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EPA's Acid Rain Program Information - SO2 and NOx Regulation

EPA's Acid Rain Program Information - SO2 and NOx Regulation

Acid rain describes the acidification of rain by airborne acids. These acids are commonly produced by mad made sources, particularly combustion of fossil fuels in power plants and cars and trucks, but it can also be produced by sources in nature, such as volcanoes. Acid rain is a serious environmental problem because it is harmful to plant life and water life, such as in lakes and streams. t Acid rain is particularly damaging to lakes, streams, and forests and the plants and animals that live in these ecosystems in large parts of the United States ,Canada and China. First, here is information for the general public, then below is information that environmental professionals may need:

You can also find information about acid rain where you live , numerous educational resources , and other sources of information on acid rain.

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Acid Rain Program Overview

The overall goal of the Acid Rain Program is to achieve significant environmental and public health benefits through reductions in emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx), the primary causes of acid rain. To achieve this goal at the lowest cost to society, the program employs both traditional and innovative, market-based approaches for controlling air pollution. In addition, the program encourages energy efficiency and pollution prevention.

  • Laws and Regulations
    Provides links to Title IV of the Clean Air Act which mandates control of acid deposition, as well a links to regulations issued under Title IV including permits regulation, continuous emissions monitoring, and appeal procedures.
  • Guidance and Fact SheetsProvides links to permitting guidance, emissions monitoring and reporting guidance, applicability determinations, and more.
  • Program Forms
    Links to a comprehensive list of Acid Rain Program forms including permitting, allowance, and others.
  • Program Results
    Provides links to compliance and progress reports, emissions data, and other summary reports.

Key Features of the Acid Rain Program

Phases and Reductions

Title IV of the Clean Air Act set a goal of reducing annual SO 2 emissions by 10 million tons below 1980 levels. To achieve these reductions, the law required a two-phase tightening of the restrictions placed on fossil fuel-fired power plants.

Phase I began in 1995 and affected 263 units at 110 mostly coal-burning electric utility plants located in 21 eastern and midwestern states. An additional 182 units joined Phase I of the program as substitution or compensating units, bringing the total of Phase I affected units to 445. Emissions data indicate that 1995 SO 2 emissions at these units nationwide were reduced by almost 40 percent below their required level.

Phase II, which began in the year 2000, tightened the annual emissions limits imposed on these large, higher emitting plants and also set restrictions on smaller, cleaner plants fired by coal, oil, and gas, encompassing over 2,000 units in all. The program affects existing utility units serving generators with an output capacity of greater than 25 megawatts and all new utility units.

The Act also called for a 2 million ton reduction in NO x emissions by the year 2000. A significant portion of this reduction has been achieved by coal-fired utility boilers that will be required to install low NO x burner technologies and to meet new emissions standards.

Detailed information about the emissions reductions achieved under the Acid Rain Program is available at Emissions Data .

Operating Principles : Feasible, Flexible, and Accountable

The Acid Rain Program is implemented through an integrated set of rules and guidance designed to accomplish three primary objectives:

  • Achieve environmental benefits through reductions in S02 and NO x emissions.
  • Facilitate active trading of allowances and use of other compliance options to minimize compliance costs, maximize economic efficiency, and permit strong economic growth.
  • Promote pollution prevention and energy efficient strategies and technologies.

Each individual component fulfills a vital function in the larger program:

  • The allowance trading system creates low-cost rules of exchange that minimize government intrusion and make allowance trading a viable compliance strategy for reducing SO 2 .
  • The opt-in program allows nonaffected industrial and small utility units to participate in allowance trading.
  • The NO x emissions reduction rule sets new NO x emissions standards for existing coal-fired utility boilers and allows emissions averaging to reduce costs.
  • The permitting process affords sources maximum flexibility in selecting the most cost-effective approach to reducing emissions.
  • The continuous emission monitoring (CEM) requirements provide credible accounting of emissions to ensure the integrity of the market-based allowance system and to verify the achievement of the reduction goals.
  • The excess emissions provision provides incentives to ensure self-enforcement, greatly reducing the need for government intervention.
  • The appeals procedures allow the regulated community to appeal decisions with which it may disagree.

