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United States Regulations
40 CFR PART 73—SULFUR DIOXIDE ALLOWANCE SYSTEM



Title 40: Protection of Environment



PART 73—SULFUR DIOXIDE ALLOWANCE SYSTEM



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Authority: 42 U.S.C. 7601 and 7651 et seq.

Subpart A—Background and Summary
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Source: 58 FR 3687, Jan. 11, 1993, unless otherwise noted.

§ 73.1 Purpose and scope.
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The purpose of this part is to establish the requirements and procedures for the following:

(a) The allocation of sulfur dioxide emissions allowances;

(b) The tracking, holding, and transfer of allowances;

(c) The deduction of allowances for purposes of compliance and for purposes of offsetting excess emissions pursuant to parts 72 and 77 of this chapter;

(d) The sale of allowances through EPA-sponsored auctions and a direct sale, including the independent power producers written guarantee program; and

(e) The application for, and distribution of, allowances from the Conservation and Renewable Energy Reserve.

(f) The application for, and distribution of, allowances for desulfurization of fuel by small diesel refineries.

[58 FR 3687, Jan. 11, 1993, as amended at 58 FR 15650, Mar. 23, 1993]

§ 73.2 Applicability.
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The following parties shall be subject to the provisions of this part:

(a) Owners, operators, and designated representatives of affected sources and affected units pursuant to §72.6 of this chapter;

(b) Any new independent power producer as defined in section 416 of the Act and §72.2 of this chapter, except as provided in section 405(g)(6) of the Act;

(c) Any owner of an affected unit who may apply to receive allowances under the Energy Conservation and Renewable Energy Reserve Program established in accordance with section 404(f) of the Act;

(d) Any small diesel refinery as defined in §72.2 of this chapter, and

(e) Any other person, as defined in §72.2 of this chapter, who chooses to purchase, hold, or transfer allowances as provided in section 403(b) of the Act.

§ 73.3 General.
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Part 72 of this chapter, including §§72.2 (definitions), 72.3 (measurements, abbreviations, and acronyms), 72.4 (Federal authority), 72.5 (State authority), 72.6 (applicability), 72.7 (new units exemption), 72.8 (retired unit exemption), 72.9 (standard requirements), 72.10 (availability of information), and 72.11 (computation of time) of part 72, subpart A of this chapter, shall apply to this part. The procedures for appeals of decisions of the Administrator under this part are contained in part 78 of this chapter. Sections 73.3 (Definitions) and 73.4 (Deadlines), which were previously published with subpart E of this part—“Auctions, Direct Sales, and Independent Power Producers Written Guarantee”, are codified at §§72.2 and 72.12 of this chapter, respectively.

Subpart B—Allowance Allocations
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Source: 58 FR 3687, Jan. 11, 1993, unless otherwise noted.

§ 73.10 Initial allocations for phase I and phase II.
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Link to an amendment published at 70 FR 25335, May 12, 2005.

(a) Phase I allowances. The Administrator will allocate allowances to the unit account for each unit listed in table 1 of this section in the amount listed in column A to be held in each future year subaccount for the years 1995 through 1999.


