today I am introducing important
legislation to affirm Federal jurisdiction over the waters of the
United States. I am pleased to have three members of the Environment
and Public Works Committee, the Senator from California, Mrs. Boxer,
the Senator from Vermont, Mr. Jeffords, and the Senator from
Connecticut, Mr. Lieberman, as original cosponsors of this bill.
In the U.S. Supreme Court's January 2001 decision, Solid Waste Agency
of Northern Cook County versus the Army Corps of Engineers, a 5 to 4
majority limited the authority of Federal agencies to use the so-called
migratory bird rule as the basis for asserting Clean Water Act
jurisdiction over non-navigable, intrastate, isolated wetlands,
streams, ponds, and other bodies of water.
This decision, known as the SWANCC decision, means that the
Environmental Protection Agency and Army Corps of Engineers can no
longer enforce Federal Clean Water Act protection mechanisms to protect
a waterway solely on the basis that it is used as habitat for migratory
birds.
In its discussion of the case, the Court went beyond the issue of the
migratory bird rule and questioned whether Congress intended the Clean
Water Act to provide protection for isolated ponds, streams, wetlands
and other waters, as it had been interpreted to provide for most of the
last 30 years. While not the legal holding of the case, the Court's
discussion has resulted in a wide variety of interpretations by EPA and
Corps officials that jeopardize protection for wetlands, and other
waters.

[[Page S2928]]

The wetlands at risk include prairie potholes and bogs, familiar to
many in Wisconsin, and many other types of wetlands.
In effect, the Court's decision removed much of the Clean Water Act
protection for between 30 percent to 60 percent of the Nation's
wetlands. An estimate from my home state of Wisconsin suggested that
more than 60 percent of the wetlands in my state lost federal
protection. Wisconsin is not alone. The National Association of State
Wetland Managers has been collecting data from states across the
country. For example, Nebraska estimates that it will lose protection
for more than 40 percent of its wetlands. Indiana estimates they will
lose 31 percent of total wetland acreage and 74 percent of the total
number of wetlands. Delaware estimates the loss of protection for 33
percent or more of their freshwater wetlands.
These wetlands absorb floodwaters, prevent pollution from reaching
our rivers and streams, and provide crucial habitat for most of the
nations ducks and other waterfowl, as well as hundreds of other bird,
fish, shellfish and amphibian species. Loss of these waters would have
a devastating effect on our environment.
In addition, by narrowing the water and wetland areas subject to
Federal regulation, the decision also shifts more of the economic
burden for regulating wetlands to State and local governments. My home
State of Wisconsin has passed legislation to assume the regulation of
isolated waters, but many other States have not. This patchwork of
regulation means that the standards for protection of wetlands
nationwide is unclear, confusing, and jeopardizes the migratory birds
and other wildlife that depend on these wetlands.
Since 2001, the confusion over the interpretation of the SWANCC
decision is growing. On January 15, 2003, the EPA and Army Corps of
Engineers published in the Federal Register an Advanced Notice of
Proposed Rulemaking raising questions about the jurisdiction of the
Clean Water Act. Simultaneously, they released a guidance memo to their
field staff regarding Clean Water Act jurisdiction.
The agencies claim these actions are necessary because of the SWANCC
case. But both the guidance memo and the proposed rulemaking go far
beyond the holding in SWANCC. The guidance took effect right away and
has had an immediate impact. It tells the Corps and EPA staff to stop
asserting jurisdiction over isolated waters without first obtaining
permission from headquarters. Based on this guidance, waters that the
EPA and Corps judge to be outside the Clean Water Act can be filled,
dredged, and polluted without a permit or any other long-standing Clean
Water Act safeguard.
The rulemaking announces the Administration's intention to consider
even broader changes to Clean Water Act coverage for our waters.
Specifically, the agencies are questioning whether there is any basis
for asserting Clean Water Act jurisdiction over additional waters, like
intermittent streams. The possibility for a redefinition of our waters
is troubling because there is only one definition of the term ``water''
in the Clean Water Act. The wetlands program, the point source program
which stops the dumping of pollution, and the non-point program
governing polluted runoff all depend on this definition.
If we don't protect a category of waters from being filled under the
wetlands program, we also fail to protect them from having trash or raw
sewage dumped in them, or having other activities that violate the
Clean Water Act conducted in them as well.
Congress needs to re-establish the common understanding of the Clean
Water Act's jurisdiction to protect all waters of the U.S.--the
understanding that Congress held when the Act was adopted in 1972--as
reflected in the law, legislative history, and longstanding
regulations, practice, and judicial interpretations prior to the SWANCC
decision.
The proposed legislation does three things, and it is a very simple
bill. It adopts a statutory definition of ``waters of the United
States'' based on a longstanding definition of waters in the EPA and
Corps of Engineers' regulations. Second, it deletes the term navigable
from the Act to clarify that Congress's primary concern in 1972 was to
protect the nation's waters from pollution, rather than just sustain
the navigability of waterways, and to reinforce that original intent.
Finally, it includes a set of findings that explain the factual basis
for Congress to assert its constitutional authority over waters and
wetlands on all relevant Constitutional grounds, including the Commerce
Clause, the Property Clause, the Treaty Clause, and Necessary and
Proper Clause.
In conclusion, I am very pleased to have the support of so many
environmental and conservation groups, and well as organizations that
represent those who regulate and manage our country's wetlands, such
as: the Natural Resources Defense Council, Earthjustice, the National
Wildlife Federation, Sierra Club, American Rivers, the National Audubon
Society, U.S. Public Interest Research Group, Defenders of Wildlife,
the Ocean Conservancy, Trout Unlimited, the Izaac Walton League, and
the Association of State Floodplain Managers. They know, as I do, that
we need to re-affirm the federal government's role in protecting our
water. This legislation is a first step in doing just that.
I ask unanimous consent that the text of the legislation be printed
in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 473

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Clean Water Authority
Restoration Act of 2003''.

SEC. 2. PURPOSES.

The purposes of this Act are as follows:
(1) To reaffirm the original intent of Congress in enacting
the Federal Water Pollution Control Act Amendments of 1972
(86 Stat. 816) to restore and maintain the chemical,
physical, and biological integrity of the waters of the
United States.
(2) To clearly define the waters of the United States that
are subject to the Federal Water Pollution Control Act.
(3) To provide protection to the waters of the United
States to the fullest extent of the legislative authority of
Congress under the Constitution.

SEC. 3. FINDINGS.

Congress finds the following:
(1) Water is a unique and precious resource that is
necessary to sustain human life and the life of animals and
plants.
(2) Water is used not only for human, animal, and plant
consumption, but is also important for agriculture,
transportation, flood control, energy production, recreation,
fishing and shellfishing, and municipal and commercial uses.
(3) In enacting amendments to the Federal Water Pollution
Control Act in 1972 and through subsequent amendment,
including the Clean Water Act of 1977 (91 Stat. 1566) and the
Water Quality Act of 1987 (101 Stat. 7), Congress established
the national objective of restoring and maintaining the
chemical, physical, and biological integrity of the waters of
the United States and recognized that achieving this
objective requires uniform, minimum national water quality
and aquatic ecosystem protection standards to restore and
maintain the natural structures and functions of the aquatic
ecosystems of the United States.
(4) Water is transported through interconnected hydrologic
cycles, and the pollution, impairment, or destruction of any
part of an aquatic system may affect the chemical, physical,
and biological integrity of other parts of the aquatic
system.
(5) Protection of intrastate waters, along with other
waters of the United States, is necessary to restore and
maintain the chemical, physical, and biological integrity of
all waters in the United States.
(6) The regulation of discharges of pollutants into
interstate and intrastate waters is an integral part of the
comprehensive clean water regulatory program of the United
States.
(7) Small and periodically-flowing streams comprise the
majority of all stream channels in the United States and
serve critical biological and hydrological functions that
affect entire watersheds, including reducing the introduction
of pollutants to large streams and rivers, and especially
affecting the life cycles of aquatic organisms and the flow
of higher order streams during floods.
(8) The pollution or other degradation of waters of the
United States, individually and in the aggregate, has a
substantial relation to and effect on interstate commerce.
(9) Protection of the waters of the United States,
including intrastate waters, is necessary to prevent
significant harm to interstate commerce and sustain a robust
system of interstate commerce in the future.
(10) Waters, including wetlands, provide protection from
flooding, and draining or filling wetlands and channelizing
or filling streams, including intrastate wetlands and
streams, can cause or exacerbate flooding,

[[Page S2929]]

placing a significant burden on interstate commerce.
(11) Millions of people in the United States depend on
wetlands and other waters of the United States to filter
water and recharge surface and subsurface drinking water
supplies, protect human health, and create economic
opportunity.
(12) Millions of people in the United States enjoy
recreational activities that depend on intrastate waters,
such as waterfowl hunting, bird watching, fishing, and
photography and other graphic arts, and those activities and
associated travel generate billions of dollars of income each
year for the travel, tourism, recreation, and sporting
sectors of the economy of the United States.
(13) Activities that result in the discharge of pollutants
into waters of the United States are commercial or economic
in nature.
(14) States have the responsibility and right to prevent,
reduce, and eliminate pollution of waters, and the Federal
Water Pollution Control Act respects the rights and
responsibilities of States by preserving for States the
ability to manage permitting, grant, and research programs to
prevent, reduce, and eliminate pollution, and to establish
standards and programs more protective of a State's waters
than is provided under Federal standards and programs.
(15) Protecting the quality of and regulating activities
affecting the waters of the United States is a necessary and
proper means of implementing treaties to which the United
States is a party, including treaties protecting species of
fish, birds, and wildlife.
(16) Protecting the quality of and regulating activities
affecting the waters of the United States is a necessary and
proper means of protecting Federal land, including hundreds
of millions of acres of parkland, refuge land, and other land
under Federal ownership and the wide array of waters
encompassed by that land.
(17) Protecting the quality of and regulating activities
affecting the waters of the United States is necessary to
protect Federal land and waters from discharges of pollutants
and other forms of degradation.

SEC. 4. DEFINITION OF WATERS OF THE UNITED STATES.

Section 502 of the Federal Water Pollution Control Act (33
U.S.C. 1362) is amended--
(1) by striking paragraph (7);
(2) by redesignating paragraphs (8) through (23) as
paragraphs (7) through (22), respectively; and
(3) by adding at the end the following:
``(23) Waters of the united states.--The term `waters of
the United States' means all waters subject to the ebb and
flow of the tide, the territorial seas, and all interstate
and intrastate waters and their tributaries, including lakes,
rivers, streams (including intermittent streams), mudflats,
sandflats, wetlands, sloughs, prairie potholes, wet meadows,
playa lakes, natural ponds, and all impoundments of the
foregoing, to the fullest extent that these waters, or
activities affecting these waters, are subject to the
legislative power of Congress under the Constitution.''.

SEC. 5. CONFORMING AMENDMENTS.

The Federal Water Pollution Control Act (33 U.S.C. 1251 et
seq.) is amended--
(1) by striking ``navigable waters of the United States''
each place it appears and inserting ``waters of the United
States'';
(2) in section 304(l)(1) by striking ``navigable waters''
in the heading and inserting ``waters of the united states'';
and
(3) by striking ``navigable waters'' each place it appears
and inserting ``waters of the United States''.
______

By Mr. THOMAS:
S. 475. A bill to reform the nation's outdated laws relating to the
electric industry, improve the operation of our transmission system,
enhance reliability of our electric grid, increase consumer benefits
from whole electric competition and restore investor confidence in the
electric industry; to the Committee on Energy and Natural Resources.
Mr. THOMAS. Mr. President, I come to the floor to talk about one of
the things that is so important. Obviously, items connected with
terrorism, the war in Iraq have to be dealt with. We have to deal with
heightened homeland security and related issues. Health care is an area
we need to talk about. Prescription drugs is in the process of this.
One issue that is particularly important is an energy policy. I don't
think there has ever been a time when it has been more apparent and
more important to deal with energy policy. We have an economy, prices
with gas and energy that are high. We have uncertainty, certainly, in
the Middle East. We have had a Venezuelan problem. We had a very cold
winter. We cannot seem to come together to put together a policy that
will allow us to move forward, an aggressive energy policy. I would
like to talk briefly about a component of that which I think is very
important, and that is an electric component.
I rise today to introduce the Electric Transmission Reliability and
Enhancement Act of 2003. It is my intention to build on a changing
wholesale, competitive, open access market and to suggest that we build
that into a policy. Things have changed in the way energy is generated,
the way energy is transmitted, the way energy is sold. We need to
change our policy, as well.
Very simply, what we have is: In years past, there was a generator
that generated for their own distribution area. That was pretty simple.
Prices were controlled. It was a simple technique. Now we have more and
more merchant generators, people who do not have a constituency or
distribution system of their own but they sell into the marketplace.
This is good. There is competition. And we will see more and more of
that. But to do that, we have to update our laws and we have to update
the regulations that go with that. My legislation would extend and
improve open nondiscriminatory access policies. Access to transmission
would remove antiquated Federal barriers that stand in the way of
competitive wholesale markets. Wholesale markets that are competitive
are new. We have to change to meet those needs. We have to encourage
increased investments in our transmission system and establish
reliability standards.
We saw what happened in California 2 years ago. If there is no
reliability, we cannot depend upon getting that energy to people's
homes, to businesses, and then we have a very difficult situation.
Particularly what has changed now is it is interstate. For years we
grew up with the fact that in your State the State controlled both the
generation and the distribution, and that worked well. Now we go across
interstate lines and there needs to be something different.
Legislatively we have to pare down our wish list so we get to the
bare essentials and keep those things that are necessary.
It seems clear, if we are going to have a truly wholesale market, we
need to ensure that all the industry participants play by the same
rules. Only Congress can give FERC, the Federal Energy Regulatory
Commission, the tools it needs to ensure that all participants get
treated fairly in a competitive marketplace. Under the Federal law,
currently FERC has no jurisdiction or authority over transmission owned
by public power agencies, municipals, cooperatives, yet they want to
participate and need to participate and should participate. Many of
them--most--are willing to participate.
These nonregulated utilities represent 52 percent of the total, so we
do not want to move forward with FERC's so-called market plan. I think
it goes too far getting into the authority of the States. But there are
some changes that need to be made, and we would like to do that.
We also need to protect those cooperatives. I grew up in a area of
cooperatives and spent much of my life working with cooperatives. So we
have given that break. Those that sell less than 4 million megawatt
hours per year are entirely exempt. We think that is as it should be.
We would repeal the Public Utility Holding Company Act, PUHCA,
because it needs to be restructured and the deployment of capital in
this industry needs to go where it is desperately needed. We need to do
that. There is ample regulation over those investments now in the
existing business. We want to make it easier for people to be able to
invest, produce competitively, and go into the marketplace.
The Department of Justice, Federal Trade Commission, and the State
commissions would still be able to monitor rates and prevent cross-
subsidies. So my legislation would prospectively eliminate mandatory
purchase and sales obligations of PURPA, one that was put in a very
long time ago. Despite the State administering it, it causes favoritism
to many utilities and changes things.
Over the years the grid has been protected through voluntary
standards and that is exactly right. But what we are now faced with is
to have RTOs, regional transportation organizations, where they can
make those decisions within the RTO. There would be a Western one, a
Midwestern one, a New England one, and so on. But then connecting with
those will be an interstate, like an interstate highway. That has to,
of course, be organized and controlled by a national group because it
serves all these different ones.

[[Page S2930]]

So what we need is to modernize our system so we can accommodate
things that have changed. Reliability organizations must be run by
market participants and be overseen by FERC. Reliability organizations
must be made up of representatives of everyone who is affected:
residential, commercial, industrial. That can be done, and this
provides an opportunity to do that.
During our discussions last year, we were made to address some of the
more egregious behavior and found a great deal of issues that needed to
be dealt with--market manipulation, those kinds of things. This is very
complex. I believe we can address these issues with regulatory
agencies, things that truly can exist.

So my legislation would provide a greater price in the transmission
of availability of information and outlaw the practice of roundtrip
trading. In the past we found some trading where they went around, got
it back, made a profit on the sale, and served no one.
We prohibit the reporting of false information for the purpose of
manipulating price indices. Again, we go back a little bit to the
California situation, where there obviously is a great need to do some
opening up so there is visibility of what is happening. That is what we
are seeking to do. It would increase civil and criminal penalties for
the violation of the Federal Power Act and would accelerate the
effective dates of refunds and so on.
In the end, it is about consumers, it is about serving consumers, it
is about competition, it is about reliability, it is about keeping the
lights on--the part of energy that probably affects more people and
more businesses than any other. It is my hope that the Electric
Transmission Reliability Enhancement Act of 2003 will produce a more
reliable, efficient transmission system, a more dependable and more
affordable product for the end user, and perhaps more than anything
else, bring our system and our oversight into the modern time of
electric generation and transmission.
Things change. We need to change. Now is the time. We will have an
energy bill. It needs to have an energy component.
Mr. President, any comprehensive energy bill must contain an electric
component. That is why, today, I rise to introduce the ``Electric
Transmission and Reliability Enhancement Act of 2003.'' It is my
intention to build on the competitive wholesale open access policies
adopted by the Congress in the 1992 Energy Policy Act. My legislation
would extend and improve these open, non-discriminatory access
policies; remove antiquated federal statutory barriers that stand in
the way of competitive wholesale markets; encourage increased
investment in our transmission system and establish enforceable
reliability standards to help ensure the continued reliability of the
interstate transmission system.
The state of the industry is far weaker financially than it has been
in years. Billions of dollars of shareholder value has evaporated.
Access to capital is becoming an important issue for large segments of
the industry that are fighting for survival. In addition, the Federal
Energy Regulatory Commission, FERC, policy regarding wholesale markets
seems to be in a state of constant change. The Standard Market Design,
SMD, Notice of Proposed Rulemaking, NOPR, has divided regulators and
industry participants in a way that may be unprecedented, threatening
more years of rulemakings, litigation and regulatory uncertainty.
If we are to legislate successfully, we will have to par down our
wish list to the bare essentials, plus those issues necessary for the
electric industry to attract the capital it needs to keep our lights
on. Last year, the Enron fallout dominated the debate. By being on the
defensive most of last year, it was not possible to successfully
advance those issues most important to consumers and the industry that
serves them.
It seems clear that if truly competitive wholesale markets are to
exist, there is a need to ensure that all industry participants play by
the same rules. While FERC has tried to ensure this, the Commission's
tools are limited. Only Congress can give FERC the tools it needs to
ensure that all industry participants in competitive wholesale markets
play by the same rules.
The Wyoming State commissioners wrote that ``under present Federal
law the FERC has no jurisdiction or authority over transmission
facilities owned by public power agencies, municipalities and
cooperatives. In the West these types of entities own a substantial
portion, perhaps as much as half of the interstate electric
transmission system.'' As a matter of fact, in the Western Electric
Coordinating Council, an area that encompasses all or part of 11
Western States and parts of Canada, non-FERC jurisdictional facilities
account for 52 percent of transmission miles.
The Wyoming commissioners claim that, ``without the full
participation of all of those who own transmission in the West, the
FERC's wholesale market initiative will fail to provide the full
spectrum of benefits Congress expected when it created wholesale
electricity markets. System optimization requires that bulk power be
able to move freely throughout the interconnected system without regard
to who owns the facilities over which the power travels. Removing the
institutional impediments to the free movement of bulk power is also
requisite to identifying the physical constraints that exist in the
western system. Proper planning for the relief of such constraints
depends on properly identifying and quantifying them, absent other
economic and institutional constraints.''

They go on to say that such a vision for the future of wholesale
power markets makes a compelling case for the inclusion of all
facilities which can be used to move bulk power across the West,
regardless of ownership. Anything less than 100 percent participation
by transmission owning entities will simply perpetuate some level of
inefficiency in the system and will continue to afford those who do not
participate the ability to favor their own generation resources.
My legislation would permit FERC to require certain nonregulated
utilities to offer transmission serviced at comparable rates to those
they charge themselves, and on terms and conditions comparable to those
applicable to jurisdictional public utilities. Currently nonregulated
transmitting utilities would not be subject to the full panoply of FERC
regulation under this provision. Instead, a ``light handed'' form of
regulation would apply and small nonregulated entities, such as those
that sell less than 4,000,000 MW/h per year, would be entirely exempt
from these nondiscrimination requirements.
It also seems clear that the Public Utility Holding Company Act
PUHCA, is hindering necessary restructuring of the industry and the
deployment of capital into an industry that desperately needs it.
Investors are deterred simply because they do not want to deal with the
PUHCA rules and restrictions. If repealed, utility securities will
continue to be regulated by the Securities and Exchange Commission,
SEC, FERC and most state commissions. Mergers and acquisitions of
jurisdictional assets would still require FERC and state commission
approval and review by Department of Justice, DOJ, and the Federal
Trade Commission, FTC. FERC and State commissions would still be able
to monitor rates and prevent cross-subsidies.
Despite State progress in administering the Public Utility Regulatory
Policies Act of 1978, PURPA, more in-tune with markets, it is clear
that PURPA continues to provide special privileges to certain favored
generators at the expense of utilities and their customers. Like PUHCA,
PURPA is no longer needed in today's competitive wholesale markets. My
legislation prospectively eliminates the mandatory purchase and sell
obligations of PURPA.
Over the years the grid has been well protected through voluntary
standards established by the North American Electric Reliability
Council, NERC, NERC's voluntary reliability standards--which are not
enforceable--have generally been complied with by the electric power
industry. But with the opening of the wholesale power market to
competition, our transmission grid is being used in ways for which it
was not designed. New system strains are also being created by the
breakup of vertically integrated utilities and by the emergence of new
market structures and participants. The results of these changes have
been an increase in the number and severity of violations of NERC's
voluntary rules.

[[Page S2931]]

My legislation converts the existing NERC voluntary reliability
system into a mandatory reliability system. A nation-wide organization
would have the authority to establish and enforce reliability
standards, and take into account regional differences. The new
reliability organization will be run by market participants, and will
be overseen by the FERC in the U.S. The reliability organization will
be made up of representatives of everyone who is affected--residential,
commercial and industrial consumers; state public utility commissions;
independent power producers; electric utilities and others. There is no
question that we need a new system to safeguard the integrity of our
electric grid. My legislation would do this, using language that was
effectively agreed upon last fall by House and Senate conferees for the
energy bill.
During discussions last year, efforts were made to address some of
the more egregious behavior and attempted market manipulation through
legislation. While this area is obviously very complex, I believe that
we need to address this issue if regulatory gaps truly do exist. I
realize my attempt might not be perfect, but I wanted to intimate
discussion on this very important topic if, in fact, regulatory
agencies do need additional authority to police and monitor the
industry.
My legislation will provide greater price and transmission
availability information, outlaw the practice of round trip trading and
prohibit reporting of false information for the purpose of manipulating
price indices. In addition, I've included authority the FERC has
requested and that would increase civil and criminal penalties for
violation of the Federal Power Act and accelerate the refund effective
date to the date of filing of a complaint.
In the end it's about the consumer. It is my hope and vision that the
``Electric Transmission and Reliability and Enhancement Act of 2003'' I
am introducing today will produce a more reliable and efficient
transmission system and that these improvements will result in a more
dependable and affordable product for the end user. This legislation is
the best solution to move forward with a better product for all classes
of consumers and the industry as a whole.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 475

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Electric Transmission and
Reliability Enhancement Act of 2003''.

TITLE I--TRANSMISSION IMPROVEMENT

SEC. 101. OPEN NON-DISCRIMINATORY ACCESS.

Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is
amended by inserting after section 211 the following:

``open access by unregulated transmitting utilities

Sec. 211A. (a) Subject to section 212(h), the Commission
may, by rule or order, require an unregulated transmitting
utility to provide transmission services--
``(1) at rates that are comparable to those that the
unregulated transmitting utility charges itself, and
``(2) on terms and conditions (not relating to rates) that
are comparable to those under Commission rules that require
public utilities to offer open access transmission services
and that are not unduly discriminatory or preferential.
``(b) The Commission shall exempt from any rule or order
under this subsection any unregulated transmitting utility
that--
``(1) sells no more than 4,000,000 megawatt hours of
electricity per year;
``(2) does not own or operate any transmission facilities
that are necessary for operating an interconnected
transmission system (or any portion thereof); or
``(3) meets other criteria the Commission determines to be
in the public interest.
``(c) The rate changing procedures applicable to public
utilities under subsections (c) and (d) of section 205 are
applicable to unregulated transmitting utilities for purposes
of this section.
``(d) In exercising its authority under paragraph (1) of
subsection (a), the Commission may remand transmission rates
to an unregulated transmitting utility for review and
revision where necessary to meet the requirements of
subsection (a).
``(e) The provision of transmission services under
subsection (a) does not preclude a request for transmission
services under 211.
``(f) The Commission may not require a State or
municipality to take action under this section that
constitutes a private business use for purposes of section
141 of the Internal Revenue Code of 1986 (26 U.S.C. 141).
``(g) For purposes of this subsection, the term
`unregulated transmitting utility' means an entity that--
``(1) owns or operates facilities used for the transmission
of electric energy in interstate commerce, and
``(2) is either an entity described in section 201(f) or a
rural electric cooperative.''.

SEC. 102. FEDERAL AGENCY COORDINATION.

The Department of Energy shall be the lead agency for
conducting environmental review (for purposes of the National
Environmental Policy Act of 1969) of the establishment and
modification of electric power transmission corridors across
federal lands. The Secretary of Energy shall coordinate with
Federal agencies, including Federal land management agencies,
to ensure the timely completion of environmental reviews
pertaining to such corridors and may set deadlines for the
completion of such reviews. For purposes of this section, the
term ``Federal land management agencies'' means the Bureau of
Land Management, the United States Forest Service, the United
States Fish and Wildlife Service, and the Department of
Defense. For purposes of this section, ``Federal lands''
means all lands owned by the United States except lands in
the National Park System or the national wilderness
preservation system, or such other lands as the President may
designate.

SEC. 103. PRIORITY FOR RIGHTS-OF-WAY ACROSS FEDERAL LANDS.

Section 501 of the Federal Land Policy and Management Act
of 1976 (43 U.S.C. 1761) is amended by adding the following
new subsection at the end thereof:
``(e) In administering the provisions of this title, the
Secretary of the Interior and the Secretary of Agriculture
shall each shall give a priority to applications for rights
of way for electric power transmission corridors.''.

SEC. 104. ELECTRIC RELIABILITY STANDARDS.

Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is
amended by inserting the following new section at the end
thereof:

``SEC. 215. ELECTRIC RELIABILITY

``(a) Definitions.--For purposes of this section--
``(A) facilities and control systems necessary for
operating an interconnected electric energy transmission
network (or any portion thereof); and
``(B) electric energy from generation facilities needed to
maintain transmission system reliability.
The term does not include facilities used in the local
distribution of electric energy.
``(2) The terms `Electric Reliability Organization' and
`ERO' mean the organization certified by the Commission under
subsection (c) the purpose of which is to establish and
enforce reliability standards for the bulk-power system,
subject to Commission review.
``(3) The term `reliability standard' means a requirement,
approved by the Commission under this section, to provide for
reliable operation of the bulk-power system. The term
includes requirements for the operation of existing bulk-
power system facilities and the design of planned additions
or modifications to such facilities to the extent necessary
to provide for reliable operation of the bulk-power system,
but the term does not include any requirement to enlarge such
facilities or to construct new transmission capacity or
generation capacity.
``(4) The term `reliable operation' means operating the
elements of the bulk-power system within equipment and
electric system thermal, voltage, and stability limits so
that instability, uncontrolled separation, or cascading
failures of such system will not occur as a result of a
sudden disturbance or unanticipated failure of system
elements.
``(5) The term `Interconnection' means a geographic area in
which the operation of bulk-power system components is
synchronized such that the failure of one or more of such
components may adversely affect the ability of the operators
of other components within the system to maintain reliable
operation of the facilities within their control.
``(6) The term `transmission organization' means a regional
transmission organization, independent system operator,
independent transmission provider, or other transmission
organization finally approved by the Commission for the
operation of transmission facilities.
``(7) The term `regional entity' means an entity having
enforcement authority pursuant to subsection (e)(4).
``(b) Jurisdiction and Applicability.--(1) The Commission
shall have jurisdiction, within the United States, over the
ERO certified by the Commission under subsection (c), any
regional entities, and all users, owners and operators of the
bulk-power system, including but not limited to the entities
described in section 201(f), for purposes of approving
reliability standards established under this section and
enforcing compliance with this section. All users, owners and
operators of the bulk-power system shall comply with
reliability standards that take effect under this section.
``(2) The Commission shall issue a final rule to implement
the requirements of this section not later than 180 days
after the date of enactment of this section.
``(c) Certification.--Following the issuance of a
Commission rule under subsection (b)(2), any person may
submit an application to the Commission for certification

[[Page S2932]]

as the Electric Reliability Organization (ERO). The
Commission may certify one such ERO if the Commission
determines that such ERO--
``(1) has the ability to develop and enforce, subject to
subsection (e)(2), reliability standards that provide for an
adequate level of reliability of the bulk-power system;
``(2) has established rules that--
``(A) assure its independence of the users and owners
and operators of the bulk-power system, while assuring
fair stakeholder representation in the selection of its
directors and balanced decisionmaking in any ERO committee
or subordinate organizational structure;
``(B) allocate equitably reasonable dues, fees, and other
charges among end users for all activities under this
section;
``(C) provide fair and impartial procedures for enforcement
of reliability standards through the imposition of penalties
in accordance with subsection (e) (including limitations on
activities, functions, or operations, or other appropriate
sanctions);
``(D) provide for reasonable notice and opportunity for
public comment, due process, openness, and balance of
interests in developing reliability standards and otherwise
exercising its duties; and
``(E) provide for taking, after certification, appropriate
steps to gain recognition in Canada and Mexico.
``(d) Reliability Standards.--(1) The Electric Reliability
Organization shall file each reliability standard or
modification to a reliability standard that it proposes to be
made effective under this section with the Commission.
``(2) The Commission may approve by rule or order a
proposed reliability standard or modification to a
reliability standard if it determines that the standard is
just, reasonable, not unduly discriminatory or preferential,
and in the public interest. The Commission shall give due
weight to the technical expertise of the Electric Reliability
Organization with respect to the content of a proposed
standard or modification to a reliability standard and to the
technical expertise of a regional entity organized on an
Interconnection-wide basis with respect to a reliability
standard to be applicable within that Interconnection, but
shall not defer with respect to the effect of a standard on
competition. A proposed standard or modification shall take
effect upon approval by the Commission.
``(3) The Electric Reliability Organization shall
rebuttably presume that a proposal from a regional entity
organized on an Interconnection-wide basis for a reliability
standard or modification to a reliability standard to be
applicable on an Interconnection-wide basis is just,
reasonable, and not unduly discriminatory or preferential,
and in the public interest.
``(4) The Commission shall remand to the Electric
Reliability Organization for further consideration a proposed
reliability standard or a modification to a reliability
standard that the Commission disapproves in whole or in part.
``(5) The Commission, upon its own motion or upon
complaint, may order the Electric Reliability Organization to
submit to the Commission a proposed reliability standard or a
modification to a reliability standard that addresses a
specific matter if the Commission considers such a new or
modified reliability standard appropriate to carry out this
section.
``(6) The final rule adopted under subsection (b)(2) shall
include fair processes for the identification and timely
resolution of any conflict between a reliability standard and
any function, rule, order, tariff, rate schedule, or
agreement accepted, approved, or ordered by the Commission
applicable to a transmission organization. Such transmission
organization shall continue to comply with such function,
rule, order, tariff, rate schedule or agreement accepted
approved, or ordered by the Commission until--
``(A) the Commission finds a conflict exists between a
reliability standard and any such provision;
``(B) the Commission orders a change to such provision
pursuant to section 206 of this part; and
``(C) the ordered change becomes effective under this part.
If the Commission determines that a reliability standard
needs to be changed as a result of such a conflict, it shall
order the ERO to develop and file with the Commission a
modified reliability standard under paragraph (4) or (5) of
this subsection.
``(e) Enforcement.--(1) The ERO may impose, subject to
paragraph (2), a penalty on a user or owner or operator of
the bulk-power system for a violation of a reliability
standard approved by the Commission under subsection (d) if
the ERO, after notice and an opportunity for a hearing--
``(A) finds that the user or owner or operator has violated
a reliability standard approved by the Commission under
subsection (d); and
``(B) files notice and the record of the proceeding with
the Commission.
``(2) A penalty imposed under paragraph (1) may take effect
not earlier than the 31st day after the Electric Reliability
Organization files with the Commission notice of the penalty
and the record of proceedings. Such penalty shall be subject
to review by the Commission, on its own motion or upon
application by the user, owner or operator that is the
subject of the penalty filed within 30 days after the date
such notice is filed with the Commission. Application to the
Commission for review, or the initiation of review by the
Commission on its own motion, shall not operate as a stay of
such penalty unless the Commission otherwise orders upon its
own motion or upon application by the user, owner or operator
that is the subject of such penalty. In any proceeding to
review a penalty imposed under paragraph (1), the Commission,
after notice and opportunity for hearing (which hearing may
consist solely of the record before the Electric Reliability
Organization and opportunity for the presentation of
supporting reasons to affirm, modify, or set aside the
penalty), shall by order affirm, set aside, reinstate, or
modify the penalty, and, if appropriate, remand to the
Electric Reliability Organization for further proceedings.
The Commission shall implement expedited procedures for such
hearings.
``(3) On its own motion or upon complaint, the Commission
may order compliance with a reliability standard and may
impose a penalty against a user or owner or operator of the
bulk-power system, if the Commission finds, after notice and
opportunity for a hearing, that the user or owner or operator
of the bulk-power system has engaged or is about to engage in
any acts or practices that constitute or will constitute a
violation of a reliability standard.
``(4) The Commission shall establish regulations directing
the ERO to enter into an agreement to delegate authority to a
regional entity for the purpose of proposing reliability
standards to the ERO and enforcing reliability
standards under paragraph (1) if--
``(A) the regional entity is governed by an independent,
balanced stakeholder, or combination independent and balanced
stakeholder board;
``(B) the regional entity otherwise satisfies the
provisions of subsection (c)(1) and (2); and
``(C) the agreement promotes effective and efficient
administration of bulk-power system reliability.
The Commission may modify such delegation. The ERO and the
Commission shall rebuttably presume that a proposal for
delegation to a regional entity organized on an
Interconnection-wide basis promotes effective and efficient
administration of bulk-power system reliability and should be
approved. Such regulation may provide that the Commission may
assign the ERO's authority to enforce reliability standards
under paragraph (1) directly to a regional entity consistent
with the requirements of this paragraph.
``(5) The Commission may take such action as is necessary
or appropriate against the ERO or a regional entity to ensure
compliance with a reliability standard or any Commission
order affecting the ERO or a regional entity.
``(6) Any penalty imposed under this section shall bear a
reasonable relation to the seriousness of the violation and
shall take into consideration the efforts of such user,
owner, or operator to remedy the violation in a timely
manner.
``(f) Changes in Electricity Reliability Organization
Rules.--The Electric Reliability Organization shall file with
the Commission for approval any proposed rule or proposed
rule change, accompanied by an explanation of its basis and
purpose. The Commission, upon its own motion or compliant,
may propose a change to the rules of the Electric Reliability
Organization. A proposed rule or proposed rule change shall
take effect upon a finding by the Commission, after notice
and opportunity for comment, that the change is just,
reasonable, not unduly discriminary or preferential, is in
the public interest, and satisfies the requirements of
subsection(c).
``(g) Reliability Reports.--The Electric Reliability
Organization shall conduct periodic assessments of the
reliability and adequacy of the bulk-power system in North
America.
``(h) Coordination With Canada and Mexico.--The President
is urged to negotiate international agreements with the
governments of Canada and Mexico to provide for effective
compliance with reliability standards and the effectiveness
of the Electric Reliability Organization in the United States
and Canada or Mexico.
``(i) Savings Provisions.--(1) The Electric Reliability
Organization shall have authority to develop and enforce
compliance with reliability standards for only the bulk-power
system.
``(2) This section does not authorize the Electric
Reliability Organization or the Commission to order the
construction of additional generation or transmission
capacity or to set and enforce compliance with standards for
adequacy or safety of electric facilities or services.
``(3) Nothing in this section shall be construed to preempt
any authority of any State to take action to ensure the
safety, adequacy, and reliability of electric service within
that State, as long as such action is not inconsistent
with any reliability standard.
``(4) Within 90 days of the application of the Electric
Reliability Organization or other affected party, and after
notice and opportunity for comment, the Commission shall
issue a final order determining whether a State action is
inconsistent with a reliability standard, taking into
consideration any recommendation of the Electric Reliability
Organization.
``(5) The Commission, after consultation with the Electric
Reliability Organization, may stay the effectiveness of any
State action, pending the Commission's issuance of a final
order.
``(j) Regional Advisory Bodies.--The Commission shall
establish a regional advisory body on the petition of at
least two-

[[Page S2933]]

thirds of the States within a region that have more than one-
half of their electric load served within the region. A
regional advisory body shall be composed of one member from
each participating State in the region, appointed by the
Governor of each State, and may include representatives of
agencies, States, and provinces outside the United States. A
regional advisory body may provide advice to the Electric
Reliability Organization, a regional entity, or the
Commission regarding the governance of an existing or
proposed regional entity within the same region, whether a
standard proposed to apply within the region is just,
reasonable, not unduly discriminatory or preferential, and in
the public interest, whether fees proposed to be assessed
within the region are just, reasonable, not unduly
discriminatory or preferential, and in the public interest
and any other responsibilities requested by the Commission.
The Commission may give deference to the advice of any such
regional advisory body if that body is organized on an
Interconnection-wide basis.
``(k) Application to Alaska and Hawaii.--The provisions of
this section do not apply to Alaska or Hawaii.''.