Together these measures ensure the achievement of environmental benefits at the least cost to society.

Environmental Benefits

Acid rain causes acidification of lakes and streams and contributes to damage to trees and many sensitive forest soils. In addition, acid rain accelerates the decay of building materials and paints, including irreplaceable buildings, statues, and sculptures that are part of our nation's cultural heritage. Prior to falling to the earth, SO 2 and NO x gases and their particulate matter derivatives, sulfates and nitrates, contribute to visibility degradation and impact public health.

The Acid Rain Program confers significant benefits on the nation. By reducing SO 2 and NO x , many acidified lakes and streams will significantly improve so that they can once again support fish life. Visibility will improve, allowing for increased enjoyment of scenic vistas across our country, particularly in National Parks. Stress to our forests that populate the ridges of mountains from Maine to Georgia will be reduced. Deterioration of our historic buildings and monuments will be slowed. Most importantly, reductions in SO 2 and NO x will reduce fine particulate matter (sulfates, nitrates) and ground level ozone (smog), leading to improvements in public health.

For more information, see EPA's Acid Rain Topic Web site .

Allowance Trading

The Acid Rain Program represents a dramatic departure from traditional command and control regulatory methods that establish specific, inflexible emissions limitations with which all affected sources must comply. Instead, the Acid Rain Program introduces an allowance trading system that harnesses the incentives of the free market to reduce pollution.

Under this system, affected utility units are allocated allowances based on their historic fuel consumption and a specific emissions rate. Each allowance permits a unit to emit 1 ton of SO 2 during or after a specified year. For each ton of SO 2 emitted in a given year, one allowance is retired, that is, it can no longer be used.

Allowances may be bought, sold, or banked. Anyone may acquire allowances and participate in the trading system. However, regardless of the number of allowances a source holds, it may not emit at levels that would violate federal or state limits set under Title I of the Clean Air Act to protect public health.

During Phase II of the program (now in effect), the Act set a permanent ceiling (or cap) of 8.95 million allowances for total annual allowance allocations to utilities. This cap firmly restricts emissions and ensures that environmental benefits will be achieved and maintained.

For more information on how allowance trading works under the Acid Rain Program, see the Acid Rain Program SO 2 Allowances Fact Sheet . For more information about allowance trading in general, visit CAMD Allowance Trading .

Annual Reconciliation

Annual reconciliation is the process by which EPA compares a regulated unit's annual emissions and the number of allowances it owns. At the end of each year, units are granted a 60-day grace period to ensure that they have sufficient allowances to match their SO 2 emissions during the previous year. If they need to, they may buy allowances during the grace period. Units may sell allowances that exceed their emissions or bank them for use in future years.

For more information on annual reconciliation works under the Acid Rain Program, see the Acid Rain Program Annual Reconciliation Fact Sheet .

Allowance Tracking System

EPA has instituted an electronic recordkeeping and notification system called the Allowance Tracking System (AMS) to track allowance transactions and the status of allowance accounts. AMS is the official tally of allowances by which EPA determines compliance with the emissions limitations. Any party interested in participating in the trading system may open an AMS account by submitting an application to EPA. Accounts contain information on unit account balances, account representatives (which must be appointed by each trading party), and serial numbers for each allowance. AMS is computerized to expedite the flow of data and to assist in the development of a viable market for allowances.

For more information, see Allowance Data Tracking .

Auctions and Direct Sale

EPA holds an allowance auction annually. The auctions help to send the market an allowance price signal, as well as furnish utilities with an additional avenue for purchasing needed allowances. The direct sale offered allowances at a fixed price of $1,500 (adjusted for inflation). Anyone could buy allowances in the direct sale, but independent power producers (IPPs) could obtain written guarantees from EPA stating that they had first priority. These guarantees, which were awarded on a first-come, first-served basis, secured the option for qualified IPPs to purchase a yearly amount of allowances over a 30 year span. This provision enabled IPPs to assure lenders that they would have access to the allowances they needed to build and operate new units. The direct sale was eliminated in 1997 because this provision proved to be unnecessary.

For more information, see Acid Rain Program Allowance Auctions .

