093_HB3553sam001











                                     LRB093 02578 AMC 17213 a

 1                    AMENDMENT TO HOUSE BILL 3553

 2        AMENDMENT NO.     .  Amend House Bill 3553  by  replacing
 3    everything after the enacting clause with the following:

 4        "Section  5.  The Environmental Protection Act is amended
 5    by changing Section 9.9 as follows:

 6        (415 ILCS 5/9.9)
 7        Sec. 9.9.  Nitrogen oxides trading system.
 8        (a)  The General Assembly finds:
 9             (1)  That USEPA has issued a Final Rule published in
10        the  Federal  Register  on  October  27,  1998,  entitled
11        "Finding of Significant Contribution and  Rulemaking  for
12        Certain  States  in  the Ozone Transport Assessment Group
13        Region for Purposes of  Reducing  Regional  Transport  of
14        Ozone",  hereinafter  referred  to as the "NOx SIP Call",
15        compliance with which will require reducing emissions  of
16        nitrogen oxides ("NOx");
17             (2)  That  reducing  emissions  of  NOx in the State
18        helps the State to meet the national ambient air  quality
19        standard for ozone;
20             (3)  That  emissions  trading  is  a  cost-effective
21        means of obtaining reductions of NOx emissions.
22        (b)  The  Agency  shall propose and the Board shall adopt
 
                            -2-      LRB093 02578 AMC 17213 a
 1    regulations to implement an interstate  NOx  trading  program
 2    (hereinafter  referred  to  as  the "NOx Trading Program") as
 3    provided for in 40 CFR Part 96,  including  incorporation  by
 4    reference  of  appropriate  provisions  of 40 CFR Part 96 and
 5    regulations  to  address  40  CFR  Section  96.4(b),  Section
 6    96.55(c), Subpart E, and Subpart I.  In addition, the  Agency
 7    shall  propose  and  the  Board  shall  adopt  regulations to
 8    implement NOx emission reduction programs  for  cement  kilns
 9    and stationary internal combustion engines.
10        (c)  Allocations  of  NOx  allowances  to  large electric
11    generating units ("EGUs") and large  non-electric  generating
12    units  ("non-EGUs"), as defined by 40 CFR Part 96.4(a), shall
13    not exceed  the  State's  trading  budget  for  those  source
14    categories  to  be  included in the State Implementation Plan
15    for NOx.
16        (d)  In adopting regulations to implement the NOx Trading
17    Program, the Board shall:
18             (1)  assure that the economic impact  and  technical
19        feasibility  of  NOx  emissions  reductions under the NOx
20        Trading  Program   are   considered   relative   to   the
21        traditional  regulatory control requirements in the State
22        for EGUs and non-EGUs;
23             (2)  provide that  emission  units,  as  defined  in
24        Section 39.5(1) of this Act, may opt into the NOx Trading
25        Program;
26             (3)  provide   for   voluntary   reductions  of  NOx
27        emissions from emission  units,  as  defined  in  Section
28        39.5(1)   of  this  Act,  not  otherwise  included  under
29        paragraph (c)  or  (d)(2)  of  this  Section  to  provide
30        additional   allowances   to  EGUs  and  non-EGUs  to  be
31        allocated by the Agency.  The regulations  shall  further
32        provide  that  such  voluntary reductions are verifiable,
33        quantifiable, permanent, and federally enforceable;
34             (4)  provide that the Agency  allocate  to  non-EGUs
 
                            -3-      LRB093 02578 AMC 17213 a
 1        allowances  that  are  designated in the rule, unless the
 2        Agency has been directed to transfer the  allocations  to
 3        another  unit  subject  to  the  requirements  of the NOx
 4        Trading Program, and that upon shutdown of a non-EGU, the
 5        unit may transfer or sell the  NOx  allowances  that  are
 6        allocated to such unit; and
 7             (5)  provide   that   the  Agency  shall  set  aside
 8        annually a number of allowances, not to exceed 5% of  the
 9        total  EGU  trading  budget,  to be made available to new
10        EGUs; and .
11             (6)  (A)  provide  that  those  EGUs  that  commence
12        commercial operation, as defined in 40 CFR Section  96.2,
13        at  a time that is more than half way through the control
14        period in 2003 shall return to the Agency any  allowances
15        that  were  issued  to it by the Agency and were not used
16        for compliance in 2004. (B)  The Agency may  charge  EGUs
17        that  commence commercial operation, as defined in 40 CFR
18        Section 96.2, on  or  after  January  1,  2003,  for  the
19        allowances it issues to them.
20        (d-5)  The  Agency  may sell NOx allowances to sources in
21    Illinois that are subject to 35 Ill. Adm.  Code  217,  either
22    Subpart U or W, as follows:
23             (1)  any  unearned Early Reduction Credits set aside
24        for non-EGUs under 35 Ill. Adm. Code 217, Subpart U,  but
25        only   to   those  sources  that  make  qualifying  early
26        reductions of NOx in 2003 pursuant to 35 Ill.  Adm.  Code
27        217  for  which  the source did not receive an allocation
28        thereunder.  If the Agency receives requests to  purchase
29        more  ERCs  than are available for sale, allowances shall
30        be offered for sale to qualifying sources on  a  pro-rata
31        basis;
32             (2)  any remaining Early Reduction Credits allocated
33        under  35  Ill. Adm. Code 217, Subpart U or W, that could
34        not be allocated on a pro-rata,  whole  allowance  basis,
 
