[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5049 Introduced in House (IH)]







109th CONGRESS
  2d Session
                                H. R. 5049

To establish a market-based system to regulate greenhouse gas emissions 
and to promote advanced energy research and technology development and 
                  deployment, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 29, 2006

  Mr. Udall of New Mexico (for himself and Mr. Petri) introduced the 
   following bill; which was referred to the Committee on Energy and 
 Commerce, and in addition to the Committees on Science, International 
    Relations, and Education and the Workforce, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL


 
To establish a market-based system to regulate greenhouse gas emissions 
and to promote advanced energy research and technology development and 
                  deployment, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Keep America Competitive Global 
Warming Policy Act of 2006''.

SEC. 2. DEFINITIONS.

    For purposes of this Act:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Environmental Protection Agency.
            (2) Allowance.--The term ``allowance'' means a tradeable 
        allowance issued by the Administrator pursuant to section 3(b), 
        5(a), or 7(b).
            (3) Carbon equivalent.--With respect to each greenhouse 
        gas, the term ``carbon equivalent'' means the amount of the 
        greenhouse gas that traps the same amount of heat as one metric 
        ton of carbon, as determined by the Administrator.
            (4) Covered fossil fuel.--The term ``covered fossil fuel'' 
        means coal, crude oil, natural gas, natural gas liquids, 
        refined petroleum products, and any other fossil fuel that the 
        Administrator determines appropriate.
            (5) Developing countries.--The term ``developing 
        countries'' means the countries that are not listed in Annex I 
        of the United Nations Framework Convention on Climate Change.
            (6) Greenhouse gas.--The term ``greenhouse gas'' means 
        carbon dioxide, hydrofluorocarbons, methane, nitrous oxide, 
        perfluorocarbons, and sulfur hexafluoride.
            (7) Natural gas.--The term ``natural gas'' does not include 
        natural gas liquids.
            (8) Sequestration.--The term ``sequestration'' means the 
        capture, recapture, long-term separation, isolation, or removal 
        of greenhouse gases from the atmosphere, including through 
        reforestation, forest preservation, and geological storage.

SEC. 3. ESTABLISHMENT OF SYSTEM OF ALLOWANCES.

    (a) Regulations.--The Administrator shall issue regulations not 
later than the second January 1 after the date of enactment of this Act 
to establish a system for--
            (1) issuing, recording, and tracking allowances;
            (2) appropriately measuring for purposes of section 6 the 
        relative amounts of carbon that will be emitted or produced by 
        given amounts of covered fossil fuels; and
            (3) appropriately measuring given amounts of greenhouse 
        gases in units of carbon equivalents.
    (b) Issuance of Allowances.--On the third January 1 after the date 
of enactment of this Act, and annually thereafter, the Administrator 
shall issue a number of allowances equal to the number of allowances 
that the Administrator estimates will be required to be transferred to 
the Administrator pursuant to section 6 during the calendar year 
beginning with that January 1. The Administrator shall base such 
estimate on the number of allowances that would have been transferred 
pursuant to section 6 had such transfers been required during each of 
the 3 full calendar years immediately preceding that January 1. The 
Administrator shall publish in the Federal Register the number of 
allowances to be issued pursuant to this subsection not later than July 
1 of the calendar year immediately preceding that January 1.
    (c) Sale or Exchange of Allowances.--Any person holding an 
allowance issued, sold, or exchanged under this Act may sell or 
exchange such allowance to any other person. The sale or exchange of 
such allowance shall be recorded in accordance with regulations issued 
by the Administrator. An allowance issued pursuant to subsection (b), 
section 5(a), or section 7(b) shall not be sold, exchanged, or used to 
meet the requirements of section 6 after the expiration of the 2-year 
period beginning on the date that the allowance is issued. The 
Administrator shall maintain a registry of all allowances issued, sold, 
or exchanged under this Act.
    (d) Serial Numbers.--The Administrator shall assign a unique serial 
number to each allowance issued pursuant to subsection (b), section 
5(a), and section 7(b), and shall take such action as may be necessary 
to prevent the counterfeiting of allowances. The Administrator shall 
retire the serial number assigned to an allowance pursuant to this 
subsection on the date that the allowance is used to meet the 
requirements of section 6.

SEC. 4. ALLOCATION OF ALLOWANCES.