Voluntary Entry: The Opt-in Program

The Opt-in Program expands EPA's Acid Rain Program to include additional sulfur dioxide (SO 2 ) emitting sources. Recognizing that there are additional emission reduction opportunities in the industrial sector, Congress established the Opt-in Program under section 410 of the Clean Air Act Amendments of 1990. The Opt-in Program allows sources not required to participate in the Acid Rain Program the opportunity to enter the program on a voluntary basis and receive their own SO 2 allowances.

The participation of these additional sources will reduce the cost of achieving the 10 million ton reduction in SO 2 emissions mandated under the Clean Air Act. As participating sources reduce their SO 2 emissions at a relatively low cost, their reductions-in the form of allowances-can be transferred to electric utilities where emission reductions are more expensive.

The Opt-in Program offers a combustion source a financial incentive to voluntarily reduce its SO 2 emissions. By reducing emissions below its allowance allocation, an opt-in source will have unused allowances, which it can sell in the SO 2 allowance market. Opting in will be profitable if the revenue from the sale of allowances exceeds the combined cost of the emissions reduction and the cost of participating in the Opt-in Program.

For more information, see the Opt-in Program Fact Sheet .

Pollution Prevention

The allowance trading system contains an inherent incentive for utilities to prevent pollution, since for each ton of SO 2 that a utility avoids emitting, one fewer allowance must be retired. Utilities that reduce emissions through energy efficiency and renewable energy are able to sell, use, or bank their surplus allowances. As also provided in the Act, EPA has set aside a reserve of 300,000 allowances to stimulate energy efficiency and renewable energy generation. Those utilities that either implement demand-side energy conservation programs to curtail emissions or install renewable energy generation facilities may be eligible to receive bonus allowances from this reserve.

For more information, see Conservation and Renewable Energy Incentives .

Nitrogen Oxides (NO x ) Reductions

The Clean Air Act Amendments of 1990 set a goal of reducing NO x by 2 million tons from 1980 levels. The Acid Rain program focuses on one set of sources that emit NO x , coal-fired electric utility boilers. As with the SO 2 emission reduction requirements, the NO x program was implemented in two phases, beginning in 1996 and 2000.

The NO x program embodies many of the same principles of the SO 2 trading program, in that it also has a results-oriented approach, flexibility in the method to achieve emission reductions, and program integrity through measurement of the emissions. However, it does not "cap" NO x emissions as the SO 2 program does, nor does it utilize an allowance trading system.

Emission limitations for the NO x boilers provide flexibility for utilities by focusing on the emission rate to be achieved (expressed in pounds of NO x per million Btu of heat input). In general, two options for compliance with the emission limitations are provided:

  • Compliance with an individual emission rate for a boiler.
  • Averaging of emission rates over two or more units to meet an overall emission rate limitation.

These options give utilities flexibility to meet the emission limitations in the most cost-effective way and allow for the further development of technologies to reduce the cost of compliance.

If a utility properly installs and maintains the appropriate control equipment designed to meet the emission limitation established in the regulations, but is still unable to meet the limitation, the NO x program allows the utility to apply for an alternative emission limitation (AEL) that corresponds to the level that the utility demonstrates is achievable.

Phase I of the NO x program began on January 1, 1996 and applied to two types of boilers (which were already targeted for Phase I SO 2 reductions): dry-bottom wall-fired boilers and tangentially fired boilers. Dry-bottom wall-fired boilers had to meet a limitation of 0.50 pounds of NO x per mmBtu averaged over the year, and tangentially fired boilers had to achieve a limitation of 0.45 pounds of NO x per mmBtu, again, averaged over the year. Approximately 170 boilers needed to comply with these NO x performance standards during Phase I.

Phase II of the NO x program began in 2000. These regulations:

  • Set lower emission limits for Group 1 boilers first subject to an acid rain emissions limitation in Phase II, and
  • Established initial NO x emission limitations for Group 2 boilers, which include boilers applying cell-burner technology, cyclone boilers, wet bottom boilers, and other types of coal-fired boilers.

The final rule was promulgated on December 19, 1996.

For more information, see NO x Reductions under the Acid Rain Program .

