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Clean Air Markets

Phase II of the Acid Rain Program

Group 1 and Group 2 Boilers

The final rule implements the second stage of the Nitrogen Oxides (NOx) Reduction Program under Title IV of the Clean Air Act Amendments (CAAA) of 1990 by establishing NOx emission limitations for certain coal-fired utility units and by revising NOx emission limitations for others.

See also: full text of the final rule(2 pp, 200 K, About PDF).

Benefits of Reducing NOx

Emissions of nitrogen oxides discharged into the atmosphere from the burning of fossil fuels have significant adverse effects on human health and the environment, contributing substantially to the formation of ozone, acid deposition, eutrophication of water bodies, inhalable fine particles, and visibility degradation. Substantial, additional regional NOx reductions from current levels are likely to be necessary to address these problems. Electric utilities are a major contributor to NOx emissions nationwide, and approximately 90 percent of electric-utility NOx comes from coal-fired power plants. The emission limitations established by this rule are some of the most cost-effective means of achieving NOx reductions. The level of needed reductions will likely be greater than those achievable under the Title IV NOx emission limitations established under today's final rule. The additional reductions from this final rule represent a reasonable step toward achieving necessary NOx reductions.

First Stage of the NOx Reduction Program

Title IV specifies a two-stage strategy to reduce emissions from coal-fired electric power plants. The first stage, promulgated April 13, 1995, will reduce annual NOx emissions in the United States by over 400,000 tons per year between 1996 and 1999 (Phase I), and by approximately 1.17 million tons per year beginning in the year 2000 (Phase II). These reductions are achieved by coal-fired dry bottom wall-fired boilers and tangentially fired boilers (Group 1). The total annual cost of this regulation to the electric utility industry is estimated at $267 million, resulting in an overall cost-effectiveness of $227 per ton of NOx removed.

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Second Stage of the NOx Reduction Program

In the second stage of the Title IV Program EPA has: (1) determined that more effective low NOx burner (LNB) technology is available to establish more stringent standards for Phase II, Group 1 boilers than those established for Phase I; and (2) established limitations for other boilers known as Group 2 (wet bottom boilers, cyclones, cell burner boilers, and vertically fired boilers), based on NOx control technologies that are comparable in cost to LNBs. These new determinations increase the reductions from the Title IV NOx Reduction Program to 2.1 million tons per year, beginning in 2000.

The final rule sets lower Group 1 emission limits and establishes emission limits for several other types of coal-fired boilers (Group 2) in Phase II. The annual cost of these additional reductions will be approximately $200 million, at an average cost-effectiveness of $229 per ton of NOx removed. By the year 2000, the Phase II NOx rule will achieve an additional reduction of 890,000 tons of NOx annually, increasing the overall annual reductions to 2.1 million tons. Overall, this rule achieves significant NOx reductions very cost-effectively.

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Emission Limits for Phase II

The following table presents the boiler types affected by this rule, their population, and the NOx emission limitations:

Boiler Types Number of Boilers Phase II Emission Limits

Group 1 Boilers
dry bottom wall-fired


dry bottom wall-fired: 0.46 lb/mmBtu
tangential: 0.40 lb/mmBtu

Group 2 Boilers
cell burners
cyclones > 155 MW
wet bottoms > 65 MW
vertically fired


cell burners: 0.68 lb/mmBtu
cyclones: 0.86 lb/mmBtu
wet bottoms: 0.84 lb/mmBtu
verticals: 0.80 lb/mmBtu

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Compliance and Deadlines

A utility can choose to comply with the rule in one of three ways: (1) meet the standard annual emission limitations, (2) average the emissions rates of two or more boilers, which allows utilities to over-control at units where it is technically easier and less expensive to control emissions, or (3) if a utility cannot meet the standard emission limit, it can apply for a less stringent alternative emission limit (AEL) if it uses the appropriate NOx emission control technology on which the applicable emission limit is based. EPA's determination of an AEL will be based on evidence that control equipment was properly designed, installed, and operated during a demonstration period.

Phase I affected units are required to meet the applicable limits by 1996, while Phase II affected units are required to meet the applicable limits by 2000. The final rule relies upon target performance standards, but also allows emissions averaging and the use of alternative, higher emissions limits where meeting the applicable limits is infeasible. Utilities choose the method of compliance that best suits their needs. This approach provides flexibility, promotes technology development and competition, and provides opportunities to reduce the cost of control.

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May a Source Withdraw From the Opt-In Program?

An opt-in source can withdraw from the program provided it meets certain conditions:

  • The opt-in source must submit its annual compliance certification report by January 30 of the first calendar year in which the withdrawal is to be effective (rather than March 1);
  • The opt-in source must immediately provide additional allowances if it has excess emissions;
  • The opt-in source must surrender all allowances allocated to it for the year in which the withdrawal is to take effect and for all years thereafter.

If the opt-in source does not meet these conditions to withdraw, the opt-in source shall remain in the Opt-in Program and remain subject to all requirements of the program.

Withdrawal will take effect on January 1. For opt-in sources that withdraw from the program, they cannot reapply to opt in until the year before the original opt-in permit expired.

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Additional Information

  • U.S. Court of Appeals Upholds Acid Rain Program's Phase II NOx Rule.
  • Performance of Selective Catalytic Reduction on Coal-Fired Steam Generating Units.
  • A monitoring plan is sufficient if the plan appears to contain information demonstrating that all emissions are monitored and reported in accordance with 40 CFR part 75. A determination of sufficiency shall not be construed as the approval or disapproval of the combustion source's monitoring systems.
  • The term "permitting authority" is used to designate the entity responsible for issuing and administering permits. State and local air pollution control agencies authorized to issue permits under Titles IV and V are the permitting authority.
  • The 1985 allowable emissions rate is the most stringent federally enforceable limitation for SO2 (in lb/mmBtu) applicable to the combustion source for 1985.
  • The allowable emissions rate at the time of application if it exists, is a new lower emissions limit that is finalized but not yet in effect for the applying opt-in source. EPA will consider this new limit (known as "the current promulgated SO2 emissions rate") and will adjust the combustion source's allowance allocation for the year and all years after such limit takes effect.
  • The Allowance Monitoring System (AMS) is an automated system operated by EPA's Clean Air Markets Division and used to track the allowances held by utilities, opt-in sources and other organizations and individuals. More on the Allowance Tracking System.
  • EPA holds annual auctions from a special allowance reserve and from offers of allowances from private holders. There are two types of auctions: (1) a spot allowance auction, in which allowances are sold that can be used in that same year for compliance purposes, and (2) an advance auction for the sale of allowances that will become usable in the future. More on Auctions.
  • Demand side efficiency improvements include demand side measures that improve the efficiency of electricity or steam consumption. Qualified demand side measures applicable to the calculation of utilization for opt-in sources are listed in Appendix A, Section 1 of 40 CFR part 73.

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