    (a) Secretary of Energy.--In each year that allowances are issued 
by the Administrator pursuant to section 3(b), the Administrator shall 
allocate 25 percent of such allowances to the Secretary of Energy, for 
use in carrying out section 8.
    (b) Secretary of State.--In each year that allowances are issued by 
the Administrator pursuant to section 3(b), the Administrator shall 
allocate 10 percent of such allowances to the Secretary of State. After 
consultation with such agencies as the Secretary of State determines, 
the Secretary of State shall use the allowances to--
            (1) invest in low-emission and emission-free policies, 
        technologies, and projects in developing countries; and
            (2) assist developing countries in adopting the emission 
        reducing policies and programs described in section 5(b).
    (c) Administrator.--
            (1) In general.--In each year that allowances are issued by 
        the Administrator pursuant to section 3(b), the Administrator 
        shall retain 35 percent of such allowances for distribution 
        under this subsection.
            (2) Rulemaking.--The Administrator shall establish, by 
        rule, a procedure to distribute allowances without charge to 
        the industry sectors listed in paragraph (3) in a sufficient 
        amount to offset, but no more than offset, any expected loss of 
        profits by that industry sector as a whole, directly 
        attributable to the enactment of this Act. Within each of the 
        industry sectors listed in paragraph (3), the allowances shall 
        be distributed without charge to companies within the 
        respective industry sector based on their relative historic 
        share of greenhouse gas emissions, as determined by the 
        Administrator.
            (3) Industry.--Consistent with paragraph (2), the 
        Administrator shall distribute without charge not more than 5 
        percent of the allowances issued by the Administrator pursuant 
        to section 3(b) each calendar year to each of--
                    (A) the fossil fuel-fired electric generating 
                industry;
                    (B) the petroleum and natural gas industry;
                    (C) the coal industry; and
                    (D) energy-intensive industries, as determined by 
                the Administrator, and industries that are required to 
                transfer allowances to the Administrator under section 
                6(b) or (c).
            (4) Transition assistance.--
                    (A) In general.--The Administrator, in consultation 
                with the Secretary of Labor, shall distribute the 
                percentage of allowances described in subparagraph (B) 
                each calendar year to the States. Each State shall 
                receive allowances under this paragraph according to 
                the proportion of individuals who have lost jobs in 
                that State in the previous year as a result of the 
                enactment of this Act as compared to all the 
                individuals who have lost jobs in all States the 
                previous year as a result of the enactment of this Act. 
                Each State shall use the allowances to make--
                            (i) grants to individuals who have lost 
                        their jobs as a result of the enactment of this 
                        Act for the purpose of--
                                    (I) providing training, adjustment 
                                assistance, and employment services to 
                                such individuals; and
                                    (II) making income-maintenance and 
                                needs-related payments to such 
                                individuals; and
                            (ii) grants to local governments that 
                        represent communities that demonstrate economic 
                        losses that are directly attributable to the 
                        enactment of this Act for the purpose of 
                        assisting the communities in attracting new 
                        employers or providing essential local 
                        government services.
                    (B) Percentage of allowances used for transition 
                assistance.--With respect to allowances issued in the 
                third full calendar year beginning after the date of 
                enactment of this Act, the percentage referred to in 
                subparagraph (A) shall be 15 percent of the allowances 
                issued by the Administrator pursuant to section 3(b) 
                for that year. The percentage shall be reduced by 1.5 
                percentage points each calendar year thereafter.
            (5) Low-income home energy assistance.--The Administrator 
        shall distribute 5 percent of the allowances issued by the 
        Administrator pursuant to section 3(b) each calendar year to 
        the States. Each State shall receive allowances under this 
        paragraph equal to its share of the total of all individuals 
        receiving home energy assistance pursuant to the Low-Income 
        Home Energy Assistance Act of 1981 (42 U.S.C. 8621 et seq.) in 
        the previous year. Each State shall use the allowances to 
        provide home energy assistance to such individuals.
    (d) Secretary of the Treasury.--In each year that allowances are 
issued by the Administrator pursuant to section 3(b), the Administrator 
shall allocate 25 percent of such allowances to the Secretary of the 
Treasury, plus the percentage not distributed under subparagraph (B) of 
subsection (c)(4) pursuant to the percentage reduction described in the 
last sentence of that subparagraph. The Secretary of the Treasury shall 
deposit the cash proceeds from selling the allowances pursuant to 
section 3(c) in the Treasury. Allowances that have been allocated or 
retained under subsection (a), (b), or (c) but have not been 
distributed pursuant to such subsections at the end of the calendar 
year in which they were issued by the Administrator shall be 
transferred, without charge, to the Secretary of the Treasury for sale 
pursuant to section 3(c).

