Clean Air Act; Acid Rain Provisions

ENVIRONMENTAL PROTECTION AGENCY

[FRL-5964-5]

Clean Air Act; Acid Rain Provisions

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of the 1998 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 auctions

of a small portion of allowances (2.8%) withheld from the total

allowances allocated to utilities each year. 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 sixth annual SO2 allowance auctions. The

regulation governing the auctions was 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 regulation 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 1998 auctions will consist of

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

the spot auction are useable for compliance beginning in 1998.

Allowances sold in the 7-year advance auction are useable for

compliance beginning in 2005. 150,000 allowances will be sold in the

spot auction and 125,000 allowances will be sold in the 7-year advance

auction. Bid Forms for the 1998 auctions must be received by the CBOT

by the close of business on March 17, 1997. The auctions themselves

will be conducted on March 23, 1998, with the results announced on

March 25.

CBOT will also sell in the 1998 auctions any spot 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. 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 2, 1998. The auction regulation requires

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

prior to the date of the auctions.

ADDRESSES:

Regular mail: U.S. EPA Acid Rain Division (6204J), Attn: Auctions, 401

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

Overnight mail: US EPA Acid Rain Division (6204J), Attn: Auctions, 501

3rd Street, N.W., Washington, DC 20001.

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

2240, Chicago, IL 60604.

FOR FURTHER INFORMATION: Information on bidding in the 1998 EPA

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

SO2 Allowance Auctions, Sixth Annual Auctions--March 23,

1998''; general information on the EPA auctions can be found in the

``Acid Rain Program Allowance Auctions'' fact sheet. These

publications, as well as the forms needed to participate in the EPA

auctions, can be obtained by calling the Acid Rain Hotline at (202)

564-9620, by writing to EPA at the address listed above, or by

accessing the Acid Rain Program home page at http://www.epa.gov/

acidrain.

Dated: January 28, 1998.

Janice K. Wagner,

Acting Director, Acid Rain Division.

[FR Doc. 98-3320 Filed 2-9-98; 8:45 am]

BILLING CODE 6560-50-P