42 U.S.C. § 7651d — Phase II sulfur dioxide requirements

**(a) Applicability** (1) After January 1, 2000, each existing utility unit as provided below is subject to the limitations or requirements of this section. Each utility unit subject to an annual sulfur dioxide tonnage emission limitation under this section is an affected unit under this subchapter. Each source that includes one or more affected units is an affected source. In the case of an existing unit that was not in operation during calendar year 1985, the emission rate for a calendar year after 1985, as determined by the Administrator, shall be used in lieu of the 1985 rate. The owner or operator of any unit operated in violation of this section shall be fully liable under this chapter for fulfilling the obligations specified in [section 7651j of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651j&num=0&edition=prelim). (2) In addition to basic Phase II allowance allocations, in each year beginning in calendar year 2000 and ending in calendar year 2009, inclusive, the Administrator shall allocate up to 530,000 Phase II bonus allowances pursuant to subsections (b)(2), (c)(4), (d)(3)(A) and (B), and (h)(2) of this section and [section 7651e of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651e&num=0&edition=prelim). Not later than June 1, 1998, the Administrator shall calculate, for each unit granted an extension pursuant to [section 7651h of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651h&num=0&edition=prelim) the difference between (A) the number of allowances allocated for the unit in calendar year 2000, and (B) the product of the unit’s baseline multiplied by 1.20 lbs/mmBtu, divided by 2000, and sum the computations. In each year, beginning in calendar year 2000 and ending in calendar year 2009, inclusive, the Administrator shall deduct from each unit’s basic Phase II allowance allocation its pro rata share of 10 percent of the sum calculated pursuant to the preceding sentence. (3) In addition to basic Phase II allowance allocations and Phase II bonus allowance allocations, beginning January 1, 2000, the Administrator shall allocate for each unit listed on Table A in [section 7651c of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651c&num=0&edition=prelim) (other than units at Kyger Creek, Clifty Creek, and Joppa Steam) and located in the States of Illinois, Indiana, Ohio, Georgia, Alabama, Missouri, Pennsylvania, West Virginia, Kentucky, or Tennessee allowances in an amount equal to 50,000 multiplied by the unit’s pro rata share of the total number of basic allowances allocated for all units listed on Table A (other than units at Kyger Creek, Clifty Creek, and Joppa Steam). Allowances allocated pursuant to this paragraph shall not be subject to the 8,900,000 ton limitation in [section 7651b(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651b/a&num=0&edition=prelim). **(b) Units equal to, or above, 75 MWe and 1.20 lbs/mmBtu** (1) Except as otherwise provided in paragraph (3), after January 1, 2000, it shall be unlawful for any existing utility unit that serves a generator with nameplate capacity equal to, or greater, than 75 MWe and an actual 1985 emission rate equal to or greater than 1.20 lbs/mmBtu to exceed an annual sulfur dioxide tonnage emission limitation equal to the product of the unit’s baseline multiplied by an emission rate equal to 1.20 lbs/mmBtu, divided by 2,000, unless the owner or operator of such unit holds allowances to emit not less than the unit’s total annual emissions. (2) In addition to allowances allocated pursuant to paragraph (1) and [section 7651b(a)(1) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651b/a/1&num=0&edition=prelim) as basic Phase II allowance allocations, beginning January 1, 2000, and for each calendar year thereafter until and including 2009, the Administrator shall allocate annually for each unit subject to the emissions limitation requirements of paragraph (1) with an actual 1985 emissions rate greater than 1.20 lbs/mmBtu and less than 2.50 lbs/mmBtu and a baseline capacity factor of less than 60 percent, allowances from the reserve created pursuant to subsection (a)(2) in an amount equal to 1.20 lbs/mmBtu multiplied by 50 percent of the difference, on a Btu basis, between the unit’s baseline and the unit’s fuel consumption at a 60 percent capacity factor. (3) After January 1, 2000, it shall be unlawful for any existing utility unit with an actual 1985 emissions rate equal to or greater than 1.20 lbs/mmBtu whose annual average fuel consumption during 1985, 1986, and 1987 on a Btu basis exceeded 90 percent in the form of lignite coal which is located in a State in which, as of July 1, 1989, no county or portion of a county was designated nonattainment under [section 7407 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7407&num=0&edition=prelim) for any pollutant subject to the requirements of [section 7409 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7409&num=0&edition=prelim) to exceed