
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 42USC7651o]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
            CHAPTER 85--AIR POLLUTION PREVENTION AND CONTROL
 
                SUBCHAPTER IV-A--ACID DEPOSITION CONTROL
 
Sec. 7651o. Contingency guarantee, auctions, reserve


(a) Definitions

    For purposes of this section--
        (1) 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.
        (2) 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) is nonrecourse project-financed (as such term is defined 
        by the Secretary of Energy within 3 months of November 15, 
        1990);
            (C) does not generate electric energy sold to any affiliate 
        (as defined in section 79b(a)(11) of title 15) of the facility's 
        owner or operator unless the owner or operator of the facility 
        demonstrates that it cannot obtain allowances from the 
        affiliate; and
            (D) is a new unit required to hold allowances under this 
        subchapter.

        (3) The term ``required allowances'' means the allowances 
    required to operate such unit for so much of the unit's useful life 
    as occurs after January 1, 2000.

(b) Special reserve of allowances

    Within 36 months after November 15, 1990, the Administrator shall 
promulgate regulations establishing a Special Allowance Reserve 
containing allowances to be sold under this section. 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.

(c) Direct sale at $1,500 per ton

                   (1) Subaccount for direct sales

        In accordance with regulations under this section, the 
    Administrator shall establish a Direct Sale Subaccount in the 
    Special Allowance Reserve established under this section. The Direct 
    Sale Subaccount shall contain allowances in the amount of 50,000 
    tons per year for each year beginning in the year 2000.

                              (2) Sales

        Allowances in the subaccount shall be offered for direct sale to 
    any person at the times and in the amounts specified in table 1 at a 
    price of $1,500 per allowance, adjusted by the Consumer Price Index 
    in the same manner as provided in paragraph (3). Requests to 
    purchase allowances from the Direct Sale Subaccount established 
    under paragraph (1) shall be approved in the order of receipt until 
    no allowances remain in such subaccount, except that an opportunity 
    to purchase such allowances shall be provided to the independent 
    power producers referred to in this subsection before such 
    allowances are offered to any other person. Each applicant shall be 
    required to pay 50 percent of the total purchase price of the 
    allowances within 6 months after the approval of the request to 
    purchase. The remainder shall be paid on or before the transfer of 
    the allowances.

   Table 1--Number of Allowances Available for Sale at $1,500 Per Ton
------------------------------------------------------------------------
                                   Spot Sale (same
          Year of Sale                  year)            Advance Sale
------------------------------------------------------------------------
1993-1999.......................  .................         25,000
2000 and after..................        25,000              25,000
------------------------------------------------------------------------
Allowances sold in the spot sale in any year are allowances which may
  only be used in that year (unless banked for use in a later year).
  Allowances sold in the advance sale 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).

                (3) Entitlement to written guarantee

        Any independent power producer that submits an application to 
    the Administrator establishing that such independent power 
    producer--
            (A) proposes to construct a new independent power production 
        facility for which allowances are required under this 
        subchapter;
            (B) will apply for financing to construct such facility 
        after January 1, 1990, and before the date of the first auction 
        under this section;
            (C) has submitted to each owner or operator of an affected 
        unit listed in table A (in section 7651c of this title) a 
        written offer to purchase the required allowances for $750 per 
        ton; and
            (D) has not received (within 180 days after submitting 
        offers to purchase under subparagraph (C)) an acceptance of the 
        offer to purchase the required allowances,

    shall, within 30 days after submission of such application, be 
    entitled to receive the Administrator's written guarantee (subject 
    to the eligibility requirements set forth in paragraph (4)) that 
    such required allowances will be made available for purchase from 
    the Direct Sale Subaccount established under this subsection and at 
    a guaranteed price. The guaranteed price at which such allowances 
    shall be made available for purchase shall be $1,500 per ton, 
    adjusted by the percentage, if any, by which the Consumer Price 
    Index (as determined under section 7661a(b)(3)(B)(v) of this title) 
    for the year in which the allowance is purchased exceeds the 
    Consumer Price Index for the calendar year 1990.