Emissions Monitoring and Reporting

Under the Acid Rain Program, each unit must continuously measure and record its emissions of S0 2 , NO x , and CO 2 , as well as volumetric flow and opacity. In most cases, a continuous emission monitoring (CEM) system must be used. There are provisions for initial equipment certification procedures, periodic quality assurance and quality control procedures, recordkeeping and reporting, and procedures for filling in missing data periods. Units report hourly emissions data to EPA on a quarterly basis. This data is then recorded in the Emissions Tracking System, which serves as a repository of emissions data for the utility industry. The emissions monitoring and reporting systems are critical to the program. They instill confidence in allowance transactions by certifying the existence and quantity of the commodity being traded and assure that NO x averaging plans are working. Monitoring also ensures, through accurate accounting, that the SO 2 and NO x emissions reduction goals are met.

For more information, see the Continuous Emissions Monitoring Fact Sheet .

Excess Emissions

If annual emissions exceed the number of allowances held, the owners or operators of delinquent units must pay a penalty of $2,000 (adjusted for inflation) per excess ton of SO 2 or NO x emissions. In addition, violating utilities must offset the excess SO 2 emissions with allowances in an amount equivalent to the excess. A utility may either have allowances deducted immediately or submit an excess emissions offset plan to EPA that outlines how these cutbacks will be achieved.

Designated Representatives

Each source appoints one individual, the Designated Representative, to represent the owners and operators of the source in all matters relating to the holding and disposal of allowances for its units that are affected by the Clean Air Act. The Designated Representative is also responsible for all submissions pertaining to permits, compliance plans, emission monitoring reports, offset plans, compliance certification, and other necessary information. A source may appoint an Alternate Designated Representative to act on behalf of the Designated Representative.


The Designated Representative for each source is required to file an acid rain permit application for the source and a compliance plan to the Title V permitting authority for each affected unit at the source. The Acid Rain permits and compliance plans are simple, allow sources to fashion a compliance strategy tailored to their individual needs, and foster trading. For example, they allow sources to make real-time allowance trading decisions through the use of automatic permit amendments.

Acid rain permits, which are also issued by the relevant Title V permitting authority, require that each unit account hold a sufficient number of allowances to cover the unit's SO 2 emissions in each year, comply with the applicable NO x limit, and monitor and report emissions. Permits are subject to public comment before approval.

For more information, see Acid Rain Permits and Applicability Air regs section 408.

Compliance Options: Freedom to Choose

The Acid Rain Program allows sources to select their own compliance strategy. For example, to reduce SO 2 an affected source may repower its units, use cleaner burning fuel, or reassign some of its energy production capacity from dirtier units to cleaner ones. Sources also may decide to reduce electricity generation by adopting conservation or efficiency measures. Most options, like fuel switching, require no special prior approval, allowing the source to respond quickly to market conditions without needing government approval. For NO x , the source may meet the performance standard on a utility-unit basis, enter into an emissions averaging plan, or apply for an alternative emissions limitation.

In either case, the program allows affected utilities to combine these and other options in ways they see fit in order to tailor their compliance plans to the unique needs of each unit or system.

A Model Program

EPA gained broad input into the development of the Acid Rain Program by consulting with representatives from various stakeholder groups, including utilities, coal and gas companies, emissions control equipment vendors, labor, academia, Public Utility Commissions, state pollution control agencies, and environmental groups.

EPA is maintaining this open door policy as it implements the program, and it continues to solicit ideas from the numerous and diverse individuals and groups interested in acid rain control. In addition, EPA is collaborating with groups who wish to evaluate the benefits and effects of the program through economic and environmental studies.

The Acid Rain Program is already being viewed around the world as a prototype for tackling emerging environmental issues. The allowance trading system capitalizes on the power of the marketplace to reduce SO 2 emissions in the most cost-effective manner possible. The permitting program allows sources the flexibility to tailor and update their compliance strategy based on their individual circumstances. The continuous emissions monitoring and reporting systems provide the accurate accounting of emissions necessary to make the program work, and the excess emissions penalties provide strong incentives for self-enforcement. Each of these separate components contributes to the effective working of an integrated program that lets market incentives do the work to achieve cost-effective emissions reductions. The General Accounting Office recently confirmed the benefits of this approach, projecting that the allowance trading system could save as much as $3 billion per year-over 50 percent-compared with a command and control approach typical of previous environmental protection programs.