TITLE II--ELIMINATION OF COMPETITIVE BARRIERS

Subtitle A--Provisions Regarding the Public Utility Holding Company Act
of 1935

SEC. 201. DEFINITIONS.

For the purpose of this subtitle:
(1) The term ``affiliate'' of a company means any company 5
percent or more of the outstanding voting securities of which
are owned, controlled, or held with power to vote, directly
or indirectly, by such company.
(2) The term ``associate company'' of a company means any
company in the same holding company system with such company.
(3) The term ``Commission'' means the Federal Energy
Regulatory Commission.
(4) the term ``company'' means a corporation, partnership,
association, joint stock company, business rust, or any
organized group of persons, whether incorporated or not, or a
receiver, trustee, or other liquidating agent of any of the
foregoing.
(5) The term ``electric utility company'' means any company
that owns or operates facilities used for the generation,
transmission, or distribution of electric energy for sale.
(6) The term ``exempt wholesale generator'' and ``foreign
utility company'' have the same meanings as in sections 32
and 33, respectively, of the Public Utility Holding Company
Act of 1935 (15 U.S.C. 79z-5, 79z-5b), as those sections
existed on the day before the effective date of this
subtitle.
(7) The term ``gas utility company'' means any company that
owns or operates facilities used for distribution at retail
(other than the distribution only in enclosed portable
containers or distribution to tenants or employees of the
company operating such facilities for their own use and not
for resale) of natural or manufactured gas for heat, light,
or power.
(8) the term ``holding company'' means--
(A) any company that directly or indirectly owns, controls,
or holds, with power to vote, 10 percent or more of the
outstanding voting securities of a public utility company or
of a holding company of any public utility company; and
(B) any person, determined by the Commission, after notice
and opportunity for hearing, to exercise directly or
indirectly (either alone or pursuant to an arrangement or
understanding with one or more persons) such a controlling
influence over the management or policies of any public
utility company or holding company as to make it necessary or
appropriate for the rate protection of utility customers with
respect to rates that such persons be subject to the
obligations, duties, and liabilities imposed by this subtitle
upon holding companies.
(9) The term ``holding company system'' means a holding
company, together with its subsidiary companies.
(10) The term ``jurisdictional rates'' means rates
established by the Commission for the transmission of
electric energy in interstate commerce, the sale of electric
energy at wholesale in interstate commerce, the
transportation of natural gas in interstate commerce, and the
sale in interstate commerce of natural gas for resale for
ultimate public consumption for domestic, commercial,
industrial, or any other use.
(11) The term ``natural gas company'' means a person
engaged in the transportation of natural gas in interstate
commerce or the sale of such gas in interstate commerce for
resale.
(12) The term ``person'' means an individual or company.
(13) The term ``public utility'' means any person who owns
or operates facilities used for transmission of electric
energy in interstate commerce or sales of electric energy in
interstate commerce or sales of electric energy at wholesale
in interstate commerce.
(14) The term ``public utility company'' means an electric
utility company or a gas utility company.
(15) The term ``State commission'' means any commission,
board, agency, or officer, by whatever name designated, of a
State, municipality, or other political subdivision of a
State that, under the laws of such State, has jurisdiction to
regulate public utility companies.
(16) The term ``subsidiary company'' of a holding company
means--
(A) any company, 10 percent or more of the outstanding
voting securities of which are directly or indirectly owned,
controlled, or held with power to vote, by such holding
company; and
(B) any person, the management or policies of which the
Commission, after notice and opportunity for hearing,
determines to be subject to a controlling influence, directly
or indirectly, by such holding company (either alone or
pursuant to an arrangement or understanding with one or more
other persons) so as to make it necessary for the rate
protection of utility customers with respect to rates that
such person be subject to the obligations, duties, and
liabilities imposed by this subtitle upon subsidiary
companies of holding companies.
(17) The term ``voting security'' means any security
presently entitling the owner or holder thereof to vote in
the direction or management of the affairs of a company.

SEC. 202. REPEAL OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF
1935.

The Public Utility Holding Company Act of 1935 (15 U.S.C.
79a and following) is repealed, effective 12 months after the
date of enactment of this Act.

SEC. 203. FEDERAL ACCESS TO BOOKS AND RECORDS.

(a) In General.--Each holding company and each associate
company thereof shall maintain, and shall make available to
the Commission, such books, accounts, memoranda, and other
records as the Commission determines are relevant to costs
incurred by a public utility or natural gas company that is
an associate company of such holding company and necessary or
appropriate for the protection of utility customers with
respect to jurisdictional rates.
(b) Affiliate Companies.--Each affiliate of a holding
company or of any subsidiary company of a holding company
shall maintain, and make available to the Commission, such
books, accounts, memoranda, and other records with respect to
any transaction with another affiliate, as the Commission
determines are relevant to costs incurred by a public utility
or natural gas company that is an associate company of such
holding company and necessary or appropriate for the
protection of utility customers with respect to
jurisdictional rates.
(c) Holding Company Systems.--The Commission may examine
the books, accounts, memoranda, and other records of any
company in a holding company system, or any affiliate
thereof, as the Commission determines are relevant to costs
incurred by a public utility or natural gas company within
such holding company system and necessary or appropriate for
the protection of utility customers with respect to
jurisdictional rates.
(d) Confidentiality.--No member, officer, or employee of
the Commission shall divulge any fact or information that may
come to his or her knowledge during the course of examination
of books, accounts, memoranda, or other records as provided
in this section, except as may be directed by the Commission
or by a court of competent jurisdiction.

SEC. 204. STATE ACCESS TO BOOKS AND RECORDS.

(a) In General.--Upon the written request of a State
commission having jurisdiction to regulate a public utility
company in a holding company system, and subject to such
terms and conditions as may be necessary and appropriate to
safeguard against unwarranted disclosure to the public of any
trade secrets or sensitive commercial information, a holding
company or any associate company or affiliate thereof,
wherever located, shall produce for inspection books,
accounts, memoranda, and other records that--
(1) have been identified in reasonable detail in a
proceeding before the State commission;
(2) the State commission determines are relevant to costs
incurred by such public utility company; and
(3) are necessary for the effective discharge of the
responsibilities of the State commission with respect to such
proceeding.
(b) Effect on State Law.--Nothing in this section shall
preempt applicable State law concerning the provision of
books, accounts, memoranda, or other records, or in any way
limit the rights of any State to obtain books, accounts,
memoranda, or other records, under federal law, contract, or
otherwise.
(c) Court Jurisdiction.--Any United States district court
located in the State in which the State commission referred
to in subsection (a) is located shall have jurisdiction to
enforce compliance with this section.

SEC. 205. EXEMPTION AUTHORITY.

(a) Rulemaking.--Not later 90 days after the date of
enactment of this Act, the Commission shall promulgate a
final rule to exempt from the requirements of section 203 any
person that is a holding company, solely with respect to one
or more--
(1) qualifying facilities under the Public Utility
Regulatory Policies Act of 1978;
(2) exempt wholesale generators; or
(3) foreign utility companies.
(b) Other Authority.--If, upon application or upon its own
motion, the Commission finds that the books, accounts,
memoranda, and other records of any person are not relevant
to the jurisdictional rates of a public utility company or
natural gas company, or if the Commission finds that any
class of transactions is not relevant to the jurisdictional
rates of a public utility company, the Commission shall
exempt such person or transaction from the requirements of
section 203.

[[Page S2934]]

SEC. 206. AFFILIATE TRANSACTIONS.

Nothing in this subtitle shall preclude the Commissioner or
a State commission from exercising its jurisdiction under
otherwise applicable law to determine whether a public
utility company, public utility, or natural gas company may
recover in rates any costs of an activity performed by an
associate company, or any costs of goods or services acquired
by such public utility company, public utility, or natural
gas company from an associate company.

SEC. 207. APPLICABILITY.

No provision of this subtitle shall apply to, or be deemed
to include--
(1) the United States;
(2) a State or any political subdivision of a State;
(3) any foreign governmental authority not operating in the
United States;
(4) any agency, authority, or instrumentality of any entity
referred to in paragraph (1), (2), or (3); or
(5) any officer, agent, or employee of any entity referred
to in paragraph (1), (2), or (3) acting as such in the course
of such officer, agent, or employee's official duty.

SEC. 208. EFFECT ON OTHER REGULATIONS.

Nothing in this subtitle precludes the Commission or a
State commission from exercising its jurisdiction under
otherwise applicable law to protect utility customers.

SEC. 209. ENFORCEMENT.

The Commission shall have the same powers as set forth in
sections 306 through 317 of the Federal Power Act (16 U.S.C.
825e-825p) to enforce the provisions of this subtitle.

SEC. 210. SAVINGS PROVISIONS.

(a) In General.--Nothing in this subtitle prohibits a
person from engaging in or continuing to engage in activities
or transactions in which it is legally engaged or authorized
to engage on the date of enactment of this Act, if that
person continues to comply with the terms of any such
authorization, whether by rule or by order.
(b) Effect on Other Commission Authority.--Nothing in this
subtitle limits the authority of the Commission under the
Federal Power Act (16 U.S.C. 791a and following) (including
section 301 of that Act) or the Natural Gas Act (15 U.S.C.
717 and following) (including section 8 of that Act).

SEC. 211. IMPLEMENTATION.

Not later than 12 months after the date of enactment of
this Act, the Commission shall--
(1) promulgate such regulations as may be necessary or
appropriate to implements this subtitle; and
(2) submit to Congress detailed recommendations on
technical and conforming amendments to Federal law necessary
to carry out this subtitle and the amendments made by this
subtitle.

SEC. 212. TRANSFER OR RESOURCES.

All books and records that relate primarily to the
functions transferred to the Commission under this subtitle
shall be transferred from the Securities and Exchange
Commission to the Commission.

SEC. 213. EFFECTIVE DATE.

This subtitle shall take effect 12 months after the date of
enactment of this Act.

SEC. 214. CONFORMING AMENDMENT TO THE FEDERAL POWER ACT.

Section 318 of the Federal Power Act (16 U.S.C. 825q) is
repealed.

Subtitle B--Provisions Regarding The Public Utility Regulatory Policies
Act of 1978

SEC. 215. PROSPECTIVE REPEAL OF SECTION 210.

(a) New Contracts.--After the date of enactment of this
Act, no electric utility shall be required to enter into a
new contract or obligation to purchase or to sell electric
energy or capacity pursuant to section 210 of the Public
Utility Regulatory Policies Act of 1978 (16 U.S.C. 824a-3).
(b) Existing Rights and Remedies Not Affected.--Nothing in
this Act affects the rights or remedies of any party with
respect to the purchase or sale of electric energy or
capacity from or to a facility determined to be a qualifying
small power production facility or a qualifying cogeneration
facility under section 210 of the Public Utility Regulatory
Policies Act of 1978 pursuant to any contract or obligation
to purchase or to sell electric energy or capacity in effect
on the date of enactment of this Act, including the right to
recover the costs of purchasing such electric energy or
capacity.

SEC. 216. RECOVERY OF COSTS.

In order to assure recovery by electric utilities
purchasing electric energy or capacity from a qualifying
facility pursuant to any legally enforceable obligation
entered into or imposed pursuant to section 210 of the Public
Utility Regulatory Policies Act of 1978 prior to the date of
enactment of this Act, of all costs associated with such
purchases, the Commission shall promulgate and enforce such
regulations as may be required to assure that no such
electric utility shall be required directly or indirectly to
absorb the costs associated with such purchases from a
qualifying facility. Such regulations shall be treated as a
rule enforceable under the Federal Power Act (16 U.S.C. 791a-
825r).

SEC. 217. DEFINITIONS.

For purposes of this subtitle, the terms ``Commission'',
``electric utility'', ``qualifying cogeneration facility'',
and ``qualifying small power production facility'', shall
have the same meanings as provided in the Public Utility
Regulatory Policies Act of 1978, and the term ``qualifying
facility'' shall mean either a qualifying small production
facility or a qualifying cogeneration facility as defined
in such Act.

TITLE III--MARKET TRANSPARENCY, ANTIMANIPULATION AND ENFORCEMENT

Subtitle A--Market Transparency, Anti-Manipulation and Enforcement

SEC. 301. MARKET TRANSPARENCY RULES.

Part II of the Federal Power Act is amended by adding after
section 215 as added by this Act the following:

``sec. 216. market transparency rules.

``(a) Commission Rules.--Not later than 180 days after the
date of enactment of this section, the Commission shall issue
rules establishing an electronic information system to
provide the Commission and the public with access to such
information as is necessary or appropriate to facilitate
price transparency and participation in markets subject to
the Commission's jurisdiction. Such systems shall provide
statistical information about the availability and market
price of wholesale electric energy and transmission services
to the Commission, State commissioners, buyers and sellers of
wholesale electric energy, users of transmission services,
and the public on a timely basis.
``(b) Information Required.--The Commission shall require--
``(1) each regional transmission organization or, where no
regional transmission organization is operating, each
transmitting utility to provide information about the
available capacity of transmission facilities operated by the
organization or transmitting utility; and
``(2) each regional transmission organization or broker or
exchange to provide aggregate information about the amount
and price of physical sales of electric energy at wholesale
in interstate commerce it transacts.
``(c) Definition.--For purposes of this section, the term
`broker or exchange' means an entity that matches offers to
sell and offers to buy physical sales of wholesale electric
energy in interstate commerce.
``(d) Protection of Sensitive Information.--The Commission
shall exempt from disclosure information it determines would,
if disclosed, be detrimental to the operation of an effective
market.''.

SEC. 302. MARKET MANIPULATION.

(a) Part II of the Federal Power Act is amended by adding
after section 216 as added by this Act the following:

``SEC. 217. PROHIBITION ON FILING FALSE INFORMATION.

``It shall be a violation of this Act for any person
willfully and knowingly to report any information relating to
the price of electricity sold at wholesale, which information
the person knew to be false at the time of the reporting, to
any governmental or non-governmental entity and with the
intent to manipulate the date being compiled by such
entity.''.

``SEC. 218. PROHIBITION ON ROUND TRIP TRADING.

``(a) Prohibition.--It shall be a violation of this Act for
any person willfully and knowingly to enter into any contract
or other arrangement to execute a ``round-trip trade'' for
the purchase or sale of electric energy at wholesale.
``(b) Definition of Round-Trip Trade.--For the purposes of
this section, the term `round trip trade' means a
transaction, or combination of transactions, in which a
person or other entity--
``(1) enters into a contract or other arrangement to
purchase from, or sell to, any other person or other entity
electric energy at wholesale;
``(2) simultaneously with entering into the contract or
arrangement described in paragraph (1), arranges a
financially offsetting trade with such other person or entity
for the same such electric energy, at the same location,
price, quantity and terms so that, collectively, the purchase
and sale transactions in themselves result in no financial
gain or loss; and
``(3) enters into the contract or arrangement with the
intent to deceptively affect reported revenues, trading
volumes, or prices.''.

SEC. 303. ENFORCEMENT.

(a) Complaints.--Section 306 of the Federal Power Act (16
U.S.C. 825e) is amended by--
(1) inserting ``electric utility,'' after ``Any person,'';
and
(2) inserting ``transmitting utility,'' after ``license''
each place it appears.
(b) Investigations--Section 307(a) of the Federal Power Act
(16 U.S.C. 825f((a)) is amended by inserting ``or
transmitting utility'' after ``any person'' in the first
sentence.
(c) Review of Commission Orders.--Section 313(a) of the
Federal Power Act (16 U.S.C. 8251) is amended by inserting
``electric utility,'' after ``Any person,'' in the first
sentence.
(d) Criminal Penalties--Section 316 of the Federal Power
Act (16 U.S.C. 825o) is amended--
(1) in subsection (a), by striking ``$5,000'' and inserting
``$1,000,000'', and by striking ``two years'' and inserting
``five years'';
(2) in subsection (b), by striking ``$500'' and inserting
``$25,000''; and
(3) by striking subsection (c).
(e) Civil Penalties.--Section 316A of the Federal Power Act
(16 U.S.C. 825o-1 is amended--
(1) in subsections (a) and (b), by striking ``section 211,
212, 213, or 214'' each place it appears and inserting ``Part
II''; and
(2) in subsection (b), by striking ``$10,000'' and
inserting ``$1,000,000''.

[[Page S2935]]

Subtitle B--Refund Effective Date

SEC. 304. REFUND EFFECTIVE DATE.

Section 206(b) of the Federal Power Act (16 U.S.C. 824e(b))
is amended by--
(1) striking ``the date 60 days after the filing of such
complaint nor later than 5 months after the expiration of
such 60-day period'' in the second sentence and inserting
``the date of the filing of such complaint nor later than 5
months after the filing of such complaint'';
(2) striking ``60 days after'' in the third sentence and
inserting ``of'';
(3) striking ``expiration of such 60-day period'' in the
third sentence and inserting ``publication date''; and
(4) striking the fifth sentence and inserting in lieu
thereof; ``If no final decision is rendered by the conclusion
of the 180-day period commencing upon initiation of a
proceeding pursuant to this section, the Commission shall
state the reasons why it has failed to do so and shall state
its best estimate as to when it reasonably expects to make
such decision.''.
______

By Mr. FEINGOLD (for himself, Mr. Leahy, and Mr. Dayton):
S. 477. A bill to amend the Internal Revenue Code of 1986 to disallow
deductions and credits for companies who discriminate against Canadian
pharmacies that pass along discounts to consumers living in the United
States; to the Committee on Finance.
Mr. FEINGOLD. Mr. President, I rise today to introduce legislation on
behalf of Wisconsin's seniors and taxpayers whose wallets are being
gauged by certain pharmaceutical companies. My legislation is in
response to certain pharmaceutical companies' decision to target
seniors who are crossing into Canada to get more affordable
prescription drugs for their own use.
If these pharmaceutical companies are going to price gauge seniors's
wallets, they don't deserve the taxpayers' support.
A growing number of American seniors are obtaining their prescription
drugs from Canada for personal use.
Unfortunately, many of these seniors who are crossing the boarder to
access more affordable prescription drugs for their personal use are
being targeted by the very pharmaceutical companies that receive
millions in tax breaks.
I recently received a call from seniors in my state that Glaxo Smith
Klein had decided to stop supplying Canadian pharmacies that resell its
drugs to Americans, thereby preventing them from receiving the same
benefits these pharmacies provide to Canadians.
The Seniors in my State were not the only ones who took notice of
this action. On February 21st of this month, Seniors groups from 12
States, including Wisconsin, sent Glaxo a message by launching a
boycott of nonprescription products of Glaxo-Smith-Kline.
Congress should also send all pharmaceutical companies a message that
this practice simply is unacceptable.
I think the single most important step we can take is to modernize
Medicare and make it better is to eliminate the current inequities in
the Medicare system and provide the prescription drug coverage senior
citizens need.
At the same time Congress should pass legislation, that Senators
Schumer, McCain, and I introduced that would bring lower-cost generic
drugs to the market faster and lower the cost of prescription drugs by
$60 billion.
Until we pass a comprehensive prescription drug benefit, we must
ensure that seniors are not targeted by pharmaceutical companies. If
these drug companies actively discriminate against American seniors, we
should not provide them tax breaks.
That's why my legislation would deny tax breaks to drug companies who
discriminate against Canadian pharmacies that provide Americans the
same discount that they provide to Canadians.
I urge my colleagues to join me in cosponsoring this legislation.
______

By Mr. SARBANES (for himself, Mr. Warner, Mrs. Murray, Mr.
Campbell, Mrs. Hutchison, Mrs. Clinton, Mr. Sessions, and Mr.
Miller):
S. 478. A bill to grant a Federal charter Korean War Veterans
Association, Incorporated, and for other purposes; to the Committee on
the Judiciary.
Mr. SARBANES. Mr. President, today I am once again introducing
legislation together with Senators Warner, Campbell, Murray, Clinton,
Sessions, Hutchison and Miller which would grant a Federal Charter to
the Korean War Veterans Association, Incorporated. This legislation,
which has passed the Senate in the past two Congresses, recognizes and
honors the 5.7 million Americans who fought and served during the
Korean War for their struggles and sacrifices on behalf of freedom and
the principles and ideals of our nation.
For the past three years, under the direction of Public Law 105-85,
we have been marking the 50th Anniversary of the events of the Korean
War--beginning with the events of June 1950 when the North Korea
People's Army swept across the 38th Parallel to occupy Seoul, South
Korea. Members of our Armed Forces--including many from the State of
Maryland--immediately answered the call of the U.N. to repel this
forceful invasion. Without hesitation, these soldiers traveled to an
unfamiliar corner of the world to join an unprecedented multi-national
force comprised of 22 countries and risked their lives to protect
freedom. The Americans who led this international effort were true
patriots who fought with remarkable courage.
In battles such as Pork Chop Hill, the Inchon Landing and the frozen
Chosin Reservoir, which was fought in temperatures as low as fifty-
seven degrees below zero, they faced some of the most brutal combat in
history. This year, on July 27, we will commemorate the 50th
Anniversary of the signing of the Military Armistice Agreement which
officially ended armed hostilities. By the time the fighting had ended,
8,177 Americans were listed as missing or prisoners of war--some of
whom are still missing--and over 36,000 Americans had died. One hundred
and thirty-one Korean War Veterans were awarded the nation's highest
commendation for combat bravery, the Medal of Honor. Ninety-four of
these soldiers gave their lives in the process.
There is an engraving on the Korean War Veterans Memorial which
reflects these losses and how brutal a war this was. It reads,
``Freedom is not Free.'' Yet, as a Nation, we have done little more
than establish this memorial to publicly acknowledge the bravery of
those who fought in the Korean War. The Korean War has been termed by
many as the ``Forgotten War.'' Freedom is not free. We owe our Korean
War Veterans a debt of gratitude. Granting this Federal charter--at no
cost to the government--is a small expression of appreciation that we
as a Nation can offer to these men and women, one which will enable
them to work as a unified front to ensure that the ``Forgotten War'' is
forgotten no more.
The Korean War Veterans Association was originally incorporated on
June 25, 1985. Since its first annual reunion and memorial service in
Arlington, Virginia, where its members decided to develop a national
focus and strong commitment to service, the association has grown
substantially to a membership of approximately 19,000. A Federal
charter would allow the Association to continue and grow its mission
and further its charitable and benevolent causes. Specifically, it will
afford the Korean War Veterans' Association the same status as other
major veterans organizations and allow it to participate as part of
select committees with other congressionally chartered veterans and
military groups. A Federal charter will also accelerate the
Association's ``accreditation'' with the Department of Veterans Affairs
which will enable its members to assist in processing veterans' claims.
The Korean War Veterans have asked for very little in return for
their service and sacrifice. I urge my colleagues to join me in
supporting this legislation and ask that the text of the measure be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 478

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

SECTION 1. GRANT OF FEDERAL CHARTER TO KOREAN WAR VETERANS
ASSOCIATION, INCORPORATED.

(a) Grant of Charter.--Part B of subtitle II of title 36,
United States Code, is amended--
(1) by striking the following:

``CHAPTER 1201--[RESERVED]''; and

(2) by inserting the following:

``CHAPTER 1201--KOREAN WAR VETERANS ASSOCIATION, INCORPORATED

``Sec.
``120101. Organization.

[[Page S2936]]

``120102. Purposes.
``120103. Membership.
``120104. Governing body.
``120105. Powers.
``120106. Restrictions.
``120107. Duty to maintain corporate and tax-exempt status.
``120108. Records and inspection.
``120109. Service of process.
``120110. Liability for acts of officers and agents.
``120111. Annual report.

``Sec. 120101. Organization

``(a) Federal Charter.--Korean War Veterans Association,
Incorporated (in this chapter, the `corporation'),
incorporated in the State of New York, is a federally
chartered corporation.
``(b) Expiration of Charter.--If the corporation does not
comply with the provisions of this chapter, the charter
granted by subsection (a) expires.

``Sec. 120102. Purposes

``The purposes of the corporation are as provided in its
articles of incorporation and include--
``(1) organizing, promoting, and maintaining for benevolent
and charitable purposes an association of persons who have
seen honorable service in the Armed Forces during the Korean
War, and of certain other persons;
``(2) providing a means of contact and communication among
members of the corporation;
``(3) promoting the establishment of, and establishing, war
and other memorials commemorative of persons who served in
the Armed Forces during the Korean War; and
``(4) aiding needy members of the corporation, their wives
and children, and the widows and children of persons who were
members of the corporation at the time of their death.

``Sec. 120103. Membership

``Eligibility for membership in the corporation, and the
rights and privileges of members of the corporation, are as
provided in the bylaws of the corporation.

``Sec. 120104. Governing body

``(a) Board of Directors.--The board of directors of the
corporation, and the responsibilities of the board of
directors, are as provided in the articles of incorporation
of the corporation.
``(b) Officers.--The officers of the corporation, and the
election of the officers of the corporation, are as provided
in the articles of incorporation.

``Sec. 120105. Powers

``The corporation has only the powers provided in its
bylaws and articles of incorporation filed in each State in
which it is incorporated.

``Sec. 120106. Restrictions

``(a) Stock and Dividends.--The corporation may not issue
stock or declare or pay a dividend.
``(b) Political Activities.--The corporation, or a director
or officer of the corporation as such, may not contribute to,
support, or participate in any political activity or in any
manner attempt to influence legislation.
``(c) Loan.--The corporation may not make a loan to a
director, officer, or employee of the corporation.
``(d) Claim of Governmental Approval or Authority.--The
corporation may not claim congressional approval, or the
authority of the United States, for any of its activities.

``Sec. 120107. Duty to maintain corporate and tax-exempt
status

``(a) Corporate Status.--The corporation shall maintain its
status as a corporation incorporated under the laws of the
State of New York.
``(b) Tax-Exempt Status.--The corporation shall maintain
its status as an organization exempt from taxation under the
Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.).

``Sec. 120108. Records and inspection

``(a) Records.--The corporation shall keep--
``(1) correct and complete records of account;
``(2) minutes of the proceedings of its members, board of
directors, and committees having any of the authority of its
board of directors; and
``(3) at its principal office, a record of the names and
addresses of its members entitled to vote on matters relating
to the corporation.
``(b) Inspection.--A member entitled to vote on matters
relating to the corporation, or an agent or attorney of the
member, may inspect the records of the corporation for any
proper purpose, at any reasonable time.

``Sec. 120109. Service of process

``The corporation shall have a designated agent in the
District of Columbia to receive service of process for the
corporation. Notice to or service on the agent is notice to
or service on the Corporation.

``Sec. 120110. Liability for acts of officers and agents

``The corporation is liable for the acts of its officers
and agents acting within the scope of their authority.

``Sec. 120111. Annual report

``The corporation shall submit an annual report to Congress
on the activities of the corporation during the preceding
fiscal year. The report shall be submitted at the same time
as the report of the audit required by section 10101 of this
title. The report may not be printed as a public document.''.
(b) Clerical Amendment.--The table of chapters at the
beginning of subtitle II of title 36, United States Code, is
amended by striking the item relating to chapter 1201 and
inserting the following new item:

``1201. Korean War Veterans Association, Incorporated.....120101''.....

______

By Mr. EDWARDS:
S. 479. A bill to amend title IV of the Higher Education Act of 1965
to provide grants for homeland security scholarships; to the Committee
on Health, Education, Labor, and Pensions.
Mr. EDWARDS. Mr. President, I rise today to introduce the Protect
America Scholarships Act of 2003. The Act will draw talented young
people into professions that are vital to America's security and that
are critically short of expertise. It offers college students a simple
deal: If you'll serve for five years, we'll pay for your college.
The reason for this law is simple. Our country continues to have
tremendous homeland security needs. We have thousands of important jobs
that we aren't filling because we don't have the qualified people. And
we have thousands of young people who are looking to serve their
country, and who are also looking for ways to pay for college.
So this bill puts together the needs of our country and the idealism
of our young people. It says that young people who commit to meeting
priority homeland security needs will get money for college in return.
Let me give three examples of professions where this bill can make a
real difference.
First, our public health system suffers from a shortage of trained
professionals who can contribute to the fight against terrorism. Too
few medical professionals are trained to diagnose and treat diseases
caused by biological agents. Public health laboratories don't have the
capacity to test all the specimens suspected of being biological
agents. Local governments need as many as 15,000 new public health
preparedness employees. And despite the central role of nurses in
responding should terrorists attack with chemical or biological
weapons, there are more than 126,000 unfilled nursing positions today.
There are special roles in all of these professions that trained young
people could fill in important ways.
Second, the federal government faces a critical shortage of
policymakers and intelligence analysts with expertise in foreign
languages and cultures. The General Accounting Office has reported that
the FBI's efforts to combat terrorism have been impeded by a lack of
qualified translators. Thousands of hours of audiotapes and pages of
written material have not been reviewed or translated. Similarly, the
U.S. Department of State reports that lack of language fluency has
weakened its fight against international terrorism and drug
trafficking.
A third area where we need more people is fighting cyberterrorism. We
now live in a world where a terrorist can do as much damage with a
keyboard and a modem as with a gun or a bomb. By exploiting computer
vulnerabilities, terrorists might be able to shut down power for entire
cities for extended periods; disrupt our phones; poison our water;
erase financial records; paralyze our police, firefighters, and
ambulances; and stop all traffic on the Internet. Yet our workforce
specializing in cybersecurity remains inadequate. The federal
government has especially serious shortages. These vulnerabilities
leave our Federal agencies exposed to hackers, system shutdowns, and
cyberterrorists.
By offering up to $10,000 in college tuition, the Protect America
Scholarships Act will harness the patriotism and determination of a new
generation of Americans to urgent national priorities. The federal
government and a growing number of states, including North Carolina,
use similar programs to recruit teachers successfully. The recent Hart-
Rudman report identified student loan debt burdens as a particular
obstacle to attracting young adults into public service.
The safety of the American people depends on the millions of people
working to protect them. Today's bill will help recruit more talented
Americans to professions needed to defend our nation. I hope it will
earn the support of my colleagues.
I request unanimous consent that the text of the bill be printed in
the Record.

[[Page S2937]]

There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 479

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Protect America Scholarships
Act of 2003''.

SEC. 2. GRANTS AUTHORIZED.

Part A of title IV of the Higher Education Act of 1965 (20
U.S.C. 1070 et seq.) is amended by adding at the end the
following:

``Subpart 9--Homeland Security Scholarships

``SEC. 420K. PURPOSES.

``The purposes of this subpart are--
``(1) to recruit talented young people to professions that
are needed to ensure the Nation's homeland security; and
``(2) to make college education more affordable.

``SEC. 420L. DEFINITIONS.

