[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.

       ``(a) Evaluation.--(1) The Administrator, in consultation 
     with the Secretary of Energy, shall study whether the 
     limitations on the total annual amounts of allowances 
     available starting in 2018 for sulfur dioxide under section 
     423, nitrogen oxides under section 453, and mercury under 
     section 473 should be adjusted.
       ``(2) In conducting the study, the Administrator shall 
     include the following analyses and evaluations concerning the 
     pollutants under paragraph (1) of subsection (a)(1):
       ``(A) An evaluation of the need for further emission 
     reductions from affected EGUs

[[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.

       ``(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-

[[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.

                          ____________________