                    (4) Eligibility requirements

        The guarantee issued by the Administrator under paragraph (3) 
    shall be subject to a demonstration by the independent power 
    producer, satisfactory to the Administrator, that--
            (A) the independent power producer has--
                (i) made good faith efforts to purchase the required 
            allowances from the owners or operators of affected units to 
            which allowances will be allocated, including efforts to 
            purchase at annual auctions under this section, and from 
            industrial sources that have elected to become affected 
            units pursuant to section 7651i of this title; and
                (ii) such bids and efforts were unsuccessful in 
            obtaining the required allowances; and

            (B) the independent power producer will continue to make 
        good faith efforts to purchase the required allowances from the 
        owners or operators of affected units and from industrial 
        sources.

       (5) Issuance of guaranteed allowances from Direct Sale 
                        Subaccount under this section

        From the allowances available in the Direct Sale Subaccount 
    established under this subsection, upon payment of the guaranteed 
    price, the Administrator shall issue to any person exercising the 
    right to purchase allowances pursuant to a guarantee under this 
    subsection the allowances covered by such guarantee. Persons to 
    which guarantees under this subsection have been issued shall have 
    the opportunity to purchase allowances pursuant to such guarantee 
    from such subaccount before the allowances in such reserve are 
    offered for sale to any other person.

                            (6) Proceeds

        Notwithstanding section 3302 of title 31 or any other provision 
    of law, the Administrator shall require that the proceeds of any 
    sale under this subsection be transferred, within 90 days after the 
    sale, without charge, on a pro rata basis to the owners or operators 
    of the affected units from whom the allowances were withheld under 
    subsection (b) of this section and that any unsold allowances be 
    transferred to the Subaccount for Auction Sales established under 
    subsection (d) of this section. No proceeds of any sale under this 
    subsection shall be held by any officer or employee of the United 
    States or treated for any purpose as revenue to the United States or 
    to the Administrator.

                    (7) Termination of subaccount

        If the Administrator determines that, during any period of 2 
    consecutive calendar years, less than 20 percent of the allowances 
    available in the subaccount for direct sales established under this 
    subsection have been purchased under this paragraph, the 
    Administrator shall terminate the subaccount and transfer such 
    allowances to the Auction Subaccount under subsection (d) of this 
    section.

(d) 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 
    beginning in the calendar year 2000.

                         (2) Annual auctions

        Commencing in 1993 and in each year thereafter, 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, in consultation 
    with the Secretary of the Treasury, within 12 months of November 15, 
    1990. The allowances referred to in paragraph (1) shall be offered 
    for sale at auction in the amounts specified in table 2. 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 allowances at 
    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 subchapter.

           Table 2--Number of Allowances Available for Auction
------------------------------------------------------------------------
                                    Spot  Auction
          Year of Sale               (same year)       Advance 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 and after..................       100,000             100,000
------------------------------------------------------------------------
Allowances sold in the spot sale in any year are allowances which may
  only be used 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) Notwithstanding section 3302 of title 31 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) of this section. 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) 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.

                 (4) Additional auction participants

        Any person holding allowances or to whom allowances are 
    allocated by the Administrator may submit those allowances to the 
    Administrator to be offered for sale at auction under this 
    subsection. The proceeds of any such sale shall be transferred at 
    the time of sale by the purchaser to the person submitting such 
    allowances for sale. The holder of allowances offered for sale under 
    this paragraph may specify a minimum sale price. Any person may 
    purchase allowances offered for auction under this paragraph. Such 
    allowances shall be allocated and sold to purchasers on the basis of 
    bid price after the auction under paragraph (2) is complete. 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.

                        (5) 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 subchapter.

(e) Changes in sales, 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 sales or advance auctions) and 2005 (in the case of spot sales 
or spot auctions) decrease the number of allowances withheld and sold 
under this section.

(f) Termination of auctions

    The Administrator may terminate the withholding of allowances and 
the auction sales under this section if the Administrator determines 
that, during any period of 3 consecutive calendar years after 2002, less 
than 20 percent of the allowances available in the auction subaccount 
have been purchased. Pursuant to regulations under this section, the 
Administrator may by 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.

(July 14, 1955, ch. 360, title IV, Sec. 416, as added Pub. L. 101-549, 
title IV, Sec. 401, Nov. 15, 1990, 104 Stat. 2626.)

                  Section Referred to in Other Sections

    This section is referred to in sections 7651b, 7651d of this title.