Table 1_Phase I Allowance Allocations
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Column B
Column A final auction and
State name Plant name Boiler phase 1 sales
allocation reserve
----------------------------------------------------------------------------------------------------------------
Alabama........................... Colbert........................ 1 13213 357
2 14907 403
3 14995 405
4 15005 405
5 36202 978
E.C. Gaston.................... 1 17624 476
2 18052 488
3 17828 482
4 18773 507
5 58265 1575
Florida........................... Big Bend....................... BB01 27662 748
BB02 26387 713
BB03 26036 704
Crist.......................... 6 18695 505
7 30846 834
Georgia........................... Bowen.......................... 1BLR 54838 1482
2BLR 53329 1441
3BLR 69862 1888
4BLR 69852 1888
Hammond........................ 1 8549 231
2 8977 243
3 8676 234
4 36650 990
Jack McDonough................. MB1 19386 524
MB2 20058 542
Wansley........................ 1 68908 1862
2 63708 1722
Yates.......................... Y1BR 7020 190
Y2BR 6855 185
Y3BR 6767 183
Y4BR 8676 234
Y5BR 9162 248
Y6BR 24108 652
Y7BR 20915 565
Illinois.......................... Baldwin........................ 1 46052 1245
2 48695 1316
3 46644 1261
Coffeen........................ 01 12925 349
02 39102 1057
Grand Tower.................... 09 6479 175
Hennepin....................... 2 20182 545
Joppa Steam.................... 1 12259 331
2 10487 283
3 11947 323
4 11061 299
5 11119 301
6 10341 279
Kincaid........................ 1 34564 934
2 37063 1002
Meredosia...................... 05 15227 411
Vermilion...................... 2 9735 263
Indiana........................... Bailly......................... 7 12256 331
8 17134 463
Breed.......................... 1 20280 548
Cayuga......................... 1 36581 989
2 37415 1011
Clifty Creek................... 1 19620 530
2 19289 521
3 19873 537
4 19552 528
5 18851 509
6 19844 536
Elmer W. Stout................. 50 4253 115
60 5229 141
70 25883 699
F.B. Culley.................... 2 4703 127
3 18603 503
Frank E. Ratts................. 1SG1 9131 247
2SG1 9296 251
Gibson......................... 1 44288 1197
2 44956 1215
3 45033 1217
4 44200 1195
H.T. Pritchard................. 6 6325 171
Michigan City.................. 12 25553 691
Petersburg..................... 1 18011 487
2 35496 959
R. Gallagher................... 1 7115 192
2 7980 216
3 7159 193
4 8386 227
Tanners Creek.................. U4 27209 735
Wabash River................... 1 4385 118
2 3135 85
3 4111 111
5 4023 109
6 13462 364
Warrick........................ 4 29577 799
Iowa.............................. Burlington..................... 1 10428 282
Des Moines..................... 11 2259 61
George Neal.................... 1 2571 69
Milton L. Kapp................. 2 13437 363
Prairie Creek.................. 4 7965 215
Riverside...................... 9 3885 105
Kansas............................ Quindaro....................... 2 4109 111
Kentucky.......................... Coleman........................ C1 10954 296
C2 12502 338
C3 12015 325
Cooper......................... 1 7254 196
2 14917 403
E.W. Brown..................... 1 6923 187
2 10623 287
3 25413 687
Elmer Smith.................... 1 6348 172
2 14031 379
Ghent.......................... 1 27662 748
Green River.................... 5 7614 206
H.L. Spurlock.................. 1 22181 599
HMP&L Station 2............ H1 12989 351
H2 11986 324
Paradise....................... 3 57613 1557
Shawnee........................ 10 9902 268
Maryland.......................... C.P. Crane..................... 1 10058 272
2 8987 243
Chalk Point.................... 1 21333 577
2 23690 640
Morgantown..................... 1 34332 928
2 37467 1013
Michigan.......................... J.H. Campbell.................. 1 18773 507
2 22453 607
Minnesota......................... High Bridge.................... 6 4158 112
Mississippi....................... Jack Watson.................... 4 17439 471
5 35734 966