                            -4-      LRB093 02578 AMC 17213 a
 1        but  only  to  those  sources  that made qualifying early
 2        reductions of NOx in 2003 pursuant to 35 Ill.  Adm.  Code
 3        217 for which the source did not receive an allocation;
 4             (3)  any  allowances  under  35  Ill. Adm. Code 217,
 5        Subpart W,  that  remain  after  each  3-year  allocation
 6        period  that  could not be allocated on a pro-rata, whole
 7        allowance basis pursuant to the provisions of Subpart  W;
 8        and
 9             (4)  any  allowances  requested  from the New Source
10        Set Aside for those sources that commenced operation,  as
11        defined  in  40  CFR Section 96.2, on or after January 1,
12        2004.
13        (d-10)  The selling price for ERC allowances shall be 70%
14    of the market price index for 2005 NOx allowances, determined
15    by the Agency as follows:
16             (1)  using the mean of 2 or  more  published  market
17        price  indexes  for the 2005 NOx allowances as of October
18        6, 2003; or
19             (2)  if there  are  not  2  published  market  price
20        indexes  for  2005  NOx allowances as of October 6, 2003,
21        the Agency may use any reasonable  indication  of  market
22        price.
23        (e)  The Agency may adopt procedural rules, as necessary,
24    to   implement  the  regulations  promulgated  by  the  Board
25    pursuant  to  subsections  (b)  and  (d)  and  to   implement
26    subsections  (d-5),  (d-10),  (i),  and (j) subsection (i) of
27    this Section.
28        (f)  Notwithstanding any provisions in subparts T, U, and
29    W of Section 217 of Title 35 of the  Illinois  Administrative
30    Code   to  the  contrary,  compliance  with  the  regulations
31    promulgated by the Board pursuant to subsections (b) and  (d)
32    of this Section is required by May 31, 2004.
33        (g)  To the extent that a court of competent jurisdiction
34    finds   a   provision   of   40  CFR  Part  96  invalid,  the
 
                            -5-      LRB093 02578 AMC 17213 a
 1    corresponding Illinois provision shall be stayed  until  such
 2    provision  of  40  CFR  Part  96  is  found to be valid or is
 3    re-promulgated. To the extent that  USEPA  or  any  court  of
 4    competent   jurisdiction   stays  the  applicability  of  any
 5    provision of the NOx SIP Call to any person  or  circumstance
 6    relating  to  Illinois,  during  the period of that stay, the
 7    effectiveness of the corresponding Illinois  provision  shall
 8    be  stayed.   To  the  extent  that  the  invalidity  of  the
 9    particular  requirement  or application does not affect other
10    provisions or applications of the NOx SIP Call pursuant to 40
11    CFR 51.121 or the NOx trading program pursuant to 40 CFR Part
12    96 or 40 CFR Part 97, this Section, and rules or  regulations
13    promulgated  hereunder,  will  be  given  effect  without the
14    invalid provisions or applications.
15        (h)  Notwithstanding any other provision of this Act, any
16    source or other authorized person that  participates  in  the
17    NOx  Trading  Program  shall  be  eligible  to  exchange  NOx
18    allowances with other sources in accordance with this Section
19    and with regulations promulgated by the Board or the Agency.
20        (i)  There is hereby created within the State Treasury an
21    interest-bearing  special fund to be known as the NOx Trading
22    System  Fund.   Moneys  generated  from  the  sale   of   NOx
23    allowances  from  the  New  Source  Set  Aside or the sale of
24    allowances pursuant to subsection (d-5) of this Section shall
25    be deposited into the Fund.  This Fund , which shall be  used
26    and administered by the Agency for the purposes stated below:
27             (1)  To  accept  funds from persons who purchase NOx
28        allowances from the New Source Set Aside from the Agency;
29             (2)  To disburse the proceeds of the sale of the NOx
30        allowances from the New Source Set Aside, to  the  extent
31        that  proceeds  remain  after the Agency has recouped the
32        reasonable  costs  incurred  by   the   Agency   in   the
33        administration   of  the  NOx  SIP  Call  Program,  sales
34        pro-rata to the owners or  operators  of  the  EGUs  that
 
                            -6-      LRB093 02578 AMC 17213 a
 1        received  allowances  from  the  Agency  but not from the
 2        Agency's New Source Set Aside  set-aside,  in  accordance
 3        with  regulations  that may be promulgated by the Agency;
 4        and
 5             (3)  To finance the reasonable costs incurred by the
 6        Agency in the administration of the NOx SIP Call  Program
 7        Trading System.
 8        (j)  Moneys  generated  from  the sale of early reduction
 9    credits shall be deposited into the Clean Air Act Permit Fund
10    created pursuant to Section 39.5(18)(d) of this Act, and  the
11    proceeds  shall  be  used  and  administered by the Agency to
12    finance the costs associated with the Clean  Air  Act  Permit
13    Program.
14    (Source:  P.A.  91-631,  eff.  8-19-99;  92-12,  eff. 7-1-01;
15    92-279, eff. 8-7-01.)

16        Section 99. Effective date. This Act  takes  effect  upon
17    becoming law.".