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.

January 24, 2005

Mr. INHOFE (for himself and Mr. VOINOVICH) introduced the following bill; which was read twice and referred to the Committee on Environment and Public Works

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.

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 2005'.

(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

`Part B--Sulfur Dioxide Emission Reductions

`SUBPART 1--ACID RAIN PROGRAM

`SUBPART 2--CLEAR SKIES SULFUR DIOXIDE ALLOWANCE PROGRAM

`SUBPART 3--WESTERN REGIONAL AIR PARTNERSHIP

`Part C--Nitrogen Oxides Clear Skies Emission Reductions

`SUBPART 1--ACID RAIN PROGRAM

`SUBPART 2--CLEAR SKIES NITROGEN OXIDES ALLOWANCE PROGRAM

`SUBPART 3--OZONE SEASON NOX BUDGET PROGRAM

`Part D--Mercury Emissions Reductions

`Part E--National Emission Standards; Research, Environmental Accountability; Major Source Preconstruction Review and Best Available 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.

`In this title:

`(1) AFFECTED EGU- The term `affected EGU' shall have the meaning set forth in section 421, 430, 451, or 471, as appropriate.

`(2) AFFECTED FACILITY- The term `affected facility' or `affected source' means a facility or source that includes one or more affected units.

`(3) AFFECTED UNIT- 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, if 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) ALLOWANCE- 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) BASELINE HEAT INPUT-

`(A) IN GENERAL- 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 three years in which the unit had the highest heat input for the period 1998 through 2002.

`(B) COMMENCEMENT OF OPERATION AFTER JANUARY 1, 2001- Notwithstanding subparagraph (A), if a unit commenced or commences operation after January 1, 2001, 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, 80 percent for combustion turbine cogeneration units elected under section 407, 50 percent for combustion turbines other than simple cycle turbines, and 5 percent for simple cycle combustion turbines.

`(C) HEAT INPUT DETERMINATION- 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) REGULATIONS- Not later than three months after the enactment of the Clear Skies Act of 2005, 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 nine months after the enactment of the Clear Skies Act of 2005, 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) COAL- The term `coal' means any solid fuel classified as anthracite, bituminous, subbituminous, or lignite.

`(7) COAL-DERIVED FUEL- 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.

`(8) COAL-FIRED- 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 amount of any other fuel in any year.

`(9) COGENERATION UNIT- 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.

`(10) COMBUSTION TURBINE-

`(A) IN GENERAL- The term `combustion turbine' means any combustion turbine that is not self-propelled.

`(B) INCLUSION- The term `combustion turbine' includes 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.

`(C) EXCLUSIONS- The term `combustion turbine' does not include a combined turbine in an integrated gasification combined cycle plant.

`(11) COMMENCE COMMERCIAL OPERATION- The term `commence commercial operation' with regard to a unit means the start up of the unit's combustion chamber and the commencement of the generation of electricity for sale.

`(12) COMPLIANCE PLAN- 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.

`(13) CONTINUOUS EMISSION MONITORING SYSTEM- 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.

`(14) DESIGNATED REPRESENTATIVE- 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.

`(15) DUCT BURNER- The term `duct burner' means a combustion device that uses the exhaust from a combustion turbine to burn fuel for heat recovery.

`(16) FACILITY- The term `facility' means all buildings, structures, or installations located on 1 or more contiguous or adjacent properties under common control of the same person or persons.

`(17) FOSSIL FUEL- The term `fossil fuel' means natural gas, petroleum, coal, or any form of solid, liquid, or gaseous fuel derived from such material.

`(18) FOSSIL FUEL-FIRED- The term `fossil fuel-fired', with regard to a unit, means the combustion of fuel that is composed of at least 10 percent fossil fuel.

`(19) FUEL OIL- The term `fuel oil' means a petroleum-based fuel, including diesel fuel or petroleum derivatives.

`(20) GAS-FIRED- 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 least 90 percent, and fuel oil comprising no more than 10 percent, of the unit's total heat input in any year.

`(21) GASIFY- The term `gasify' means to convert carbon-containing material into a gas consisting primarily of carbon monoxide and hydrogen.

`(22) GENERATOR- 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.

`(23) HEAT INPUT-

`(A) IN GENERAL- The term `heat input', with regard to a specific period of time, means the product (in mmBtu/time) obtained by multiplying--

`(i) the gross calorific value of the fuel (in mmBtu/lb); and

`(ii) the fuel feed rate into a unit (in lb of fuel/time).

`(B) EXCLUSIONS- The term `heat input' does not include the heat derived from preheated combustion air, recirculated flue gases, or exhaust.

`(24) INTEGRATED GASIFICATION COMBINED CYCLE PLANT- 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.

`(25) OIL-FIRED- The term `oil-fired', with regard to a unit, means, except under sections 424 and 434, combusting fuel oil for more than 10 percent the unit's total heat input, and combusting no coal or coal-derived fuel, in any year.

`(26) OWNER OR OPERATOR- 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.

`(27) PERMITTING AUTHORITY- 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.

`(28) POTENTIAL ELECTRICAL OUTPUT- The term `potential electrical output' with regard to a generator means the nameplate capacity of the generator multiplied by 8,760 hours.

`(29) SIMPLE CYCLE COMBUSTION TURBINE- The term `simple cycle combustion turbine' means a combustion turbine that does not extract heat from the combustion turbine exhaust gases.

`(30) STATIONARY SOURCE- The term `stationary source' means any building, structure, facility, or installation located on one or more contiguous or adjacent properties under common control or ownership of the same person or persons which emits or may emit any air pollutant subject to regulations under the Clear Skies Act of 2005.

`(31) STATE- The term `State' means--

`(A) 1 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, 1 of the 48 contiguous States or the District of Columbia.

`(32) UNIT- The term `unit' means--

`(A) a fossil fuel-fired boiler, combustion turbine, or integrated gasification combined cycle plant;

`(B) under subpart 1 of part B and subpart 1 of part C, a fossil fuel-fired combustion device; and

`(C) a stationary source that--

`(i) emits nitrogen oxides, sulfur dioxide, mercury, or any combination of those substances; and

`(ii) is elected under section 407.

`(33) UTILITY UNIT- The term `utility unit' shall have the meaning set forth in section 411.

`(34) YEAR- The term `year' means a calendar year.

`SEC. 403. ALLOWANCE SYSTEM.

`(a) ALLOCATIONS-

`(1) IN GENERAL- 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) NO JUDICIAL REVIEW- 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) ALLOCATION WITHOUT COST- Allowances shall be allocated by the Administrator without cost to the recipient, in accordance with this title.