``In this subpart:
``(1) Eligible entity.--The term `eligible entity' means a
partnership between--
``(A) an institution of higher education (or consortium of
such institutions); and
``(B) a qualified employer (or consortium of such
employers).
``(2) Eligible student.--The term `eligible student' means
an individual who--
``(A)(i) is enrolled as a full- or part-time student at an
institution of higher education with a qualified academic
major or program; or
``(ii) has been accepted for enrollment at an institution
of higher education and intends to major in a qualified
academic major or program;
``(B) submits an application for a scholarship under this
subpart; and
``(C) submits a written contract, prior to receiving
assistance, accepting payment of a scholarship in exchange
for providing qualified service.
``(3) Qualified academic major or program.--
``(A) In general.--The term `qualified academic major or
program' means an academic major or program of study
designated by the Secretary for each State in an annual
notice in the Federal Register that--
``(i) prepares students in such majors or programs for a
career that--

``(I) is primarily related to homeland security;
``(II) requires specialized expertise; and
``(III) suffers from a critical shortage of qualified
personnel; and

``(ii) is a--

``(I) national priority, as determined by the Secretary in
consultation with the Secretary of Homeland Security; or
``(II) State priority, as determined by the chief executive
officer in the State in which the student seeking a
scholarship under this subpart--

``(aa) graduated from secondary school; or
``(bb) is enrolled at an institution of higher education.
``(B) Continuation of qualification.--An academic major or
program of study designated by the Secretary under
subparagraph (A) shall continue to be considered a qualified
academic major or program for a student if such academic
major or program of study was a qualified academic major or
program at the time such student commenced study of such
major or program of study.
``(4) Qualified employer.--The term `qualified employer'
means--
``(A) a nonprofit organization; or
``(B) a public agency.
``(5) Qualified service.--
``(A) In general.--The term `qualified service' means full-
time employment with the qualified employer of the eligible
entity that awarded the eligible student a scholarship or
with another qualified employer (consistent with the
guidelines issued by the Secretary pursuant to subparagraph
(B)), for a period of 2 years for the first year of a
scholarship award and an additional 1 year for each
additional year of a scholarship award, in a position that--
``(i) is primarily related to homeland security;
``(ii) requires specialized expertise related to the
qualified academic major or program of the eligible student;
and
``(iii) suffers from a critical lack of qualified
personnel.
``(B) Service with different employer.--The Secretary shall
issue guidelines describing when employment may be completed
with a qualified employer who is not the qualified employer
of the eligible entity that awarded the eligible student a
scholarship.

``SEC. 420M. GRANTS TO ELIGIBLE ENTITIES.

``(a) In General.--From funds appropriated under section
420O, the Secretary shall award grants, on a competitive
basis, to eligible entities to enable the entities to award
scholarships to eligible students in exchange for qualified
service from such students.
``(b) Application.--An eligible entity that desires to
receive a grant under this subpart shall submit an
application to the Secretary at such time, in such manner,
and containing such information as the Secretary may require.
``(c) Use of Grant Funds.--
``(1) Scholarship awards.--An eligible entity that receives
a grant under this subpart shall award scholarships to
eligible students in exchange for qualified service from such
students.
``(2) Application form.--An eligible entity that receives a
grant under this subpart shall create an application form for
a student desiring to receive a scholarship under this
subpart, and include in such form a summary of the rights and
liabilities of a student whose application is approved (and
whose contract is accepted) by the eligible entity.
``(3) Contract.--
``(A) In general.--An eligible entity that receives a grant
under this subpart shall prepare a written contract that
shall be provided to a student desiring to receive a
scholarship under this subpart at the time that an
application is provided to such student.
``(B) Content.--The contract described in subparagraph (A)
shall be an agreement between the eligible entity and student
that states that, subject to subparagraph (C)--
``(i) the eligible entity agrees to provide the student
with a scholarship, that may be renewed in each year of study
at the institution of higher education for a total of not
more than 4 years; and
``(ii) the student agrees to--

``(I)(aa) accept provision of such a scholarship to the
student;
``(bb) maintain enrollment in the qualified academic major
or program until the student completes the course of study at
the institution of higher education;
``(cc) while enrolled in such qualified academic major or
program, maintain an acceptable level of academic standing
(as determined by the institution of higher education); and
``(dd) provide qualified service; and
``(II) repay the scholarship under the terms of this
subpart if the student fails to comply with the requirements
of subclause (I).

``(C) Limitation.--The contract described in subparagraph
(A) shall contain a provision that any financial obligation
of the United States arising out of a contract entered into
under this subpart and any obligation of the student which is
conditioned thereon, is contingent upon funds being
appropriated for scholarships under this subpart.
``(4) Information on scholarship recipients.--An eligible
entity that receives a grant under this subpart shall submit
a report to the Secretary at the time a scholarship award is
provided to an eligible student identifying--
``(A) such student's name, date of birth, and social
security number; and
``(B) the amount of such scholarship.
``(d) Matching Funds.--An eligible entity receiving Federal
assistance under this subpart shall contribute non-Federal
matching funds in an amount equal to 50 percent of the amount
of Federal assistance.
``(e) Duration of Grant.--Grants awarded under this subpart
shall be for a term of 5 years.

``SEC. 420N. SCHOLARSHIPS.

``(a) Submission of Application and Written Contract.--A
student that desires to receive a scholarship under this
subpart shall submit an application and written contract to
an eligible entity at such time, in such manner, and
containing such information as the eligible entity may
require.
``(b) Payment.--
``(1) In general.--Subject to paragraph (2), a scholarship
provided to an eligible student under this subpart for a
school year shall consist of payment to, or (in accordance
with paragraph (3)) on behalf of, the eligible student of the
amount of the tuition and fees, described in section 472(1),
of the eligible student in such school year.
``(2) Maximum scholarship amount.--A scholarship awarded
under this subpart during fiscal year 2004 shall not exceed
$10,000. The Secretary shall determine the maximum
scholarship amount for each succeeding fiscal year after
adjusting for inflation.
``(3) Contract.--The Secretary may contract with an
institution of higher education, in which an eligible student
is enrolled, for the payment to the institution of higher
education of the amounts of tuition and fees described in
paragraph (1).
``(c) Verification of Qualified Service.--
``(1) Documentation.----
``(A) From eligible student.--An eligible student that
receives a scholarship under this subpart shall submit
documentation to the eligible entity that awarded the student
the scholarship, under standards and procedures determined by
the eligible entity, verifying that the student has completed
such student's qualified service.
``(B) From eligible entity.--An eligible entity that
receives a grant under this subpart shall submit
documentation to the Secretary by a date specified by the
Secretary and under standards and procedures determined by
the Secretary, verifying that each eligible student awarded a
scholarship under this subpart has completed such student's
qualified service.
``(2) Role of secretary.--If the Secretary does not receive
satisfactory documentation under paragraph (1)(B) by the date
specified by the Secretary, then the Secretary shall collect
the scholarship amount determined under paragraph (3) as a
loan under the terms and conditions for repayment of loans
under part B (including provisions under such part that
provide for loan repayment over time).
``(3) Breach of agreement.--Subject to paragraph (4), if an
eligible student receives a scholarship under this subpart
and agrees to provide qualified service in consideration for
receipt of the scholarship, the eligible student is liable to
the Federal Government

[[Page S2938]]

for the amount of such award, for interest on such amount at
the rate applicable at the time of noncompliance for Stafford
loans under section 427A, and for reasonable collections
costs, if the eligible student fails to submit the
documentation required under paragraph (1)(A).
``(4) Waiver or suspension of liability.--The Secretary
shall waive liability under paragraph (3) if--
``(A) the student subsequently demonstrates that such
student has provided qualified service;
``(B) the student suffers death or permanent and total
disability;
``(C) the student is unable to complete the program in
which such student was enrolled due to the closure of the
institution of higher education; or
``(D) the Secretary determines that compliance by the
student with the agreement involved is impossible or would
involve extreme hardship to such student.
``(5) Amounts to remain available.--Any amounts collected
by the Secretary under this subsection shall remain available
for grant awards under this subpart.
``(d) Tax-Free.--The amount of any scholarship that is
received under this subpart shall not, consistent with
section 108(f) of the Internal Revenue Code of 1986, be
treated as gross income for Federal income tax purposes.

``SEC. 420O. AUTHORIZATION OF APPROPRIATIONS.

``There are authorized to be appropriated to carry out this
subpart--
``(1) $50,000,000 for fiscal year 2004;
``(2) $100,000,000 for fiscal year 2005;
``(3) $150,000,000 for fiscal year 2006; and
``(4) such sums as may be necessary for each of fiscal
years 2007 and 2008.''.
______

By Mr. HARKIN (for himself, Mr. Grassley, Mr. Kennedy, Mr.
Cochran, Mrs. Lincoln, Mr. Kerry, Mr. Bingaman, Mr. Dodd, Mr.
Baucus, and Mr. edwards):
S. 480. A bill to provide competitive grants for training court
reporters and closed captioners to meet requirements for realtime
writers under the Telecommunications Act of 1996, and for other
purposes; to the Committee on Commerce, Science, and Transportation.
Mr. HARKIN. Mr. President, today I am introducing legislation, the
Training for Realtime Writers Act of 2003, on behalf of myself and my
colleagues, Senators Grassley, Kennedy, Cochran, Lincoln, Kerry,
Bingaman, Dodd, and Baucus. The 1996 Telecom Act required that all
television broadcasts were to be captioned by 2006. This was a much
needed reform that has helped millions of deaf and hard-of-hearing
Americans to be able to take full advantage of television programing.
As of today, it is estimated that 3,000 captioners will be needed to
fulfill this requirement, and that number continues to increase as more
and more broadband stations come online. Unfortunately, the United
States only has 300 captioners. If our country expects to have media
fully captioned by 2006, something must be done.
This is an issue that I feel very strongly about because my late
brother, Frank, was deaf. I know personally that access to culture,
news, and other media was important to him and to others in achieving a
better quality of life. More than 28 million Americans, or 8 percent of
the population, are considered deaf or hard of hearing and many
requires captioning services to participate in mainstream activities.
In 1990, I authored legislation that required all television sets to be
equipped with a computer chip to decode closed captioning. This bill
completes the promise of that technology, affording deaf and hard of
hearing Americans the same equality and access that captioning
provides.
Though we don't necessarily think about it, on the morning of
September 11 was a perfect example of the need for captioners. Holli
Miller of Ankeny, IA, was captioning for Fox News. She was supposed to
do her three and a half hour shift ending at 8:00 a.m. but as we all
know, disaster struck. Despite the fact that she had already worked
most of her shift and had two small children to care for, Holli Miller
stayed right where she was and for nearly five more hours and continued
to caption. Without even the ability to take bathroom breaks, Holli
Miller made sure that deaf and hard of hearing people got the same news
the rest of us got on September 11. I want to personnally say thank you
to Holli Miller and all the many captioners and other people across the
country that made sure all Americans were alert and informed on that
tragic day.
But let me emphasize that the deaf and hard of hearing population is
only one of a number of groups that will benefit from the legislation.
The audience for captioning also includes individuals seeking to
acquire or improve literacy skills, including approximately 27 million
functionally illiterate adults, 3 to 4 million immigrants learning
English as a second language, and 18 million children learning to read
in grades kindergarten through 3. In addition, I see people using
closed captioning to stay informed everywhere--from the gym to the
airport. Captioning helps people educate themselves and helps all of us
stay informed and entertained when audio isn't the most appropriate
medium.
Although we have a few years to go until the deadline given by the
1996 Telecom Act, our nation is facing a serious shortage of
captioners. Over the past five years, student enrollment in programs
that train court reporters to become realtime writers has decreased
significantly, causing such programs to close on many campuses. Yet the
need for these skills continues to rise. That is why my colleagues and
I are introducing this vital piece of legislation. The Training for
Realtime Writers Act of 2003 would establish competitive grants to be
used toward training real time captioners. This is necessary to ensure
that we meet our goal set by the 1996 Telecom Act.
I urge my colleagues to review this legislation and I hope they will
join us in support and join us in our effort to win its passage. I ask
unanimous consent that the text of the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 480

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Training for Realtime
Writers Act of 2003''.

SEC. 2. FINDINGS.

Congress makes the following findings:
(1) As directed by Congress in section 723 of the
Communications Act of 1934 (47 U.S.C. 613), as added by
section 305 of the Telecommunications Act of 1996 (Public Law
104-104; 110 Stat. 126), the Federal Communications
Commission adopted rules requiring closed captioning of most
television programming, which gradually require new video
programming to be fully captioned beginning in 2006.
(2) More than 28,000,000 Americans, or 8 percent of the
population, are considered deaf or hard of hearing, and many
require captioning services to participate in mainstream
activities.
(3) More than 24,000 children are born in the United States
each year with some form of hearing loss.
(4) According to the Department of Health and Human
Services and a study done by the National Council on Aging--
(A) 25 percent of Americans over 65 years old are hearing
impaired;
(B) 33 percent of Americans over 70 years old are hearing
impaired; and
(C) 41 percent of Americans over 75 years old are hearing
impaired.
(5) The National Council on Aging study also found that
depression in older adults may be directly related to hearing
loss and disconnection with the spoken word.
(6) Empirical research demonstrates that captions improve
the performance of individuals learning to read English and,
according to numerous Federal agency statistics, could
benefit--
(A) 3,700,000 remedial readers;
(B) 12,000,000 young children learning to read;
(C) 27,000,000 illiterate adults; and
(D) 30,000,000 people for whom English is a second
language.
(7) Over the past 5 years, student enrollment in programs
that train court reporters to become realtime writers has
decreased significantly, causing such programs to close on
many campuses.

SEC. 3. AUTHORIZATION OF GRANT PROGRAM TO PROMOTE TRAINING
AND JOB PLACEMENT OF REALTIME WRITERS.

(a) In General.--The National Telecommunications and
Information Administration shall make competitive grants to
eligible entities under subsection (b) to promote training
and placement of individuals, including individuals who have
completed a court reporting training program, as realtime
writers in order to meet the requirements for closed
captioning of video programming set forth in section 723 of
the Communications Act of 1934 (47 U.S.C. 613) and the rules
prescribed thereunder.
(b) Eligible Entities.--For purposes of this Act, an
eligible entity is a court reporting program that--
(1) can document and demonstrate to the Secretary of
Commerce that it meets minimum standards of educational and
financial accountability, with a curriculum capable of
training realtime writers qualified to provide captioning
services;

[[Page S2939]]

(2) is accredited by an accrediting agency recognized by
the Department of Education; and
(3) is participating in student aid programs under title IV
of the Higher Education Act of 1965.
(c) Priority in Grants.--In determining whether to make
grants under this section, the Secretary of Commerce shall
give a priority to eligible entities that, as determined by
the Secretary of Commerce--
(1) possess the most substantial capability to increase
their capacity to train realtime writers;
(2) demonstrate the most promising collaboration with local
educational institutions, businesses, labor organizations, or
other community groups having the potential to train or
provide job placement assistance to realtime writers; or
(3) propose the most promising and innovative approaches
for initiating or expanding training and job placement
assistance efforts with respect to realtime writers.
(d) Duration of Grant.--A grant under this section shall be
for a period of two years.
(e) Maximum Amount of Grant.--The amount of a grant
provided under subsection (a) to an entity eligible may not
exceed $1,500,000 for the two-year period of the grant under
subsection (d).

SEC. 4. APPLICATION.

(a) In General.--To receive a grant under section 3, an
eligible entity shall submit an application to the National
Telecommunications and Information Administration at such
time and in such manner as the Administration may require.
The application shall contain the information set forth under
subsection (b).
(b) Information.--Information in the application of an
eligible entity under subsection (a) for a grant under
section 3 shall include the following:
(1) A description of the training and assistance to be
funded using the grant amount, including how such training
and assistance will increase the number of realtime writers.
(2) A description of performance measures to be utilized to
evaluate the progress of individuals receiving such training
and assistance in matters relating to enrollment, completion
of training, and job placement and retention.
(3) A description of the manner in which the eligible
entity will ensure that recipients of scholarships, if any,
funded by the grant will be employed and retained as realtime
writers.
(4) A description of the manner in which the eligible
entity intends to continue providing the training and
assistance to be funded by the grant after the end of the
grant period, including any partnerships or arrangements
established for that purpose.
(5) A description of how the eligible entity will work with
local workforce investment boards to ensure that training and
assistance to be funded with the grant will further local
workforce goals, including the creation of educational
opportunities for individuals who are from economically
disadvantaged backgrounds or are displaced workers.
(6) Additional information, if any, of the eligibility of
the eligible entity for priority in the making of grants
under section 3(c).
(7) Such other information as the Administration may
require.

SEC. 5. USE OF FUNDS.

(a) In General.--An eligible entity receiving a grant under
section 3 shall use the grant amount for purposes relating to
the recruitment, training and assistance, and job placement
of individuals, including individuals who have completed a
court reporting training program, as realtime writers,
including--
(1) recruitment;
(2) subject to subsection (b), the provision of
scholarships;
(3) distance learning;
(4) development of curriculum to more effectively train
realtime writing skills, and education in the knowledge
necessary for the delivery of high-quality closed captioning
services;
(5) assistance in job placement for upcoming and recent
graduates with all types of captioning employers;
(6) encouragement of individuals with disabilities to
pursue a career in realtime writing; and
(7) the employment and payment of personnel for such
purposes.
(b) Scholarships.--
(1) Amount.--The amount of a scholarship under subsection
(a)(2) shall be based on the amount of need of the recipient
of the scholarship for financial assistance, as determined in
accordance with part F of title IV of the Higher Education
Act of 1965 (20 U.S.C. 1087kk).
(2) Agreement.--Each recipient of a scholarship under
subsection (a)(2) shall enter into an agreement with the
National Telecommunications and Information Administration to
provide realtime writing services for a period of time (as
determined by the Administration) that is appropriate (as so
determined) for the amount of the scholarship received.
(3) Coursework and employment.--The Administration shall
establish requirements for coursework and employment for
recipients of scholarships under subsection (a)(2), including
requirements for repayment of scholarship amounts in the
event of failure to meet such requirements for coursework and
employment. Requirements for repayment of scholarship amounts
shall take into account the effect of economic conditions on
the capacity of scholarship recipients to find work as
realtime writers.
(c) Administrative Costs.--The recipient of a grant under
section 3 may not use more than 5 percent of the grant amount
to pay administrative costs associated with activities funded
by the grant.
(d) Supplement Not Supplant.--Grants amounts under this Act
shall supplement and not supplant other Federal or non-
Federal funds of the grant recipient for purposes of
promoting the training and placement of individuals as
realtime writers

SEC. 6. REPORTS.

(a) Annual Reports.--Each eligible entity receiving a grant
under section 3 shall submit to the National
Telecommunications and Information Administration, at the end
of each year of the grant period, a report on the activities
of such entity with respect to the use of grant amounts
during such year.
(b) Report Information.--
(1) In general.--Each report of an entity for a year under
subsection (a) shall include a description of the use of
grant amounts by the entity during such year, including an
assessment by the entity of the effectiveness of activities
carried out using such funds in increasing the number of
realtime writers. The assessment shall utilize the
performance measures submitted by the entity in the
application for the grant under section 4(b).
(2) Final report.--The final report of an entity on a grant
under subsection (a) shall include a description of the best
practices identified by the entity as a result of the grant
for increasing the number of individuals who are trained,
employed, and retained in employment as realtime writers.

SEC. 7. AUTHORIZATION OF APPROPRIATIONS.

There is authorized to be appropriated to carry out this
Act, amounts as follows:
(1) $20,000,000 for each of fiscal years 2004, 2005, and
2006.
(2) Such sums as may be necessary for fiscal year 2007.

Mr. GRASSLEY. Mr. President, I am pleased to once again be the lead
Republican cosponsor of the ``Training for Realtime Writers Act''. This
legislation that Senator Harkin and I are introducing today will
provide grants for the training of realtime reporters and captioners.
While we ran out of time to address this matter in the 107th Congress,
I would remind Senators of the looming problem related to a shortage of
what are called ``realtime writers''. Realtime writers are essentially
trained court reporters, much like the Official Reporters of Debates
here in the Senate, who use a combination of additional specialized
training and technology to transform words into text as they are
spoken. This can allow deaf and hard of hearing individuals to
understand live television as well as follow proceedings at a civic
function or in a classroom.
In the Telecommunications Act of 1996, Congress mandated that most
television programming be fully captioned by 2006 in order to allow the
28 million Americans who are deaf or had of hearing to have access to
the same news and information that many of us take for granted.
Information provides a vital link to the outside world. Americans
receive a large amount of their information about what is happening in
the world and right in their communities from television. Whether it is
an international crisis or a weather warning, information is necessary
to fully participate in our society. In order for those who are deaf
and hard of hearing to receive the same information as it is broadcast
on live television, groups of captions must work around the clock
transcribing words as they are spoken.
Currently, video-programming distributers must provide an average of
at least 900 hours of captioned programming. Starting in 2005, this
will increase to 1350 hours. By 2006, 100 percent of new nonexempt
programming must be provided with captions. At the same time, student
enrollment in programs that provide essential training in captioning
has decreased significantly, with programs closing on many campuses. In
order to meet the growing demand for realtime writers caused by this
mandate, we must do everything we can to increase the number of
individuals receiving this very specialized training.
Our bill will help address the shortage of individuals trained as
realtime writers by providing grants to accredited court reporting
programs to promote the training and placement of individuals as
realtime writers. Specifically, court reporting programs could use
these grants for item like recruitment of students for realtime writing
programs, need-based scholarships, distance learning, education and
training, job placement assistance, the encouragement of individuals
with disabilities to pursue a career as a realtime writer, and
personnel costs.

[[Page S2940]]

The expansion of distance learning opportunities in particular will
have an enormous impact by making training accessible to individuals
who want to become realtime writers but do not live in metropolitan
areas. Also, need based scholarships offered using these grants funds
would be subject to an agreement with the National Telecommunications
and Information Administration to provide realtime writing services for
a period of time.
We must act quickly because the shortage of individuals trained as
realtime writers will only grow more severe as the captioning mandate
in the 1996 Telecommunications Act continues to take effect. Failure to
act could leave the 28 million deaf or hard of hearing Americans
without the ability to fully participate in many of the professional,
educational, and civic activities that other Americans enjoy. Congress
was not able to complete work on this urgent matter before the end of
the 107th Congress, so we must redouble our efforts. I would urge all
senators to support the swift passage of this legislation.
______

By Mr. ALLEN (for himself and Mr. Warner):
S. 481. A bill to amend chapter 84 of title 5, United States Code, to
provide that certain Federal annuity computations are adjusted by 1
percentage point relating to periods of receiving disability payments,
and for other purposes; to the Committee on Governmental Affairs.
Mr. ALLEN. Mr. President, I rise today to introduce a bill to fairly
assist injured Federal employees. This legislation will adjust Federal
employees retirement computations to offset reductions in their
retirement arising from on-the-job injuries covered by the Workers
Compensation program. I introduced similar legislation last session
that was passed by the Senate. I would like to thank my colleague
Senator Warner the senior Senator from Virginia, for his valuable
support in cosponsoring this important effort.
This bill addresses a problem in the retirement program for Federal
employees that has been recognized but unresolved since 1986 when the
current retirement system was established. Unfortunately, complications
arising from the Tax Code and the Workers Rehabilitation Act of 1973
have blocked any solution.
My resolve to address this problem was inspired by Ms. Louise Kurtz,
a Federal employee from Virginia who was severely injured in the
September 11 attack on the pentagon. She suffered burns over 70 percent
of her body and lost all of her fingers. She has had many painful
surgeries and faces additional surgeries in the future. She continues
to endure rehabilitation over a year after suffering her injuries, yet
still hopes to return to work some day. Current law, however, does not
allow Mrs. Kurtz to contribute to her retirement program while she is
recuperating and receiving Workers' Compensation disability payments.
As a result, after returning to work and eventually retiring, she will
find herself inadequately prepared and unable to afford to retire
because of the lack of contributions during her recuperation.
As Ms. Kurt's situation reveals, Federal employee under the Federal
Employees Retirement System who have sustained an on-the-job injury and
are receiving disability compensation from the Department of Labor's
Office of Worker's Compensation Programs are unable to make
contributions or payments into Social Security or the Thrift Savings
Plan. Therefore, the future retirement benefits from both sources are
reduced.
This legislation offsets the reductions in Social Security and Thrift
savings Plan retirement benefits by increasing the Federal Employees
Retirement System Direct Benefit calculation by one percentage point
for extended periods of disability.
The passage of this bill ensures that the pensions of our hard-
working federal employees will be kept whole during a period of injury
and recuperations, especially now that many of them are on the
frontlines of protecting our homeland security in this new war on
terror. By protecting the retirement security of injured Federal
employee, we have provided an incentive for them to return to work and
increased our ability to retain our most dedicated and experienced
Federal workers. This is a reasonable and fair approach in which the
whole Senate acted in a logical and compassionate manner last fall. Let
us do so again.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 481

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

SECTION 1. ANNUITY COMPUTATION ADJUSTMENT FOR PERIODS OF
DISABILITY.

(a) In General.--Section 8415 of title 5, United States
Code, is amended--
(1) by redesignating the second subsection (i) as
subsection (k); and
(2) by adding at the end the following:
``(l) In the case of any annuity computation under this
section that includes, in the aggregate, at least 2 months of
credit under section 8411(d) for any period while receiving
benefits under subchapter I of chapter 81, the percentage
otherwise applicable under this section for that period so
credited shall be increased by 1 percentage point.''
(b) Conforming Amendment.--Section 8422(d)(2) of title 5,
United States Code (as added by section 122(b)(2) of Public
Law 107-135), is amended by striking ``8415(i)'' and
inserting ``8415(k)''.
(c) Applicability.--The amendments made by this section
shall apply with respect to any annuity entitlement which is
based on a separation from service occurring on or after the
date of enactment of this Act.
______

By Ms. COLLINS:
S. 482. A bill to reauthorize and amend the Magnuson-Stevens Fishery
Conservation and Management Act, and for other purposes; to the
Committee on Commerce, Science, and Transportation.
______

By Ms. COLLINS (for herself and Ms. SNOWE):
S. 483. A bill to authorize the Secretary of the Army to carry out a
project for the mitigation of shore damages attributable to the project
for navigation, Saco River, Maine; to the Committee on Environment and
Public Works.
Ms. COLLINS. Mr. President, I rise today to introduce two pieces of
legislation that will improve the lives of our Nation's fishermen who
are struggling to make a living on the sea.
Fishing is more than just a profession in New England. Fishing is a
culture and a way of life. This way of life is being threatened,
however, by excessive regulation and unnecessary litigation. Despite
scientific evidence of a rebound in fish stocks, New England's
fishermen are suffering under ever more burdensome restrictions.
Everyday, I hear from fishermen who struggle to support their families
because they have been deprived of their right to make an honest living
on the seas. The ``working waterfronts'' of our communities are in
danger if disappearing, likely to be replaced by development. When that
happens, a part of Maine's heritage is lost forever.
Today, I am introducing a package of amendments to the Magnuson-
Stevens Act that will deliver a resource management strategy that is
balanced, responsive, and sensible. It recognizes the fishermen's
strong commitment to conserving the stocks, and acknowledges fishermen
as partners in fisheries management.
The Fisheries Science and Management Improvement Act of 2003 will
address much needed improvements in the science and regulatory
standards of fisheries management. The Nation's fisheries management
system, as it is currently designed, is broken. If anyone doubts this
is the case, I want to point out that more than 100 lawsuits are
currently pending against the Department of Commerce involving
fisheries management plans.
Litigation is no way to manage one of our Nation's most important
ecological and economic resources. The fact is, the courts are simply
not well-suited to making biological and regulatory decisions.
Fisheries management is best left to those who know the subject best:
the fishermen, scientists, and regulators working together
cooperatively.

No one in the country knows this better than New England
groundfishermen. Over the last two years, a court case has thrown New
England's groundfishing industry into a crisis. The case ended when a
Federal judge ordered severe restrictions on groundfishing, including a
20-percent

[[Page S2941]]

cut in Days-at-Sea. The effect of this court order has been simply
catastrophic for New England's groundfishing industry--an industry made
up of small, independently-owned, and often family-owned, businesses.
These severe restrictions were ordered despite the fact that the
science clearly demonstrates that the biomass for New England
groundfish has increased every year since 1996. If the biomass is
increasing, and the stock is clearly rebuilding, it makes no sense to
enforce an arbitrarily structured and unscientifically based timeframe
on the rebuilding process. This is especially true when the survival of
a culture is at stake.
My legislation would inject consistency and common-sense standards
into the fisheries management process: it addresses the importance of
solid and reliable science in fisheries management. It strengthens the
definition of ``best scientific information available'' and requires
scientific data, including all stock assessments, to be peer-reviewed
and to include the consideration of anecdotal information gathered from
the people who know fishing best--the fishermen themselves. My bill
ensures that the process of rebuilding stocks is based on rational and
comprehensive science. Under current law, when fisheries are classified
as overfished, the Councils are required to implement rebuilding plans
to attain a historic high level of abundance within ten years,
regardless of whether or not the current state of the marine
environment can sustain such an abundance level. My bill redefines the
concept of ``overfishing'' to take into consideration natural
fluctuations in the marine environment. It also eliminates the ten-year
rebuilding requirement--a requirement that has no foundation in
science--and requires rebuilding periods to take into consideration the
biology of the fish stock and the economic impact on fishing
communities.
The legislation also addresses problems with the current conception
of Essential Fish Habitat. Currently, the entire Exclusive Economic
Zone has been defined as Essential Fish Habitat instead of more
discrete units of habitat as originally conceived. Further, current law
allows the Councils to regulate the impacts of fishing activity on
Essential Fish Habitat, while the Councils cannot regulate other
commercial activities--such as mining and coastal development and the
laying of telecommunications cables--that affect these areas. My bill
focuses the management of these areas on ``Habitat Areas of Particular
Concern''--more discrete units of fish habitat that are more consistent
with the congressional intent behind the Essential Fish Habitat
concept.

My proposal treats the fishing industry as a legitimate interest in
fisheries management by acknowledging the important role that
commercial fishing plays in food security and healthy food consumption.
My bill also ensures that the cumulative economic and social impacts of
fisheries management decisions are considered, rather than assessed in
isolation from one another.
Finally, the legislation would reduce the litigation burden on the
fisheries management system. My proposal ensures that fishery
management plans are pre-determined to be compliant with NEPA
requirements, thereby preventing NEPA law from being used in an
incorrect way to regulate fisheries. It would still require fishery
management plans to meet all the other conservation provisions,
including those governing rebuilding of overfished stocks, set out in
the law. The Nation's Councils have asked for this protection from
lawsuits so they may resume their proper role as a regulatory body.
I want to acknowledge the important role that my colleagues Senators
Snowe and Kerry, Chair and Ranking Member of the Oceans and Fisheries
Subcommittee, are playing in addressing the problems of Magnuson-
Stevens. My hope is that my proposal will help propel a discussion in
the upcoming months as their committee moves forward with their own
ideas.
The second piece of legislation I am offering is the Commercial
Fishermen Safety Act of 2003, a bill to help fishermen purchase the
life-saving safety equipment they need to survive when disaster
strikes. I am pleased to be joined by my good friend from
Massachusetts, Senator Kerry, in introducing this legislation. Senator
Kerry has been a leader in the effort to sustain our fisheries and to
maintain the proud fishing tradition that exists in his state and
throughout the country.
The release of the movie The Perfect Storm provided millions of
Americans with a glimpse of the challenges and dangers associated with
earning a living in the fishing industry. While based on a true story,
the movie merely scratches the surface of what it is like to be a
modern-day fisherman. Everyday, members of our fishing communities
struggle to cope with the pressures of running a small business,
complying with extensive regulations, and maintaining their vessels and
equipment. Added to these challenges are the dangers associated with
fishing, where disaster can strike in conditions that are far less
extreme than those depicted by the movie.
Year-in and year-out, commercial fishing is among the nation's most
dangerous occupations. According to data compiled by the Coast Guard
and the Bureau of Labor Statistics, 536 fishermen have lost their lives
at sea since 1994. In fact, with an annual fatality rate of about 150
deaths per 100,000 workers, fishing is 30 times more dangerous than the
average occupation.
The year 2000 will always be remembered in Maine's fishing
communities as a year marked by tragedy. All told, nine commercial
fishermen lost their lives off the coast of Maine in the year 2000,
exceeding the combined casualties of the three previous years.
Yet as tragic as the year was, it could have been worse. Heroic acts
by the Coast Guard and other fishermen resulted in the rescue of 13
commercial fishermen off the coast of Maine in the year 2000. In most
of these circumstances, these fishermen were returned to their families
because they had access to safety equipment that made the difference
between life and death.
Coast Guard regulations require all fishing vessels to carry safety
equipment. The requirements vary depending on factors such as the size
of the vessel, the temperature of the water, and the distance the
vessel travels from shore to fish.
When an emergency arises, safety equipment is priceless. At all other
times, the cost of purchasing or maintaining this equipment must
compete with other expenses such as loan payments, fuel, wages,
maintenance, and insurance. Meeting all of these obligations is made
more difficult by a regulatory framework that uses measures such as
trip limits, days at sea, and gear alterations to manage our marine
resources.
The Commercial Fishermen Safety Act of 2003 lends a hand to fishermen
attempting to prepare in case disaster strikes. My bill provides a tax
credit equal to 75 percent of the amount paid by fishermen to purchase
or maintain required safety equipment. The tax credit is capped at
$1500. Items such as EPIRBs and immersion suits cost hundreds of
dollars, while life rafts can reach into the thousands. The tax credit
will make life-saving equipment more affordable for more fishermen, who
currently face limited options under the federal tax code.
I believe these two bills will assist our Nation's fishermen as they
struggle to make their living on the seas. Fishing is a legitimate
profession that deserves to be treated with the common-sense and
consistency that we treat other professions. The legislation I am
introducing gives these communities the tools they need to safely make
their living in a way that still protects the resource.
______

By Mr. LEAHY (for himself and Ms. Snowe):
S. 484. A bill to amend the Clean Air Act to establish requirements
concerning the operation of fossil fuel-fired electric utility stem
generating units, commercial and industrial boiler units, solid waste
incineration units, medical waste incinerators, hazardous waste
combustors, chlor-alkali plants, and Portland cement plants to reduce
emissions of mercury to the environment, and for other purposes; to the
Committee on Environmental and Public Works.
Mr. LEAHY. Mr. President, the risks and health effects of mercury
contamination continue to be serious and immediate. We have known about
mercury pollution for many years. It remains one of, if not the last
of, the

[[Page S2942]]

major toxic pollutants without a comprehensive plan to control its
spread. We know where the sources contributing to mercury contamination
are, we have a pretty good idea where it goes, and we definitely know
what harm it causes to people and to wildlife. Yet, serious
contamination continues. That is why I am reintroducing important
legislation today to confront this problem directly.
The most serious threat of mercury pollution is to our children. Just
this week, the Environmental Protection Agency finally released their
report, ``American's Children and the Environment: Measures of
Contaminants, Body Burdens and Illnesses.'' The report should alarm all
of us. It highlights the neurological harm that can come to children
exposed to elevated mercury levels while in the womb and during the
first years of their lives. As more mercury is dumped into our
environment, more children will be at risk. Today, according to the
Centers for Disease Control, 1 in 12 women of childbearing age has
mercury levels above the safe health threshold established by EPA.
Although the report comes nine months late, it does highlight a
serious gap between the Administration's ``Clear Skies'' proposal and
the Leahy/Snowe bill when it comes to reducing mercury levels. The only
thing clear about the Administration's proposal is that it won't
protect Vermont's children from the pollution spewing out of power
plants in the Midwest. The Administration's Clear Skies proposal will
actually relax current mercury emissions law.
Our bill will reduce mercury emission from coal-fired power plants by
90 percent. The Clear Skies proposal would only reduce emissions by 50
percent in the near future and 70 percent over the next 15 years. Not
only does this fall far short of our proposal, but it also falls short
of current law and the Administration's previous position. In 2001, EPA
Administrator Christie Todd Whitman said the EPA had initiated strict
``maximum achievable control technology'' MACT, standards for oil- and
coal-fired electric utility units as required under section 112 of the
Clean Air Act. At that time, Whitman said that mercury reductions are
``necessary now, not decades from now.''
Administrator Whitman was right then and wrong now. With industry's
vigorous opposition to tighter mercury controls and the Bush
administration's record to date rolling back environmental legislation
regulation, especially the Clean Air Act, I worry that more children
will be put at risk as the Administration continues to delay the MACT
standards and other policies. The delays and rollbacks make you ask
whose interests the Administration is putting first--children, or the
big powerplant companies?
I ask for unanimous consent that a summary of the bill be printed in
the Record.
There being no objection, the summary of the bill was ordered to be
printed in the Record, as follows:

Summary of the Omnibus Mercury Emissions Reduction Act of 2003

What will the Omnibus Mercury Emissions Reduction Act of 2003 do?