Guidance and Fact Sheets

The links on this page provide guidance on permitting, emissions monitoring, reporting, and other activities under the Acid Rain Program.

Annual Reconciliation

Affected units are allocated "allowances" based on their historic fuel consumption and a specific emissions rate. Annual reconciliation is the process by which EPA compares a regulated unit's annual emissions and the number of allowances it owns.

For more information on how annual reconciliation works under the Acid Rain Program, see the Acid Rain Program Annual Reconciliation Fact Sheet .

Applicability Determinations

An applicability determination is a formal EPA response to questions about how regulations apply to a particular situation.

To view applicability determinations related to the Acid Rain Program regulations, visit Acid Rain Program Applicability Determinations.

Emissions Monitoring

40 CFR Part 75 of the Acid Rain Program regulations requires affected sources to perform continuous emissions monitoring for sulfur dioxide (SO 2 ), nitrogen oxides (NO x ), and other related pollutants in order to track progress, ensure compliance, and provide credibility to the trading component of the Acid Rain Program.

For more information, see:

Emissions Reporting

Regulated sources must report all emissions as measured by continuous emissions monitors. EPA has established standard reporting procedures and has issued standard software for such reporting.

For more information, see:


Every emissions source affected by the Acid Rain Program must have a permit. Each acid rain permit specifies the Title IV requirements that apply to each affected unit at the affected source.

For more information, see Acid Rain Permits and Applicability.

Acid Rain Program Forms

Forms for Clean Air Markets Programs

You will need Adobe Acrobat Reader to view some of the files on this page. See EPA's About PDF page to learn more about PDF, and a link to the free Adobe Acrobat Reader.

Please check with your permitting authority before submitting some of the forms below. It is possible that a state or local permitting authority has modified these forms, and requests that sources submit the state-modified versions only.

Electronic versions of all forms are available below:

You may enter most of the form data using the CAMD Business System (CBS) . However, if you are mailing the forms, we recommend using overnight delivery services to ensure timely receipt of documents. Please mark all overnight deliveries with the name and phone number of the person to whom the package should be delivered.

Street Address (overnight mail and package delivery)

Clean Air Markets Division
1310 L Street, NW
Second Floor
Washington, DC 20005
Telephone: (202) 343-9494

Regular or certified mail

Clean Air Markets Division
1200 Pennsylvania Avenue, NW
Mail Code 6204J
Washington, DC 20460

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Acid Rain Program, CAIR and CAMR Forms

  • General Account Form
    PDF (5 pp., 132 K) | Word (5 pp., 328 K)
  • Retired Unit Exemption Form
    PDF (6 pp., 41 K) | Word (6 pp., 103 K)

Acid Rain Program

EPA SO 2 Allowance Auction

For more information, see the Acid Rain Program Allowance Auction Fact Sheet

Acid Rain Permitting

Phase II SO 2 Permitting

  • Phase II Permit Application Form
    PDF (5 pp., 44 K) | WordPerfect (5 pp., 64 K)
  • New Unit Exemption Form
    PDF (4 pp., 37 K) | WordPerfect (4 pp., 67 K)

Phase II NO x Permitting

  • Phase II NO x Compliance Plan
    PDF (5 pp., 56 K) | WordPerfect (5 pp., 78 K)
  • Phase II NO x Averaging Plan
    PDF (7 pp., 73 K) | WordPerfect (7 pp., 105 K)
For more information, see Acid Rain Permits and Applicability


For more information, see Emissions Monitoring and Report Emissions

Phase II Annual Reconciliation

For more information, see the Acid Rain Program Annual Reconciliation Fact Sheet

Top of Page

NO x Budget Trading Programs

Allowance Forms

  • Account Certificate of Representation Form
    PDF (4 pp., 101 K) | WordPerfect (4 pp., 49 K)
  • Allowance Transfer Form
    PDF (3 pp., 95 K) | WordPerfect (3 pp., 54 K)

Compliance Forms

  • Compliance Certification Report
    PDF (3 pp., 102 K) | WordPerfect (3 pp., 49 K)
  • Common Stack Deduction
    PDF (3 pp., 90 K) | WordPerfect (3 pp., 56 K)


  • Sample Permit Application Form (official format available from the permitting authority)
    PDF (4 pp., 17 K) | Word (4 pp., 42 K)

For more information, see NO x Budget Trading Programs

Ozone Transport Commission (OTC) Nitrogen Oxides (NOx) Budget Program Forms

Note: Do not use these forms for the Section 126 Federal NOx Budget Trading Program .