SEC. 5. SAFETY VALVE ALLOWANCES.

    (a) Safety Valve Price.--Beginning on the third January 1 after the 
date of enactment of this Act, the Secretary of the Treasury shall 
offer for sale an unlimited number of allowances at the safety valve 
price. The allowances sold under this subsection shall be in addition 
to the allowances issued pursuant to section 3(b). In the third full 
calendar year beginning after the date of enactment of this Act, the 
safety valve price shall be $25 per allowance. On January 1 of each 
calendar year thereafter, the Secretary of the Treasury shall adjust 
the safety valve price by the percentage increase in the Consumer Price 
Index for All Urban Consumers (United States city average) during the 
1-year period ending 2 months before the date of the adjustment plus 
one percent.
    (b) Policy Comparability Certification.--Beginning in the sixth 
full calendar year beginning after the date of enactment of this Act 
and in subsequent years thereafter, the Secretary of State shall 
evaluate whether the 5 developing countries with the most greenhouse 
gas emissions, as determined by the Secretary of State in consultation 
with the Administrator, have adopted and are enforcing policies and 
programs to reduce greenhouse gas emissions that are comparable to the 
policies and programs established pursuant to this Act. Based on the 
evaluation completed during the previous calendar year, the Secretary 
of State shall provide certification to the President on the seventh 
January 1 after the date of enactment of this Act and annually 
thereafter if the Secretary finds that the 5 developing countries with 
the most greenhouse gas emissions have adopted and are enforcing 
comparable policies and programs. Not later than 30 days after the 
Secretary of State provides such certification, the President shall 
transmit to Congress an acceptance or rejection of the Secretary of 
State's certification along with a report documenting substantial 
evidence that supports the President's decision. If the Secretary of 
State provides certification pursuant to this subsection and the 
President accepts such certification, the Secretary of the Treasury 
shall adjust the safety valve price, in addition to the percentage 
increase due to the Consumer Price Index under subsection (a), by 2 
percent, not later than 30 days after the President accepts such 
certification. The Secretary of the Treasury shall not increase the 
safety valve price under this subsection during any calendar year in 
which the Secretary of State has not provided certification pursuant to 
this subsection or the President has not accepted such certification.

SEC. 6. ALLOWANCES REQUIRED.

