PETITION OF:

SECTION 1. Whereas the legislature finds that acid deposition, commonly referred to as acid rain, in sensitive resource areas of the state degrades natural ecosystems, causes significant economic and environmental damage, including but not limited to, reduction in the economic productivity of lands, and undermines the public health;
Whereas the legislature finds that in the absence of federal action the state must act to safeguard public health and to protect its environment, economy and infrastructure from irreparable damage from acid deposition;
Whereas the legislature finds that market-based pollution allowance trading programs can reduce the overall cost of making pollution reductions but such allowance trading programs must be structured to achieve necessary environmental and public health goals;
Therefore, it is the intent of the legislature to ensure that owners of electric generating facilities sited in Massachusetts make prudent revenue decisions regarding their participation in the federal allowance credit trading programs established pursuant to the Federal Clean Air Act; and
It is the intent of the legislature to encourage sales and trades of pollution allowance credits that are beneficial to the sensitive resource areas of the state and thus, to the people of the state of Massachusetts.

SECTION 2. Chapter 111 of the General Laws, as appearing in the 2002 Official Edition, is hereby amended by inserting after section 142N the following section:—
Section 142O. (a). As used in this section, the following words shall have the following meanings unless the context clearly requires otherwise:
“Acid Precipitation Source States” shall mean the following states: New Jersey, Pennsylvania, Maryland, Delaware, Virginia, North Carolina, Tennessee, West Virginia, Ohio, Michigan, Illinois, Kentucky, Indiana, Wisconsin, New York, Connecticut and Rhode Island.
“Department” shall mean the department of environmental protection.
“Select Sulfur Dioxide Allowance Credit” shall mean any sulfur dioxide allowance credit issued to generating sources located within the boundaries of the state of Massachusetts.
“Sulfur Dioxide Allowance Credit” shall mean any sulfur dioxide credit issued to a generating source within the United States pursuant to the provisions of Title Four of the Federal Clean Air Act Amendments of 1990.
(b) Air Pollution Mitigation Offset.
The department shall assess an air pollution mitigation offset equal to any sum received by any utility corporation, person or entity entering into contracts or engaging in the sale or trade of select sulfur dioxide allowance credits for use in operations, permits or for maintaining compliance with sulfur dioxide emission requirements in acid precipitation source states, where such select sulfur dioxide allowance credits are found to have been transferred to the allowance deductions reserve account by a generating source located in an acid precipitation source state.
Any utility corporation, person or entity entering into contracts or engaging in the sale or trade of any select sulfur dioxide allowance credits shall provide the department with written notice of any select sulfur dioxide allowance transaction within five business days of such transaction. Such notice shall include the purchase price, and shall provide the department a copy of the allowance transfer form of the United States Environmental Agency upon the issuance and/or signing of said form relating to the sale, exchange or trade by the utility corporation, person or entity, its subsidiaries, agents, employees, successors and assigns of select sulfur dioxide allowance credits.
The department will annually review information contained in the sulfur dioxide allowance tracking database operated by the United States Environmental Protection Agency for select sulfur dioxide allowances as identified by their unique serial number.
Any moneys collected as an air pollution mitigation offset pursuant to this subdivision shall be deposited in the air pollution mitigation fund administered by the department of environmental protection.
(c) Exemptions.
The department shall produce by rule or order a model restrictive covenant for use by any utility corporation, person or entity entering into contracts or engaging in the sale or trade of select sulfur dioxide allowance credits. The model restrictive covenants will be a self enforcing contract that shall include at a minimum, the requirement to give notice to the department of any sulfur dioxide allowance transaction covered by the restrictive covenant; the requirement that any subsequent holders of the sulfur dioxide allowance covered by the restrictive covenant include an identical restrictive covenant in any document relating to the sale or purchase of sulfur dioxide allowances; and provisions restricting usage in acid precipitation source states; and provisions for the enforcement of the terms of the restrictive covenant by the state of Massachusetts.
Any utility corporation, person or entity entering into contracts or engaging in the sale or trade of select sulfur dioxide allowance credits may attach a restrictive covenant as a standard provision in any document relating to the sale or trade by the utility corporation, person or entity, its subsidiaries, agents, employees, successors and assigns, of select sulfur dioxide allowance credits. Such restrictive covenant must conform with the required provisions of the model restrictive covenant produced by the department pursuant to this subdivision.
Any utility corporation, person or entity acting in conformance with the provisions of this subsection shall be exempt from the assessment of an air pollution mitigation offset.
(d) Nothing contained in this section shall restrict a utility corporation, person or entity owning an electric generating facility from use or transfer of sulfur dioxide allowances at Massachusetts facilities owned, controlled or operated now or in the future by the utility corporation, person or entity owning an electric generating facility, its successors, assigns or purchasers that come to own, control or operate such facilities.
(e) Nothing in this section shall discourage or prohibit allowance trades (such as for retirement purposes) that will have a beneficial impact on sensitive receptor areas in the state of Massachusetts.
(f) Nothing within this section will invalidate or subvert any prior contractual commitments and/or obligations made by a utility corporation, person or entity identified in subdivision one of this section prior to the effective date of this section.
(g) The commissioner of the department of environmental protection shall make a written report to the legislature upon his finding that a federal law has been enacted that will result in at least a fifty percent reduction in the emissions of sulfur dioxide by electric generating sources pursuant to Title Four of the Federal Clean Air Act after full implementation.

SECTION 3. Chapter 29 of the General Laws, as appearing in the 1998 Official Edition, is hereby amended by inserting after §2VV the following section:—
Section 2WW: Air Pollution Mitigation Fund.
(a) There is hereby established in the custody of the department of environmental protection a special fund to be known as the “Air Pollution Mitigation Fund”.
(b) Such fund shall consist of all moneys collected by the department of environmental protection as an air pollution mitigation offset pursuant to chapter 111 section 142O. Any interest earned by the investment of moneys in such fund shall be added to such fund, become a part of such fund, and be used for the purpose of such fund.
(c) Moneys of such fund shall be available to the department of environmental protection for the purpose of carrying out the provisions of chapter 111 section 142O.
(d) The commissioner of the department of environmental protection shall establish guidelines pertaining to the allocation of moneys from this fund.
(e) The commissioner shall administer the air pollution mitigation fund established by the department of environmental protection and consisting of moneys collected by said department as an air pollution mitigation offset pursuant to chapter 111 section 142O.
(f) The commissioner shall disburse moneys from such fund for the following purposes: (i) to reduce acid precipitation through energy efficiency, or through public benefit research and development, including, but not limited to, renewable energy; or (ii) the monitoring of, or research related to, the impact of acid precipitation deposit.

SECTION 5. Severability. The provisions of this act shall be severable, and if any clause, sentence, paragraph, subdivision or part of this act shall be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not effect, impair or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, subdivision or part thereof directly involved in the controversy in which such judgment shall have been rendered.

SECTION 6. This act shall take effect immediately.