The Omnibus Mercury Emissions Reduction Act of 2003
mandates substantial reductions in mercury emissions from all
major sources in the United States. It is the only
comprehensive legislation to control mercury emissions from
all major sources. It directs EPA to issue new standards for
unregulated sources and to monitor and report on the progress
of currently regulated sources. It sets an aggressive
timetable for these reductions so that mercury emissions are
reduced as soon as possible.
With these emissions reductions, the bill requires the safe
disposal of mercury recovered from pollution control systems,
so that the hazards of mercury are not merely transferred
from one environmental medium to another. It requires annual
public reporting--in both paper and electronic form--of
facility-specific mercury emissions. It phases out mercury
use in consumer products, requires product labeling, and
mandates international cooperation. It supports research into
the retirement of excess mercury, the handling of mercury
waste, the effectiveness of fish consumption advisories, and
the magnitude of previously uninventoried sources.

Section 3. Mercury emission standards for fossil fuel-fired electric
utility steam generating units

The EPA's ``Mercury Study Report to Congress'' estimated 52
tons of mercury emissions per year from coal- and oil-fired
electric utility steam generating units. More recently, an
EPA inventory estimated 43 tons of mercury from coal-fired
power plants. Collectively, these power plants constitute the
largest source of mercury emissions in the United States. In
December 2000, the EPA issued a positive determination to
regulate these mercury emissions. But these rules will take
years to write and implement, and there is already vigorous
industry opposition. It is uncertain what form these rules
will take or how long they may be delayed. This section
requires EPA to set a ``maximum achievable control
technology'' (MACT) standard for these emissions, such that
nationwide emissions decrease by at least 90 percent.

Section 4. Mercury emission standards for coal- and oil-fired
commercial and industrial boiler units

The EPA's report on its study estimates that 29 tons of
mercury emissions are released per year from coal- and oil-
fired commercial and industrial boiler units. The EPA has not
yet decided to regulate these emissions. This section
requires EPA to set a MACT standard for these mercury
emissions, such that nationwide emissions decrease by at
least 90 percent.

section 5. reduction of mercury emissions from solid waste incineration
units

The EPA study estimates that 30 tons of mercury emissions
are released each year from municipal waste combustors. These
emissions result from the presence of mercury-containing
items such as fluorescent lamps, fever thermometers,
thermostats and switches, in municipal solid waste streams.
In 1995 EPA promulgated final rules for these emissions, and
these rules took effect in 2000. This section reaffirms those
rules and requires stricter rules for units that do not
comply. The most effective way to reduce mercury emissions
from incinerators is to reduce the volume of mercury-
containing items before they reach the incinerator. That is
why this section also requires the separation of mercury-
containing items from the waste stream, the labeling of
mercury-containing items to facilitate this separation, and
the phaseout of mercury in consumer products within three
years, allowing for the possibility of exceptions for
essential uses.

section 6. mercury emission standards for chlor-alkali plants

The EPA study estimates that 7 tons of mercury emissions
are released per year from chlor-alkali plants that use the
mercury cell process to produce chlorine. EPA has not issued
rules to regulate these emissions. This section requires each
chlor-alkali plant that uses the mercury cell process to
reduce its mercury emissions by 95 percent. The most
effective way to meet this standard would be to switch to the
more energy efficient membrane cell process, which many
plants already use.

section 7. mercury emission standards for portland cement plants

The EPA study estimates that 5 tons of mercury emissions
are released each year from Portland cement plants. In 1999
EPA promulgated final rules for emissions from cement plants,
but these rules did not include mercury. This section
requires each Portland cement plant to reduce its mercury
emissions by 95 percent.

section 8. report on implementation of mercury emission standards for
medical waste incinerators

The EPA study estimates that 16 tons of mercury emissions
are released per year from medical waste incinerators. In
1997 EPA issued final rules for emissions from hospital/
medical/infectious waste incinerators. This section requires
EPA to report on the success of these rules in reducing these
mercury emissions.

section 9. report on implementation of mercury emission standards for
hazardous waste combustors

The EPA study estimates that 7 tons of mercury emissions
are released each year form hazardous waste incinerators. In
1999 EPA promulgated final rules for these emissions. This
section requires EPA to report on the success of these rules
in reducing these mercury emissions.

section 10. defense activities

This section requires the Department of Defense to report
on its use of mercury, including the steps it is taking to
reduce mercury emissions and to stabilize and recycle
discarded mercury. This section also prohibits the Department
of Defense from returning the nearly 5,000 tons of mercury in
the National Defense Stockpile to the global market.

section 11. international activities

This section directs EPA to work with Canada and Mexico to
study mercury pollution in North America, including the
sources of mercury pollution, the pathways of the pollution,
and options for reducing the pollution.

section 12. mercury research

This section supports a variety of mercury research
projects. First, it promotes accountability by mandating an
interagency report on the effectiveness of this act in
reducing mercury pollution. Second, it mandates an EPA study
on mercury sedimentation trends in major bodies of water.
Third, it directs EPA to evaluate and improve state-level
mercury data and fish consumption advisories. Fourth, it
mandates a National Academy of Sciences report on the
reatirement of excess mercury, such as

[[Page S2943]]

stockpiled industrial mercury that is no longer needed due to
plant closures or process changes. Fifth, it mandates an EPA
study of mercury emissions from electric arc furnaces, a
source not studied in the EPA's study report. Finally, it
authorizes $2,000,000 for modernization and expansion of the
Mercury Deposition Network, plus $10,000,000 over ten years
for operational support of that network.

Ms. SNOWE. Mr. President, I rise today as the lead cosponsor of
Senator Leahy's Omnibus Mercury Reduction Act of 2003 to ask support
for our continued efforts to dramatically reduce mercury pollution that
has been shown to pose serious health risks, especially for pregnant
women, and can cause irreversible nerve damage in young children.
This legislation responds to the Environmental Protection Agency's
just released report on ``America's Children and the Environment:
Measures of Contaminants, Body Burdens, and Illnesses'', which states
that EPA remains concerned about children potentially exposed to
mercury in the womb.
Mercury is among the least-controlled and most dangerous toxins
threatening pregnant women and children from mercury exposure through
the air and water in America today, and we need to continue the fight
to pass a national approach to better control its use. Because mercury
pollution knows no State borders, a national initiative is necessary to
control it and better understand its health effects.
The Omnibus Mercury Emissions Reduction Act of 2003 would require the
U.S. Environmental Protection Agency, EPA, to impose new restrictions
on mercury emissions by utility power plants, coal and oil-fired
commercial boilers, solid waste incinerators, and other sources of
emissions. According to the EPA, an estimated 30 tons of mercury
emissions per year come from municipal waste combustors because of the
presence of mercury-containing items such as fluorescent lamps, fever
thermometers, thermostats, and switches.
Our bill requires utility power plants and commercial boilers to
reduce mercury emissions by 95 percent in five years, and requires the
EPA to publish a list of mercury-containing items that need to be
separated and removed from the waste streams that feed solid waste
management facilities. The most effective way to reduce mercury
emissions from incinerators is to reduce the volume of mercury-
containing items before they reach the incinerator.
The bill would also expand research on the effects of mercury on
sensitive subpopulations such as pregnant women and children, and it
directs the EPA to work with the States to improve the quality and
dissemination of State fish consumption advisories.
Even in Maine, where great efforts have been made to preserve clean
air and water, mercury arrives as an unseen threat, carried in the air
from hundreds of miles away and deposited in our lakes, rivers and
coastal regions through rain and snowfall. This bill complements the
steps Maine has taken to reduce mercury emissions, and by addressing
what happens outside our borders, it also can ensure that Maine's
actions will not be in vain.
Mercury is a dangerous toxin present in coal, which is burned to
produce 65 percent of the nation's electricity, other fossil fuels, and
various household and industrial products. When mercury is burned, fine
particles are released and carried by precipitation back to earth,
contaminating water bodies, fish, and wildlife, and ultimately posing a
threat to humans. Nationwide, 39 States have issued warnings about
eating certain fish in more than 50,000 bodies of water, up from 27
States in 1993.
While Maine ranks 49th among the least-polluting States in terms of
mercury emissions, nearly all of its lakes are under health advisories
due to airborne mercury pollution transported in air currents from
other States. Because mercury is an element and cannot be destroyed, it
cycles endlessly through the environment, necessitating control of the
toxin at the source.
With the technology and resources available, we can and must find
creative ways to substantially reduce mercury pollution, and this bill
kicks that process into gear and will go a very long way toward
removing this harmful toxin as a threat to human health and the
environment.
In partnership with the Omnibus mercury bill, I am also a cosponsor
of Senator Jeffords' Clean Power Act that calls for a 90 percent
reduction of mercury from coal burning power plants by 2008. By 2009,
the Jeffords bill also dramatically cuts aggregate power plant
emissions of the three other major power plant pollutants: nitrogen
oxides, NOx, the primary cause of smog, by 71 percent from
2000 levels; sulfur dioxide, SO2, that causes acid rain and
respiratory disease, by 81 percent from 2000 levels; and carbon
dioxide, CO2, the greenhouse gas most directly linked to
global climate variabilities, by 21 percent from 2000 levels. Of note,
the NOx, SO2, and mercury reductions are set at
levels that are known to be cost effective with available technology.
I hope to work with my colleagues in the 108th Congress to see that
provisions in these two bills are fully debated and policy is passed to
protect our environment and our population from the ravages of these
major air pollutants. We must move forward for the health of the
unborn, the American public and the entire planet.
______

By Mr. INHOFE (for himself and Mr. Voinovich) (by request):
S. 485. A bill to amend the Clean Air Act to reduce air pollution
through expansion of cap and trade programs, to provide an alternative
regulatory classification for units subject to the cap and trade
program, and for other purposes; to the Committee on Environment and
Public Works.
Mr. INHOFE. Mr. President, I hereby introduce, by request, the Clear
Skies Initiative to reduce harmful air pollutants.
I am pleased that Senator Voinovich and I and our counterparts in the
House have the opportunity to work with the President on one of his top
legislative priorities. Clear Skies demonstrates the President's
serious commitment to providing strong environmental protections for
the American people. It is the most aggressive presidential initiative
in history to reduce power plant emissions.
Clear Skies will build upon the remarkable environmental progress
we've made over the last 30 years. Since passage of the Clean Air Act
in 1970 the nation's gross domestic product has increased 160 percent,
energy consumption has increased 45 percent, and population has
increased 38 percent. At the same time we've reduced emissions by 29
percent.
President Bush understands that achieving positive environmental
results and promoting economic growth are not incompatible goals.
Moving beyond the confusing, command-and-control mandates of the past,
Clear Skies cap-and-trade system harnesses the power of technology and
innovation to bring about significant reductions in harmful pollutants.
I look forward to working with the Administration on crafting a sound
bill. I believe Clear Skies represents a good starting point for moving
forward with the legislative process.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 485

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

Sec. 1. Short title, table of contents.
Sec. 2. Emission Reduction Programs.

``TITLE IV--EMISSION REDUCTION PROGRAMS

``Part A--General Provisions

``Sec. 401. (Reserved)
``Sec. 402. Definitions.
``Sec. 403. Allowance system.
``Sec. 404. Permits and compliance plans.
``Sec. 405. Monitoring, reporting, and recordkeeping requirements.
``Sec. 406. Excess emissions penalty; general compliance with other
provisions; enforcement.
``Sec. 407. Election of additional units.
``Sec. 408. Clean coal technology regulatory incentives.
``Sec. 409. Auctions.
``Sec. 410. Evaluation of limitations on total sulfur dioxide, nitrogen
oxides, and mercury emissions that start in 2018.

[[Page S2944]]

``Part B--Sulfur Dioxide Emission Reductions

``Subpart 1--Acid Rain Program

``Sec. 410. Evaluation of limitations on total sulfur dioxide, nitrogen
oxides, and mercury emissions that start in 2018.
``Sec. 411. Definitions.
``Sec. 412. Allowance allocations.
``Sec. 413. Phase I sulfur dioxide requirements.
``Sec. 414. Phase II sulfur dioxide requirements.
``Sec. 415. Allowances for States with emission rates at or below .8
lbs/mmBtu.
``Sec. 416. Election for additional sources.
``Sec. 417. Auctions, Reserve.
``Sec. 418. Industrial sulfur dioxide emissions.
``Sec. 419. Termination.

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

``Sec. 421. Definitions.
``Sec. 422. Applicability.
``Sec. 423. Limitations on total emissions.
``Sec. 424. Allocations.
``Sec. 425. Disposition of sulfur dioxide allowances allocated under
subpart 1.
``Sec. 426. Incentives for sulfur dioxide emission control technology.

``Subpart 3--Western Regional Air Partnership

``Sec. 431. Definitions.
``Sec. 432. Applicability.
``Sec. 433. Limitations on total emissions.
``Sec. 434. Allocations.

``Part C--Nitrogen Oxides Emissions Reductions

``Subpart 1--Acid Rain Program

``Sec. 441. Nitrogen Oxides Emission Reduction Program.
``Sec. 442. Termination.

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

``Sec. 451. Definitions.
``Sec. 452. Applicability.
``Sec. 453. Limitations on total emissions.
``Sec. 454. Allocations.

``Subpart 3--Ozone Season NOX Budget Program

``Sec. 461. Definitions.
``Sec. 462. General Provisions.
``Sec. 463. Applicable Implementation Plan.
``Sec. 464. Termination of Federal Administration of NOX
Trading Program.
``Sec. 465. Carryforward of Pre-2008 Nitrogen Oxides Allowances.

``Part D--Mercury Emission Reductions

``Sec. 471. Definitions.
``Sec. 472. Applicability.
``Sec. 473. Limitations on total emissions.
``Sec. 474. Allocations.

``Part E--National Emission Standards; Research; Environmental
Accountability; Major Source Preconstruction Review and Best Available
Retrofit Control Technology Requirements

``Sec. 481. National emission standards for affected units.
``Sec. 482. Research, environmental monitoring, and assessment.
``Sec. 483. Exemption from major source preconstruction review and best
availability retrofit control technology requirements.''
Sec. 3. Other amendments.

SEC. 2. EMISSION REDUCTION PROGRAMS.

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

``TITLE IV--EMISSION REDUCTION PROGRAMS

``PART A--GENERAL PROVISIONS

``SEC. 401. (RESERVED)

``SEC. 402. DEFINITIONS.

``As used in this title--
``(1) The term `affected EGU' shall have the meaning set
forth in section 421, 431, 451, or 471, as appropriate.
``(2) The term `affected facility' or `affected source'
means a facility or source that includes one or more affected
units.
``(3) The term `affected unit' means--
``(A) under this part, a unit that is subject to emission
reduction requirements or limitations under part B, C, or D
or, it applicable, under a specified part or subpart; or
``(B) under subpart 1 of part B or subpart 1 of part C, a
unit that is subject to emission reduction requirements or
limitations under that subpart.
``(4) The term `allowance' means--
``(A) an authorization, by the Administrator under this
title, to emit one ton of sulfur dioxide, one ton of nitrogen
oxides, or one ounce of mercury; or
``(B) under subpart 1 of part B, an authorization by the
Administrator under this title, to emit one ton of sulfur
dioxide.
``(5)(A) The term `baseline heat input' means, except under
subpart 1 of part B and section 407, the average annual heat
input used by a unit during the 3 years in which the unit had
the highest heat input for the period 1998 through 2002.
``(B) Notwithstanding subparagraph (A), if a unit commenced
or commences operation during the period 2001 through 2004,
then `baseline heat input' means the manufacturer's design
heat input capacity for the unit multiplied by 80 percent for
coal-fired units, 50 percent for boilers that are not coal-
fired, 50 percent for combustion turbines other than simple
cycle turbines, and 5 percent for simple cycle combustion
turbines.
``(C) A unit's heat input for a year shall be the heat
input--
``(i) required to be reported under section 405 for the
unit, if the unit was required to report heat input during
the year under that section;
``(ii) reported to the Energy Information Administration
for the unit, if the unit was not required to report heat
input under section 405;
``(iii) based on data for the unit reported to the State
where the unit is located as required by State law, if the
unit was not required to report heat input during the year
under section 405 and did not report to the Energy
Information Administration; or
``(iv) based on fuel use and fuel heat content data for the
unit from fuel purchase or use records, if the unit was not
required to report heat input during the year under section
405 and did not report to the Energy Information
Administration and the State.
``(D) Not later than 3 months after the enactment of the
Clear Skies Act of 2003, the Administrator shall promulgate
regulations, without notice and opportunity for comment,
specifying the format in which the information under
subparagraphs (B)(ii) and (C)(ii), (iii), or (iv) shall be
submitted. Not later than 9 months after the enactment of the
Clear Skies Act of 2003, the owner or operator of any unit
under subparagraph (B)(ii) or (C)(ii), (iii), or (iv) to
which allowances may be allocated under section 424, 434,
454, or 474 shall submit to the Administrator such
information. The Administrator is not required to allocate
allowances under such sections to a unit for which the owner
or operator fails to submit information in accordance with
the regulations promulgated under this subparagraph.
``(6) The term `clearing price' means the price at which
allowances are sold at an auction conducted by the
Administrator or, if allowances are sold at an auction
conducted by the Administrator at more than one price, the
lowest price at which allowances are sold at the auction.
``(7) The term `coal' means any solid fuel classified as
anthracite, bituminous, subbituminous, or lignite.
``(8) The term `coal-derived fuel' means any fuel (whether
in a solid, liquid, or gaseous state) produced by the
mechanical, thermal, or chemical processing of coal.
``(9) The term `coal-fired' with regard to a unit means,
except under subpart 1 of part B, subpart 1 of part C, and
sections 424 and 434, combusting coal or any coal-derived
fuel alone or in combination with any mount of any other fuel
in any year.
``(10) The term `cogeneration unit' means, except under
subpart 1 of part B and subpart 1 of part C, a unit that
produces through the sequential use of energy:
``(A) electricity; and
``(B) useful thermal energy (such as heat or steam) for
industrial, commercial, heating, or cooling purposes.
``(11) The term `combustion turbine' means any combustion
turbine that is not self-propelled. The term includes, but is
not limited to, a simple cycle combustion turbine, a combined
cycle combustion turbine and any duct burner or heat recovery
device used to extract heat from the combustion turbine
exhaust, and a regenerative combustion turbine. The term does
not include a combined turbine in an integrated gasification
combined cycle plant.
``(12) The term `commence operation' with regard to a unit
means start up the unit's combustion chamber.
``(13) The term `compliance plan' means either--
``(A) a statement that the facility will comply with all
applicable requirements under this title, or
``(B) under subpart 1 of part B or subpart 1 of part C,
where applicable, a schedule and description of the method or
methods for compliance and certification by the owner or
operator that the facility is in compliance with the
requirements of that subpart.
``(14) The term `continuous emission monitoring system'
(CEMS) means the equipment as required by section 405, used
to sample, analyze, measure, and provide on a continuous
basis a permanent record of emissions and flow (expressed in
pounds per million British thermal units (lbs/mmBtu), pounds
per hour (lbs/hr) or such other form as the Administrator may
prescribe by regulations under section 405.
``(15) The term `designated representative' means a
responsible person or official authorized by the owner or
operator of a unit and the facility that includes the unit to
represent the owner or operator in matters pertaining to the
holding, transfer, or disposition of allowances, and the
submission of and compliance with permits, permit
applications, and compliance plans.
``(16) The term `duct burner' means a combustion device
that uses the exhaust from a combustion turbine to burn fuel
for heat recovery.
``(17) The term `facility' means all buildings, structures,
or installations located on one or more contiguous or
adjacent properties under common control of the same person
or persons.
``(18) The term `fossil fuel' means natural gas, petroleum,
coal, or any form of solid, liquid, or gaseous fuel derived
from such material.

[[Page S2945]]

``(19) The term `fossil fuel-fired' with regard to a unit
means combusting fossil fuel, alone or in combination with
any amount of other fuel or material.
``(20) The term `fuel oil' means a petroleum-based fuel,
including diesel fuel or petroleum derivatives.
``(21) The term `gas-fired' with regard to a unit means,
except under subpart 1 of part B and subpart 1 of part C,
combusting only natural gas or fuel oil, with natural gas
comprising at lease 90 percent, and fuel oil comprising no
more than 10 percent, of the unit's total heat input in any
year.
``(22) The term `gasify' means to convert carbon-containing
material into a gas consisting primarily of carbon monoxide
and hydrogen.
``(23) The term `generator' means a device that produces
electricity and, under subpart 1 of part B and subpart 1 of
part C, that is reported as a generating unit pursuant to
Department of Energy Form 860.
``(24) The term `heat input' with regard to a specific
period of time means the product (in mmBtu/time) of the gross
calorific value of the fuel (in mmBtu/lb) and the fuel feed
rate into a unit (in lb of fuel/time) and does not include
the heat derived from preheated combustion air, recirculated
flue gases, or exhaust.
``(25) The term `integrated gasification combined cycle
plant' means any combination of equipment used to gasify
fossil fuels (with or without other material) and then burn
the gas in a combined cycle combustion turbine.
``(26) The term `oil-fired' with regard to a unit means,
except under section 424 and 434, combusting fuel oil for
more than 10 percent of the unit's total heat input, and
combusting no coal or coal-derived fuel, in any year.
``(27) The term `owner or operator' with regard to a unit
or facility means, except for subpart 1 of part B and subpart
1 of part C, any person who owns, leases, operates, controls,
or supervises the unit or the facility.
``(28) The term `permitting authority' means the
Administrator, or the State or local air pollution control
agency, with an approved permitting program under title V of
the Act.
``(29) The term `potential electrical output' with regard
to a generator means the nameplate capacity of the generator
multiplied by 8,760 hours.
``(30) The term `simple cycle combustion turbine' means a
combustion turbine that does not extract heat from the
combustion turbine exhaust gases.
``(31) The term `source' means, except for sections 410,
481, and 482, all buildings, structures, or installations
located on one or more contiguous or adjacent properties
under common control of the same person or persons.
``(32) The term `State' means--
``(A) one of the 48 contiguous States, Alaska, Hawaii, the
District of Columbia, the Commonwealth of Puerto Rico, the
Virgin Islands, Guam, American Samoa, or the Commonwealth of
the Northern Mariana Islands; or
``(B) under subpart 1 of part B and subpart 1 of part C,
one of the 48 contiguous States or the District of Columbia.
``(33) The term `unit' means--
``(A) a fossil fuel-fired boiler, combustion turbine, or
integrated gasification combined cycle plan; or
``(B) under subpart 1 of part B and subpart 1 of part C, a
fossil fuel-fired combustion device.
``(34) The term `utility unit' shall have the meaning set
forth in section 411.
``(35) The term `year' means calendar year.

SEC. 403. ALLOWANCE SYSTEM.

``(a) Allocations in General.--
``(1) For the emission limitation programs under this
title, the Administrator shall allocate annual allowances for
an affected unit, to be held or distributed by the designated
representative of the owner or operator in accordance with
this title as follows--
``(A) sulfur dioxide allowances in an amount equal to the
annual tonnage emission limitation calculated under section
413, 414, 415, or 416, except as otherwise specifically
provided elsewhere in subpart 1 of part B, or in an amount
calculated under section 424 or 434,
``(B) nitrogen oxides allowances in an amount calculated
under section 454, and
``(C) mercury allowances in an amount calculated under
section 474.
``(2) Notwithstanding any other provision of law to the
contrary, the calculation of the allocation for any unit or
facility, and the determination of any values used in such
calculation, under sections 424, 434, 454, and 474 shall not
be subject to judicial review.
``(3) Allowances shall be allocated by the Administrator
without cost to the recipient, and shall be auctioned or sold
by the Administrator, in accordance with this title.
``(b) Allowance Transfer System.--Allowances allocated,
auctioned, or sold by the Administrator under this title may
be transferred among designated representatives of the owners
or operators of affected facilities under this title and any
other person, as provided by the allowance system regulations
promulgated by the Administrator. With regard to sulfur
dioxide allowances, the Administrator shall implement this
subsection under 40 CFR part 73 (2002), amended as
appropriate by the Administrator. With regard to nitrogen
oxides allowances and mercury allowances, the Administrator
shall implement this subsection by promulgating regulations
not later than 24 months after the date of enactment of the
Clear Skies Act of 2003. The regulations under this
subsection shall establish the allowance system prescribed
under this section, including, but not limited to,
requirements for the allocation, transfer, and use of
allowances under this title. Such regulations shall prohibit
the use of any allowance prior to the calendar year for which
the allowance was allocated or auctioned and shall provide,
consistent with the purposes of this title, for the
identification of unused allowances, and for such unused
allowances to be carried forward and added to allowances
allocated in subsequent years, except as otherwise provided
in section 425. Such regulations shall provide, or shall be
amended to provide, that transfers of allowances shall not be
effective until certification of the transfer, signed by a
responsible official of the transferor, is received and
recorded by the Administrator.
``(c) Allowance Tracking System.--The Administrator shall
promulgate regulations establishing a system for issuing,
recording, and tracking allowances, which shall specify all
necessary procedures and requirements for an orderly and
competitive functioning of the allowance system. Such system
shall provide, not later than the commencement date of the
nitrogen oxides allowance requirement under section 452, for
one or more facility-wide accounts for holding sulfur dioxide
allowances, nitrogen oxides allowances, and, if applicable,
mercury allowances for all affected units at an affected
facility. With regard to sulfur dioxide allowances, the
Administrator shall implement this subsection under 40 CFR
part 73 (2002), amended as appropriate by the Administrator.
With regard to nitrogen oxides allowances and mercury
allowances, the Administrator shall implement this subsection
by promulgating regulations not later than 24 months after
the date of enactment of the Clear Skies Act of 2002. All
allowance allocations and transfers shall, upon recording by
the Administrator, be deemed a part of each unit's or
facility's permit requirements pursuant to section 404,
without any further permit review and revision.
``(d) Nature of Allowances.--A sulfur dioxide allowance,
nitrogen oxides allowance, or mercury allowance allocated,
auctioned, or sold by the Administrator under this title is a
limited authorization to emit one ton of sulfur dioxide, one
ton of nitrogen oxides, or one ounce of mercury, as the case
may be, in accordance with the provisions of this title. Such
allowance does not constitute a property right. Nothing in
this title or in any other provision of law shall be
construed to limit the authority of the United States to
terminate or limit such authorization. Nothing in this
section relating to allowances shall be construed as
affecting the application of, or compliance with, any other
provision of this Act to an affected unit or facility,
including the provisions related to applicable National
Ambient Air Quality Standards and State implementation plans.
Nothing in this section shall be construed as requiring a
change of any kind in any State law regulating electric
utility rates and charges or affecting any State law
regarding such State regulation or as limiting State
regulation (including any prudency review) under such a State
law. Nothing in this section shall be construed as modifying
the Federal Power Act or as affecting the authority of the
Federal Energy Regulatory Commission under that Act. Nothing
in this title shall be construed to interfere with or impair
any program for competitive bidding for power supply in a
State in which such program is established. Allowances, once
allocated or auctioned to a person by the Administrator, may
be received, held, and temporarily or permanently transferred
in accordance with this title and the regulations of the
Administrator without regard to whether or not a permit is in
effect under title V or section 404 with respect to the unit
for which such allowance was originally allocated and
recorded.
``(e) Prohibition.--
``(1) It shall be unlawful for any person to hold, use, or
transfer any allowance allocated, auctioned, or sold by the
Administrator under this title, except in accordance with
regulations promulgated by the Administrator.
``(2) It shall be unlawful for any affected unit or for the
affected units at a facility to emit sulfur dioxide, nitrogen
oxides, and mercury, as the case may be, during a year in
excess of the number of allowances held for that unit or
facility for that year by the owner or operator as provided
in sections 412(c), 422, 432, 452, and 472.
``(3) The owner or operator of a facility may purchase
allowances directly from the Administrator to be used only to
meet the requirements of sections 422, 432, 452, and 472, as
the case may be, for the year in which the purchase is made
or the prior year. Not later than 36 months after the date of
enactment of the Clear Skies Act of 2003, the Administrator
shall promulgate regulations providing for direct sales of
sulfur dioxide allowances, nitrogen oxides allowances, and
mercury allowances to an owner or operator of a facility. The
regulations shall provide that--
``(A) such allowances may be used only to meet the
requirements of section 422, 432, 452, and 472, as the case
may be, for such facility and for the year in which the
purchase is made or the prior year,
``(B) each such sulfur dioxide allowance shall be sold for
$4,000, each such nitrogen

[[Page S2946]]

oxides allowance shall be sold for $4,000, and each such
mercury allowance shall be sold for $2,187.50, with such
prices adjusted for inflation based on the Consumer Price
Index on the date of enactment of the Clear Skies Act of 2003
and annually thereafter,
``(C) the proceeds from any sales of allowances under
subparagraph (B) shall be deposited in the United States
Treasury,
``(D) the allowances directly purchased for use for the
year specified in subparagraph (A) shall be taken from, and
reduce, the amount of sulfur dioxide allowances, nitrogen
oxides allowances, or mercury allowances, as the case may be,
that would otherwise be auctioned under section 423, 453, or
473 starting for the year after the specified year and
continuing for each subsequent year as necessary,
``(E) if an owner or operator does not use any such
allowance in accordance with paragraph (A)--
``(i) the owner or operator shall hold the allowance for
deduction by the Administrator, and
``(ii) the Administrator shall deduct the allowance,
without refund or other form of recompense, and offer it for
sale in the auction from which it was taken under
subparagraph (D) or a subsequent relevant auction as
necessary, and
``(F) if the direct sales of allowances result in the
removal of all sulfur dioxide allowances, nitrogen oxides
allowances, or mercury allowances, as the case may be, from
auctions under section 423, 453, or 473 for 3 consecutive
years, the Administrator shall conduct a study to determine
whether revisions to the relevant allowance trading program
are necessary and shall report the results to the Congress.
``(4) Allowances may not be used prior to the calendar year
for which they are allocated or auctioned. Nothing in this
section or in the allowance system regulations shall relieve
the Administrator of the Administrator's permitting,
monitoring and enforcement obligations under this Act, nor
relieve affected facilities of their requirements and
liabilities under the Act.
``(f) Competitive Bidding for Power Supply.--Nothing in
this title shall be construed to interfere with or impair any
program for competitive bidding for power supply in a State
in which such program is established.
``(g) Applicability of the Antitrust Laws.--(1) Nothing in
this section affects--
``(A) the applicability of the antitrust laws to the
transfer, use, or sale of allowances, or
``(B) the authority of the Federal Energy Regulatory
Commission under any provision of law respecting unfair
methods of competition or anticompetitive acts or practices.
``(2) As used in this section, `antitrust laws' means those
Acts set forth in section 1 of the Clayton Act (15 U.S.C.
12), as amended.
``(h) Public Utility Holding Company Act.--The acquisition
or disposition of allowances pursuant to this title including
the issuance of securities or the undertaking of any other
financing transaction in connection with such allowances
shall not be subject to the provisions of the Public Utility
Holding Company Act of 1935.
``(i) Interpollutant Trading.--Not later 6 years after the
enactment of the Clear Skies Act of 2003, the Administrator
shall furnish to the Congress a study evaluating the
environmental and economic consequences of amending this
title to permit trading sulfur dioxide allowances for
nitrogen oxides allowances and nitrogen oxides allowances for
sulfur dioxide allowances.
``(j) International Trading.--Not later than 24 months
after the date of enactment of the Clear Skies Act of 2003,
the Administrator shall furnish to the Congress a study
evaluating the feasibility of international trading of sulfur
dioxide allowances, nitrogen oxides allowances, and mercury
allowances.

``SEC. 404. PERMITS AND COMPLIANCE PLANS.

``(a) Permit Program.--The provisions of this title shall
be implemented, subject to section 403, by permits issued to
units and facilities subject to this title and enforced in
accordance with the provisions of title V, as modified by
this title. Any such permit issued by the Administrator, or
by a State with an approved permit program, shall prohibit--
``(1) annual emissions of sulfur dioxide, nitrogen oxides,
and mercury in excess of the number of allowances required to
be held in accordance with sections 412(c), 422, 432, 452,
and 472,
``(2) exceeding applicable emissions rates under section
441,
``(3) the use of any allowance prior to the year for which
it was allocated or auctioned, and
``(4) contravention of any other provision of the permit.