an annual sulfur dioxide tonnage limitation equal to the product of the unit’s baseline multiplied by the lesser of the unit’s actual 1985 emissions rate or its allowable 1985 emissions rate, divided by 2,000, unless the owner or operator of such unit holds allowances to emit not less than the unit’s total annual emissions. (4) After January 1, 2000, the Administrator shall allocate annually for each unit, subject to the emissions limitation requirements of paragraph (1), which is located in a State with an installed electrical generating capacity of more than 30,000,000 kw in 1988 and for which was issued a prohibition order or a proposed prohibition order (from burning oil), which unit subsequently converted to coal between January 1, 1980 and December 31, 1985, allowances equal to the difference between (A) the product of the unit’s annual fuel consumption, on a Btu basis, at a 65 percent capacity factor multiplied by the lesser of its actual or allowable emissions rate during the first full calendar year after conversion, divided by 2,000, and (B) the number of allowances allocated for the unit pursuant to paragraph (1): Provided, That the number of allowances allocated pursuant to this paragraph shall not exceed an annual total of five thousand. If necessary to meeting the restriction imposed in the preceding sentence the Administrator shall reduce, pro rata, the annual allowances allocated for each unit under this paragraph. **(c) Coal or oil-fired units below 75 MWe and above 1.20 lbs/mmBtu** (1) Except as otherwise provided in paragraph (3), after January 1, 2000, it shall be unlawful for a coal or oil-fired existing utility unit that serves a generator with nameplate capacity of less than 75 MWe and an actual 1985 emission rate equal to, or greater than, 1.20 lbs/mmBtu and which is a unit owned by a utility operating company whose aggregate nameplate fossil fuel steam-electric capacity is, as of December 31, 1989, equal to, or greater than, 250 MWe to exceed an annual sulfur dioxide emissions limitation equal to the product of the unit’s baseline multiplied by an emission rate equal to 1.20 lbs/mmBtu, divided by 2,000, unless the owner or operator of such unit holds allowances to emit not less than the unit’s total annual emissions. (2) After January 1, 2000, it shall be unlawful for a coal or oil-fired existing utility unit that serves a generator with nameplate capacity of less than 75 MWe and an actual 1985 emission rate equal to, or greater than, 1.20 lbs/mmBtu (excluding units subject to [section 7411 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7411&num=0&edition=prelim) or to a federally enforceable emissions limitation for sulfur dioxide equivalent to an annual rate of less than 1.20 lbs/mmBtu) and which is a unit owned by a utility operating company whose aggregate nameplate fossil fuel steam-electric capacity is, as of December 31, 1989, less than 250 MWe, to exceed an annual sulfur dioxide tonnage emissions limitation equal to the product of the unit’s baseline multiplied by the lesser of its actual 1985 emissions rate or its allowable 1985 emissions rate, divided by 2,000, unless the owner or operator of such unit holds allowances to emit not less than the unit’s total annual emissions. (3) After January 1, 2000, it shall be unlawful for any existing utility unit with a nameplate capacity below 75 MWe and an actual 1985 emissions rate equal to, or greater than, 1.20 lbs/mmBtu which became operational on or before December 31, 1965, which is owned by a utility operating company with, as of December 31, 1989, a total fossil fuel steam-electric generating capacity greater than 250 MWe, and less than 450 MWe which serves fewer than 78,000 electrical customers as of November 15, 1990, to exceed an annual sulfur dioxide emissions tonnage limitation equal to the product of its baseline multiplied by the lesser of its actual or allowable 1985 emission rate, divided by 2,000, unless the owner or operator holds allowances to emit not less than the units 11 So in original. Probably should be “unit’s”. total annual emissions. After January 1, 2010, it shall be unlawful for each unit subject to the emissions limitation requirements of this paragraph to exceed an annual emissions tonnage limitation equal to the product of its baseline multiplied by an emissions rate of 1.20 lbs/mmBtu, divided by 2,000, unless the owner or operator holds allowances to emit not less than the unit’s total annual emissions. (4) In addition to allowances allocated pursuant to paragraph (1) and [section 7651b(a)(1) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651b/a/1&num=0&edition=prelim) as basic Phase II allowance allocations, beginning January 1, 2000, and for each calendar year thereafter until and including 2009, inclusive, the Administrator shall allocate annually for each unit subject to the emissions limitation requirements of paragraph (1) with an actual 1985 emissions rate equal to, or greater than, 1.20 lbs/mmBtu and less than 2.50 lbs/mmBtu