Missouri.......................... Asbury......................... 1 15764 426
James River.................... 5 4722 128
LaBadie........................ 1 39055 1055
2 36718 992
3 39249 1061
4 34994 946
Montrose....................... 1 7196 194
2 7984 216
3 9824 266
New Madrid..................... 1 27497 743
2 31625 855
Sibley......................... 3 15170 410
Sioux.......................... 1 21976 594
2 23067 623
Thomas Hill.................... MB1 9980 270
MB2 18880 510
New Hampshire..................... Merrimack...................... 1 9922 268
2 21421 579
New Jersey........................ B.L. England................... 1 8822 238
2 11412 308
New York.......................... Dunkirk........................ 3 12268 332
4 13690 370
Greenidge...................... 6 7342 198
Milliken....................... 1 10876 294
2 12083 327
Northport...................... 1 19289 521
2 23476 634
3 25783 697
Port Jefferson................. 3 10194 276
4 12006 324
Ohio.............................. Ashtabula...................... 7 18351 496
Avon Lake...................... 11 12771 345
12 33413 903
Cardinal....................... 1 37568 1015
2 42008 1135
Conesville..................... 1 4615 125
2 5360 145
3 6029 163
4 53463 1445
Eastlake....................... 1 8551 231
2 9471 256
3 10984 297
4 15906 430
5 37349 1009
Edgewater...................... 13 5536 150
Gen. J.M. Gavin................ 1 86690 2343
2 88312 2387
Kyger Creek.................... 1 18773 507
2 18072 488
3 17439 471
4 18218 492
5 18247 493
Miami Fort..................... 5-1 417 11
5-2 417 11
6 12475 337
7 42216 1141
Muskingum River................ 1 16312 441
2 15533 420
3 15293 413
4 12914 349
5 44364 1199
Niles.......................... 1 7608 206
2 9975 270
Picway......................... 9 5404 146
R.E. Burger.................... 5 3371 91
6 3371 91
7 11818 319
8 13626 368
W.H. Sammis.................... 5 26496 716
6 43773 1183
7 47380 1280
Walter C. Beckjord............. 5 9811 265
6 25235 682
Pennsylvania...................... Armstrong...................... 1 14031 379
2 15024 406
Brunner Island................. 1 27030 730
2 30282 818
3 52404 1416
Cheswick....................... 1 38139 1031
Conemaugh...................... 1 58217 1573
2 64701 1749
Hatfield's Ferry............... 1 36835 995
2 36338 982
3 39210 1060
Martins Creek.................. 1 12327 333
2 12483 337
Portland....................... 1 5784 156
2 9961 269
Shawville...................... 1 10048 272
2 10048 272
3 13846 374
4 13700 370
Sunbury........................ 3 8530 230
4 11149 301
Tennessee......................... Allen.......................... 1 14917 403
2 16329 441
3 15258 412
Cumberland..................... 1 84419 2281
2 92344 2496
Gallatin....................... 1 17400 470
2 16855 455
3 19493 527
4 20701 559
Johnsonville................... 1 7585 205
10 7351 199
2 7828 212
3 8189 221
4 7780 210
5 8023 217
6 7682 208
7 8744 236
8 8471 229
9 6894 186
West Virginia..................... Albright....................... 3 11684 316
Fort Martin.................... 1 40496 1094
2 40116 1084
Harrison....................... 1 47341 1279
2 44936 1214
3 40408 1092
Kammer......................... 1 18247 493
2 18948 512
3 16932 458
Mitchell....................... 1 42823 1157
2 44312 1198
M.T. Storm..................... 1 42570 1150
2 34644 936
3 41314 1116
Wisconsin......................... Edgewater...................... 4 24099 651
Genoa.......................... 1 22103 597
Nelson Dewey................... 1 5852 158
2 6504 176
North Oak Creek................ 1 5083 137
2 5005 135
3 5229 141
4 6154 166
Pulliam........................ 8 7312 198
South Oak Creek................ 5 9416 254
6 11723 317
7 15754 426
8 15375 415
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(b) Phase II allowances. (1) The Administrator will allocate allowances to the unit account for each unit listed in table 2 of this section in the amount specified in table 2 column C to be held in the future year subaccounts representing calendar years 2000 through 2009.