NOx Reductions Under the Acid Rain Program

This page provides an overview of how reductions in NO x emissions are to be achieved under the Acid Rain Program.


The Clean Air Act Amendments of 1990 set a goal of reducing NO x by 2 million tons from 1980 levels. The Acid Rain Program focuses on one set of sources that emit NOx: coal-fired electric utility boilers. As with the SO 2 emission reduction requirements , the NO x program was implemented in two phases, beginning in 1996 and 2000:

  • Phase I (1996 - 1999)
    --Covered Group 1 Boilers
The NO x program embodies many of the same principles of the SO 2 trading program , in that it also has a results-oriented approach, flexibility in the method to achieve emission reductions, and program integrity through measurement of the emissions. However, it does not "cap" NO x emissions as the SO 2 program does, nor does it utilize an allowance trading system.

U.S. Court of Appeals Upholds Acid Rain Program's Phase II NOx Rule

On February 13, 1998, the DC Circuit Court of Appeals issued its decision to uphold EPA's December 1996 rule setting emission limits on nitrogen oxide (NO x ) emissions from coal-fired electric power plants for Phase II (starting January 1, 2000) of the Acid Rain Program. A coalition of electric utilities had sought to overturn the NO x limits, but the court denied the utilities' petition in its entirety.

Beginning January 1, 2000, NO x emissions from utilities will be reduced by an additional 15 percent, or 900,000 tons per year, beyond the 1.2 million per year reduction required by EPA's April 1995 rule which set emission limits for Phase I and Phase II.

For additional details, see: Full text of court ruling to uphold Phase II NOx Rule (PDF) (57 pp, 162 K, About PDF )

NO x Control Technology

NO x Control Technology Cost Tool

This tool calculates costs and cost-effectiveness ratios for combinations of NO x control technologies for utility boilers with specified characteristics. It works by taking input from the user, such as which boiler is to be analyzed, and/or what the boiler's characteristics are. Use of the tool requires Microsoft Excel or a compatible spreadsheet program.

To use the tool, download the following zip file which contains the NO x Control Technology Cost Tool (in Excel) and the instruction guide (in Word Perfect): Cost Tool Zip file (Zip, 368 K) .

Performance of Selective Catalytic Reduction on Coal-Fired Steam Generating Units (PDF) (238 pp, 2 MB, About PDF )

This 1997 report provides an comprehensive overview of the application and performance of selective catalytic reduction (SRC) as a control technology for NO x for coal-fired steam generating units. This assessment includes information provided by SCR installations on boilers and SCR systems, coal characteristics, NO x control performance, operational experience, and costs. In all, data have been obtained from SCR installations on coal-fired boilers in the U.S., Germany, Sweden, Austria, Denmark, and Finland. The findings indicate that all coal-fired units using SCR have achieved targeted NO emission levels.

Laws and Regulations

Title IV of the Clean Air Act � Acid Deposition Control

Title IV of the 1990 Amendments to the Clean Air Act (CAA) mandates requirements for the control of acid deposition-also known as acid rain.

The full document is available at: Title IV � Acid Deposition Control (PDF) . (68 pp. 157 K, About PDF )

Use the following links to view the individual sections of Title IV:

To view the entire Clean Air Act (CAA), visit EPA's Clean Air Act page .

Acid Rain Program Regulations

The Acid Rain Program regulations are contained in 40 CFR Parts 72 through 78.

Note : There have been several changes to the Part 72 and Part 75 rules since the regulations were originally promulgated. For more information, visit Consolidated Part 72 and 75 Regulations .

Use the following links to view the individual parts:

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