and a baseline capacity factor of less than 60 percent, allowances from the reserve created pursuant to subsection (a)(2) in an amount equal to 1.20 lbs/mmBtu multiplied by 50 percent of the difference, on a Btu basis, between the unit’s baseline and the unit’s fuel consumption at a 60 percent capacity factor. (5) After January 1, 2000, it shall be unlawful for any existing utility unit with a nameplate capacity below 75 MWe and an actual 1985 emissions rate equal to, or greater than, 1.20 lbs/mmBtu which is part of an electric utility system which, as of November 15, 1990, (A) has at least 20 percent of its fossil-fuel capacity controlled by flue gas desulfurization devices, (B) has more than 10 percent of its fossil-fuel capacity consisting of coal-fired units of less than 75 MWe, and (C) has large units (greater than 400 MWe) all of which have difficult or very difficult FGD Retrofit Cost Factors (according to the Emissions and the FGD Retrofit Feasibility at the 200 Top Emitting Generating Stations, prepared for the United States Environmental Protection Agency on January 10, 1986) to exceed an annual sulfur dioxide emissions tonnage limitation equal to the product of its baseline multiplied by an emissions rate of 2.5 lbs/mmBtu, divided by 2,000, unless the owner or operator holds allowances to emit not less than the unit’s total annual emissions. After January 1, 2010, it shall be unlawful for each unit subject to the emissions limitation requirements of this paragraph to exceed an annual emissions tonnage limitation equal to the product of its baseline multiplied by an emissions rate of 1.20 lbs/mmBtu, divided by 2,000, unless the owner or operator holds for use allowances to emit not less than the unit’s total annual emissions. **(d) Coal-fired units below 1.20 lbs/mmBtu** (1) After January 1, 2000, it shall be unlawful for any existing coal-fired utility unit the lesser of whose actual or allowable 1985 sulfur dioxide emissions rate is less than 0.60 lbs/mmBtu to exceed an annual sulfur dioxide tonnage emission limitation equal to the product of the unit’s baseline multiplied by (A) the lesser of 0.60 lbs/mmBtu or the unit’s allowable 1985 emissions rate, and (B) a numerical factor of 120 percent, divided by 2,000, unless the owner or operator of such unit holds allowances to emit not less than the unit’s total annual emissions. (2) After January 1, 2000, it shall be unlawful for any existing coal-fired utility unit the lesser of whose actual or allowable 1985 sulfur dioxide emissions rate is equal to, or greater than, 0.60 lbs/mmBtu and less than 1.20 lbs/mmBtu to exceed an annual sulfur dioxide tonnage emissions limitation equal to the product of the unit’s baseline multiplied by (A) the lesser of its actual 1985 emissions rate or its allowable 1985 emissions rate, and (B) a numerical factor of 120 percent, divided by 2,000, unless the owner or operator of such unit holds allowances to emit not less than the unit’s total annual emissions. (3) (A) In addition to allowances allocated pursuant to paragraph (1) and [section 7651b(a)(1) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651b/a/1&num=0&edition=prelim) as basic Phase II allowance allocations, at the election of the designated representative of the operating company, beginning January 1, 2000, and for each calendar year thereafter until and including 2009, the Administrator shall allocate annually for each unit subject to the emissions limitation requirements of paragraph (1) allowances from the reserve created pursuant to subsection (a)(2) in an amount equal to the amount by which (i) the product of the lesser of 0.60 lbs/mmBtu or the unit’s allowable 1985 emissions rate multiplied by the unit’s baseline adjusted to reflect operation at a 60 percent capacity factor, divided by 2,000, exceeds (ii) the number of allowances allocated for the unit pursuant to paragraph (1) and [section 7651b(a)(1) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651b/a/1&num=0&edition=prelim) as basic Phase II allowance allocations. (B) In addition to allowances allocated pursuant to paragraph (2) and [section 7651b(a)(1) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651b/a/1&num=0&edition=prelim) as basic Phase II allowance allocations, at the election of the designated representative of the operating company, beginning January 1, 2000, and for each calendar year thereafter until and including 2009, the Administrator shall allocate annually for each unit subject to the emissions limitation requirements of paragraph (2) allowances from the reserve created pursuant to subsection (a)(2) in an amount equal to the amount by which (i) the product of the lesser of the unit’s actual 1985 emissions rate or its allowable 1985 emissions rate multiplied by the unit’s baseline adjusted to reflect operation at a 60 percent capacity factor, divided by 2,000, exceeds (ii) the number of allowances allocated for the unit pursuant to paragraph (2) and [section 