    (a) Fossil Fuels.--
            (1) Imported petroleum fuel products.--Except as provided 
        in paragraph (6) and consistent with regulations issued by the 
        Administrator pursuant to section 3(a), a person shall not 
        import into the United States any refined petroleum product 
        without transferring to the Administrator a number of 
        allowances equal to the number of metric tons of carbon that 
        will be emitted or produced from the amount of refined 
        petroleum product that is imported into the United States by 
        such person.
            (2) Natural gas.--
                    (A) Pipelines.--
                            (i) Prohibition.--Except as provided in 
                        paragraph (6) and consistent with regulations 
                        issued by the Administrator pursuant to section 
                        3(a), an owner or operator of a natural gas 
                        pipeline shall not accept for transportation in 
                        such pipeline any natural gas without 
                        transferring to the Administrator a number of 
                        allowances equal to the number of metric tons 
                        of carbon that will be emitted or produced from 
                        the amount of natural gas accepted for 
                        transportation by the owner or operator.
                            (ii) Exception.--With respect to an amount 
                        of natural gas for which an owner or operator 
                        of a natural gas pipeline or a natural gas 
                        processing plant has transferred allowances to 
                        the Administrator pursuant to this paragraph 
                        before a subsequent owner or operator of a 
                        natural gas pipeline accepts the natural gas 
                        for transportation, the subsequent owner or 
                        operator shall not be required to transfer 
                        additional allowances to the Administrator.
                    (B) Processing plants.--
                            (i) Prohibition.--Except as provided in 
                        paragraph (6) and consistent with regulations 
                        issued by the Administrator pursuant to section 
                        3(a), an owner or operator of a natural gas 
                        processing plant shall not sell or dispose of 
                        natural gas or natural gas liquids without 
                        transferring to the Administrator a number of 
                        allowances equal to the number of metric tons 
                        of carbon that will be emitted or produced from 
                        the amount of natural gas or natural gas 
                        liquids sold or disposed of by the owner or 
                        operator.
                            (ii) Exceptions.--With respect to an amount 
                        of natural gas or natural gas liquids for which 
                        an owner or operator of a natural gas 
                        processing plant has transferred allowances to 
                        the Administrator pursuant to clause (i) before 
                        a subsequent owner or operator of a natural gas 
                        processing plant sells or disposes of the 
                        natural gas or natural gas liquids, the 
                        subsequent owner or operator shall not be 
                        required to transfer additional allowances to 
                        the Administrator. With respect to an amount of 
                        natural gas for which an owner or operator of a 
                        natural gas pipeline has transferred allowances 
                        to the Administrator pursuant to subparagraph 
                        (A)(i) before an owner of a natural gas 
                        processing plant sells or disposes of the 
                        natural gas (including in liquid form), the 
                        owner or operator of the natural gas processing 
                        plant shall not be required to transfer 
                        additional allowances to the Administrator 
                        pursuant to this subparagraph.
            (3) Crude oil.--
                    (A) Prohibition.--Except as provided in paragraph 
                (6) and consistent with regulations issued by the 
                Administrator pursuant to section 3(a), an owner or 
                operator of a refinery shall not receive crude oil 
                without transferring to the Administrator a number of 
                allowances equal to the number of metric tons of carbon 
                that will be emitted or produced from the amount of 
                crude oil that is received by the owner or operator.
                    (B) Exception.--With respect to an amount of crude 
                oil for which an owner or operator of a refinery has 
                transferred allowances to the Administrator pursuant to 
                subparagraph (A) before a subsequent owner or operator 
                of a refinery receives the crude oil, the subsequent 
                owner or operator shall not be required to transfer 
                additional allowances to the Administrator.
            (4) Coal.--
                    (A) Preparation plants.--
                            (i) Prohibition.--Except as provided in 
                        paragraph (6) and consistent with regulations 
                        issued by the Administrator pursuant to section 
                        3(a), an owner or operator of a coal 
                        preparation plant shall not sell or dispose of 
                        coal prepared at such plant without 
                        transferring to the Administrator a number of 
                        allowances equal to the number of metric tons 
                        of carbon that will be emitted or produced from 
                        the amount of coal sold or disposed of by the 
                        owner or operator.
                            (ii) Exception.--With respect to an amount 
                        of coal for which a person has transferred 
                        allowances to the Administrator pursuant to 
                        this paragraph before a subsequent owner or 
                        operator of a coal preparation plant sells or 
                        disposes of the coal, the subsequent owner or 
                        operator shall not be required to transfer 
                        additional allowances to the Administrator.
                    (B) Coal producers.--
                            (i) Prohibition.--Except as provided in 
                        paragraph (6) and consistent with regulations 
                        issued by the Administrator pursuant to section 
                        3(a), an owner or operator of a coal mine shall 
                        not sell or dispose of coal without 
                        transferring to the Administrator a number of 
                        allowances equal to the number of metric tons 
                        of carbon that will be emitted or produced from 
                        the amount of coal sold or disposed of by the 
                        owner or operator.