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

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

``(a) Applicability.--
``(1)(A) The owner and operator of any facility subject to
this title shall be required to install and operate CEMS on
each affected unit subject to subpart 1 of part B or subpart
1 of part C at the facility, and to quality assure the data,
for sulfur dioxide, nitrogen oxides, opacity, and volumetric
flow at each such unit.
``(B) The Administrator shall, by regulations, specify the
requirements for CEMS under subparagraph (A), for any
alternative monitoring system that is demonstrated as
providing information with the same precision, reliability,
accessibility, and time lines as that provided by CEMS, and
for recordkeeping and reporting of information from such
systems. Such regulations may include limitations on the use
of alternative compliance methods by units equipped with an
alternative monitoring system as may be necessary to preserve
the orderly functioning of the allowance system, and which
will ensure

[[Page S2947]]

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

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

``(a) Excess Emissions Penalty.--
``(1) Amount for oxides of nitrogen.--The owner or operator
of any unit subject to the requirements of section 441 that
emits nitrogen oxides for any calendar year in excess of the
unit's emissions limitation requirement shall be liable for
the payment of an excess emissions penalty, except where such
emission were authorized pursuant to section 110(f). That
penalty shall be calculated on the basis of the number of
tons emitted in excess of the unit's emissions limitation
requirement multiplied by $2,000.
``(2) Amount for sulfur dioxide before 2008.--The owner or
operator of any unit subject to the requirements of section
412(c) that emits sulfur dioxide for any calendar year before
2008 in excess of the sulfur dioxide allowances the owner or
operator holds for use for the unit for that calendar year
shall be liable for the payment of an excess emissions
penalty, except where such emissions were authorized pursuant
to section 110(f). That penalty shall be calculated as
follows:
``(A) the product of the unit's excess emissions (in tons)
multiplied by the clearing price of sulfur dioxide allowances
sold at the most recent auction under section 417, if within
thirty days after the date on which the owner or operator was
required to hold sulfur dioxide allowances--
``(i) the owner or operator offsets the excess emissions in
accordance with paragraph (b)(1); and
``(ii) the Administrator receives the penalty required
under this subparagraph.
``(B) if the requirements of clause (A)(i) or (A)(ii) are
not met, 300 percent of the product of the unit's excess
emissions (in tons) multiplied by the clearing price of
sulfur dioxide allowances sold at the most recent auction
under section 417.
``(3) Amount for sulfur dioxide after 2007.--If the units
at a facility that are subject to the requirements of section
412(c) emit sulfur dioxide for any calendar year after 2007
in excess of the sulfur dioxide allowances that the owner or
operator of the facility holds for use for the facility for
that calendar year, the owner or operator shall be liable for
the payment of an excess emissions penalty, except where such
emissions were authorized pursuant to section 110(f). That
penalty shall be calculated under paragraph (4)(A) or (4)(B).
``(4) Units subject to sections 422, 432, 452, or 472 .--If
the units at a facility that are subject to the requirements
of section 422, 432, 452, or 472 emit sulfur dioxide,
nitrogen oxides, or mercury for any calendar year in excess
of the sulfur dioxide allowances, nitrogen oxides allowances,
or mercury allowances, as the case may be, that the owner or
operator of the facility holds for use for the facility for
that calendar year, the owner or operator shall be liable for
the payment of an excess emissions penalty, except where such
emissions were authorized pursuant to section 110(f). That
penalty shall be calculated as follows:
``(A) the product of the units' excess emissions (in tons
or, for mercury emissions, in ounces) multiplied by the
clearing price of sulfur dioxide allowances, nitrogen oxides
allowances, or mercury allowances, as the case may be, sold
at the most recent auction under section 423, 453, or 473, if
within thirty days after the date on which the owner or
operator was required to hold sulfur dioxide, nitrogen oxides
allowance, or mercury allowances as the case may be--
``(i) the owner or operator offsets the excess emissions in
accordance with paragraph (b)(2) or (b)(3), as applicable;
and
``(ii) the Administrator receives the penalty required
under this subparagraph.
``(B) if the requirements of clause (A)(i) or (A)(ii) are
not met, 300 percent of the product of the units' excess
emissions (in tons or, for mercury emissions, in ounces)
multiplied by the clearing price of sulfur dioxide
allowances, nitrogen oxides allowances, or mercury
allowances, as the case may be, sold at the most recent
auction under section 423, 453, or 473.
``(5) Payment.--Any penalty under paragraph 1, 2, 3, or 4
shall be due and payable without demand to the Administrator
as provided in regulations issued by the Administrator. With
regard to the penalty under

[[Page S2948]]

paragraph 1, the Administrator shall implement this paragraph
under 40 CFR part 77 (2002), amended as appropriate by the
Administrator. With regard to the penalty under paragraphs 2,
3, and 4, the Administrator shall implement this paragraph by
issuing regulations no later than 24 months after the date of
enactment of the Clear Skies Act of 2003. Any such payment
shall be deposited in the United States Treasury. Any penalty
due and payable under this section shall not diminish the
liability of the unit's owner or operator for any fine,
penalty or assessment against the unit for the same violation
under any other section of this Act.
``(b) Excess Emissions Offset.--
``(1) The owner or operator of any unit subject to the
requirements of section 412(c) that emits sulfur dioxide
during any calendar year before 2008 in excess of the sulfur
dioxide allowances held for the unit for the calendar year
shall be liable to offset the excess emissions by an equal
tonnage amount in the following calendar year, or such longer
period as the Administrator may prescribe. The Administrator
shall deduct sulfur dioxide allowances equal to the excess
tonnage from those held for the facility for the calendar
year, or succeeding years during which offsets are required,
following the year in which the excess emissions occurred.
``(2) If the units at a facility that are subject to the
requirements of section 412(c) emit sulfur dioxide for a year
after 2007 in excess of the sulfur dioxide allowances that
the owner or operator of the facility holds for use for the
facility for that calendar year, the owner or operator shall
be liable to offset the excess emissions by an equal amount
of tons in the following calendar year, or such longer period
as the Administrator may prescribe. The Administrator shall
deduct sulfur dioxide allowances equal to the excess
emissions in tons from those held for the facility for the
year, or succeeding years during which offsets are required,
following the year in which the excess emissions occurred.
``(3) If the units at a facility that are subject to the
requirements of section 422, 432, 452, or 472 emit sulfur
dioxide, nitrogen oxides, or mercury for any calendar year in
excess of the sulfur dioxide allowances, nitrogen oxides
allowances, or mercury allowances, as the case may be, that
the owner or operator of the facility holds for use for the
facility for that calendar year, the owner or operator shall
be liable to offset the excess emissions by an equal amount
of tons or, for mercury, ounces in the following calendar
year, or such longer period as the Administrator may
prescribe. The Administrator shall deduct sulfur dioxide
allowances, nitrogen oxide allowances, or mercury allowances,
as the case may be, equal to the excess emissions in tons or,
for mercury, ounces from those held for the facility for the
year, or succeeding years during which offsets are required,
following the year in which the excess emissions occurred.
``(c) Penalty Adjustment.--The Administrator shall, by
regulation, adjust the penalty specified in subsection (a)(1)
for inflation, based on the Consumer Price Index, on November
15, 1990, and annually thereafter.
``(d) Prohibition.--It shall be unlawful for the owner or
operator of any unit or facility liable for a penalty and
offset under this section to fail--
``(1) to pay the penalty under subsection (a); or
``(2) to offset excess emissions as required by subsection
(b).
``(e) Savings Provision.--Nothing in this title shall limit
or otherwise affect the application of section 113, 114, 120,
or 304 except as otherwise explicitly provided in this title.
``(f) Other requirements.--Except as expressly provided,
compliance with the requirements of this title shall not
exempt or exclude the owner or operator of any facility
subject to this title from compliance with any other
applicable requirements of this Act. Notwithstanding any
other provision of this Act, no State or political
subdivision thereof shall restrict or interfere with the
transfer, sale, or purchase of allowances under this title.
``(g) Violations.--Violation by any person subject to this
title of any prohibition of, requirement of, or regulation
promulgated pursuant to this title shall be a violation of
this Act. In addition to the other requirements and
prohibitions provided for in this title, the operation of any
affected unit or the affected units at a facility to emit
sulfur dioxide, nitrogen oxides, or mercury in violation of
section 412(c), 422, 432, 452, and 472, as the case may be,
shall be deemed a violation, with each ton or, in the case of
mercury, each ounce emitted in excess of allowances held
constituting a separate violation.

``SEC. 407. ELECTION FOR ADDITIONAL UNITS.

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

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

``(a) Definition.--For purposes of this section, `clean
coal technology' means any technology, including technologies
applied at the precombustion, combustion, or post combustion
stage, at a new or existing facility which will achieve
significant reductions in air emissions of sulfur dioxide or
oxides of nitrogen associated with the utilization of coal in
the generation of electricity, process steam, or industrial
products, which is not in widespread use as of the date of
enactment of this title.
``(b) Revised Regulations for Clean Coal Technology
Demonstrations.--
``(1) Applicability.--This subsection applies to physical
or operational changes to existing facilities for the sole
purpose of installation, operation, cessation, or removal of
a temporary or permanent clean coal technology demonstration
project. For the purposes of this section, a clean coal
technology

[[Page S2949]]

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

``SEC. 409. AUCTIONS.

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

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

[[Page S2950]]

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

``PART B--SULFUR DIOXIDE EMISSION REDUCTIONS

``Subpart 1--Acid Rain Program

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

``(a) Evaluation.--(1) The Administrator, in consultation
with the Secretary of Energy, shall study whether the
limitations on the total annual amounts of allowances
available starting in 2018 for sulfur dioxide under section
423, nitrogen oxides under section 453, and mercury under
section 473 should be adjusted.
``(2) In conducting the study, the Administrator shall
include the following analyses and evaluations concerning the
pollutants under paragraph (a)(1),
``(A) an evaluation of the need for further emission
reductions from affected EGUs under subpart 2 of part B,
subpart 2 of part C, or part D and other sources to attain or
maintain the national ambient air quality standards;
``(B) A benefit-cost analysis to evaluate whether the
benefits of the limitations on the total annual amounts of
allowances available starting in 2018 justify the costs and
whether adjusting any of the limitations would provide
additional benefits which justify the costs of such
adjustment, taking into account both quantifiable and non-
quantifiable factors;
``(C) the marginal cost effectiveness of reducing emissions
for each pollutant;
``(D) the merits of allowing trading between NOx
and SO2 limitations;
``(E) an evaluation of the relative marginal cost
effectiveness of reducing sulfur dioxide and nitrogen oxide
emissions from affected EGUs under sub-part 2 of part B and
subpart 2 of part C, as compared to the marginal cost
effectiveness of controls on other sources of sulfur dioxide,
nitrogen oxides and other pollutants that can be controlled
to attain or maintain national ambient air quality standard;
``(F) an evaluation of the feasibility of attaining the
limitations on the total annual amounts of allowances
available starting in 2018 given the available control
technologies and the ability to install control technologies
by 2018, and the feasibility of attaining alternative
limitations on the total annual amounts of allowances
available starting in 2018 under paragraph (a)(1) for each
pollutant, including the ability to achieve alternative
limitations given the available control technologies, and the
feasibility of installing the control technologies needed to
meet the alternative limitation by 2018;
``(G) an assessment of the results of the most current
research and development regarding technologies and
strategies to reduce the emissions of one or more of these
pollutants from affected EGUs under subpart 2 of part B,
subpart 2 of part C, or part D, as

[[Page S2951]]

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

``SEC. 411. DEFINITIONS.

``For purposes of this subpart and subpart 1 of part B:
``(1) The term `actual 1985 emission rate', for electric
utility units means the annual sulfur dioxide or nitrogen
oxides emission rate in pounds per million Btu as reported in
the NAPAP Emissions Inventory, Version, 2 National Utility
reference File. For nonutility units, the term `actual 1985
emission rate' means the annual sulfur dioxide or nitrogen
oxides emission rate in pounds per million Btu as reported in
the NAPAP Emission Inventory, Version 2.
``(2) The term `allowable 1985 emissions rate' means a
federally enforceable emissions limitation for sulfur dioxide
or oxides of nitrogen, applicable to the unit in 1985 or the
limitation applicable in such other subsequent year as
determined by the Administrator if such a limitation for 1985
does not exist. Where the emissions limitation for a unit is
not expressed in pounds of emissions per million Btu, or the
averaging period of that emissions limitation is not
expressed on an annual basis, the Administrator shall
calculate the annual equivalent of that emissions.
``(3) The term `alternative method of compliance' means a
method of compliance in accordance with one or more of the
following authorities--
``(A) a substitution plan submitted and approved in
accordance with subsections 413(b) and (c); or
``(B) a Phase I extension plan approved by the
Administrator under section 413(d), using qualifying phase I
technology as determined by the Administrator in accordance
with that section.
``(4) The term `baseline' means the annual quantity of
fossil fuel consumed by an affected unit, measured in
millions of British Thermal Units (`mmBtu's'), calculated as
follows:
``(A) For each utility unit that was in commercial
operation prior to January 1, 1985, the baseline shall be the
annual average quantity of mmBtu's consumed in fuel during
calendar years 1985, 1986, and 1987, as recorded by the
Department of Energy pursuant to Form 767. For any utility
unit for which such form was not filed, the baseline shall be
the level specified for such unit in the 1985 National Acid
Precipitation Assessment Program (NAPAP) Emissions Inventory,
Version 2, National Utility Reference File (NURF) or in a
corrected data base as established by the Administrator
pursuant to paragraph (3). For non-utility units, the
baseline in the NAPAP Emissions Inventory, Version 2. The
Administrator, in the Administrator's sole discretion, may
exclude periods during which a unit is shutdown for a
continuous period of 4 calendar months or longer, and make
appropriate adjustments under this paragraph. Upon petition
of the owner or operator of any unit, the Administrator may
make appropriate baseline adjustments for accidents that
caused prolonged outages.
``(B) For any other nonutility unit that is not included in
the NAPAP Emissions Inventory, Version 2, or a corrected data
base as established by the Administrator pursuant to
paragraph (3), the baseline shall be the annual average
quantity, in mmBtu consumed in fuel by that unit, as
calculated pursuant to a method which the Administrator shall
prescribe by regulation to be promulgated not later than 18
months after November 15, 1990.
``(C) The Administrator shall, upon application or on his
own motion, by December 31, 1991, supplement data needed in
support of this subpart and correct any factual errors in
data from which affected Phase II units' baselines or actual
1985 emission rates have been calculated. Corrected data
shall be used for purposes of issuing allowances under this
subpart. Such corrections shall not be subject to judicial
review, nor shall the failure of the Administrator to correct
an alleged factual error in such reports be subject to
judicial review.
``(5) The term `basic Phase II allowance allocations'
means:
``(A) For calendar years 2000 through 2009 inclusive,
allocations of allowances made by the Administrator pursuant
to section 412 and subsections (b)(1), (3), and (4); (c)(1),
(2), (3), and (5); (d)(1), (2), (4), and (5); (e); (f); (g)
(1), (2), (3), (4), and (5); (h)(1); (i) and (j) of section
414.
``(B) For each calendar year beginning in 2010, allocations
of allowances made by the Administrator pursuant to section
412 and subsections (b)(1), (3), and (4); (c)(1), (2), (3),
and (5); (d)(1), (2), (4) and (5); (e); (f); (g)(1), (2),
(3), (4), and (5); (h)(1) and (3); (i) and (j) of section
414.
``(6) The term `capacity factor' means the ratio between
the actual electric output from a unit and the potential
electric output from that unit.
``(7) The term `commenced' as applied to construction of
any new electric utility unit

[[Page S2952]]

means that an owner or operator has undertaken a continuous
program of construction or that an owner or operator has
entered into a contractual obligation to undertake and
complete, within a reasonable time, a continuous program of
construction.
``(8) The term `commenced commercial operation' means to
have begun to generate electricity for sale.
``(9) The term `construction' means fabrication, erection,
or installation of an affected unit.
``(10) The term `existing unit' means a unit (including
units subject to section 111) that commenced commercial
operation before November 15, 1990. Any unit that commenced
commercial operation before November 15, 1990 which is
modified, reconstructed, or repowered after November 15, 1990
shall continue to be an existing unit for the purposes of
this subpart. For the purposes of this subpart, existing
units shall not include simple combustion turbines, or units
which serve a generator with a nameplate capacity of 25 MWe
or less.
``(11) The term `independent power producer' means any
person who owns or operates, in whole or in part, one or more
new independent power production facilities.
``(12) The term `new independent power production facility'
means a facility that--
``(A) is used for the generation of electric energy, 80
percent or more of which is sold at wholesale;
``(B) in nonrecourse project-financed (as such term is
defined by the Secretary of Energy within 3 months of the
date of the enactment of the Clean Air Act Amendments of
1990); and
``(C) is a new unit required to hold allowances under this
subpart.
``(13) The term `industrial source' means a unit that does
not serve a generator that produces electricity, a `non-
utility unit' as defined in this section, or a process
source.
``(14) The term `life-of-the-unit, firm power contractual
arrangement' means a unit participation power sales agreement
under which a utility or industrial customer reserves, or is
entitled to receive, a specified amount or percentage of
capacity and associated energy generated by a specified
generating unit (or units) and pays its proportional amount
of such unit's total costs, pursuant to a contract either--
``(A) for the life of the unit;
``(B) for a cumulative term of no less than 30 years,
including contracts that permit an election for early
termination; or
``(C) for a period equal to or greater than 25 years or 70
percent of the economic useful life of the unit determined as
of the time the unit was built, with option rights to
purchase or release some portion of the capacity and
associated energy generated by the unit (or units) at the end
of the period.
``(15) The term `new unit' means a unit that commences
commercial operation on or after November 15, 1990.
``(16) The term `nonutility unit' means a unit other than a
utility unit.
``(17) The term `Phase II bonus allowance allocations'
means, for calendar year 2000 through 2009, inclusive, and
only for such years, allocations made by the Administrator
pursuant to section 412, subsections (a)(2), (b)(2), (c)(4),
(d)(3) (except as otherwise provided therein), and (h)(2) of
section 414, and section 415.
``(18) The term `qualifying phase I technology' means a
technological system of continuous emission reduction which
achieves a 90 percent reduction in emissions of sulfur
dioxide from the emissions that would have resulted from the
use of fuels which were not subject to treatment prior to
combustion.
``(19) The term `repowering' means replacement of an
existing coal-fired boiler with one of the following clean
coal technologies: atmospheric or pressurized fluidized bed
combustion, integrated gasification combined cycle, magneto-
hydrodynamics, direct and indirect coal-fired turbines,
integrated gasification fuel cells, or as determined by the
Administrator, in consultation with the Secretary of Energy,
a derivative of one or more of these technologies, and any
other technology capable of controlling multiple combustion
emissions simultaneously with improved boiler or generation
efficiency and with significantly greater waste reduction
relative to the performance of technology in widespread
commercial use as of November 15, 1990.
``(20) The term `reserve' means any bank of allowances
established by the Administrator under this subpart.
``(21)(A) The term `utility unit' means--
``(i) a unit that serves a generator in any State that
produces electricity for sale, or
``(ii) a unit that, during 1985, served a generator in any
State that produced electricity for sale.
``(B) Notwithstanding subparagraph (A), a unit described in
subparagraph (A) that--
``(i) was in commercial operations during 1985, but
``(ii) did not during 1985, serve a generator in any State
that produced electricity for sale shall not be a utility
unit for purposes of this subpart.
``(C) A unit that cogenerates steam and electricity is not
a `utility unit' for purposes of this subpart unless the unit
is constructed for the purpose of supplying, or commences
construction after November 15, 1990 and supplies more than
one-third of its potential electric output capacity of more
than 25 megawatts electrical output to any utility power
distribution system for sale.

``SEC. 412. ALLOWANCE ALLOCATION.

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

A passive lessor, or a person who has an equitable interest
through such lessor, whose rental payments are not based,
either directly or indirectly, upon the revenues or income
from the affected unit shall not be deemed to be a holder of
a legal, equitable, leasehold, or contractual interest for
the purpose of holding or distributing allowances as provided
in this subsection, during either

[[Page S2953]]

the term of such leasehold or thereafter, unless expressly
provided for in the leasehold agreement. Except as otherwise
provided in this subsection, where all legal or equitable
title to or interest in an affected unit is held by a single
person, the certification shall state that all allowances
under this subpart received by the unit are deemed to be held
for that person.

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

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

[[Page S2954]]

``(C) the amount by which (i) the product of each unit's
baseline multiplied by an emission rate of 1.20 lbs/mmBtu,
divided by 2,000, exceeds (ii) the tonnage level specified
under subparagraph (E) of paragraph (2) of this subsection
multiplied by a factor of 3.
``(5) Each eligible Phase I extension unit shall receive
allowances determined under subsection (a)(1) or (c) of this
section. In addition, for calendar year 1995, the
Administrator shall allocate to each eligible Phase I
extension unit, from the allowance reserve created pursuant
to subsection (a)(2), allowances equal to the difference
between the lesser of the average annual emissions in
calendar years 1988 and 1989 or its projected emission
tonnage for calendar year 1995 and the product of the unit's
baseline multiplied by an emission rate of 2.50 lbs/mmBtu,
divided by 2,000. In calendar year 1996, the Administrator
shall allocate for each eligible unit, from the allowance
reserve created pursuant to subsection (a)(2), allowances
equal to the difference between the lesser of the average
annual emissions in calendar years 1988 and 1989 or its
projected emissions tonnage for calendar year 1996 and the
product of the unit's baseline multiplied by an emission rate
of 2.50 lbs/mmBtu, divided by 2,000. It shall be unlawful for
any source or unit subject to an approved extension plan
under this subsection to emit sulfur dioxide in excess of the
emissions limitations provided for in the permit and approved
extension plan, unless the owner or operator of each unit
governed by the permit and approved plan holds allowances to
emit not less than the unit's total annual emissions.
``(6) In addition to allowances specified in paragraph (4),
the Administrator shall allocate for each eligible Phase I
extension unit employing qualifying Phase I technology, for
calendar years 1997, 1998, and 1999, additional allowances,
from any remaining allowances in the reserve created pursuant
to subsection (a)(2), following the reduction in the reserve
provided for in paragraph (4), not to exceed the amount by
which (A) the product of each eligible unit's baseline times
an emission rate of 1.20 lbs/mmBtu, divided by 2,000 exceeds
(B) the tonnage level specified under subparagraph (E) of
paragraph (2) of this subsection.
``(7) After January 1, 1997, in addition to any liability
under this Act, including under section 406, if any eligible
phase I extension unit employing qualifying phase I
technology or any transfer unit under this subsection emits
sulfur dioxide in excess of the annual tonnage limitation
specified in the extension plan, as approved in paragraph (2)
of this subsection, the Administrator shall, in the calendar
year following such excess, deduct allowances equal to the
amount of such excess from such unit's annual allowance
allocation.
``(e)(1) In the case of a unit that receives authorization
from the Governor of the State in which such unit is located
to make reductions in the emissions of sulfur dioxide prior
to calendar year 1995 and that is part of a utility system
that meets the following requirements--
``(A) the total coal-fired generation within the utility
system as a percentage of total system generation decreased
by more than 20 percent between January 1, 1980, and December
31, 1985; and
``(B) the weighted capacity factor of all coal-fired units
within the utility system averaged over the period from
January 1, 1985, through December 31, 1987, was below 50
percent, the Administrator shall allocate allowances under
this paragraph for the unit pursuant to this subsection. The
Administrator shall allocate allowances for a unit that is an
affected unit pursuant to section 414 (but is not also an
affected unit under this section) and part of a utility
system that includes 1 or more affected units under section
414 for reductions in the emissions of sulfur dioxide made
during the period 1995-1999 if the unit meets the
requirements of this subsection and the requirements of the
preceding sentence, except that for the purposes of applying
this subsection to any such unit, the prior year concerned as
specified below, shall be any year after January 1, 1995 but
prior to January 1, 2000.
``(2) In the case of an affected unit under this section
described in subparagraph (A), the allowances allocated under
this subsection for early reductions in any prior year may
not exceed the amount which (A) the product of the unit's
baseline multiplied by the unit's 1985 actual sulfur dioxide
emission rate (in lbs. per mmBtu), divided by 2,000 exceeds
(B) the allowances specified for such unit in Table A. In the
case of an affected unit under section 414 described in
subparagraph (A), the allowances awarded under this
subsection for early reductions in any prior year may not
exceed the amount by which (i) the product of the quality of
fossil fuel consumed by the unit (in mmBtu) in the prior year
multiplied by the lesser of 2.50 or the most stringent
emission rate (in lbs. per mmBtu) applicable to the unit
under the applicable implementation plan, divided by 2,000
exceeds (ii) the unit's actual tonnage of sulfur dioxide
emission for the prior year concerned. Allowances allocated
under this subsection for units referred to in subparagraph
(A) may be allocated only for emission reductions achieved as
a result of physical changes or changes in the method of
operation made after November 15, 1990, including changes in
the type or quality of fossil fuel consumed.
``(3) In no event shall the provisions of this paragraph be
interpreted as an event of force majeure or a commercial
impracticability or in any other way as a basis for excused
nonperformance by a utility system under a coal sales
contract in effect before November 15, 1990.

``TABLE A.--AFFECTED SOURCES AND UNITS IN PHASE I AND THEIR SULFUR DIOXIDE ALLOWANCES (TONS)
----------------------------------------------------------------------------------------------------------------
Phase I
State Plant name Generator allowances
----------------------------------------------------------------------------------------------------------------
Alabama....................................... Colbert............................... 1 13,570
2 15,310
3 15,400
4 15,410
5 37,180
E.C. Gaston........................... 1 18,100
2 18,540
3 18,310
4 19,280
5 59,840
Florida....................................... Big Bend.............................. 1 28,410
2 27,100
3 26,740
Crist................................. 6 19,200
7 31,680
Georgia....................................... Bowen................................. 1 56,320
2 54,770
3 71,750
4 71,740
Hammond............................... 1 8,780
2 9,220
3 8,910
4 37,640
J. McDonough.......................... 1 19,910
2 20,600
Wansley............................... 1 70,770
2 65,430
Yates................................. 1 7,210
2 7,040
3 6,950
4 8,910
5 9,410
6 24,760
7 21,480
Illinois...................................... Baldwin............................... 1 42,010
2 44,420
3 42,550
Coffeen............................... 1 11,790
2 35,670
Grand Tower........................... 4 5,910
Hennepin.............................. 2 18,410
Joppa Steam........................... 1 12,590
2 10,770
3 12,270
4 11,360
5 11,420
6 10,620
Kincaid............................... 1 31,530
2 33,810

[[Page S2955]]

Meredosia............................. 3 13,890
Vermilion............................. 2 8,880
Indiana....................................... Bailly................................ 7 11,180
8 15,630
Breed................................. 1 18,500
Cayuga................................ 1 33,370
2 34,130
Clifty Creek.......................... 1 20,150
2 19,810
3 20,410
4 20,080
5 19,360
6 20,380
E. W. Stout........................... 5 3,880
6 4,770
7 23,610
F. B. Culley.......................... 2 4,290
3 16,970
F. E. Ratts........................... 1 8,330
2 8,480
Gibson................................ 1 40,400
2 41,010
3 41,080
4 40,320
H.T. Pritchard........................ 6 5,770
Michigan City......................... 12 23,310
Petersburg............................ 1 16,430
2 32,380
R. Gallagher.......................... 1 6,490
2 7,280
3 6,530
4 7,650
Tanners Creek......................... 4 24,820
Wabash River.......................... 1 4,000
2 2,860
3 3,750
5 3,670
6 12,280
Warrick............................... 4 26,980
Iowa.......................................... Burlington............................ 1 10,710
Des Moines............................ 7 2,320
George Neal........................... 1 1,290
M.L. Kapp............................. 2 13,800
Prairie Creek......................... 4 8,180
Riverside............................. 5 3,990
Kansas........................................ Quindaro.............................. 2 4,220
Kentucky...................................... Coleman............................... 1 11,250
2 12,840
3 12,340
Cooper................................ 1 7,450
2 15,320
E.W. Brown............................ 1 7,110
2 10,910
3 26,100
Elmer Smith........................... 1 6,520
2 14,410
Ghent................................. 1 28,410
Green River........................... 4 7,820
H.L. Spurlock......................... 1 22,780
Henderson II.......................... 1 13,340
2 12,310
Paradise.............................. 3 59,170
Shawnee............................... 10 10,170
Maryland...................................... Chalk Point........................... 1 21,910
2 24,330
C.P. Crane............................ 1 10,330
2 9,230
Morgantown............................ 1 35,260
2 38,480
Michigan...................................... J.H. Campbell......................... 1 19,280
2 23,060
Minnesota..................................... High Bridge........................... 6 4,270
Mississippi................................... Jack Watson........................... 4 17,910
5 36,700
Missouri...................................... Asbury................................ 1 16,190
James River........................... 5 4,850
Labadie............................... 1 40,110
2 37,710
3 40,310
4 35,940
Montrose.............................. 1 7,390
2 8,200
3 10,090
New Madrid............................ 1 28,240
2 32,480
Sibley................................ 3 15,580
Sioux................................. 1 22,570
2 23,690
Thomas Hill........................... 1 10,250
2 19,390
New Hampshire................................. Merrimack............................. 1 10,190
2 22,000
New Jersey.................................... B.L. England.......................... 1 9,060
2 11,720
New York...................................... Dunkirk............................... 3 12,600
4 14,060
Greenidge............................. 4 7,540
Milliken.............................. 1 11,170
2 12,410
Northport............................. 1 19,810
2 24,110
3 26,480
Port Jefferson........................ 3 10,470
4 12,330
Ohio.......................................... Ashtabula............................. 5 16,740
Avon Lake............................. 8 11,650
9 30,480
Cardinal.............................. 1 34,270
2 38,320
Conesville............................ 1 4,210
2 4,890

[[Page S2956]]

3 5,500
4 48,770
Eastlake.............................. 1 7,800
2 8,640
3 10,020
4 14,510
5 34,070
Edgewater............................. 4 5.050
Gen. J.M. Gavin....................... 1 79,080
2 80,560
Kyger Creek........................... 1 19,280
2 18,560
3 17,910
4 18,710
5 18,740
Miami Fort............................ 5 760
6 11,380
7 38,510
Muskingum River....................... 1 14,880
2 14,170
3 13,950
4 11,780
5 40,470
Niles................................. 1 6,940
2 9,100
Picway................................ 5 4,930
R.E. Burger........................... 3 6,150
4 10,780
5 12,430
W.H. Sammis........................... 5 24,170
6 39,930
7 43,220
W.C. Beckjord......................... 5 8,950
6 23,020
Pennsylvania.................................. Armstrong............................. 1 14,410
2 15,430
Brunner Island........................ 1 27,760
2 31,100
3 53,820
Cheswick.............................. 1 39,170
Conemaugh............................. 1 59,790
2 66,450
Hatfield's Ferry...................... 1 37,830
2 37,320
3 40,270
Martins Creek......................... 1 12,660
2 12,820
Portland.............................. 1 5,940
2 10,230
Shawville............................. 1 10,320
2 10,320
3 14,220
4 14,070
Sunbury............................... 3 8,760
4 11,450
Tennessee..................................... Allen................................. 1 15,320
2 16,770
3 15,670
Cumberland............................ 1 86,700
2 94,840
Gallatin.............................. 1 17,870
2 17,310
3 20,020
4 21,260
Johnsonville.......................... 1 7,790
2 8,040
3 8,410
4 7,990
5 8,240
6 7,890
7 8,980
8 8,700
9 7,080
10 7,550
West Virginia................................. Albright.............................. 3 12,000
Fort Martin........................... 1 41,590
2 41,200
Harrison.............................. 1 48,620
2 46,150
3 41,500
Kammer................................ 1 18,740
2 19,460
3 17,390
Mitchell.............................. 1 43,980
2 45,510
Mount Storm........................... 1 43,720
2 35,580
3 42,430
Wisconsin..................................... Edgewater............................. 4 24,750
La Crosse/Genoa....................... 3 22,700
Nelson Dewey.......................... 1 6,010
2 6,680
N. Oak Creek.......................... 1 5,220
2 5,140
3 5,370
4 6,320
Pulliam............................... 8 7,510
S. Oak Creek.......................... 5 9.670
6 12,040
7 16,180
8 15,790
----------------------------------------------------------------------------------------------------------------

``(f) Energy Conservation and Renewable Energy.--
``(1) Definitions.--As used in this subsection:
``(A) Qualified energy conservation measure.--The term
`qualified energy conservation measure' means a cost
effective measure, as identified by the Administrator in
consultation with the Secretary of Energy, that increases the
efficiency of the use of electricity provided by an electric
utility to its customers.

[[Page S2957]]

``(B) Qualified renewable energy.--The term `qualified
renewable energy' means energy derived from biomass, solar,
geothermal, or wind as identified by the Administrator in
consultation with the Secretary of Energy.
``(C) Electric utility.--The term `electric utility' means
any person, State agency, or Federal agency, which sells
electric energy.
``(2) Allowances for emissions avoided through energy
conservation and renewable energy.--
``(A) In general.--The regulations under paragraph (4) of
this subsection shall provide that for each ton of sulfur
dioxide emissions avoided by an electric utility, during the
applicable period, through the use of qualified energy
conservation measures or qualified renewable energy, the
Administrator shall allocate a single allowance to such
electric utility, on a first-come-first-served basis from the
Conservation and Renewable Energy Reserve established under
subsection (g), up to a total of 300,000 allowances for
allocation from such Reserve.
``(B) Requirements for issuance.--The Administrator shall
allocate allowances to an electric utility under this
subsection only if all of the following requirements are met:
``(i) Such electric utility is paying for the qualified
energy conservation measures or qualified renewable energy
directly or through purchase from another person.
``(ii) The emissions of sulfur dioxide avoided through the
use of qualified energy conservation measures or qualified
renewable energy are quantified in accordance with
regulations promulgated by the Administrator under this
subsection.
``(iii)(I) Such electric utility has adopted and is
implementing a least cost energy conservation and electric
power plan which evaluates a range of resources, including
new power supplies, energy conservation, and renewable energy
resources, in order to meet expected future demand at the
lowest system cost.
``(II) The qualified energy conservation measures or
qualified renewable energy, or both, are consistent with that
plan.
``(III) Electric utilities subject to the jurisdiction of a
State regulatory authority must have such plan approved by
such authority. For electric utilities not subject to the
jurisdiction of a State regulatory authority such plan shall
be approved by the entity with rate-making authority for such
utility.
``(iv) In the case of qualified energy conservation
measures undertaken by a State regulated electric utility,
the Secretary of Energy certifies that the State regulatory
authority with jurisdiction over the electric rates of such
electric utility has established rates and charges which
ensure that the net income of such electric utility after
implementation of specific cost effective energy conservation
measures is at least as high as such net income would have
been if the energy conservation measures had not been
implemented. Upon the date of any such certification by the
Secretary of Energy, all allowances which, but for this
paragraph, would have been allocated under subparagraph (B)
before such date, shall be allocated to the electric utility.
This clause is not a requirement for qualified renewable
energy.
``(v) Such utility or any subsidiary of the utility's
holding company owns or operates at least one affected unit.
``(C) Period of applicability.--Allowances under this
subsection shall be allocated only with respect to kilowatt
hours of electric energy saved by qualified energy
conservation measures or generated by qualified renewable
energy after January 1, 1992, and before the earlier of (i)
December 31, 2000, or (ii) the date on which any electric
utility steam generating unit owned or operated by the
electric utility to which the allowances are allocated
becomes subject to this subpart (including those sources that
elect to become affected by this title, pursuant to section
417).
``(D) Determination of avoided emissions.--
``(i) Application.--In order to receive allowances under
this subsection, an electric utility shall make an
application which--

``(I) designates the qualified energy conservation measures
implemented and the qualified renewable energy sources used
for purposes of avoiding emissions;
``(II) calculates, in accordance with subparagraphs (F) and
(G), the number of tons of emissions avoided by reason of the
implementation of such measures or the use of such renewable
energy sources; and
``(III) demonstrates that the requirements of subparagraph
(B) have been met. Such application for allowances by a
State-regulated electric utility shall require approval by
the State regulatory authority with jurisdiction over such
electric utility. The authority shall review the application
for accuracy and compliance with this subsection and the
rules under this subsection. Electric utilities whose retail
rates are not subject to the jurisdiction of a State
regulatory authority shall apply directly to the
Administrator for such approval.