7651b(a)(1) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651b/a/1&num=0&edition=prelim) as basic Phase II allowance allocations. (C) An operating company with units subject to the emissions limitation requirements of this subsection may elect the allocation of allowances as provided under subparagraphs (A) and (B). Such election shall apply to the annual allowance allocation for each and every unit in the operating company subject to the emissions limitation requirements of this subsection. The Administrator shall allocate allowances pursuant to subparagraphs (A) and (B) only in accordance with this subparagraph. (4) Notwithstanding any other provision of this section, at the election of the owner or operator, after January 1, 2000, the Administrator shall allocate in lieu of allocation, pursuant to paragraph (1), (2), (3), (5), or (6),22 So in original. This subsection does not contain a paragraph (6). allowances for a unit subject to the emissions limitation requirements of this subsection which commenced commercial operation on or after January 1, 1981 and before December 31, 1985, which was subject to, and in compliance with, [section 7411 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7411&num=0&edition=prelim) in an amount equal to the unit’s annual fuel consumption, on a Btu basis, at a 65 percent capacity factor multiplied by the unit’s allowable 1985 emissions rate, divided by 2,000. (5) For the purposes of this section, in the case of an oil- and gas-fired unit which has been awarded a clean coal technology demonstration grant as of January 1, 1991, by the United States Department of Energy, beginning January 1, 2000, the Administrator shall allocate for the unit allowances in an amount equal to the unit’s baseline multiplied by 1.20 lbs/mmBtu, divided by 2,000. **(e) Oil and gas-fired units equal to or greater than 0.60 lbs/mmBtu and less than 1.20 lbs/mmBtu** After January 1, 2000, it shall be unlawful for any existing oil and gas-fired utility unit the lesser of whose actual or allowable 1985 sulfur dioxide emission rate is equal to, or greater than, 0.60 lbs/mmBtu, but less than 1.20 lbs/mmBtu to exceed an annual sulfur dioxide tonnage limitation equal to the product of the unit’s baseline multiplied by (A) the lesser of the unit’s allowable 1985 emissions rate or its actual 1985 emissions rate and (B) a numerical factor of 120 percent divided by 2,000, unless the owner or operator of such unit holds allowances to emit not less than the unit’s total annual emissions. **(f) Oil and gas-fired units less than 0.60 lbs/mmBtu** (1) After January 1, 2000, it shall be unlawful for any oil and gas-fired existing utility unit the lesser of whose actual or allowable 1985 emission rate is less than 0.60 lbs/mmBtu and whose average annual fuel consumption during the period 1980 through 1989 on a Btu basis was 90 percent or less in the form of natural gas to exceed an annual sulfur dioxide tonnage emissions limitation equal to the product of the unit’s baseline multiplied by (A) the lesser of 0.60 lbs/mmBtu or the unit’s allowable 1985 emissions, and (B) a numerical factor of 120 percent, divided by 2,000, unless the owner or operator of such unit holds allowances to emit not less than the unit’s total annual emissions. (2) In addition to allowances allocated pursuant to paragraph (1) as basic Phase II allowance allocations and [section 7651b(a)(1) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651b/a/1&num=0&edition=prelim), beginning January 1, 2000, the Administrator shall,33 So in original. The words “the Administrator shall,” probably should not appear. in the case of any unit operated by a utility that furnishes electricity, electric energy, steam, and natural gas within an area consisting of a city and 1 contiguous county, and in the case of any unit owned by a State authority, the output of which unit is furnished within that same area consisting of a city and 1 contiguous county, the Administrator shall allocate for each unit in the utility its pro rata share of 7,000 allowances and for each unit in the State authority its pro rata share of 2,000 allowances. **(g) Units that commence operation between 1986 and December 31, 1995** (1) After January 1, 2000, it shall be unlawful for any utility unit that has commenced commercial operation on or after January 1, 1986, but not later than September 30, 1990 to exceed an annual tonnage emission limitation equal to the product of the unit’s annual fuel consumption, on a Btu basis, at a 65 percent capacity factor multiplied by the unit’s allowable 1985 sulfur dioxide emission rate (converted, if necessary, to pounds per mmBtu), divided by 2,000 unless the owner or operator of such unit holds allowances to emit not less than the unit’s total annual emissions. (2) After January 1, 2000, the Administrator shall allocate allowances pursuant to [section 7651b of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651b&num=0&edition=prelim) to each unit which is listed in table B of this paragraph in an annual amount equal