Clean Air Act; Acid Rain Provisions

ENVIRONMENTAL PROTECTION AGENCY

[FRL-4852-8]

Clean Air Act; Acid Rain Provisions

AGENCY: Environmental Protection Agency.

ACTION: Notice of Privately Offered Allowances for the 1994 EPA

SO2 Allowance Auctions; the 1994 Direct Sale; and the Opening of

the Allowance Tracking System Docket.

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SUMMARY: Pursuant to title IV of the Clean Air Act and 40 CFR part 73,

the EPA is responsible for implementing a program to reduce emissions

of sulfur dioxide (SO2), a precursor of acid rain. The centerpiece

of the SO2 control program is the allocation of transferable

allowances, or authorizations to emit SO2, which are distributed

in limited quantities for existing utility units and which eventually

must be held by virtually all utility units to cover their SO2

emissions. These allowances may be transferred among polluting sources

and others, so that market forces may govern their ultimate use and

distribution, resulting in the most cost-effective sharing of the

emissions control burden.

EPA is directed under section 416 of the Act to conduct annual

sales and auctions of a small portion of allowances (2.8%) withheld

from the total allowances allocated to utilities each year. Sales and

auctions are expected to stimulate and support such a market in

allowances and to provide a public source of allowances, particularly

to new units for which no allowances are allocated. In the Fall of

1992, EPA delegated the administration of the EPA allowance auctions

and sales to the Chicago Board of Trade (CBOT). The auctions and sales

will be conducted under the regulations governing the auctions and

sales which were promulgated on December 17, 1991 (40 CFR part 73,

subpart E). Today, the Acid Rain Division is giving notice of (1) the

total amount of allowances that will be auctioned in the second annual

SO2 allowance auctions, which are scheduled for March 28, 1994;

(2) the start date of the 1994 Direct Sale; and (3) the opening of a

docket to communicate information held in EPA's Allowance Tracking

System. Notice of the date of the second annual SO2 allowance

auctions was previously given in the February 2, 1994 Federal Register,

cite 59 FR 4919.

Auctions. Anyone can participate in the EPA auctions, and bidders

are not restricted as to the quantity or price of their bid. Allowances

sold at the auctions will be sold to the highest bidder until no

allowances remain. The 1994 auctions will consist of one ``spot''

auction and two ``advance'' auctions. Allowances sold in the spot

auction are usable for compliance beginning in 1995. Allowances sold in

the 6-year advance auction are useable for compliance beginning in

2000; allowances sold in the 7-year advance auction are useable for

compliance beginning in 2001. The 6-year advance auction will sell the

unsold allowances from the 1993 Direct Sale. The Act directs EPA to

sell in the 1994 auctions any spot or advance allowances that are

offered by any Phase I or Phase II utility. However, offered will be

sold after the allowances that were withheld from the utilities, so

offered allowances will consequently be sold at a lower price than the

withheld allowances. Owners of offered allowances may set a minimum

price for their allowances. The number of withheld allowances and

offered allowances that are being sold in the 1994 auctions are listed

in the table below. Bid Forms for the 1994 auctions must be received by

the CBOT by the close of business on March 22, 1994.

Allowances To Be Sold in the 1994 Auctions

------------------------------------------------------------------------

6-year 7-year

Spot advance advance

auction auction auction

Origin of allowances (first (first (first

useable useable useable

1995) 2000) 2001)

------------------------------------------------------------------------

EPA.............................. 50,000 ........... 100,000

1993 direct sale................. ........... 25,000 ...........

Offered.......................... 58,001 50,000 47,000

Total.......................... 108,001 75,000 147,000

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Direct Sale. Anyone can participate in the EPA Direct Sale, and

buyers are not restricted as to the quantity of their purchase request.

The 1994 Direct Sale will consist of one ``advance'' sale in which

25,000 allowances, first useable beginning in the year 2001, will be

available for purchase. These allowances will be sold for $1,677.88

each (this amount reflects the $1,500 required price adjusted annually

for inflation). The 1994 Direct Sale will run from June 1, 1994 to

January 31, 1995. EPA will accept Direct Sale Application Forms during

this time period. Buyers should not send payment with their form; after

EPA receives a Direct Sale Application Form, it will convey, in

writing, the exact price for allowances and payment instructions.

Allowances from the Direct Sale will be sold on a first come, first

served basis.

Allowance Tracking System Information Docket. A docket titled

``Allowance Tracking System Information,'' Docket number A-94-17, has

been opened to hold summary information from the Allowance Tracking

System for public viewing and copying. The Docket is located in room

1500 Waterside Mall, 401 M St., SW., Washington, DC 20460. Information

will be available in the Docket beginning Monday, March 21, 1994.

ADDRESSES: U.S. EPA Acid Rain Division (6204J), Attn: Auctions and

Sales, 401 M St., SW., Washington, DC 20460. Chicago Board of Trade,

141 W. Jackson Blvd., suite 2240, Attn: EPA Auctions, Chicago, IL

60604.

Forms needed to participate in the EPA auctions and Direct Sale are

available from the Acid Rain Hotline at (202) 233-9620.

FOR FURTHER INFORMATION CONTACT: Information on bidding in the 1994 EPA

auctions can be found in the brochure ``How to bid in the EPA SO2

Allowance Auctions;'' general informatin on the EPA auctions and sales

can be found in the ``Acid Rain Program Allowance Auctions and Direct

Sales'' fact sheet. These publications can be obtained by calling the

Acid Rain Hotline at (202) 233-9620 or by writing to EPA at the address

listed above.

Dated: March 15, 1994.

Brian J. McLean,

Director, Acid Rain Division.

[FR Doc. 94-6541 Filed 3-17-94; 8:45 am]

BILLING CODE 6560-50-M