``(E) Avoided emissions from qualified energy conservation
measures.--For the purposes of this subsection, the emission
tonnage deemed avoided by reason of the implementation of
qualified energy conservation measures for any calendar year
shall be a tonnage equal to the product of multiplying--
``(i) the kilowatt hours that would otherwise have been
supplied by the utility during such year in the absence of
such qualified energy conservation measures, by
``(ii) 0.004, and dividing by 2,000.
``(F) Avoided emissions from the use of qualified renewable
energy.--The emissions tonnage deemed avoided by reason of
the use of qualified renewable energy by an electric utility
for any calendar year shall be a tonnage equal to the product
of multiplying--(i) the actual kilowatt hours generated by,
or purchased from, qualified renewable energy, by (ii) 0.004,
and dividing by 2,000.
``(G) Prohibitions.--
``(i) No allowances shall be allocated under this
subsection for the implementation of programs that are
exclusively informational or educational in nature.
``(ii) No allowances shall be allocated for energy
conservation measures or renewable energy that were
operational before January 1, 1992.
``(3) Savings provision.--Nothing in this subsection
precludes a State or State regulatory authority from
providing additional incentives to utilities to encourage
investment in demand-side resources.
``(4) Regulations.--The Administrator shall implement this
subsection under 40 CFR part 73 (2002), amended as
appropriate by the Administrator. Such regulations shall list
energy conservation measures and renewable energy sources
which may be treated as qualified energy conservation
measures and qualified renewable energy for purposes of this
subsection. Allowances shall only be allocated if all
requirements of this subsection and the rules promulgated to
implement this subsection are complied with. The
Administrator shall review the determinations of each State
regulatory authority under this subsection to encourage
consistency from electric utility and from State-to-State in
accordance with the Administrator's rules. The Administrator
shall publish the findings of this review no less than
annually.
``(g) Conservation and Renewable Energy Reserve.--The
Administrator shall establish a Conservation and Renewable
Energy Reserve under this subsection. Beginning on January 1,
1995, the Administrator may allocate from the Conservation
and Renewable Energy Reserve an amount equal to a total of
300,000 allowances for emissions of sulfur dioxide pursuant
to section 411. In order to provide 300,000 allowances for
such reserve, in each year beginning in calendar year 2000
and until calendar year 2009, inclusive, the Administrator
shall reduce each unit's basic Phase II allowance allocation
on the basis of its pro rata share of 30,000 allowances.
Notwithstanding the prior sentence, if allowances remain in
the reserve one year after the date of enactment of the Clear
Skies Act of 2003, the Administrator shall allocate such
allowances for affected units under section 414 on a pro rata
basis. For purposes of this subsection, for any unit subject
to the emissions limitation requirements of section 414, the
term `pro rata basis' refers to the ratio which the
reductions made in such unit's allowances in order to
establish the reserve under this subsection bears to the
total of such reductions for all such units.
``(h) Alternative Allowance Allocation for Units in Certain
Utility Systems With Optional Baseline.--
``(1) Optional baseline for units in certain systems.--In
the case of a unit subject to the emissions limitation
requirements of this section which (as of November 15,
1990)--
``(A) has an emission rate below 1.0 lbs/mmBtu,
``(B) has decreased its sulfur dioxide emissions rate by 60
percent or greater since 1980, and
``(C) is part of a utility system which has a weighted
average sulfur dioxide emissions rate for all fossil fueled-
fired units below 1.0 lbs/mmBtu, at the election to the owner
or operator of such unit, the unit's baseline may be
calculated
``(i) as provided under section 411, or
``(ii) by utilizing the unit's average annual fuel
consumption at a 60 percent capacity factor. Such election
shall be made no later than March 1, 1991.
``(2) Allowance allocation.--Whenever a unit referred to in
paragraph (1) elects to calculate its baseline as provided in
clause (ii) of paragraph (1), the Administrator shall
allocate allowances for the unit pursuant to section 412(a),
this section, and section 414 (as Basic Phase II allowance
allocations) in an amount equal to the baseline selected
multiplied by the lower of the average annual emission rate
for such unit in 1989, or 1.0 lbs./mmBtu. Such allowance
allocation shall be in lieu of any allocation of allowances
under this section and section 414.

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

``(a) Applicability.--
``(1) After January 1, 2000, each existing utility unit as
provided below is subject to the limitations or requirements
of this section. Each utility unit subject to an annual
sulfur dioxide tonnage emission limitation under this section
is an affected unit under this subpart. Each source that
includes one or more affected units is an affected source. In
the case of an existing unit that was not in operation during
calendar year 1985, the emission rate for a calendar year
after 1985, as determined by the Administrator, shall be used
in lieu of the 1985 rate. The owner or operator of any unit
operated in violation of this section shall be fully liable
under this Act for fulfilling the obligations specified in
section 406.

[[Page S2958]]

``(2) In addition to basic Phase II allowance allocations,
in each year beginning in calendar year 2000 and ending in
calendar year 2009, inclusive, the Administrator shall
allocate up to 530,000 Phase II bonus allowances pursuant to
subsections (b)(2),(c)(4), (d)(3)(A) and (B), and (h)(2) of
this section and section 415.
``(3) In addition to basic Phase II allowances allocations
and Phase II bonus allowance allocations, beginning January
1, 2000, the Administrator shall allocate for each unit
listed on Table A in section 413 (other than units at Kyger
Creek, Clifty Creek, and Joppa Stream) and located in the
States of Illinois, Indiana, Ohio, Georgia, Alabama,
Missouri, Pennsylvania, West Virginia, Kentucky, or Tennessee
allowances in an amount equal to 50,000 multiplied by the
unit's pro rata share of the total number of basic allowances
allocated for all units listed on Table A (other than units
at Kyger Creek, Clifty Creek, and Joppa Stream). Allowances
allocated pursuant to this paragraph shall not be subject to
the 8,900,000 ton limitation in section 412(a).
``(b) Units Equal to, or Above, 75 MWe and 1.20 lbs/
mmBtu.--
``(1) Except as otherwise provided in paragraph (3), after
January 1, 2000, it shall be unlawful for any existing
utility unit that serves a generator with nameplate capacity
equal to, or greater, than 75 MWe and an actual 1985 emission
rate equal to or greater than 1.20 lbs/mmBtu to exceed an
annual sulfur dioxide tonnage emission limitation equal to
the product of the unit's baseline multiplied by an emission
rate equal to 1.20 lbs/mmBtu, divided by 2,000, unless the
owner or operator of such unit holds allowances to emit not
less than the unit's total annual emissions or, for a year
after 2007,

unless the owner or operator of the source that includes such
unit holds allowances to emit not less than the total annual
emissions of all affected units at the source.
``(2) In addition to allowances allocated pursuant to
paragraph (1) and section 412(a) as basic Phase II allowance
allocations, beginning January 1, 2000, and for each calendar
year thereafter until and including 2009, the Administrator
shall allocate annually for each unit subject to the
emissions limitation requirements of paragraph (1) with an
actual 1985 emissions rate greater than 1.20 lbs/mmBtu and
less than 2.50 lbs/mmBtu and a baseline capacity factor of
less than 60 percent, allowances from the reserve created
pursuant to subsection (a)(2) in an amount equal to 1.20 lbs/
mmBtu multiplied by 50 percent of the difference, on a Btu
basis, between the unit's baseline and the unit's fuel
consumption at a 60 percent capacity factor.
``(3) After January 1, 2000, it shall be unlawful for any
existing utility unit with an actual 1985 emissions rate
equal to or greater than 1.20 lbs/mmBtu whose annual average
fuel consumption during 1985, 1986, and 1987 on a Btu basis
exceeded 90 percent in the form of lignite coal which is
located in a State in which, as of July 1, 1989, no county or
portion of a county was designated nonattainment under
section 107 of this Act for any pollutant subject to the
requirements of section 109 of this Act to exceed an annual
sulfur dioxide tonnage limitation equal to the product of the
unit's baseline multiplied by the lesser of the unit's actual
1985 emissions rate or its allowable 1985 emissions rate,
divided by 2,000, unless the owner or operator of such unit
holds allowances to emit not less than the unit's total
annual emissions or, for a year after 2007, unless the owner
or operator of the source that includes such unit holds
allowances to emit not less than the total annual emissions
of all affected units at the source.
``(4) After January 1, 2000, the Administrator shall
allocate annually for each unit, subject to the emissions
limitation requirements of paragraph (1), which is located in
a State with an installed electrical generating capacity of
more than 30,000,000 kw in 1988 and for which was issued a
prohibition order or a proposed prohibition order (from
burning oil), which unit subsequently converted to coal
between January 1, 1980 and December 31, 1985, allowances
equal to the difference between (A) the product of the unit's
annual fuel consumption, on a Btu basis, at a 65 percent
capacity factor multiplied by the lesser of its actual or
allowable emissions rate during the first full calendar year
after conversion, divided by 2,000, and (B) the number of
allowances allocated for the unit pursuant to paragraph (1):
Provided, That the number of allowances allocated pursuant to
this paragraph shall not exceed an annual total of five
thousand. If necessary to meeting the restriction imposed in
the preceding sentence the Administrator shall reduce, pro
rata, the annual allowances allocated for each unit under
this paragraph.
``(c) Coal or Oil-Fired Units Below 75 MWe and Above 1.20
lbs/mmBtu.--
``(1) Except as otherwise provided in paragraph (3), after
January 1, 2000, it shall be unlawful for a coal or oil-fired
existing utility unit that serves a generator with nameplate
capacity of less than 75 MWe and an actual 1985 emission rate
equal to, or greater than, 1.20 lbs/mmBtu and which is a unit
owned by a utility operating company whose aggregate
nameplate fossil fuel steam-electric capacity is, as of
December 31, 1989, equal to, or greater than, 250 MWe to
exceed an annual sulfur dioxide emissions limitation equal to
the product of the unit's baseline multiplied by an emission
rate equal to 1.20 lbs/mmBtu, divided by 2,000 unless the
owner or operator of such unit holds allowances to emit not
less than the unit's total annual emissions or, for a year
after 2007, unless the owner or operator of the source that
includes such unit holds allowances to emit not less than the
total annual emissions of all affected units at the source.
``(2) After January 1, 2000, it shall be unlawful for a
coal or oil-fired existing utility unit that serves a
generator with nameplate capacity of less than 75 MWe and an
actual 1985 emission rate equal to, or greater than, 1.20
lbs/mmBtu (excluding units subject to section 111 of the Act
or to a federally enforceable emissions limitation for sulfur
dioxide equivalent to an annual rate of less than 1.20 lbs/
mmBtu) and which is a unit owned by a utility operating
company whose aggregate nameplate fossil fuel steam-electric
capacity is, as of December 31, 1989, less than 250 MWe, to
exceed an annual sulfur dioxide tonnage emissions limitation
equal to the product of the unit's baseline multiplied by the
lesser of its actual 1985 emissions rate or its allowable
1985 emissions rate, divided by 2,000, unless the owner or
operator of such unit holds allowances to emit not less than
the unit's total annual emissions or, for a year after 2007,
unless the owner or operator of the source that includes such
unit holds allowances to emit not less than the total annual
emissions of all affected units at the source.
``(3) After January 1, 2000 it shall be unlawful for any
existing utility unit with a nameplate capacity below 75 MWe
and an actual 1985 emissions rate equal to, or greater than,
1.20 lbs/mmBtu which became operational on or before December
31, 1965, which is owned by a utility operating company with,
as of December 31, 1989, a total fossil fuel steam-electric
generating capacity greater than 250 MWe, and less than 450
MWe which serves fewer than 78,000 electrical customers as of
November 15, 1990, to exceed an annual sulfur dioxide
emissions tonnage limitation equal to the product of its
baseline multiplied by the lesser of its actual or allowable
1985 emission rate, divided by 2,000, unless the owner or
operator holds allowances to emit not less than the units
total annual emissions or, for a year after 2007, unless the
owner or operator of the source that includes such unit holds
allowances to emit not less than the total annual emissions
of all affected units at the source. After January 1, 2010,
it shall be unlawful for each unit subject to the emissions
limitation requirements of this paragraph to exceed an annual
emissions tonnage limitation equal to the product of its
baseline multiplied by an emissions rate of 1.20 lbs/mmBtu,
divided by 2,000, unless the owner or operator holds
allowances to emit not less than the unit's total annual
emissions or, for a year after 2007, unless the owner or
operator of the source that includes such unit holds
allowances to emit not less than the total annual emissions
of all affected units at the source.
``(4) In addition to allowances allocated pursuant to
paragraph (1) and section 412(a) as basic Phase II allowance
allocations, beginning January 1, 2000, and for each calendar
year thereafter until and including 2009, inclusive, the
Administrator shall allocate annually for each unit subject
to the emissions limitation requirements of paragraph (1)
with an actual 1985 emissions rate equal to, or greater than,
1.20 lbs/mmBtu and less than 2.50 lbs/mmBtu and a baseline
capacity factor of less than 60 percent, allowances from the
reserve created pursuant to subsection (a)(2) in an amount
equal to 1.20 lbs/mmBtu multiplied by 50 percent of the
difference, on a Btu basis, between the unit's baseline and
the unit's fuel consumption at a 60 percent capacity factor.
``(5) After January 1, 2000, is shall be unlawful for any
existing unit with a nameplate capacity below 75 MWe and an
actual 1985 emissions rate equal to, or greater than, 1.20
lbs/mmBtu which is part of an electric utility system which,
as of November 15, 1990--
``(A) has at least 20 percent of its fossil-fuel capacity
controlled by flue gas desulfurization devices,
``(B) has more than 10 percent of its fossil-fuel capacity
consisting of coal-fired unites of less than 75 MWe, and
``(C) has large units (greater than 400 MWe) all of which
have difficult or very difficult FGD Retrofit Cost Factors
(according to the Emissions and the FGD Retrofit Feasibility
at the 200 Top Emitting Generating Stations, prepared for the
United States Environmental Protection Agency on January 10,
1986) to exceed an annual sulfur dioxide emissions tonnage
limitation equal to the product of its baseline multiplied by
an emissions rate of 2.5 lbs/mmBtu, divided by 2,000, unless
the owner or operator holds allowances to emit not less than
the unit's total annual emissions or, for a year after 2007,
unless the owner or operator of the source that includes such
unit holds allowances to emit not less than the total annual
emissions of all affected units at the source. After January
1, 2010, it shall be unlawful for each unit subject to the
emissions limitation requirements of this paragraph to exceed
an annual emissions tonnage limitation equal to the project
of its baseline multiplied by an emissions rate of 1.20 lbs/
mmBtu, divided by 2,000, unless the owner or operator holds
for use allowances to emit not less than the unit's total
annual emissions or, for a year after 2007, unless the owner
or operator of the source that includes such unit holds
allowances to emit not less than the total annual emissions
of all affected units at the source.
``(d) Coal-Fired Units Below 1.20 lbs/mmBtu.--

[[Page S2959]]

``(1) After January 1, 2000, it shall be unlawful for any
existing coal-fired utility unit the lesser of whose actual
or allowable 1985 sulfur dioxide emissions rate is less than
0.60 lbs/mmBtu to exceed an annual sulfur dioxide tonnage
emission limitation equal to the product of the unit's
baseline multiplied by--
``(A) the lesser of 0.60 lbs/mmBtu or the unit's allowable
1985 emissions rate, and
``(B) a numerical factor of 120 percent, divided by 2,000,
unless the owner or operator of such unit holds allowances to
emit not less than the unit's total annual emissions or, for
a year after 2007, unless the owner or operator of the source
that includes such unit holds allowances to emit not less
than the total annual emissions of all affected units at the
source.
``(2) After January 1, 2000, it shall be unlawful for any
existing coal-fired utility unit the lesser of whose actual
or allowable 1985 sulfur dioxide emissions rate is equal to,
or greater than, 0.60 lbs/mmBtu and less than 1.20 lbs/mmBtu
to exceed an annual sulfur dioxide tonnage emissions
limitation equal to the product of the unit's baseline
multiplied by (A) the lesser of its actual 1985 emissions
rate or its allowable 1985 emissions rate, and (B) a
numerical factor of 120 percent, divided by 2,000, unless the
owner or operator of such unit holds allowances to emit not
less than the unit's total annual emissions or, for a year
after 2007, unless the owner or operator of the source that
includes such unit holds allowances to emit not less than the
total annual emissions of all affected units at the source.
``(3)(A) In addition to allowances allocated pursuant to
paragraph (1) and section 412(a) as basic Phase II allowance
allocations, at the election of the designated representative
of the operating company, beginning January 1, 2000, and for
each calendar year thereafter until and including 2009, the
Administrator shall allocate annually for each unit subject
to the emissions limitation requirements of paragraph (1)
allowances from the reserve created pursuant to subsection
(a)(2) in an amount equal to the amount by which--
``(i) the product of the lesser of 0.60 lbs.mmBtu or the
unit's allowable 1985 emissions rate multiplied by the unit's
baseline adjusted to reflect operation at a 60 percent
capacity factor, divided by 2,000, exceeds
``(ii) the number of allowances allocated for the unit
pursuant to paragraph (1) and section 403(a)(1) as basic
Phase II allowance allocations.
``(B) In addition to allowances allocated pursuant to
paragraph (2) and section 412(a) as basic Phase II allowance
allocations, at the election of the designated representative
of the operating company, beginning January 1, 2000, and for
each calendar year thereafter until and including 2009, the
Administrator shall allocate annually for each unit subject
to the emissions limitation requirements of paragraph (2)
allowances from the reserve created pursuant to subsection
(a)(2) in an amount equal to the amount by which--
``(i) the product of the lesser of the unit's actual 1985
emissions rate or its allowable 1985 emissions rate
multiplied by the unit's baseline adjusted to reflect
operation at a 60 percent capacity factor, divided by 2,000,
exceeds
``(ii) the number of allowances allocated for the unit
pursuant to paragraph (2) and section 412(a) as basic Phase
II allowance allocations.
``(C) An operating company with units subject to the
emissions limitation requirements of this subsection may
elect the allocation of allowances as provided under
subparagraphs (A) and (B). Such election shall apply to the
annual allowance allocation for each and every unit in the
operating company subject to the emissions limitation
requirements of this subsection. The Administrator shall
allocate allowances pursuant to subparagraphs (A) and (B)
only in accordance with this subparagraph.
``(4) Notwithstanding any other provision of this section,
at the election of the owner or operator, after January 1,
2000, the Administrator shall allocate in lieu of allocation,
pursuant to paragraph (1), (2), (3), (5), or (6), allowances
for a unit subject to the emissions limitation requirements
of this subsection which commenced commercial operation on or
after January 1, 1981 and before December 31, 1985, which was
subject to, and in compliance with, section 111 of the Act in
an amount equal to the unit's annual fuel consumption, on a
Btu basis, at a 65 percent capacity factor multiplied by the
unit's allowable 1985 emissions rate, divided by 2,000.
``(5) For the purposes of this section, in the case of an
oil- and gas-fired unit which has been awarded a clean coal
technology demonstration grant as of January 1, 1991, by the
United States Department of Energy, beginning January 1,
2002, the Administrator shall allocate for the unit
allowances in an amount equal to the unit's baseline
multiplied by 1.20 lbs/mmBtu, divided by 2,000.
``(e) Oil and Gas-Fired Units Equal to or Greater Than 0.60
lbs/mmBtu and Less Than 1.20 lbs/mmBtu.--After January 1,
2000, it shall be unlawful for any existing oil and gas-fired
utility unit the lesser of whose actual or allowable 1985
sulfur dioxide emission rate is equal to, or greater than,
0.60 lbs/mmBtu, but less than 1.20 lbs/mmBtu to exceed an
annual sulfur dioxide tonnage limitation equal to the product
of the unit's baseline multiplied by (A) the lesser of the
unit's allowable 1985 emissions rate or its actual 1985
emissions rate and (B) a numerical factor of 120 percent
divided by 2,000, unless the owner or operator of such unit
holds allowances to emit not less than the unit's total
annual emissions or, for a year after 2007, unless the owner
or operator of the source that includes such unit holds
allowances to emit not less than the total annual emissions
of all affected units at the source.
``(f) Oil and Gas-Fired Units Less Than 0.60 lbs/mmBtu.--
``(1) After January 1, 2000, it shall be unlawful for any
oil and gas-fired existing utility unit the lesser of whose
actual or allowance 1985 emission rate is less than 0.60 lbs/
mmBtu and whose average annual fuel consumption during the
period 1980 through 1989 on a Btu basis was 90 percent or
less in the form of natural gas to exceed an annual sulfur
dioxide tonnage emissions limitation equal to the product of
the unit's baseline multiplied by--
``(A) the lesser of 0.60 lbs/mmBtu or the unit's allowance
1985 emissions, and
``(B) a numerical factor of 120 percent, divided by 2,000,
unless the owner or operator of such unit holds allowances to
emit not less than the unit's total annual emissions or, for
a year after 2007,
unless the owner or operator of the source that includes such
unit holds allowances to emit not less than the total annual
emissions of all affected units at the source.
``(2) In addition to allowances allocated pursuant to
paragraph (1) as basic Phase II allowance allocations and
section 412(a), beginning January 1, 2000, the Administrator
shall, in the case of any unit operated by a utility that
furnishes electricity, electric energy, steam, and natural
gas within an area consisting of a city and 1 contiguous
county, and in the case of any unit owned by a State
authority, the output of which unit is furnished within that
same area consisting of a city and 1 contiguous county, the
Administrator shall allocate for each unit in the utility its
pro rata share of 7,000 allowances and for each unit in the
State authority its pro rata share of 2,000 allowances.
``(g) Units That Commence Operation Between 1986 and
December 31, 1995.--
``(1) After January 1, 2000, it shall be unlawful for any
utility unit that has commenced commercial operation on or
after January 1, 1986, but not later than September 30, 1990
to exceed an annual tonnage emission limitation equal to the
product of the unit's annual fuel consumption, on a Btu
basis, at a 65 percent capacity factor multiplied by the
unit's allowance 1985 sulfur dioxide emission rate
(converted, if necessary, to pounds per mmBtu), divided by
2,000 unless the owner or operator of such unit holds
allowances to emit not less than the unit's total annual
emissions or, for a year after 2007, unless the owner or
operator of the source that includes such unit holds
allowances to emit not less than the total annual emissions
of all affected units at the source.
``(2) After January 1, 2000, the Administrator shall
allocate allowances pursuant to section 411 to each unit
which is listed in table B of this paragraph in an annual
amount equal to the amount specified in table B.

``TABLE B

Unit Allowances
Brandon Shores..................................................8,907
Miller 4........................................................9,197
TNP One 2.......................................................4,000
Zimmer 1.......................................................18,458
Spruce 1........................................................7,647
Clover 1........................................................2,796
Clover 2........................................................2,796
Twin Oak 2......................................................1,760
Twin Oak 1......................................................9,158
Cross 1.........................................................6,401
Malakoff 1......................................................1,759

Notwithstanding any other paragraph of this subsection, for
units subject to this paragraph, the Administrator shall not
allocate allowances pursuant to any other paragraph of this
subsection, provided that the owner or operator of a unit
listed on Table B may elect an allocation of allowances under
another paragraph of this subsection in lieu of an allocation
under this paragraph.
``(3) Beginning January 1, 2000, the Administrator shall
allocate to the owner or operator of any utility unit that
commences commercial operation, or has commenced commercial
operation, on or after October 1, 1990, but not later than
December 31, 1992 allowances in an amount equal to the
product of the unit's annual fuel consumption, on a Btu
basis, at a 65 percent capacity factor multiplied by the
lesser of 0.30 lbs/mmBtu or the unit's allowable sulfur
dioxide emission rate (converted, if necessary, to pounds per
mmBtu), divided by 2,000.
``(4) Beginning January 1, 2000, the Administrator shall
allocate to the owner or operator of any utility unit that
has commenced construction before December 31, 1990 and that
commences commercial operation between January 1, 1993 and
December 31, 1995, allowances in an amount equal to the
product of the unit's annual fuel consumption, on a Btu
basis, at a 65 percent capacity factor multiplied by the
lesser of 0.30 lbs/mmBtu or the unit's allowable sulfur
dioxide emission rate (converted, if necessary, to pounds per
mmBtu), divided by 2,000.
``(5) After January 1, 2000, it shall be unlawful for any
existing utility unit that has completed conversion from
predominantly gas fired existing operation to coal fired
operation between January 1, 1985 and December 31, 1987, for
which there has been allocated a proposed or final
prohibition order pursuant to section 301(b) of the
Powerplant and Industrial Fuel Use Act of 1978 (42 U.S.C.

[[Page S2960]]

8301 et seq, repealed 1987) to exceed an annual sulfur
dioxide tonnage emissions limitation equal to the product of
the unit's annual fuel consumption, on a Btu basis, at a 65
percent capacity factor multiplied by the lesser of 1.20 lbs/
mmBtu or the unit's allowable 1987 sulfur dioxide emissions
rate, divided by 2,000, unless the owner or operator of such
unit has obtained allowances equal to its actual emissions
or, for a year after 2007, unless the owner or operator of
the source that includes such unit holds allowances to emit
not less than the total annual emissions of all affected
units at the source.
``(6) Unless the Administrator has approved a designation
of such facility under section 417, the provisions of this
subpart shall not apply to a `qualifying small power
production facility' or `qualifying cogeneration facility'
(within the meaning of section 3(17)(C) or 3(18)(B) of the
Federal Power Act) or to a `new independent power production
facility' if, as of November 15, 1990--
``(A) an applicable power sales agreement has been
executed;
``(B) the facility is the subject of a State regulatory
authority order requiring an electric utility to enter into a
power sales agreement with, purchase capacity from, or (for
purposes of establishing terms and conditions of the electric
utility's purchase of power) enter into arbitration
concerning, the facility;
``(C) an electric utility has issued a letter of intent or
similar instrument committing to purchase power from the
facility at a previously offered or lower price and a power
sales agreement is executed within a reasonable period of
time; or
``(D) the facility has been selected as a winning bidder in
a utility competitive bid solicitation.
``(h) Oil and Gas-Fired Units Less Than 10 Percent Oil
Consumed.--
``(1) After January 1, 2000, it shall be unlawful for any
oil- and gas-fired utility unit whose average annual fuel
consumption during the period 1980 through 1989 on a Btu
basis exceeded 90 percent in the form of natural gas to
exceed an annual sulfur dioxide tonnage limitation equal to
the product of the unit's baseline multiplied by the unit's
actual 1985 emissions rate divided by 2,000 unless the owner
or operator of such unit holds allowances to emit not less
than the unit's total annual emissions or, for a year after
2007, unless the owner or operator of the source that
includes such unit holds allowances to emit not less than the
total annual emissions of all affected units at the source.
``(2) In addition to allowances allocated pursuant to
paragraph (1) and section 412(a) as basic Phase II allowance
allocations, beginning January 1, 2000, and for each calendar
year thereafter until and including 2009, the Administrator
shall allocate annually for each unit subject to the
emissions limitation requirements of paragraph (1) allowances
from the reserve created pursuant to subsection (a)(2) in an
amount equal to the unit's baseline multiplied by 0.050 lbs/
mmBtu, divided by 2,000.
``(3) In addition to allowances allocated pursuant to
paragraph (1) and section 412(a), beginning January 1, 2010,
the Administrator shall allocate annually for each unit
subject to the emissions limitation requirements of paragraph
(1) allowances in an amount equal to the unit's baseline
multiplied by 0.050 lbs/mmBtu, divided by 2,000.
``(i) Units in High Growth States.--
``(1) In addition to allowances allocated pursuant to this
section and section 412(a) as basic Phase II allowance
allocations, beginning January 1, 2000, the Administrator
shall allocate annually allowances for each unit, subject to
an emissions limitation requirement under this section, and
located in a State that--
``(A) has experienced a growth in population in excess of
25 percent between 1980 and 1988 according to State
Population and Household Estimates, With Age, Sex, and
Components of Change: 1981-1988 allocated by the United
States Department of Commerce, and
``(B) had an installed electrical generating capacity of
more than 30,000,000 kw in 1988, in an amount equal to the
difference between (A) the number of allowances that would be
allocated for the unit pursuant to the emissions limitation
requirements of this section applicable to the unit adjusted
to reflect the unit's annual average fuel consumption on a
Btu basis of any three consecutive calendar years between
1980 and 1989 (inclusive) as elected by the owner or operator
and (B) the number of allowances allocated for the unit
pursuant to the emissions limitation requirements of this
section: Provided, That the number of allowances allocated
pursuant to this subsection shall not exceed an annual total
of 40,000. If necessary to meeting the 40,000 allowance
restriction imposed under this subsection the Administrator
shall reduce, pro rata, the additional annual allowances
allocated to each unit under this subsection.
``(2) Beginning January 1, 2000, in addition to allowances
allocated pursuant to this section and section 403(a)(1) as
basic Phase II allowance allocations, the Administrator shall
allocate annually for each unit subject to the emissions
limitation requirements of subsection (b)(1)--
``(A) the lesser of whose actual or allowable 1980
emissions rate has declined by 50 percent or more as of
November 15, 1990,
``(B) whose actual emissions rate is less than 1.2 lbs/
mmBtu as of January 1, 2000,
``(C) which commenced operation after January 1, 1970,
``(D) which is owned by a utility company whose combined
commercial and industrial kilowatt-hour sales have increased
by more than 20 percent between calendar year 1980 and
November 15, 1990, and
``(E) whose company-wide fossil-fuel sulfur dioxide
emissions rate has declined 40 percent or more from 1980 to
1988, allowances in an amount equal to the difference
between--
``(i) the number of allowances that would be allocated for
the unit pursuant to the emissions limitation requirements of
subsection (b)(1) adjusted to reflect the unit's annual
average fuel consumption on a Btu basis for any three
consecutive years between 1980 and 1989 (inclusive) as
elected by the owner or operator, and
``(ii) the number of allowances allocated for the unit
pursuant to the emissions limitation requirements of
subsection (b)(1): Provided, That the number of allowances
allocated pursuant to this paragraph shall not exceed an
annual total of 5,000. If necessary to meeting the 5,000
allowance restriction imposed in the last clause of the
preceding sentence the Administrator shall reduce, pro rata,
the additional allowances allocated to each unit pursuant to
this paragraph.
``(j) Certain Municipally Owned Power Plants.--Beginning
January 1, 2000, in addition to allowances allocated pursuant
to this section and section 412(a) as basic Phase II
allowance allocations, the Administrator shall allocate
annually for each existing municipally owned oil and gas-
fired utility unit with nameplate capacity equal to, or less
than, 40 MWe, the lesser of whose actual or allowable 1985
sulfur dioxide emission rate is less than 1.20 lbs/mmBtu,
allowances in an amount equal to the product of the unit's
annual fuel consumption on a Btu basis at a 60 percent
capacity factor multiplied by the lesser of its allowable
1985 emission rate or its actual 1985 emission rate, divided
by 2,000.

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

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

``SEC. 416. ELECTION FOR ADDITIONAL SOURCES.

``(a) Applicability.--The owner or operator of any unit
that is not, nor will become, an affected unit under section
412(b), 413, or 414, that emits sulfur dioxide, may elect to
designate that unit or source to become an affected unit and
to receive allowances under this subpart. An election shall
be submitted to the Administrator for approval, along with a
permit application and proposed compliance plan in accordance
with section 404. The Administrator shall approve a
designation that meets the requirements of this section, and
such designated unit shall be allocated allowances, and be an
affected unit for purposes of this subpart.
``(b) Establishment of Baseline.--The baseline for a unit
designated under this section shall be established by the
Administrator by regulation, based on fuel consumption and
operating data for the unit for calendar years 1985, 1986,
and 1987, or if such data is not available, the Administrator
may prescribe a baseline based on alternative representative
data.
``(c) Emission Limitations.--
``(1) For a unit for which an election, along with a permit
application and compliance plan, is submitted to the
Administrator under paragraph (a) before January 1, 2002,
annual emissions limitations for sulfur dioxide shall be
equal to the product of the baseline multiplied by the lesser
of the unit's 1985 actual or allowable emission rate in lbs/
mmBtu, or if the unit did not operate in 1985, by the lesser
of the unit's actual or allowable emission rate for a
calendar year after 1985 (as determined by the
Administrator), divided by 2,000.
``(2) For a unit for which an election, along with a permit
application and compliance plan, is submitted to the
Administrator under paragraph (a) on or after January 1,
2002, annual emissions limitations for sulfur dioxide shall
be equal to the product of the baseline multiplied by the
lesser of the unit's 1985 actual or allowable emission rate
in lbs/mmBtu, or, if the unit did not operate in 1985, by the
lesser of the unit's actual or allowable emission rate for a
calendar year

[[Page S2961]]

after 1985 (as determined by the Administrator), divided by
4,000.
``(d) Allowances and Permits.--The Administrator shall
issue allowances to an affected unit under this section in an
amount equal to the emissions limitation calculated under
subsection (c), in accordance with section 412. Such
allowance may be used in accordance with, and shall be
subject to, the provisions of section 412. Affected sources
under this section shall be subject to the requirements of
sections 404, 405, 406, and 412.
``(e) Limitation.--Any unit designated under this section
shall not transfer or bank allowances produced as a result of
reduced utilization or shutdown, except that, such allowances
may be transferred or carried forward for use in subsequent
years to the extent that the reduced utilization or shutdown
results from the replacement of thermal energy from the unit
designated under this section, with thermal energy generated
by any other unit or units subject to the requirements of
this subpart, and the designated unit's allowances are
transferred or carried forward for use at such other
replacement unit or units. In no case may the Administrator
allocate to a source designated under this section allowances
in an amount greater than the emissions resulting from
operation of the source in full compliance with the
requirements of this Act. No such allowances shall authorize
operation of a unit in violation of any other requirements of
this Act.
``(f) Implementation.--The Administrator shall implement
this section under 40 CFR part 74 (2002), amended as
appropriate by the Administrator.