to the amount specified in table B. TABLE B UnitAllowances Brandon Shores8,907 Miller 49,197 TNP One 24,000 Zimmer 118,458 Spruce 17,647 Clover 12,796 Clover 22,796 Twin Oak 21,760 Twin Oak 19,158 Cross 16,401 Malakoff 11,759 Notwithstanding any other paragraph of this subsection, for units subject to this paragraph, the Administrator shall not allocate allowances pursuant to any other paragraph of this subsection, Provided 44 So in original. Probably should not be capitalized. that the owner or operator of a unit listed on Table B may elect an allocation of allowances under another paragraph of this subsection in lieu of an allocation under this paragraph. (3) Beginning January 1, 2000, the Administrator shall allocate to the owner or operator of any utility unit that commences commercial operation, or has commenced commercial operation, on or after October 1, 1990, but not later than December 31, 1992 allowances in an amount equal to the product of the unit’s annual fuel consumption, on a Btu basis, at a 65 percent capacity factor multiplied by the lesser of 0.30 lbs/mmBtu or the unit’s allowable sulfur dioxide emission rate (converted, if necessary, to pounds per mmBtu), divided by 2,000. (4) Beginning January 1, 2000, the Administrator shall allocate to the owner or operator of any utility unit that has commenced construction before December 31, 1990 and that commences commercial operation between January 1, 1993 and December 31, 1995, allowances in an amount equal to the product of the unit’s annual fuel consumption, on a Btu basis, at a 65 percent capacity factor multiplied by the lesser of 0.30 lbs/mmBtu or the unit’s allowable sulfur dioxide emission rate (converted, if necessary, to pounds per mmBtu), divided by 2,000. (5) After January 1, 2000, it shall be unlawful for any existing utility unit that has completed conversion from predominantly gas fired existing operation to coal fired operation between January 1, 1985 and December 31, 1987, for which there has been allocated a proposed or final prohibition order pursuant to section 301(b) 55 See References in Text note below. of the Powerplant and Industrial Fuel Use Act of 1978 ([42 U.S.C. 8301](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section8301&num=0&edition=prelim) et seq,66 So in original. Probably should be “seq.,”. repealed 1987) to exceed an annual sulfur dioxide tonnage emissions limitation equal to the product of the unit’s annual fuel consumption, on a Btu basis, at a 65 percent capacity factor multiplied by the lesser of 1.20 lbs/mmBtu or the unit’s allowable 1987 sulfur dioxide emissions rate, divided by 2,000, unless the owner or operator of such unit has obtained allowances equal to its actual emissions. (6) (A) 77 So in original. No subpar. (B) has been enacted. Unless the Administrator has approved a designation of such facility under [section 7651i of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651i&num=0&edition=prelim), the provisions of this subchapter shall not apply to a “qualifying small power production facility” or “qualifying cogeneration facility” (within the meaning of section 796(17)(C) or 796(18)(B) of title 16) or to a “new independent power production facility” as defined in section 7651o of this title except 88 So in original. Probably should be preceded by a comma. that clause (iii) 99 So in original. Probably means clause “(C)”. of such definition in section 7651o of this title shall not apply for purposes of this paragraph if, as of November 15, 1990, (i) an applicable power sales agreement has been executed; (ii) the facility is the subject of a State regulatory authority order requiring an electric utility to enter into a power sales agreement with, purchase capacity from, or (for purposes of establishing terms and conditions of the electric utility’s purchase of power) enter into arbitration concerning, the facility; (iii) an electric utility has issued a letter of intent or similar instrument committing to purchase power from the facility at a previously offered or lower price and a power sales agreement is executed within a reasonable period of time; or (iv) the facility has been selected as a winning bidder in a utility competitive bid solicitation. **(h) Oil and gas-fired units less than 10 percent oil consumed** (1) After January 1, 2000, it shall be unlawful for any oil- and gas-fired utility unit whose average annual fuel consumption during the period 1980 through 1989 on a Btu basis exceeded 90 percent in the form of natural gas to exceed an annual sulfur dioxide tonnage limitation equal to the product of the unit’s baseline multiplied by the unit’s actual 1985 emissions rate divided by 2,000 unless the owner or operator of such unit holds allowances to emit not less than the unit’s total annual emissions. (2) In addition to allowances allocated pursuant to paragraph (1) and [section 7651b(a)(1) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651b/a/1&num=0&edition=prelim) as basic Phase II allowance allocations, beginning