SEC. 416. 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
the date of the enactment of the Clean Air Act Amend-
ments of 1990);
(C) does not generate electric energy sold to any
affiliate (as defined in section 2(a)(11) of the Public
Utility Holding Company Act of 1935) 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 title.
(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 the
date of the enactment of the Clean Air Act Amendments of 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
Year of Sale Spot Sale
(same Advance
year) 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 produc-
tion facility for which allowances are required under this
title;
(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 404) a written offer to
purchase the required allowances for $750 per ton; and
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
502(b)(3)(B)(v)) 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 410; 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 of
the United States Code 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) and that any unsold allowances be trans-
ferred to the Subaccount for Auction Sales established under
subsection (d). 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 deter-
mines 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).
(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 enactment of the Clean Air Act Amendments of 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 title.
TABLE 2- NUMBER OF ALLOWANCES AVAILABLE FOR AUCTION
Year of Sale Spot Auction
(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 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) 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 Administra-
tor 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
title.
(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.
[42 U.S.C. 7651o]