``SEC. 417. AUCTIONS, RESERVE.

``(a) Special Reserve of Allowances.--For purposes of
establishing the Special Allowance Reserve, the Administrator
shall withhold--
``(1) 2.8 percent of the allocation of allowances for each
year from 1995 through 1999 inclusive; and
``(2) 2.8 percent of the basic Phase II allowance
allocation of allowances for each year beginning in the year
2000

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

``TABLE C.--NUMBER OF ALLOWANCES AVAILABLE FOR AUCTION
------------------------------------------------------------------------
Spot auction Advance
Year of sale (same year) auction
------------------------------------------------------------------------
1993.................................... 50,000* 100,000
1994.................................... 50,000* 100,000
1995.................................... 50,000* 100,000
1996.................................... 150,000 100,000
1997.................................... 150,000 100,000
1998.................................... 150,000 100,000
1999.................................... 150,000 100,000
2000.................................... 125,000 125,000
2001.................................... 125,000 125,000
2002.................................... 125,000 125,000
2003.................................... 125,000 0
2004-2009............................... 125,000 0
------------------------------------------------------------------------
Allowances sold in the spot sale in any year are allowances which may be
used only in that year (unless banked for use in a later year), except
as otherwise noted. Allowances sold in the advance auction in any year
are allowances which may only be used in the 7th year after the year
in which they are first offered for sale (unless banked for use in a
later year).
*Available for use only in 1995 (unless banked for use in a later year).

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

``SEC. 418. INDUSTRIAL SO2 EMISSIONS.

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

``SEC. 419. TERMINATION.

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

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

``SEC. 421. DEFINITIONS.

``For purposes of this subpart--
``(1) The term `affected EGU' means--
``(A) for a unit serving a generator before the date of
enactment of the Clear Skies Act of 2003, a unit in a State
serving a generator with a nameplate capacity of greater than
25 megawatts that produced or produces electricity for sale
during 2002 or any year thereafter, except for a cogeneration
unit that produced or produces electricity for sale equal to
or less than one-third of the potential electrical output of
the generator that it served or serves during 2002 and each
year thereafter; and
``(B) for a unit commencing service of a generator on or
after the date of enactment of the Clear Skies Act of 2003, a
unit in a State serving a generator that produces electricity
for sale during any year starting with the year the unit
commences service of a generator, except for a gas-fired unit
serving one or more generators with total nameplate

[[Page S2962]]

capacity of 25 megawatts or less, or a cogeneration unit that
produces electricity for sale equal to or less than one-third
of the potential electrical output of the generator that it
serves, during each year starting with the year the unit
commences services of a generator.

Notwithstanding paragraphs (A) and (B), the term `affected
EGU' does not include a solid waste incineration unit subject
to section 129 or a unit for the treatment, storage, or
disposal of hazardous waste subject to section 3005 of the
Solid Waste Disposal Act.
``(2) The term `coal-fired' with regard to a unit means,
for purposes of section 424, combusting coal or any coal-
derived fuel alone or in combination with any amount of any
other fuel in any year during 1998 through 2002 or, for a
unit that commenced operation during 2001-2004, a unit
designed to combust coal or any coal-derived fuel alone or in
combination with any other fuel.
``(3) The term `Eastern bituminous' means bituminous that
is from a mine located in a State east of the Mississippi
River.
``(4) The term `general account' means an account in the
Allowance Tracking System under section 403(c) established by
the Administrator for any person under 40 CFR Sec. 73.31(c)
(2002), amended as appropriate by the Administrator.
``(5) The term `oil-fired' with regard to a unit means, for
purposes of section 424, combusting fuel oil for more than 10
percent of the unit's total heat input, and combusting no
coal or coal-derived fuel, in any year during 1998 through
2002 or, for a unit that commenced operation during 2001-
2004, a unit designed to combust oil for more than 10 percent
of the unit's total heat input and not to combust any coal or
coal-derived fuel coal.
``(6) The term `unit account' means an account in the
Allowance Tracking System under section 403(c) established by
the Administrator for any unit under 40 CFR Sec. 73.31(a) and
(b) (2002), amended as appropriate by the Administrator.

``SEC. 422. APPLICABILITY.

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

``SEC. 423. LIMITATIONS ON TOTAL EMISSIONS.

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

``TABLE A.--TOTAL SO2 ALLOWANCES ALLOCATED OR AUCTIONED FOR EGUS
------------------------------------------------------------------------
SO2 allowances SO2 allowances
Year allocated auctioned
------------------------------------------------------------------------
2010.................................... 4,371,666 45,000
2011.................................... 4,326,667 90,000
2012.................................... 4,281,667 135,000
2013.................................... 4,320,000 180,000
2014.................................... 4,275,000 225,000
2015.................................... 4,230,000 270,000
2016.................................... 4,185,000 315,000
2017.................................... 4,140,000 360,000
2018.................................... 2,730,000 270,000
2019.................................... 2,700,000 300,000
2020.................................... 2,670,000 330,000
2021.................................... 2,640,000 360,000
2022.................................... 2,610,000 390,000
2023.................................... 2,580,000 420,000
2024.................................... 2,550,000 450,000
2025.................................... 2,520,000 480,000
2026.................................... 2,490,000 510,000
2027.................................... 2,460,000 540,000
2028.................................... 2,430,000 570,000
2029.................................... 2,400,000 600,000
2030.................................... 2,325,000 675,000
2031.................................... 2,250,000 750,000
2032.................................... 2,175,000 825,000
2033.................................... 2,100,000 900,000
2034.................................... 2,025,000 975,000
2035.................................... 1,950,000 1,050,000
2036.................................... 1,875,000 1,125,000
2037.................................... 1,800,000 1,200,000
2038.................................... 1,725,000 1,275,000
2039.................................... 1,650,000 1,350,000
2040.................................... 1,575,000 1,425,000
2041.................................... 1,500,000 1,500,000
2042.................................... 1,425,000 1,575,000
2043.................................... 1,350,000 1,650,000
2044.................................... 1,275,000 1,725,000
2045.................................... 1,200,000 1,800,000
2046.................................... 1,125,000 1,875,000
2047.................................... 1,050,000 1,950,000
2048.................................... 975,000 2,025,000
2049.................................... 900,000 2,100,000
2050.................................... 825,000 2,175,000
2051.................................... 750,000 2,250,000
2052.................................... 675,000 2,325,000
2053.................................... 600,000 2,400,000
2054.................................... 525,000 2,475,000
2055.................................... 450,000 2,550,000
2056.................................... 375,000 2,625,000
2057.................................... 300,000 2,700,000
2058.................................... 225,000 2,775,000
2059.................................... 150,000 2,850,000
2060.................................... 75,000 2,925,000
2061.................................... 0 3,000,000
------------------------------------------------------------------------

``SEC. 424. EGU ALLOCATIONS.

``(a) In General.--Not later than 24 months before the
commencement date of the sulfur dioxide allowance requirement
of section 422, the Administrator shall promulgate
regulations determining allocations of sulfur dioxide
allowances for affected EGUs for each year during 2010
through 2060. The regulations shall provide that:
``(1)(A) 95 percent of the total amount of sulfur dioxide
allowances allocated each year under section 423 shall be
allocated based on the sulfur dioxide allowances that were
allocated under subpart 1 for 2010 or thereafter and are held
in unit accounts and general accounts in the Allowance
Tracking System under section 403(c).
``(B) The Administrator shall allocate sulfur dioxide
allowances to each facility's account and each general
account in the Allowance Tracking System under section 403(c)
as follows:
``(i) For each unit account and each general account in the
Allowance Tracking System, the Administrator shall determine
the total amount of sulfur dioxide allowances allocated under
subpart 1 for 2010 and thereafter that are recorded, as of
12:00 noon, Eastern Standard time, on the date 180 days after
enactment of the Clear Skies Act of 2003. The Administrator
shall determine this amount in accordance with 40 CFR part 73
(2002), amended as appropriate by the Administrator, except
that the Administrator shall apply a discount rate of 7
percent for each year after 2010 to the amounts of sulfur
dioxide allowances allocated for 2011 or later.
``(ii) For each unit account and each general account in
the Allowance Tracking System, the Administrator shall
determine an amount of sulfur dioxide allowances equal to the
allocation amount under subparagraph (A) multiplied by the
ratio of the amount of sulfur dioxide allowances determined
to be recorded in that account under clause (i) to the total
amount of sulfur dioxide allowances determined to be recorded
in all unit accounts and general accounts in the Allowance
Tracking System under clause (i).
``(iii) The Administrator shall allocate to each facility's
account in the Allowance Tracking System an amount of sulfur
dioxide allowances equal to the total amount of sulfur
dioxide allowances determined under clause (ii) for the unit
accounts of the units at the facility and shall allocate to
each general account in the Allowance Tracking System the
amount of sulfur dioxide allowances determined under clause
(ii) for that general account.
``(2)(A) 3\1/2\ percent of the total amount of sulfur
dioxide allowances allocated each year under section 423
shall be allocated for units at a facility that are affected
EGUs as of December 31, 2004, that commenced operation before
January 1, 2001, and that are not allocated any sulfur
dioxide allowances under subpart 1.
``(B) The Administrator shall allocate each year for the
units under subparagraph (A) an amount of sulfur dioxide
allowances determined by:
``(i) For such units at the facility that are coal-fired,
multiplying 0.40 lb/mmBtu by the total baseline heat input of
such units and converting to tons.
``(ii) For such units at the facility that are oil-fired,
multiplying 0.20 lb/mmBtu by the total baseline heat input of
such units and converting to tons.
``(iii) For all such other units at the facility that are
not covered by clause (i) or (ii), multiplying 0.05 lb/mmBtu
by the total baseline heat input of such units and converting
to tons.
``(iv) If the total of the amounts for all facilities under
clauses (i), (ii), and (iii) exceeds the allocation amount
under subparagraph (A), multiplying the allocation amount
under subparagraph (A) by the ratio of the total of the
amounts for the facility under clauses (i), (ii), and (iii)
to the total of the amounts for all facilities under clause
(i), (ii), and (iii).
``(v) Allocating to each facility the lesser of the total
of the amounts for the facility under clauses (i), (ii), and
(iii) or, if the total of the amounts for all facilities
under clauses (i), (ii), and (iii) exceeds the allocation
amount under subparagraph (A), the amount under clause (iv).
The Administrator shall add to the amount of sulfur dioxide
allowances allocated under paragraph (3) any unallocated
allowances under this paragraph.
``(3)(A) 1\1/2\ percent of the total amount of sulfur
dioxide allowances allocated each year under section 423
shall be allocated for units that are affected EGUs as of
December 31, 2004, that commence operation on or after
January 1, 2001 and before January 1, 2005, and that are not
allocated any sulfur dioxide allowances under subpart 1.
``(B) The Administrator shall allocate each year for the
units under subparagraph (A) an amount of sulfur dioxide
allowances determined by:
``(i) For such units at the facility that are coal-fired or
oil-fired, multiplying 0.19 lb/mmBtu by the total baseline
heat input of such units and converting to tons.
``(ii) For all such other units at the facility that are
not covered by clause (i), multiplying 0.02 lb/mmBtu by the
total baseline heat input of such units and converting to
tons.
``(iii) If the total of the amounts for all facilities
under clauses (i) and (ii) exceeds the allocation amount
under subparagraph (A), multiplying the allocation amount
under subparagraph (A) by the ratio of the total of the
amounts for the facility under clauses (i) and (ii) to the
total of the amounts for all facilities under clauses (i) and
(ii).
``(iv) Allocating to each facility the lesser of the total
of the amounts for the facility under clauses (i) and (ii)
or, if the total of the amounts for all facilities under
clauses (i) and (ii) exceeds the allocation amount under
subparagraph (A), the amount under clause (iv). The
Administrator shall allocate to the facilities under
paragraphs (1) and (2)

[[Page S2963]]

on a pro rata basis (based on the allocations under those
paragraphs) any unallocated allowances under this paragraph.
``(b) Failure To Promulgate.--(1) If, by the date 18 months
before January 1 of each year 2010 through 2060, the
Administrator has signed proposed regulations, but has not
promulgated final regulations, determining allocations under
subsection (a), the Administrator shall allocate, for such
year, for each facility where an affected EGU is located, and
for each general account, the amount of sulfur dioxide
allowances specified for that facility and the general
account in such proposed regulations.
``(2) If, by the date 18 months before January 1 of each
year 2010 through 2060, the Administrator has not signed
proposed regulations determining allocations under subsection
(a), the Administrator shall:
``(A) determine, for such year, for each unit with coal as
its primary or secondary fuel or residual oil as its primary
fuel listed in the Administrator's Emissions Scorecard 2001,
Appendix B, Table B1 an amount of sulfur dioxide allowances
by multiplying 95 percent of the allocation amount under
section 423 by the ratio of such unit's heat input in the
Emissions Scorecard 2001, Appendix B, Table B1 to the total
of the heat input in the Emissions Scorecard 2001, Appendix
B, Table B1 for all units with coal as their primary or
secondary fuel or residual oil as their primary fuel;
``(B) allocate, for such year, for each facility where a
unit under subparagraph (A) is located the total of the
amounts of sulfur dioxide allowances for the units at such
facility determined under subparagraph (A); and
``(C) auction an amount of sulfur dioxide allowances equal
to 5 percent of the allocation amount under section 423 and
conduct the auction on the first business day in October
following the respective promulgation deadline under
paragraph (1) and in accordance with section 409.

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

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

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

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

``Subpart 3--Western Regional Air Partnership

``SEC. 431. DEFINITIONS.

``For purposes of this subpart--
``(1) The term `adjusted baseline heat input' means the
average annual heat input used by a unit during the 3 years
in which the unit had the highest heat input for the period
from the 8th through the 4th year before the first covered
year.
``(A) Notwithstanding paragraph (1), if a unit commences
operation during such period and--
``(i) on or after January 1 of the fifth year before the
first covered year, then `adjusted baseline heat input' shall
mean the average annual heat input used by the unit during
the fifth and 4th years before the first covered year; and
``(ii) on or after January 1 of the 4th year before the
first covered year, then `adjusted baseline heat input' shall
mean the annual heat input used by the unit during the 4th
year before the first covered year.
``(B) A unit's heat input for a year shall be the heat
input--
``(i) required to be reported under section 405 for the
unit, if the unit was required to report heat input during
the year under that section;
``(ii) reported to the Energy Information Administrator for
the unit, if the unit was not required to report heat input
under section 405;
``(iii) based on data for the unit reported to the WRAP
State where the unit is located as required by State law, if
the unit was not required to report heat input during the
year under section 405 and did not report to the Energy
Information Administration; or
``(iv) based on fuel use and fuel heat content data for the
unit from fuel purchase or use records, if the unit was not
required to

[[Page S2964]]

report heat input during the year under section 405 and did
not report to the Energy Information Administration and the
WRAP State.
``(2) The term `affected EGU' means an affected EGU under
subpart 2 that is in a WRAP State and that--
``(A) in 2000, emitted 100 tons or more of sulfur dioxide
and was used to produce electricity for sale; or
``(B) in any year after 2000, emits 100 tons or more of
sulfur dioxide and is used to produce electricity for sale.
``(3) The term `coal-fired' with regard to a unit means,
for purposes of section 434, a unit combusting coal or any
coal-derived fuel alone or in combination with any amount of
any other fuel in any year during the period from the 8th
through the 4th year before the first covered year.
``(4) The term `covered year' means--
``(A)(i) the third year after the year 2018 or later when
the total annual sulfur dioxide emissions of all affected
EGUs in the WRAP States first exceed 271,000 tons; or
``(ii) the third year after the year 2013 or later when the
Administrator determines by regulation that the total annual
sulfur dioxide emissions of all affected EGUs in the WRAP
States are reasonably projected to exceed 271,000 tons in
2018 or any year thereafter. The Administrator may make such
determination only if all the WRAP States submit to the
Administrator a petition requesting that the Administrator
issue such determination and make all affected EGUs in the
WRAP States subject to the requirements of sections 432
through 434; and
``(B) each year after the `covered year' under subparagraph
(A).
``(5) The term `oil-fired' with regard to a unit means, for
purposes of section 434, a unit combusting fuel oil for more
than 10 percent of the unit's total heat input, and
combusting no coal or coal-derived fuel, an any year during
the period from the eight through the 4th year before the
first covered year.
``(6) The term `WRAP State' means Arizona, California,
Colorado, Idaho, Nevada, New Mexico, Oregon, Utah, and
Wyoming.

``SEC. 432. APPLICABILITY.

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

``SEC. 433. LIMITATIONS ON TOTAL EMISSIONS.

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

``SEC. 434. EGU ALLOCATIONS.

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

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

``Subpart 1--Acid Rain Program

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

``(a) Applicability.--On the date that a coal-fired utility
unit becomes an affected unit pursuant to sections 413 or
414, or on the date a unit subject to the provisions of
section 413(d), must meet the SO2 reduction
requirements, each such unit shall become an affected unit
for purposes of this section and shall be subject to the
emission limitations for nitrogen oxides set forth herein.
``(b) Emission Limitations.--(1) The Administrator shall by
regulation establish annual allowable emission limitations
for nitrogen oxides for the types of utility boilers listed
below, which limitations shall not exceed the rates listed
below: Provided, That the Administrator may set a rate higher
than that listed for any type of utility boiler if the
Administrator finds that the maximum listed rate for that
boiler type cannot be achieved using low NOX
burner technology. The Administrator shall implement this
paragraph under 40 CFR Sec. 76.5 (2002). The maximum
allowable emission rates are as follows:
``(A) for tangentially fired boilers, 0.45 lb/mmBtu; and
``(B) for dry bottom wall-fired boilers (other than units
applying cell burner technology), 0.50 lb/mmBtu. After
January 1, 1995, it shall be unlawful for any unit that is an
affected unit on that date and is of the type listed in this
paragraph to emit nitrogen oxides in excess of the emission
rates set by the Administrator pursuant to this paragraph.
``(2) The Administrator shall, by regulation, establish
allowable emission limitations on a lb/mmBtu, annual average
basis, for nitrogen oxides for the following types of utility
boilers:
``(A) wet bottom wall-fired boilers;
``(B) cyclones;
``(C) units applying cell burner technology; and
``(D) all other types of utility boilers.
The Administrator shall base such rates on the degree of
reduction achievable through the retrofit application of the
best system of continuous emission reduction, taking into
account available technology, costs and energy and
environmental impacts; and which is comparable to the costs
of nitrogen oxides controls set pursuant to subsection
(b)(1). The Administrator may revise the applicable emission
limitations for tangentially fired and dry bottom, wall-fired
boilers (other than cell burners) to be more stringent if the
Administrator determines that more effective low
NOx burned technology is available: Provided,
That, no unit that is an affected unit pursuant to section
413 and that is subject to the requirements of subsection
(b)(1), shall be subject to the revised emission limitations,
if any. The Administrator shall implement that paragraph
under 40 CFR Sec. Sec. 76.6 and 76.7 (2002).
``(c) Alternative Emission Limitations.--(1) The permitting
authority shall, upon request of an owner or operator of a
unit subject to this section, authorize an emission
limitation less stringent than the applicable limitation
established under subsection (b)(1) or (b)(2) upon a
determination that--
``(A) a unit subject to subsection (b)(1) cannot meet the
applicable limitation using low NOX burner
technology; or
``(B) a unit subject to subsection (b)(2) cannot meet the
applicable rate using the technology on which the
Administrator based the applicable emission limitation.
``(2) The permitting authority shall base such
determination upon a showing satisfactory to the permitting
authority, in accordance with regulations established by the
Administrator, that the owner or operator--
``(A) has properly installed appropriate control equipment
designed to meet the applicable emission rate;
``(B) has properly operated such equipment for a period of
15 months (or such other period of time as the Administrator
determines through the regulations), and provides operating
and monitoring data for such period demonstrating that the
unit cannot meet the applicable emission rate; and
``(C) has specified an emission rate that such unit can
meet on an annual average basis. The permitting authority
shall issue an operating permit for the unit in question, in
accordance with section 404 and title V--
``(i) that permits the unit during the demonstration period
referred to in subparagraph (B), to emit at a rate in excess
of the applicable emission rate;
``(ii) at the conclusion of the demonstration period to
revise the operating permit to reflect the alternative
emission rate demonstrated in subparagraphs (B) and (C).
``(3) Units subject to subsection (b)(1) for which an
alternative emission limitation is established shall not be
required to install any additional control technology beyond
low NOX burners. Nothing in this section shall
preclude an owner or operator from installing and operating
an alternative NOX control technology capable of
achieving the applicable emission limitation. The
Administrator shall implement this subsection under 40 CFR
part 76 (2002), amended as appropriate by the Administrator.

[[Page S2965]]

``(d) Emissions Averaging.--(1) In lieu of complying with
the applicable emission limitations under subsection (b)(1),
(2), or (c), the owner or operator of two or more units
subject to one or more of the applicable emission limitations
set pursuant to these sections, may petition the permitting
authority for alternative contemporaneous annual emission
limitations for such units that ensure that--
``(A) the actual annual emission rate in pounds of nitrogen
oxides per million Btu averaged over the units in question is
a rate that is less than or equal to
``(B) the Btu-weighted average annual emission rate for the
same units if they had been operated, during the same period
of time, in compliance with limitations set in accordance
with the applicable emission rates set pursuant to
subsections (b)(1) and (2).
``(2) If the permitting authority determines, in accordance
with regulations issued by the Administrator that the
conditions in paragraph (1) can be met, the permitting
authority shall issue operating permits for such units, in
accordance with section 404 and title V, that allow
alternative contemporaneous annual emission limitations. Such
emission limitations shall only remain in effect while both
units continue operation under the conditions specified in
their respective operating permits. The Administrator shall
implement this subsection under 40 CFR part 76 (2002),
amended as appropriate by the Administrator.

``SEC. 442. TERMINATION.

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

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

``SEC. 451. DEFINITIONS.

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

``SEC. 452. APPLICABILITY.

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

``SEC. 453. LIMITATIONS ON TOTAL EMISSIONS.

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

``TABLE A.--TOTAL NOX ALLOWANCES ALLOCATED OR AUCTIONED FOR EGUS IN ZONE
1
------------------------------------------------------------------------
NOX allowances NOX allowances
Year allocated auctioned
------------------------------------------------------------------------
2008.................................... 1,546,380 15,620
2009.................................... 1,530,760 31,240
2010.................................... 1,515,140 46,860
2011.................................... 1,499,520 62,480
2012.................................... 1,483,900 78,100
2013.................................... 1,468,280 93,720
2014.................................... 1,452,660 109,340
2015.................................... 1,437,040 124,960
2016.................................... 1,421,420 140,580
2017.................................... 1,405,800 156,200
2018.................................... 1,034,180 127,820
2019.................................... 1,022,560 139,440
2020.................................... 1,010,940 151,060
2021.................................... 999,320 162,680
2022.................................... 987,700 174,300
2023.................................... 976,080 185,920
2024.................................... 964,460 197,540
2025.................................... 952,840 209,160
2026.................................... 941,220 220,780
2027.................................... 929,600 232,400
2028.................................... 900,550 261,450
2029.................................... 871,500 290,500
2030.................................... 842,450 319,550
2031.................................... 813,400 348,600
2032.................................... 784,350 377,650
2033.................................... 755,300 406,700
2034.................................... 726,250 435,750
2035.................................... 697,200 464,800
2036.................................... 668,150 493,850
2037.................................... 639,100 522,900
2038.................................... 610,050 551,950
2039.................................... 581,000 581,000
2040.................................... 551,950 610,050
2041.................................... 522,900 639,100
2042.................................... 493,850 668,150
2043.................................... 464,800 697,200
2044.................................... 435,750 726,250
2045.................................... 406,700 755,300
2046.................................... 377,650 784,350
2047.................................... 348,600 813,400
2048.................................... 319,550 842,450
2049.................................... 290,500 871,500
2050.................................... 261,450 900,550
2051.................................... 232,400 929,550
2052.................................... 203,350 958,650
2053.................................... 174,300 987,700
2054.................................... 145,250 1,016,750
2055.................................... 116,200 1,045,800
2056.................................... 87,150 1,074,850
2057.................................... 58,100 1,103,900
2058.................................... 29,050 1,132,950
2059.................................... 0 1,162,000
------------------------------------------------------------------------

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

``TABLE B.--TOTAL NOX ALLOWANCES ALLOCATED FOR EGUS IN ZONE 2
------------------------------------------------------------------------
NOX allowance NOX allowance
Year allocated auctioned
------------------------------------------------------------------------
2008.................................... 532,620 5,380
2009.................................... 527,240 10,760
2010.................................... 521,860 16,140
2011.................................... 516,480 21,520
2012.................................... 511,100 26,900
2013.................................... 505,720 32,280
2014.................................... 500,340 37,660
2015.................................... 494,960 43,040
2016.................................... 489,580 48,420
2017.................................... 484,200 53,800
2018.................................... 478,820 59,180
2019.................................... 473,440 64,560
2020.................................... 468,060 69,940
2021.................................... 462,680 75,320
2022.................................... 457,300 80,700
2023.................................... 451,920 86,080
2024.................................... 446,540 91,460
2025.................................... 441,160 96,840
2026.................................... 435,780 102,220
2027.................................... 430,400 107,600
2028.................................... 416,950 121,050
2029.................................... 403,500 134,500
2030.................................... 390,050 147,950
2031.................................... 376,600 161,400
2032.................................... 363,150 174,850
2033.................................... 349,700 188,300
2034.................................... 336,250 201,750
2035.................................... 322,800 215,200
2036.................................... 309,350 228,650
2037.................................... 295,900 242,100
2038.................................... 282,450 255,550
2039.................................... 269,000 269,000
2040.................................... 255,550 282,450
2041.................................... 242,100 295,900
2042.................................... 228,650 309,350
2043.................................... 215,200 322,800
2044.................................... 201,750 336,250
2045.................................... 188,300 349,700
2046.................................... 174,850 363,150
2047.................................... 161,400 376,600
2048.................................... 147,950 390,050
2049.................................... 134,500 403,500
2050.................................... 121,050 416,950
2051.................................... 107,600 430,400
2052.................................... 94,150 443,850
2053.................................... 80,700 457,300
2054.................................... 67,250 470,750
2055.................................... 53,800 484,200
2056.................................... 40,350 497,650
2057.................................... 26,900 511,100
2058.................................... 13,450 524,550
2059.................................... 0 538,000
------------------------------------------------------------------------

``SEC. 454. EGU ALLOCATIONS.

``(a) EGU Allocations in the Zone 1 States.--
``(1) EPA regulations.--Not later than 18 months before the
commencement date of the nitrogen oxides allowance
requirement of section 452, the Administrator shall
promulgate regulations determining the allocation of nitrogen
oxides allowances for each year during 2008 through 2058 for
units at a facility in a Zone 1 State that commence operation
by and are affected EGUs as of December 31, 2004. The
regulations shall determine the allocation for such units for
each year by multiplying the allocation amount under section
453(a) by the ratio of the total amount of baseline heat
input of such units at the facility to the total amount of
baseline heat input of all affected EGUs in the Zone 1
States.
``(2) Failure to regulate.--(A) For each year 2008 through
2058, if, by the date 18 months before January 1 of such
year, the Administrator--

[[Page S2966]]

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

``Subpart 3--Ozone Season NOX Budget Program

``SEC. 461. DEFINITIONS.

``For purposes of this subpart:
``(1) The term `ozone season' means--
``(A) with regard to Connecticut, Delaware, the District of
Columbia, Maryland, Massachusetts, New Jersey, New York,
Pennsylvania, and Rhode Island, the period May 1 through
September 30 for each year starting in 2003; and
``(B) with regard to all other States, the period May 30,
2004 through September 30, 2004 and the period May 1 through
September 30 for each year thereafter.
``(2) The term `NOX SIP Call State' means
Connecticut, Delaware, the District of Columbia, Illinois,
Indiana, Kennedy, Maryland, Massachusetts, New Jersey, New
York, North Carolina, Ohio, Pennsylvania, Rhode Island, South
Carolina, Tennessee, Virginia, and West Virginia and the fine
grid portions of Alabama, Georgia, Michigan, and Missouri.
``(3) The term `fine grid portions of Alabama, Georgia,
Michigan, and Missouri' means the areas in Alabama, Georgia,
Michigan, and Missouri subject to 40 CFR Sec. 51.121 (2001),
as it would be amended in the notice of proposed rulemaking
at 67 Federal Register 8396 (February 22, 2002).

``SEC. 462. GENERAL PROVISIONS.

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

``SEC. 463. APPLICABLE IMPLEMENTATION PLAN.

``(a) SIPs.--Except as provided in subsection (b), the
applicable implementation plan for each NOX SIP
Call State shall be consistent with the requirements,
including the NOX SIP Call State's nitrogen oxides
budget and compliance supplement pool, in 40 CFR
Sec. Sec. 51.121 and 51.122 (2001), as it would be amended in
the notice of proposed rulemaking at 67 Federal Register 8396
(February 22, 2002).
``(b) Requirements.--Notwithstanding any provision to the
contrary in 40 CFR Sec. Sec. 51.121 and 51.122 (2001), as it
would be amended in the notice of proposed rulemaking at 67
Federal Register 8396 (February 22, 2002)--
``(1) the applicable implementation plan for each
NOX SIP Call State shall require full
implementation of the required emission control measures
starting no later than the first ozone season; and
``(2) starting January 1, 2008--
``(A) the owners and operators of a boiler, combustion
turbine, or integrated gasification combined cycle plant
subject to emission reduction requirements or limitations
under part B, C, or D shall not longer be subject to the
requirements in a NOX SIP Call State's applicable
implementation plan that meet the requirements of subsection
(a) and paragraph (1); and
``(B) notwithstanding subparagraph (A), if the
Administrator determines, by December 31, 2007, that a
NOX SIP Call State's applicable implementation
plan meets the requirements of subsection (a) and paragraph
(1), such applicable implementation plan shall be deemed to
continue to meet such requirements; and
``(3)(A) The owner or operator of a boiler, combustion
turbine, or combined cycle system may submit to the
Administrator a petition to allow use of nitrogen oxides
allowances allocated for 2005 to meet the applicable
requirement to hold nitrogen oxides allowances at least equal
to 2004 ozone season emissions of such boiler, combustion
turbine, or combined cycle system.
``(B) A petition under this paragraph shall be submitted to
the Administrator by February 1, 2004.
``(C) The petition shall demonstrate that the owner or
operator made reasonable efforts to install, at the boiler,
combustion turbine, or combined cycle system, nitrogen oxides
control technology designed to allow the owner or operator to
meet such requirement to hold nitrogen oxides allowances.
``(D) The petition shall demonstrate that there is an undue
risk for the reliability of electricity supply (taking into
account the feasibility of purchasing electricity or nitrogen
oxides allowances) because--
``(i) the owner or operator is not likely to be able to
install and operate the technology under subparagraph (C) on
a timely basis; or
``(ii) the technology under subparagraph (C) is not likely
to be able to achieve its design control level on a timely
basis.
``(E) The petition shall include a statement by the
NOx SIP Call State where the boiler, combustion
turbine, or combined cycle system is located that the
NOx SIP Call State does not object to the
petition.
``(F) By May 30, 2004, by order, the Administrator shall
approve the petition if it meets the requirements of
subparagraphs (B) through (E).

[[Page S2967]]

``(c) Savings Provision.--Nothing in this section or
section 464 shall preclude or deny the right of any State or
political subdivision thereof to adopt or enforce any
regulation, requirement, limitation, or standard, relating to
a boiler, combustion turbine, or integrated gasification
combined cycle plant subject to emission reduction
requirements or limitations under part B, C, or D, that is
more stringent than a regulation, requirement, limitation, or
standard in effect under this section or under any other
provision of this Act.

``SEC. 464. TERMINATION OF FEDERAL ADMINISTRATION OF
NOX TRADING PROGRAM FOR EGUS.

``Starting January 1, 2008, with regard to any boiler,
combustion turbine, or integrated gasification combined cycle
plant subject to emission reduction requirements or
limitations under part B, C, or D, the Administrator shall
not administer any nitrogen oxides trading program included
in any NOX SIP Call State's applicable
implementation plan and meeting the requirements of section
463(a) and (b)(1).

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

``The Administrator shall promulgate regulations as
necessary to assure that the requirement to hold allowances
under section 452(a)(1) may be met using nitrogen oxides
allowances allocated for an ozone season before 2008 under a
nitrogen oxides trading program that the Administrator
administers, is included in a NOX SIP Call State's
applicable implementation plan, and meets the requirements of
section 463(a) and (b)(1).

``PART D--MERCURY EMISSIONS REDUCTIONS

``SEC. 471. DEFINITIONS.

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

``SEC. 472. APPLICABILITY.

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

``SEC. 473. LIMITATIONS ON TOTAL EMISSIONS.

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

``TABLE A.--TOTAL MERCURY ALLOWANCES ALLOCATED OR AUCTIONED FOR EGUS
------------------------------------------------------------------------
Mercury Mercury
Year allowances allowances
allocated auctioned
------------------------------------------------------------------------
2010.................................... 823,680 8,320
2011.................................... 815,360 16,640
2012.................................... 807,040 24,960
2013.................................... 798,720 33,280
2014.................................... 790,400 41,600
2015.................................... 782,080 49,920
2016.................................... 773,760 58,240
2017.................................... 765,440 66,560
2018.................................... 436,800 43,200
2019.................................... 432,000 48,000
2020.................................... 427,200 52,800
2021.................................... 422,400 57,600
2022.................................... 417,600 62,400
2023.................................... 412,800 67,200
2024.................................... 408,000 72,000
2025.................................... 403,200 76,800
2026.................................... 398,400 81,600
2027.................................... 393,600 86,400
2028.................................... 388,800 91,200
2029.................................... 384,000 96,000
2030.................................... 372,000 108,000
2031.................................... 360,000 120,000
2032.................................... 348,000 132,000
2033.................................... 336,000 144,000
2034.................................... 324,000 156,000
2035.................................... 312,000 168,000
2036.................................... 300,000 180,000
2037.................................... 288,000 192,000
2038.................................... 276,000 204,000
2039.................................... 264,000 216,000
2040.................................... 252,000 228,000
2041.................................... 240,000 240,000
2042.................................... 228,000 252,000
2043.................................... 216,000 264,000
2044.................................... 204,000 276,000
2045.................................... 192,000 288,000
2046.................................... 180,000 300,000
2047.................................... 168,000 312,000
2048.................................... 156,000 324,000
2049.................................... 144,000 336,000
2050.................................... 132,000 348,000
2051.................................... 120,000 360,000
2052.................................... 108,000 372,000
2053.................................... 96,000 384,000
2054.................................... 84,000 396,000
2055.................................... 72,000 408,000
2056.................................... 60,000 420,000
2057.................................... 48,000 432,000
2058.................................... 36,000 444,000
2059.................................... 24,000 456,000
2060.................................... 12,000 468,000
2061.................................... 0 480,000
------------------------------------------------------------------------

``SEC. 474. EGU ALLOCATIONS.