January 1, 2000, and for each calendar year thereafter until and including 2009, the Administrator shall allocate annually for each unit subject to the emissions limitation requirements of paragraph (1) allowances from the reserve created pursuant to subsection (a)(2) of this section in an amount equal to the unit’s baseline multiplied by 0.050 lbs/mmBtu, divided by 2,000. (3) In addition to allowances allocated pursuant to paragraph (1) and [section 7651b(a)(1) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651b/a/1&num=0&edition=prelim), beginning January 1, 2010, the Administrator shall allocate annually for each unit subject to the emissions limitation requirements of paragraph (1) allowances in an amount equal to the unit’s baseline multiplied by 0.050 lbs/mmBtu, divided by 2,000. **(i) Units in high growth States** (1) In addition to allowances allocated pursuant to this section and [section 7651b(a)(1) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651b/a/1&num=0&edition=prelim) as basic Phase II allowance allocations, beginning January 1, 2000, the Administrator shall allocate annually allowances for each unit, subject to an emissions limitation requirement under this section, and located in a State that— (A) has experienced a growth in population in excess of 25 percent between 1980 and 1988 according to State Population and Household Estimates, With Age, Sex, and Components of Change: 1981–1988 allocated by the United States Department of Commerce, and (B) had an installed electrical generating capacity of more than 30,000,000 kw in 1988, in an amount equal to the difference between (A) the number of allowances that would be allocated for the unit pursuant to the emissions limitation requirements of this section applicable to the unit adjusted to reflect the unit’s annual average fuel consumption on a Btu basis of any three consecutive calendar years between 1980 and 1989 (inclusive) as elected by the owner or operator and (B) the number of allowances allocated for the unit pursuant to the emissions limitation requirements of this section: Provided, That the number of allowances allocated pursuant to this subsection shall not exceed an annual total of 40,000. If necessary to meeting the 40,000 allowance restriction imposed under this subsection the Administrator shall reduce, pro rata, the additional annual allowances allocated to each unit under this subsection. (2) Beginning January 1, 2000, in addition to allowances allocated pursuant to this section and [section 7651b(a)(1) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651b/a/1&num=0&edition=prelim) as basic Phase II allowance allocations, the Administrator shall allocate annually for each unit subject to the emissions limitation requirements of subsection (b)(1), (A) the lesser of whose actual or allowable 1980 emissions rate has declined by 50 percent or more as of November 15, 1990, (B) whose actual emissions rate is less than 1.2 lbs/mmBtu as of January 1, 2000, (C) which commenced operation after January 1, 1970, (D) which is owned by a utility company whose combined commercial and industrial kilowatt-hour sales have increased by more than 20 percent between calendar year 1980 and November 15, 1990, and (E) whose company-wide fossil-fuel sulfur dioxide emissions rate has declined 40 per centum or more from 1980 to 1988, allowances in an amount equal to the difference between (i) the number of allowances that would be allocated for the unit pursuant to the emissions limitation requirements of subsection (b)(1) adjusted to reflect the unit’s annual average fuel consumption on a Btu basis for any three consecutive years between 1980 and 1989 (inclusive) as elected by the owner or operator and (ii) the number of allowances allocated for the unit pursuant to the emissions limitation requirements of subsection (b)(1) of this section: Provided, That the number of allowances allocated pursuant to this paragraph shall not exceed an annual total of 5,000. If necessary to meeting the 5,000-allowance restriction imposed in the last clause of the preceding sentence the Administrator shall reduce, pro rata, the additional allowances allocated to each unit pursuant to this paragraph. **(j) Certain municipally owned power plants** Beginning January 1, 2000, in addition to allowances allocated pursuant to this section and [section 7651b(a)(1) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section7651b/a/1&num=0&edition=prelim) as basic Phase II allowance allocations, the Administrator shall allocate annually for each existing municipally owned oil and gas-fired utility unit with nameplate capacity equal to, or less than, 40 MWe, the lesser of whose actual or allowable 1985 sulfur dioxide emission rate is less than 1.20 lbs/mmBtu, allowances in an amount equal to the product of the unit’s annual fuel consumption on a Btu basis at a 60 percent capacity factor multiplied by the lesser of its allowable 1985 emission rate or its actual 1985 emission rate, divided by 2,000.