(2) The Administrator will allocate allowances to the unit account for each unit listed in table 2 of this section in the amount specified in table 2 column F to be held in the future year subaccounts representing calendar years 2010 and each year thereafter.



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(3) The owner of each unit listed in the following table shall surrender, for each allowance listed in Column A or B of such table, an allowance of the same or earlier compliance use date and shall return to the Administrator any proceeds received from allowances withheld from the unit, as listed in Column C of such table. The allowances shall be surrendered and the proceeds shall be returned by December 28, 1998.



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Allowances for Allowances for
2000 through 2010 and
State Plant name Unit 2009 column thereafter Proceeds
(A) column (B)
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CA................. El Centro........... 2 285 272 $2749.48
CO................. Valmont............. 11 4 0 0
FL................. Lauderdale.......... PFL4 776 781 7904.74
FL................. Lauderdale.......... PFL5 796 802 7904.74
LA................. R S Nelson.......... 1 30 34 0
LA................. R S Nelson.......... 2 33 32 0
MD................. R P Smith........... 9 0 56 687.37
NM................. Maddox.............. **3 85 85 687.37
SD................. Mobile.............. **2 17 17 0
VA................. Chesterfield........ **8B 409 411 4124.21
WI................. Blount Street....... 7 0 13 343.68
WI................. Blount Street....... 8 0 294 3093.16
WI................. Blount Street....... 9 0 355 3436.84
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[58 FR 3687, Jan. 11, 1993, as amended at 58 FR 15650, Mar. 23, 1993; 58 FR 33770, June 21, 1993; 58 FR 40747, July 30, 1993; 62 FR 55486, Oct. 24, 1997; 63 FR 51714, Sept. 28, 1998]

§ 73.11 [Reserved]
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§ 73.12 Rounding Procedures.
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(a) Calculation rounding. All allowances under this part and part 72 of this chapter shall be allocated as whole allowances. All calculations for such allowances shall be rounded down for decimals less than 0.500 and up for decimals of 0.500 or greater.

(b) [Reserved]

[58 FR 3687, Jan. 11, 1993, as amended at 63 FR 51765, Sept. 28, 1998]

§ 73.13 Procedures for submittals.
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(a) Address for submittal. All submittals under this subpart shall be made by the designated representative to the Director, Acid Rain Division, (6204J), 1200 Pennsylvania Ave., NW., Washington, DC 20460 and shall meet the requirements specified in 40 CFR 72.21.

(b) Appeals procedures. The designated representative may appeal the decision as to eligibility or allocation of allowances under §§73.18, 73.19, and 73.20, using the appeals procedures of part 78 of this chapter.

[58 FR 15708, Mar. 23, 1993 as amended at 63 FR 51765, Sept. 28, 1998]

§§ 73.14-73.17 [Reserved]
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§ 73.18 Submittal procedures for units commencing commercial operation during the period from January 1, 1993, through December 31, 1995.
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(a) Eligibility. To be eligible for allowances under this section, a unit shall commence commercial operation between January 1, 1993, and December 31, 1995, and have commenced construction before December 31, 1990.

(b) Application for allowances. No later than December 31, 1995, the designated representative for a unit expected to be eligible under this provision must submit a photocopy of a signed contract for the construction of the unit.

(c) Commencement of commercial operation. The Administrator will use EIA information submitted by the utility for the boiler on-line date as commencement of commercial operation.

[58 FR 15710, Mar. 23, 1993]

§ 73.19 Certain units with declining SO2 rates.
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(a) Eligibility. A unit is eligible for allowance allocations under this section if it meets the following requirements:

(1) It is an existing unit that is a utility unit;

(2) It serves a generator with nameplate capacity equal to or greater than 75 MWe;

(3) Its 1985 actual SO2 emissions rate was equal to or greater than 1.2 lb/mmBtu;

(4) Its 1990 actual SO2 emissions rate is at least 50 percent less than the lesser of its 1980 actual or allowable SO2 emissions rate;

(5) Its actual SO2 emission rate is less than 1.2 lb/mmBtu in any one calendar year from 1996 through 1999, as reported under part 75 of this chapter;

(6) It commenced commercial operation after January 1, 1970;

(7) It is part of a utility system whose combined commercial and industrial kilowatt-hour sales increased more than 20 percent between calendar years 1980 and 1990; and

(8) It is part of a utility system whose company-wide fossil-fuel SO2 emissions rate declined 40 percent or more from 1980 to 1988.