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

``PART E--NATIONAL EMISSION STANDARDS; RESEARCH; ENVIRONMENTAL
ACCOUNTABILITY; MAJOR SOURCE PRECONSTRUCTION REVIEW AND BEST AVAILABLE
RETROFIT CONTROL TECHNOLOGY REQUIREMENTS

``SEC. 481. NATIONAL EMISSION STANDARDS FOR AFFECTED UNITS.

``(a) Definitions.--For purposes of this section:
``(1) The term `commenced,' with regard to construction,
means that an owner or operator has either undertaken a
continuous program of construction or has entered into a
contractual obligation to undertake and complete, within a
reasonable time, a continuous program of construction. For
boilers and integrated gasification combined cycle plants,
this term does not include undertaking such a program or
entering into such an obligation more than 36 months prior to
the date on which the unit begins operation. For combustion
turbines, this term does not include undertaking such a
program or entering into such an obligation more than 18

[[Page S2968]]

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

[[Page S2969]]

``(k) Other Authority Under This Act.--Nothing in this
section shall diminish the authority of the Administrator or
a State to establish any other requirements applicable to
affected units under any other authority of law, including
the authority to establish for any air pollutant a national
ambient air quality standard, except that no new affected
unit subject to standards under this section shall be subject
to standards under section 111 of this Act.

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

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

[[Page S2970]]

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

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

SEC. 3. OTHER AMENDMENTS.

(a) Title I of the Clean Air Act is amended as follows:
(1) In section 103 by repealing subparagraphs (E) and (F).
(2) In section 107--
(A) By amending subparagraph (A) of subsection (d)(1) as
follows:
(i) strike ``or'' at the end of clause (ii);
(ii) strike the period at the end of clause (iii) and
insert ``, or'';
(iii) add the following clause (iv) after clause (iii):
``(iv) notwithstanding clauses (i) through (iii), an area
may be designated transitional for the PM 2.5 national
primary or secondary ambient air quality standards or the 8-
hour ozone national primary or secondary ambient air quality
standard if the Administrator has performed air quality
modeling and, in the case of an area that needs additional
local control measures, the State has performed supplemental
air quality modeling, demonstrating that the area will attain
the applicable standard or standards no later than December
31, 2015, and such modeling demonstration and all necessary
local controls have been approved into the State
implementation plan no later than December 31, 2004.''.
(iv) add at the end a sentence to read as follows: ``For
purposes of the PM 2.5 national primary or secondary ambient
air quality standards, the time period for the State to
submit the designations shall be extended to no later than
December 31, 2003.''.
(B) By amending clause (i) of subsection (d)(1)(B) by
adding at the end a sentence to read as follows: ``The
Administrator shall not be required to designate areas for
the revised PM 2.5 national primary or secondary ambient air
quality standards prior to 6 months after the States are
required to submit recommendations under section
107(d)(1)(A), but in no event shall the period for
designating such areas be extended beyond December 31,
2004.''.
(3) In section 110 as follows:
(A) By amending clause (i) of subsection (a)(2)(D) by
inserting ``except as provided in subsection (q),'' before
the word ``prohibiting''.
(B) By adding the following new subsections at the end
thereof:
``(q) Review of Certain Plans.--(1) The Administrator
shall, in reviewing, under clause (i) of subsection
(a)(2)(D), any plan with respect to affected units, within
the meaning of section 126(d)(1)--
``(A) consider, among other relevant factors, emissions
reductions required to occur by the attainment date or dates
of any relevant nonattainment areas in the other State or
States;
``(B) not require submission of plan provisions mandating
emissions reductions from such affected units, unless the
Administrator determines that--
``(i) emissions from such units may be reduced at least as
cost-effectively as emissions from each other principal
category of sources of sulfur dioxide or nitrogen oxides,
including industrial boilers, on-road mobile sources, and
off-road mobile sources, and any other category of sources
that the Administrator may identify, and
``(ii) reductions in such emissions will improve air
quality in the other State's or States' nonattainment areas
at least as cost-effectively as reductions in emissions from
each other principal category of sources of sulfur dioxide or
nitrogen oxides, to the maximum extent that a methodology is
reasonably available to make such a determination;
``(C) develop and appropriate peer reviewed methodology for
making determinations under subparagraph (B) by December 31,
2006; and
``(D) not require submission of plan provisions subjecting
affected units, within the meaning of section 126(d)(1), to
requirements with an effective date prior to January 1, 2012.
``(2) In making the determination under clause (ii) of
subparagraph (B) of paragraph (1), the Administrator will use
the best available peer- reviewed models and methodology that
consider the proximity of the source or sources to the other
State or States and incorporate other source characteristics.
``(3) Nothing in paragraph (1) shall be interpreted to
require revisions to the provisions of 40 CFR 51.121 and
51.122 (2001), as would be amended in the notice of proposed
rulemaking at 67 Federal Register 8396 (February 22,
2002);''.
``(r) Transitional Areas.--
``(1) Maintenance.--(A) By December 31, 2010, each area
designated as transitional pursuant to section 107(d)(1)
shall submit an updated emission inventory and an analysis of
whether growth in emissions, including growth in vehicle
miles traveled, will interfere with attainment by December
31, 2015.
``(B) No later than December 31, 2011, the Administrator
shall review each transitional area's maintenance analysis,
and, if the Administrator determines that growth in emissions
will interfere with attainment by December 31, 2015, the
Administrator shall consult with the State and determine what
action, if any, is necessary to assure that attainment will
be achieved by 2015.
``(2) Prevention of significant deterioration.--Each area
designated as transitional pursuant to section 107(d)(1)
shall be treated as an attainment or unclassifiable area for
purposes of the prevention of significant deterioration
provisions of part C of this title.
``(3) Consequences of failure to attain by 2015.--No later
than June 30, 2016, the Administrator shall determine whether
each area designated as transitional for the 8-hour ozone
standard or for the PM 2.5 standard has attained that
standard. If the Administrator determines that a transitional
area has not attained the standard, the area shall be
redesignated as nonattainment within 1 year of the
determination and the State shall be required to submit a
State implementation plan revision satisfying the provisions
of section 172 within 3 years of redesignation as
nonattainment.''.
(4) By adding to section 111(b)(1) a new subparagraph (C)
to read as follows:
``(C) No standards of performance promulgated under this
section shall apply to units subject to regulations
promulgated pursuant to section 481.''.
(5) By amending section 112 as follows:
(A) Paragraph (1) of subsection (c) is amended to read as
follows:
``(1) In general.--Not later than 12 months after November
15, 1990, the Administrator shall publish, and shall from
time to time, but not less often than every 8 years, revise,
if appropriate, in response to public comment or new
information, a list of all categories and subcategories of
major sources

[[Page S2971]]

and area sources (listed under paragraph (3)) of the air
pollutants listed pursuant to subsection (b). Electric
utility steam generating units not subject to section 3005 of
the Solid Waste Disposal Act shall not be included in any
category or subcategory listed under this subsection. The
Administrator shall have the authority to regulate the
emission of hazardous air pollutants listed under section
112(b), other than mercury compounds, by electric utility
steam generating units in accordance with the regime set
forth in section 112(f)(2) through (4). Any such regulations
shall be promulgated within, and shall not take effect
before, the date 8 years after the commencement date of the
mercury allowance requirement of section 472. To the extent
practicable, the categories and subcategories listed under
this subsection shall be consistent with the list of source
categories established pursuant to section 111 and part C.
Nothing in the preceding sentence limits the Administrator's
authority to establish subcategories under this section, as
appropriate.''.
(B) Subparagraph (A) of subsection (n)(1) is amended to
read as follows:
``(A) The Administrator shall perform a study of the
hazards to public health reasonably anticipated to occur as a
result of emissions by electric utility steam generating
units of pollutants listed under subsection (b) after
imposition of the requirements of this Act. The Administrator
shall report the results of this study to the Congress within
3 years after November 15, 1990.''.
(6) Section 126 is amended as follows:
(A) By replacing ``section 110(a)(2)(D)(ii) or this
section'' in subsection (b) with ``section 110(a)(2)(D)(i)''.
(B) By replacing ``this section and the prohibition of
section 110(a)(2)(D)(ii)'' in subsection (e)(1) with ``the
prohibition of section 110(a)(2)(D)(i)''.
(C) In the flush language at end of subsection (c) by
striking ``section 110(a)(2)(D)(ii)'' and inserting ``section
110(a)(2)(D)(i)'' and deleting the last sentence.
(D) By amending subsection (d) to read as follows:
``(d)(1) For purposes of this subsection, the term
`affected unit' means any unit that is subject to emission
limitations under subpart 2 of part B, subpart 2 of part C,
or part D.
``(2) To the extent that any petition submitted under
subsection (b) after the date of enactment of the Clear Skies
Act of 2003 seeks a finding for any affected unit, then,
notwithstanding any provision in subsections (a) through (c)
to the contrary--
``(A) in determining whether to make a finding under
subsection (b) for any affected unit, the Administrator shall
consider, among other relevant factors, emissions reductions
required to occur by the attainment date or dates of any
relevant nonattainment areas in the petitioning State or
political subdivision;
``(B) the Administrator may not determine that affected
units emit, or would emit, any air pollutant in violation of
the prohibition of section 110(a)(2)(D)(i) unless that
Administrator determines that--
``(i) such emissions may be reduced at least as cost-
effectively as emissions from each other principal category
of sources of sulfur dioxide or nitrogen oxides, including
industrial boilers, on-road mobile sources, and off-road
mobile sources, and any other category of sources that the
Administrator may identify; and
``(ii) reductions in such emissions will improve air
quality in the petitioning State's nonattainment area or
areas at least as cost-effectively as reductions in emissions
from each other principal category of sources of sulfur
dioxide or nitrogen oxides to the maximum extent that a
methodology is reasonably available to make such a
determination.

In making the determination under clause (ii), the
Administrator shall use the best available peer-reviewed
models and methodology that consider the proximity of the
source or sources to the petitioning State or political
subdivision and incorporate other sources characteristics.
``(C) The Administrator shall develop an appropriate peer
reviewed methodology for making determinations under
subparagraph (B) by December 31, 2006.
``(D) The Administrator shall not make any findings with
respect to an affected unit under this section prior to
January 1, 2009. For any petition submitted prior to January
1, 2007, the Administrator shall make a finding or deny the
petition by the January 31, 2009.
``(E) The Administrator, by rulemaking, shall extend the
compliance and implementation deadlines in subsection (c) to
the extent necessary to assure that no affected unit shall be
subject to any such deadline prior to January 1, 2012.''.
(b) Title III.--Section 307(d)(1)(G) of title III of the
Clean Air Act is amended to read as follows:
``(G) the promulgation or revision of any regulation under
title IV,''.
(c) Noise Pollution.--Title IV of the Clean Air Act
(relating to noise pollution) (42 U.S.C. 7641 et seq.) is
redesignated as title VII and amended by renumbering sections
401 through 403 as sections 701 through 703, respectively.
(d) Section 406.--Title IV of the Clean Air Act Amendments
of 1990 (relating to acid deposition control) is amended by
repealing section 406 (industrial SO2 emissions).
(e) Monitoring.--Section 821(a) of title VIII of the Clean
Air Act Amendments of 1990 (miscellaneous provisions) is
amended by modifying section 821(a) to read as follows:
``(a) Monitoring.--The Administrator of the Environmental
Protection Agency shall promulgate regulations within 18
months after November 15, 1990, to require that all affected
sources subject to subpart 1 of part B of title IV of the
Clean Air Act as of December 31, 2009, shall also monitor
carbon dioxide emissions according to the same timetable as
in section 405(b). The regulations shall require that such
data be reported to the Administrator. The provisions of
section 405(e) of title IV of the Clean Air Act shall apply
for purposes of this section in the same manner and to the
same extent as such provision applies to the monitoring and
data referred to in section 405. The Administrator shall
implement this subsection under 40 CFR part 75 (2002),
amended as appropriate by the Administrator.''.
______

By Mr. DOMENICI (for himself, Mr. Kennedy, Mr. Coleman, Mr.
Dayton, Mr. Grassley, Mr. Reed, Mr. Cochran, Mr. Dodd, Mr.
Warner, Mr. Reid, Mr. Thomas, Mr. Johnson, Mr. Specter, Mr.
Harkin, Mr. Lugar, Mr. Daschle, Mr. Graham of South Carolina,
Mrs. Murray, Ms. Collins, Ms. Cantwell, Mr. Roberts, Mr.
Edwards, Mr. Chafee, Mrs. Lincoln, Mr. Bennett, and Mr.
Lautenberg):
S. 486. A bill to provide for equal coverage of mental health
benefits with respect to health insurance coverage unless comparable
limitations are imposed on medical and surgical benefits; to the
Committee on Health, Education, Labor, and Pensions.
Mr. DOMENICI. Mr. President, I rise today with my friend Senator
Kennedy to introduce the ``Senator Paul Wellstone Mental Health
Equitable Treatment Act of 2003.''
I have mixed emotions today, because, while we are once again
fighting for parity, my long time partner, Paul Wellstone is not
standing across the aisle from me. Unfortunately, my colleagues are to
aware of Senator Wellstone's tragic passing last year. So, while I feel
a profound sense of sadness, I also have a renewed determination to win
a parity victory for the millions of Americans affected by these
dreaded diseases.
The time has come to end this blatant pattern of discrimination
against people merely because they suffer from a mental illness. The
human brain is the organ of the mind and just like the other organs of
our body, it is subject to illness. And just as we must treat illnesses
to our other organs, we must also treat illnesses of the brain.
Building upon that, I would ask the following question: what if forty
years ago our Nation had decided to exclude heart disease from health
insurance coverage? Think about some of the wonderful things we would
not be doing today like angioplasty, bypasses, and valve replacements
and the millions of people helped because insurance covers these
procedures.
I would submit these medical advances have occurred because insurance
dollars have followed the patient through the health care system. The
presence of insurance dollars has provided an enticing incentive to
treat those individuals suffering from heart disease. But sadly, those
suffering from a mental illness do not enjoy those same benefits of
treatment and medical advances because all too often insurance
discriminates against illnesses of the brain.
Individuals suffering from a mental illness face this discrimination
even though medical science is in an era where we can accurately
diagnosis mental illnesses and treat those afflicted so they can be
productive. I simply do not understand, why with this evidence would we
not cover these individuals and treat their illnesses like any other
disease? There simply should not be a difference in the coverage
provided by insurance companies for mental health benefits and medical
benefits, merely because an individual suffers from a mental illness.
The introduction of our Bill marks a historic opportunity for us to
take the next step towards mental health parity. The timing of our Bill
is even more important because the second consecutive one year
extension of the landmark Mental Health Parity Act of 1996 will sunset
later this year.
As my colleagues know, this is an issue I have a long involvement
with

[[Page S2972]]

and I would like to begin with a few observations.
I believe that we have made great strides in providing parity for the
coverage of mental illness. However, mental illness continues to exact
a heavy toll on many, many lives.
Even though we know so much more about mental illness, it can still
bring devastating consequences to those it touches; their families,
their friends, and their loved ones. These individuals and families not
only deal with the societal prejudices and suspicions hanging on from
the past, but they also must contend with unequal insurance coverage.
I would submit the Mental Health Parity Act of 1996 is a good first
start, but the Act is also not working. While there may adherence to
the letter of the law, there are certainly violations of the spirit of
the law. For instance, ways are being found around the law by placing
limits on the number of covered hospital days and outpatient visits.
That is why I believe it is time for a change.
Some will immediately say we cannot afford it or that inclusion of
this treatment will cost too much. But, the facts simply do not support
that conclusion. First, I would direct them to the Congressional Budget
Office's, CBO, score of the bill. CBO scored the cost of the bill as
0.9 percent or less than one percent. Second, I would point out the
Mental Health Parity Act of 1996 contains a provision allowing
companies to no longer comply with the law if their costs increase by
more than one percent. And do you know how many companies have opted
out because their costs have increased by more than one percent? Less
than ten companies throughout our entire country.
With that in mind I would like to share a couple of facts about
mental illness with my colleagues: within the developed world,
including the United States, 4 of the 10 leading causes of disability
for individuals over the age of five are mental disorders; in the order
of prevalence the disorders are major depression, schizophrenia,
bipolar disorder, and obsessive compulsive disorder; one in every five
people--more than 40 million adults--in this Nation will be afflicted
by some type of mental illness; and schizophrenia alone is 50 times
more common than cystic fibrosis, 60 times more common than muscular
dystrophy and will strike between 2 and 3 million Americans.
Let us also look at the efficacy of treatment for individuals
suffering from certain mental illnesses, especially when compared with
the success rates of treatments for other physical ailments. For a long
time, many who are in this field--especially on the insurance side--
have behaved as if you get far better results for angioplasty than you
do for treatments for bipolar illness.
Treatment for bipolar disorders--that is, those disorders
characterized by extreme lows and extreme highs--have an 80 percent
success rate if you get treatment, both medicine and care.
Schizophrenia, the most dreaded of mental illnesses, has a 60-percent
success rate in the United States today if treated properly. Major
depression has a 65 percent success rate.
Let's compare those success rates to several important surgical
procedures that everybody thinks we ought to be doing: Angioplasty has
a 41-percent success rate and Atherectomy has a 52-percent success
rate.
I would now like to take a minute to discuss the Senator Paul
Wellstone Mental Health Equitable Treatment Act of 2003. The Bill seeks
a very simple goal: provide the same mental health benefits already
enjoyed by Federal employees.
The Bill is modeled after the mental health benefits provided through
the Federal Employees Health Benefits Program, FEHBP, and expands the
Mental Health Parity Act of 1996 to prohibit a group health plan from
imposing treatment limitations or financial requirements on the
coverage of mental health benefits unless comparable limitations are
imposed on medical and surgical benefits.
Our Bill provides full parity for all categories of mental health
conditions listed in the Diagnostic and Statistical Manual of Mental
Disorders, Fourth Edition, DSM IV, with coverage being contingent on
the mental health condition being included in an authorized treatment
plan, the treatment plan is in accordance with standard protocols, and
the treatment plan meets medical necessity determination criteria.
Like the Mental Health Parity Act of 1996, the Bill does not require
a health plan to provide coverage for alcohol and substance abuse
benefits. Moreover, the Bill does not mandate the coverage of mental
health benefits, but rather the Bill only applies if the plan already
provides coverage for mental health benefits.
In conclusion, the Bill provides mental heath benefits on par with
those already enjoyed by Federal employees and members of Congress and
I would urge my colleagues to support this important piece of
legislation.
I ask unanimous consent that the text of the Bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 486

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Senator Paul Wellstone
Mental Health Equitable Treatment Act of 2003''.

SEC. 2. AMENDMENT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974.

(a) In General.--Section 712 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1185a) is amended to
read as follows:

``SEC. 712. MENTAL HEALTH PARITY.

[[Page S2973]]

network mental health benefits in accordance with subsection
(a) and provides reasonable access to in-network providers
and facilities.
``(f) Definitions.--For purposes of this section--
``(1) Financial requirements.--The term `financial
requirements' includes deductibles, coinsurance, co-payments,
other cost sharing, and limitations on the total amount that
may be paid by a participant or beneficiary with respect to
benefits under the plan or health insurance coverage and
shall include the application of annual and lifetime limits.
``(2) Medical or surgical benefits.--The term `medical or
surgical benefits' means benefits with respect to medical or
surgical services, as defined under the terms of the plan or
coverage (as the case may be), but does not include mental
health benefits.
``(3) Mental health benefits.--The term `mental health
benefits' means benefits with respect to services, as defined
under the terms and conditions of the plan or coverage (as
the case may be), for all categories of mental health
conditions listed in the Diagnostic and Statistical Manual of
Mental Disorders, Fourth Edition (DSM IV-TR), or the most
recent edition if different than the Fourth Edition, if such
services are included as part of an authorized treatment plan
that is in accordance with standard protocols and such
services meet the plan or issuer's medical necessity
criteria. Such term does not include benefits with respect to
the treatment of substance abuse or chemical dependency.
``(4) Treatment limitations.--The term `treatment
limitations' means limitations on the frequency of treatment,
number of visits or days of coverage, or other similar limits
on the duration or scope of treatment under the plan or
coverage.''.
(b) Effective Date.--The amendment made by this section
shall apply with respect to plan years beginning on or after
January 1, 2004.

SEC. 3. AMENDMENT TO THE PUBLIC HEALTH SERVICE ACT RELATING
TO THE GROUP MARKET.

(a) In General.--Section 2705 of the Public Health Service
Act (42 U.S.C. 300gg-5) is amended to read as follows:

``SEC. 2705. MENTAL HEALTH PARITY.

``(a) In General.--In the case of a group health plan (or
health insurance coverage offered in connection with such a
plan) that provides both medical and surgical benefits and
mental health benefits, such plan or coverage shall not
impose any treatment limitations or financial requirements
with respect to the coverage of benefits for mental illnesses
unless comparable treatment limitations or financial
requirements are imposed on medical and surgical benefits.
``(b) Construction.--
``(1) In general.--Nothing in this section shall be
construed as requiring a group health plan (or health
insurance coverage offered in connection with such a plan) to
provide any mental health benefits.
``(2) Medical management of mental health benefits.--
Consistent with subsection (a), nothing in this section shall
be construed to prevent the medical management of mental
health benefits, including through concurrent and
retrospective utilization review and utilization management
practices, preauthorization, and the application of medical
necessity and appropriateness criteria applicable to
behavioral health and the contracting and use of a network of
participating providers.
``(3) No requirement of specific services.--Nothing in this
section shall be construed as requiring a group health plan
(or health insurance coverage offered in connection with such
a plan) to provide coverage for specific mental health
services, except to the extent that the failure to cover such
services would result in a disparity between the coverage of
mental health and medical and surgical benefits.
``(c) Small Employer Exemption.--
``(1) In general.--This section shall not apply to any
group health plan (and group health insurance coverage
offered in connection with a group health plan) for any plan
year of any employer who employed an average of at least 2
but not more than 50 employees on business days during the
preceding calendar year.
``(2) Application of certain rules in determination of
employer size.--For purposes of this subsection--
``(A) Application of aggregation rule for employers.--Rules
similar to the rules under subsections (b), (c), (m), and (o)
of section 414 of the Internal Revenue Code of 1986 shall
apply for purposes of treating persons as a single employer.
``(B) Employers not in existence in preceding year.--In the
case of an employer which was not in existence throughout the
preceding calendar year, the determination of whether such
employer is a small employer shall be based on the average
number of employees that it is reasonably expected such
employer will employ on business days in the current calendar
year.
``(C) Predecessors.--Any reference in this paragraph to an
employer shall include a reference to any predecessor of such
employer.
``(d) Separate Application to Each Option Offered.--In the
case of a group health plan that offers a participant or
beneficiary two or more benefit package options under the
plan, the requirements of this section shall be applied
separately with respect to each such option.
``(e) In-Network and Out-of-Network Rules.--In the case of
a plan or coverage option that provides in-network mental
health benefits, out-of-network mental health benefits may be
provided using treatment limitations or financial
requirements that are not comparable to the limitations and
requirements applied to medical and surgical benefits if the
plan or coverage provides such in-network mental health
benefits in accordance with subsection (a) and provides
reasonable access to in-network providers and facilities.
``(f) Definitions.--For purposes of this section--
``(1) Financial requirements.--The term `financial
requirements' includes deductibles, coinsurance, co-payments,
other cost sharing, and limitations on the total amount that
may be paid by a participant, beneficiary or enrollee with
respect to benefits under the plan or health insurance
coverage and shall include the application of annual and
lifetime limits.
``(2) Medical or surgical benefits.--The term `medical or
surgical benefits' means benefits with respect to medical or
surgical services, as defined under the terms of the plan or
coverage (as the case may be), but does not include mental
health benefits.
``(3) Mental health benefits.--The term `mental health
benefits' means benefits with respect to services, as defined
under the terms and conditions of the plan or coverage (as
the case may be), for all categories of mental health
conditions listed in the Diagnostic and Statistical Manual of
Mental Disorders, Fourth Edition (DSM IV-TR), or the most
recent edition if different than the Fourth Edition, if such
services are included as part of an authorized treatment plan
that is in accordance with standard protocols and such
services meet the plan or issuer's medical necessity
criteria. Such term does not include benefits with respect to
the treatment of substance abuse or chemical dependency.
``(4) Treatment limitations.--The term `treatment
limitations' means limitations on the frequency of treatment,
number of visits or days of coverage, or other similar limits
on the duration or scope of treatment under the plan or
coverage.''.
(b) Effective Date.--The amendment made by this section
shall apply with respect to plan years beginning on or after
January 1, 2004.

SEC. 4. PREEMPTION.

Nothing in the amendments made by this Act shall be
construed to preempt any provision of State law, with respect
to health insurance coverage offered by a health insurance
issuer in connection with a group health plan, that provides
protections to enrollees that are greater than the
protections provided under such amendments. Nothing in the
amendments made by this Act shall be construed to affect or
modify section 514 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1144).

SEC. 5. GENERAL ACCOUNTING OFFICE STUDY.

(a) Study.--The Comptroller General shall conduct a study
that evaluates the effect of the implementation of the
amendments made by this Act on the cost of health insurance
coverage, access to health insurance coverage (including the
availability of in-network providers), the quality of health
care, and other issues as determined appropriate by the
Comptroller General. Such study shall also include an
estimate of the cost that would be incurred if such
amendments were extended in a manner so as to provide
coverage for the treatment of substance abuse and chemical
dependency.
(b) Report.--Not later than 2 years after the date of
enactment of this Act, the Comptroller General shall prepare
and submit to the appropriate committees of Congress a report
containing the results of the study conducted under
subsection (a).
Mr. KENNEDY. Mr. President, it is an honor to be here today with
Senator Domenici to renew the battle in the Senate to end one of the
most shameful forms of discrimination in our society discrimination
against mental illness. We renew the battle in the name of our friend
and colleague Paul Wellstone who did so much to advance this cause we
share and whom we miss so dearly now.
Senator Pete Domenici and Senator Paul Wellstone led us with great
skill in the Senate in this bipartisan battle in the past, and I'm
proud to join Senator Domenici today to carry on this very important
effort in the Senate.
This bill brings first class medicine to millions of Americans who
have been second class patients for too long.
We know that millions of Americans across the country with mental
illness faced stigma and misunderstanding. Even worse, they have been
denied treatment that can cure or ease their cruel afflictions. Too
often, they are the victims of discrimination by health insurance
companies. It is unacceptable that the nation continues to tolerate
actions by insurers that deny medical care for mental illnesses even
though the very same insurers fully cover the treatment of physical
illnesses that are often more costly, less debilitating and less
curable. Mental illnesses are treatable and curable, and

[[Page S2974]]

it's high time to bring relief to those who experience them.
Equal treatment of the mentally ill is not just an insurance issue,
it is a civil rights issue. At its heart, mental health parity is a
question of simple justice.
The need is clear. One in five Americans will suffer some form of
mental illness this year--but only one-third of them will receive
treatment. According to a report of the Surgeon General, at least 4
million children suffer from a major mental illness that results in
significant impairments at home, at school, and with their peers.
Families must often make painful choices about how to pay for the care
their child needs to live a normal life.
The cost is low. As we have seen in state after state and in the
Federal Employees Health Benefits Program, insurance parity does not
cause soaring insurance premiums. When parity for both mental health
coverage and substance abuse coverage was provided for federal
employees, they paid only $1 a month more for individual coverage and
$2 for family coverage. The Congressional Budget Office has estimated
that this bill will raise insurance rates by less than one percent a
small cost that will bring health care and financial security to many
families.
It is tragic when a child is diagnosed with any illness. It is heart
wrenching for parents to watch their children suffer. The tragedy is
even greater when an insurance company denies treatment for a child
solely because the illness is a mental illness. It's wrong for
insurance companies to promote modern medicine for physical diseases,
but leave mental health in the dark ages.
It is wrong to force parents to choose between the care their child
needs and the other financial needs of the family. I have heard
countless stories from mothers and fathers whose children desperately
needed the care that their insurance companies refused to provide.
There is hope for the future. Today we were presented with 30,000
petitions signed by young people asking Congress to provide affordable
coverage for mental health services. The petitions were signed in
concerts held across the country to raise awareness for suicide
prevention. Pete Domenici and I are here today to bring hope to these
parents and to these young people. It is long past time to end
insurance discrimination, and guarantee all people with mental
illnesses the coverage they deserve.
______

By Mr. DORGAN (for himself, Mr. Breaux, Mr. Durbin, Mr. Leahy,
Mr. Harkin, and Mr. Johnson):
S. 488. A bill to amend the Internal Revenue Code of 1986 to provide
a 5-year extension of the credit for electricity produced from wind; to
the Committee on Finance.
Mr. DORGAN. Mr. President, today, I am joined by Senators Breaux,
Durbin, Leahy, Harkin and Johnson in introducing legislation to extend
the current federal wind energy production tax credit, PTC, for an
additional five years. This tax credit is scheduled to expire at the
end of the year. A long-term extension of the credit will give wind
energy developers the certainty they need to grow this important
domestic industry with its seemingly limitless energy potential.
One of the most promising alternative energy sources on this
country's horizon comes from one of nature's most abundant assets: the
wind. Over 2,000 megawatts of new wind energy capacity has been added
to the nation's electricity grid in just the last 2 years. This new
wind generation has pumped over $2 billion into the struggling economy.
Congress has helped promote wind energy by making significant
financial investments in Federal research and private-sector
development over the last decade. Among other things, Congress has
provided a Federal income tax credit for facilities that produce
electricity from wind, which allows them to bring state-of-the-art wind
turbines to the marketplace at a competitive rate.
More and more utilities that have produced electricity from
traditional fossil fuels are now looking to wind energy and other
alternative energy sources to meet a larger share of this country's
future energy demands. Soaring oil and natural gas prices also remind
us of the importance of reducing our reliance on foreign energy sources
and keeping a diverse energy supply here at home.
However, despite broad bipartisan congressional support for the wind
energy production tax credit, its fate remains cloudy. As I mentioned,
the wind energy tax credit is scheduled to expire at the end of the
year. Congress will surely extend the credit. But we can't wait until
the last day of the session--or even later--to do so.
Unfortunately, this is not merely polemics. Congress has twice
allowed the PTC to expire. First, Congress allowed it to expire in July
1999 and failed to reinstate it until December 1999. As a result, wind
energy investments plummeted from 661 megawatts installed in 1999 to
only 53 megawatts in 2000. Inexplicably, the Congress let the PTC
expire a second time--at the end of 2001--and did not reinstate the
credit until March of the following year. This failure contributed to
another major drop in wind investments dropping from 1696 megawatts
installed in 2001 to just 410 megawatts in 2002.
Today, wind energy industry officials tell me that if we do not
extend the production tax credit by mid-year, thousands of jobs and
billions of dollars in economic activity would be lost. And this
shouldn't come as a surprise to my Senate colleagues. For many years,
wind energy developers have told us that one of the major stumbling
blocks to greater deployment of new wind technologies is the continued
uncertainty surrounding the availability of the wind energy production
tax credit. Even so, we still provided for just another short-term
extension of the tax credit last March. A few short months from now,
financial lenders will stop providing needed capital to new wind
initiatives. As a result, projects already underway will quickly come
to a halt, while new projects will be shelved. Many developers will
simply be unable to build and purchase equipment and secure the
financing that is needed to bring wind turbine generators on-line by
year's end.
When the tax credit last expired, I heard from manufacturers in my
state and across the nation about impending layoffs, because of the
lack of certainty at that time. A tower developer in my state of North
Dakota has again laid off 17 workers, because of the uncertainty this
industry still faces, due to the soon-to-expire tax credit. We can help
eliminate this uncertainty by extending the production tax credit for a
longer term.
If we fail to act promptly to extend the tax credit this time around,
North Dakota's wind energy industry would suffer another serious
economic blow. I am told that DMI Industries, a major producer of wind
turbine towers in North Dakota, would experience a 40-percent drop in
business activity, resulting in some $15 million in lost revenue. The
company's plan to expand its operation by 75 employees in 2004 would
also be derailed. Delay in extending the production tax credit would
mean that 100-125 new jobs would not be created in the coming year by
LM Glasfiber, which is a major blade manufacturer in Grand Forks.
There is a great deal of discussion in Washington, D.C. about passing
a stimulus package to provide a needed boost to our ailing economy.
This very effort would be needlessly undermined if we fail to extend
the wind energy production tax credit in a timely manner and make it
available over the long term.
In North Dakota, we put up several wind turbines last year and
launched an 80-megawatt project for North Dakota and South Dakota. At a
time when this industry is just beginning to ramp up in the Great
Plains, it would be foolish to thwart these efforts by failing to
extend this wind energy production tax credit for sufficient time to
get substantial new projects off the design boards and up and running.
Again, the bill I'm introducing today would extend the current
production tax credit for qualifying wind facilities that are placed in
service on or before December 31, 2008. The wind energy production tax
credit has enjoyed strong bipartisan support in both the Senate and the
House of Representatives in previous years, so we should be able to
pass this legislation quickly this year.
I urge my Senate colleagues to cosponsor this legislation and work
with me to get it enacted into law as soon as

[[Page S2975]]

possible. If we fail to act promptly, many new wind energy initiatives
will come to a halt at a time when this country can least afford it.
______

By Mr. DEWINE (for himself, Mr. Graham of Florida, Mr. Lugar, Mr.
Durbin, Mr. Chafee, and Mr. Nelson of Florida):
S. 489. A bill to expand certain preferential trade treatment for
Haiti; to the Committee on Finance.

____________________