Clean Air Act; Acid Rain Provisions

ENVIRONMENTAL PROTECTION AGENCY

[FRL-5409-3]

Clean Air Act; Acid Rain Provisions

AGENCY: Environmental Protection Agency.

ACTION: Notice of the 1996 EPA SO2 Allowance Auctions.

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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. In addition, 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. Today, the Acid Rain Division is giving notice of the fourth

annual SO2 allowance auctions. The regulations governing the

auctions and sales were promulgated on December 17, 1991 (40 CFR Part

73, Subpart E).

EPA has delegated the administration of the EPA allowance auctions

to the Chicago Board of Trade (CBOT). The auctions will be conducted

under the regulations cited above. 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 1996 auctions will consist of

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

the spot auction are useable for compliance beginning in 1996.

Allowances sold in the 6-year advance auction are useable for

compliance beginning in 2002; allowances sold in the 7-year advance

auction are useable for compliance beginning in 2003. 25,000

allowances--the unsold allowances from the 1995 direct sale--will be

sold in the 6-year advance auction, 150,000 allowances will be sold in

the spot auction and 100,000 allowances will be sold in the 7-year

advance auction. Bid Forms for the 1996 auctions must be received by

the CBOT by the close of business on March 19, 1996. The auctions

themselves will be conducted on March 25, 1996, with the results

announced the next day.

All bids in previous auctions were required to be in whole dollars.

Beginning with the March 1996 auctions, bids will be accepted in

increments of $0.01.

CBOT will also sell in the 1996 auctions any spot, 6-year advance,

or 7-year advance allowances that are offered by others holding

allowances in EPA's Allowance Tracking System. However, offered

allowances 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. However, under 40 CFR

Sec. 73.70, such offered allowances must have a minimum price in whole

dollars. To offer allowances in the EPA auctions, owners of allowances

must submit a SO2 Allowance Offer Form to EPA by the close of

business on March 1, 1996. The auction and sale regulations require

that offer forms be received by EPA no later than 15 business days

prior to the date of the auctions.

ADDRESSES:

U.S. EPA Acid Rain Division (6204J), Attn: Auctions and Sales, 401 M

St., S.W., Washington, DC 20460.

Chicago Board of Trade, Attn: EPA Auctions, 141 W. Jackson Blvd., Suite

2240, Chicago, IL 60604.

Forms needed to participate in the EPA auctions are available from

the Acid Rain Division. To obtain forms, call the Acid Rain Hotline at

(202) 233-9620.

FOR FURTHER INFORMATION: Information on bidding in the 1996 EPA

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

Allowance Auctions, Fourth Annual Auctions--March 25, 1996;'' general

information on the EPA auctions 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, by writing to EPA at

the address listed above, or by accessing the Acid Rain Program home

page on the Internet at http://www.epa.gov/docs/acidrain/ardhome.html

where additional information on the Acid Rain Program is also

available.

Dated: January 19, 1996.

Brian J. McLean,

Director, Acid Rain Division.

[FR Doc. 96-1548 Filed 1-26-96; 8:45 am]

BILLING CODE 6560-50-P