(b)[Reserved]

[58 FR 15710, Mar. 23, 1993, as amended at 63 FR 51765, Sept. 28, 1998]

§ 73.20 Phase II early reduction credits.
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(a) Unit eligibility. Units listed in table 2 or 3 of §73.10 are eligible for allowances under this section if:

(1) The unit is not a unit subject to emissions limitation requirements of Phase I and is not a substitution unit (under 40 CFR 72.41) or a compensating unit (under 40 CFR 72.43);

(2) The unit is authorized by the Governor of the State in which the unit is located;

(3) The unit is part of a utility system (which, for the purposes of this section only, includes all generators operated by a single utility, including generators that are not fossil fuel-fired) that has decreased its total coal-fired generation, as a percentage of total system generation, by more than twenty percent between January 1, 1980, and December 31, 1985; and

(4) The unit is part of a utility system that during calendar years 1985 through 1987 had a weighted capacity factor for all coal-fired units in the system of less than fifty percent. The weighted capacity factor is equal to:


(b) Emissions reductions eligibility. Sulfur dioxide emissions reductions eligible for allowance credits at units eligible under paragraph (a) of this section must meet the following requirements:

(1) Be made no earlier than calendar year 1995 and no later than calendar year 1999; and

(2) Be due to physical changes to the plant or are a result of a change in the method of operating the plant including but not limited to changing the type or quality of fuel being burned.

(c) Initial certification of eligibility. The designated representative of a unit that seeks allowances under this section shall apply for certification of unit eligibility prior to or accompanying a request for allowances under paragraph (d) of this section. A completed application for this certification shall be submitted according to §73.13 and shall include the following:

(1) A letter from the Governor of the State in which the unit is located authorizing the unit to make reductions in sulfur dioxide emissions; and

(2) A report listing all units in the utility system, each fossil fuel-fired unit's fuel consumption and fuel heat content for calendar year 1980, and each generator's total electrical generation for calendar years 1980 and 1985 (including all generators, whether fossil fuel-fired, nuclear, hydroelectric or other).

(d) Request for allowances. (1) The designated representative of the requesting unit shall submit the request for allowances according to the procedures of §73.13 and shall include the following information:

(i) The calendar year for which credits for reductions are requested and the actual SO2 emissions and fuel consumption in that year;

(ii) A letter signed by the designated representative stating and documenting the specific physical changes to the plant or changes in the method of operating the plant (including but not limited to changing the type or quality of fuel being burned) which resulted in the reduction of emissions; and

(iii) A letter signed by the designated representative certifying that all photocopies are exact copies.

(2) The designated representative shall submit each request for allowances no later than March 1 of the calendar year following the year in which the reductions were made.

(e) Allowance allocation. The Administrator will allocate allowances to the eligible unit upon satisfactory submittal of information under paragraphs (c) and (d) of this section in the amount calculated by the following equations. Such allowances will be allocated to the unit's 2000 future year subaccount.

(1) “Prior year” means a single calendar year selected by the eligible unit from 1995 to 1999 inclusive.

(2) One “credit” equals one ton of eligible SO2 emissions reductions.

(3) “ERC units” are units eligible for early reduction credits, and “non-ERC units” are fossil fuel-fired units that are part of the same operating system but are not eligible for early reduction credits.

(4) For any unit that did not operate during 1990, the unit's 1990 SO2 emission rate will be equal to the weighted average emission rate of all of the other units at the same source that did operate during 1990.

(5) Early reduction credits will be calculated at the unit level, subject to the restrictions in paragraph (e)(6) of this section.

(6) The number of credits for eligible Phase II units will be calculated as follows:

(i) Comparison of the prior year utilization of ERC units to the 1990 utilization, as a percentage of system utilization. If, as calculated below, system-wide prior year utilization of ERC units exceeds systems-wide 1990 utilization of ERC units on a percentage basis, then paragraphs (e)(6)(ii) and (iii) of this section apply. If not, the ERC units are eligible to receive early reduction credits as calculated in paragraph (e)(6)(v)(A) of this section.


(ii) Comparison of the prior year average emission rate of all ERC units to the prior year average emission rate of all non-ERC units. If, as calculated below, the system-wide average SO2 emission rate of ERC units exceeds that of non-ERC units, then a unit's prior year utilization will be restricted in accordance with paragraph (e)(6)(iv) of this section. If not, then paragraph (iii) of this section applies.


(iii) Comparison of the emission rate of the non-ERC units in the prior year to the emission rate of the non-ERC units in 1990. If, as calculated in paragraph (ii) of this section, the prior year system average non-ERC SO2 emission rate increases above the 1990 system average non-ERC SO2 emission rate, as calculated below, then a unit's prior year utilization will be restricted in accordance with paragraph (e)(6)(iv) of this section. If not, the ERC units are eligible to receive early reduction credits as calculated in paragraph (e)(6)(v)(A) of this section.


(iv) Calculation of the utilization limit for restricted units. The limit on utilization for each unit eligible for early reduction credits subject to paragraphs (e)(6) (ii) and (iii) of this section will be calculated as follows:


This result, expressed in million Btus, is the restricted utilization of the ERC unit to be used in the calculation of early reduction credits in paragraph (e)(6)(v)(B) of this section.

(v)(A) Calculation of the unit's early reduction credits where the unit's prior year utilization is not restricted.


(B) Calculation of the unit's early reduction credits where the unit's prior year utilization is restricted.


(vi) The Administrator will allocate to the ERC unit allowances equal to the lesser of the calculated number of credits in paragraphs (e)(6)(v) (A) or (B) of this section and the following limitation:


(f) Allowance loan program—(1) Eligibility. Units eligible for Phase II early reduction credits under paragraph (a) of this section are eligible for allowances under this paragraph (f) if the weighted average emission rate (based on heat input) for the prior year for all of the affected units in the unit's dispatch system was less than the system-wide weighted average emission rate for 1990. The weighted average emission rate shall be calculated as follows:


For the purposes of this calculation, the unit's dispatch system will be the dispatch system as it existed as of November 15, 1990.

(2) Allowance Calculation. Allowances under this paragraph (f) shall be calculated as follows:


(3) Allowance Loan. (i) The number of allowances calculated under paragraph (f)(2) of this section shall be allocated to the unit's year 2000 subaccount.

(ii) The number of allowances calculated under paragraph (f)(2) of this section shall be deducted, contemporaneously with the allocation under paragraph (f)(3)(i) of this section, from the unit's year 2015 subaccount.

(iii) Notwithstanding paragraph (f)(3)(ii) of this section, if the number of allowances to be deducted exceeds the amount of allowances allocated to the unit for the year 2015, allowances in the year 2015 subaccount equal to the amount of allowances allocated to the unit for the year 2015 shall be deducted. In addition to the deduction from the year 2015 subaccount, a sufficient amount of allowances in the year 2016 subaccount (up to the amount of allowances allocated to the unit for the year 2016) shall be deducted contemporaneously, such that the sum of the allowances deducted from the subaccounts equals the number of allowances required to be deducted under paragraph (f)(3)(ii) of this section.

(iv) Notwithstanding paragraph (f)(3)(ii) of this section, the procedure in paragraph (f)(3)(iii) shall be applied as follows to each year after 2015 (year-by-year in numerical order) for which the number of allowances to be deducted from that year's subaccount exceeds the number allocated to the unit for that year: allowances equal to the number allocated for that year shall be deducted from that year's subaccount and the remainder (up to the amount allocated) necessary to equal the number of allowances required to be deducted under paragraph (f)(3)(ii) of this section shall be deducted from the next year's subaccount. (continued)