                            (ii) Exceptions.--With respect to coal that 
                        is being sold to an owner or operator of a coal 
                        preparation plant who is subject to the 
                        allowance requirement described in subparagraph 
                        (A)(i), the owner or operator of a coal mine 
                        shall not be required to transfer allowances to 
                        the Administrator. With respect to an amount of 
                        coal for which an owner or operator of a coal 
                        mine has transferred allowances to the 
                        Administrator pursuant to this paragraph before 
                        a subsequent owner or operator of the coal mine 
                        sells or disposes of the coal, the subsequent 
                        owner or operator shall not be required to 
                        transfer additional allowances to the 
                        Administrator.
                    (C) Imported coal.--Except as provided in paragraph 
                (6) and consistent with regulations issued by the 
                Administrator pursuant to section 3(a), a person shall 
                not import into the United States any coal without 
                transferring to the Administrator a number of 
                allowances equal to the number of metric tons of carbon 
                that will be emitted or produced from the amount of 
                coal that is imported into the United States by such 
                person.
            (5) Other fossil fuels.--
                    (A) Prohibition.--Except as provided in paragraph 
                (6) and consistent with regulations issued by the 
                Administrator pursuant to section 3(a), a person shall 
                not sell or dispose of a covered fossil fuel that is 
                not referred to in paragraph (1), (2), (3), or (4) 
                without transferring to the Administrator a number of 
                allowances equal to the number of metric tons of carbon 
                that will be emitted or produced from the amount of 
                covered fossil fuel sold or disposed of by such person.
                    (B) Exception.--With respect to an amount of 
                covered fossil fuel for which a person has transferred 
                allowances to the Administrator pursuant to 
                subparagraph (A) before a subsequent person sells or 
                disposes of the covered fossil fuel, the subsequent 
                person shall not be required to transfer additional 
                allowances to the Administrator.
            (6) Export and nonfuel use.--Pursuant to regulations issued 
        by the Administrator, a person who--
                    (A) exports an amount of covered fossil fuel; or
                    (B) sells, disposes of, or otherwise handles an 
                amount of covered fossil fuel for a nonfuel purpose 
                that does not result in the emission of more than a 
                trace amount of a greenhouse gas,
        shall not be required to transfer allowances to the 
        Administrator pursuant to this subsection with respect to that 
        amount of covered fossil fuel.
    (b) Greenhouse Gases.--
            (1) Prohibition.--Pursuant to regulations issued by the 
        Administrator, a person shall not sell or dispose of an amount 
        of greenhouse gas other than carbon dioxide in a manner that 
        may result in the release of such greenhouse gas in the 
        atmosphere without transferring to the Administrator a number 
        of allowances equal to the amount of greenhouse gas sold or 
        disposed of by such person, measured in units of carbon 
        equivalents.
            (2) Exception.--With respect to an amount of greenhouse gas 
        for which a person has transferred allowances to the 
        Administrator pursuant to paragraph (1) before a subsequent 
        person sells or disposes of the greenhouse gas, the subsequent 
        person shall not be required to transfer additional allowances 
        to the Administrator.
    (c) Agricultural, Industrial, and Manufacturing Processes.--
            (1) Prohibition.--A person shall not sell or dispose of any 
        product processed through an agricultural, industrial, or 
        manufacturing process that emits a greenhouse gas without 
        transferring to the Administrator a number of allowances equal 
        to the amount of greenhouse gas emitted in the processing of 
        the amount of such product sold or disposed of by such person, 
        measured in units of carbon equivalents.
            (2) Exceptions.--With respect to an amount of greenhouse 
        gas emitted in the agricultural, industrial, or manufacturing 
        processing of a product for which a person has transferred 
        allowances to the Administrator pursuant to paragraph (1) or 
        subsection (b)(1) before a subsequent person sells or disposes 
        of the product processed through the agricultural, industrial, 
        or manufacturing process, the subsequent person shall not be 
        required to transfer additional allowances to the 
        Administrator. With respect to an amount of greenhouse gas 
        emitted for which a person has transferred allowances to the 
        Administrator pursuant to subsection (a) before a subsequent 
        person sells or disposes of a product processed through the 
        agricultural, industrial, or manufacturing process that emitted 
        such amount of greenhouse gas, the subsequent person shall not 
        be required to transfer additional allowances to the 
        Administrator.
    (d) Exemption.--
            (1) In general.--If the Administrator determines, after 
        public notice and comment, that it is not feasible to measure 
        or estimate the number of allowances that a person is required 
        to transfer to the Administrator pursuant to subsection (b) or 
        (c), the Administrator may grant an exemption only with respect 
        to the greenhouse gas or product processed through an 
        agricultural, industrial, or manufacturing process that emits 
        greenhouse gases for which it is not feasible to measure or 
        estimate the number of allowances required. The Administrator 
        shall revoke such exemption at any time if the Administrator 
        determines that it is feasible to measure or estimate the 
        number of allowances required.
            (2) Methane from animals.--The Administrator shall grant an 
        exemption under this subsection for the sale or disposal of 
        methane from animals until such time that the Administrator 
        determines, after notice and opportunity to be heard, that it 
        is feasible to measure or estimate the number of allowances 
        that a person is required to transfer to the Administrator 
        pursuant to subsection (b) with respect to the amount of 
        methane from animals sold or disposed of by such person.
            (3) Reduction in number of allowances.--In accordance with 
        regulations issued by the Administrator, the Administrator 
        shall reduce the total number of allowances issued pursuant to 
        section 3(b) by an amount that is proportional to the number of 
        exemptions granted under paragraphs (1) and (2) of this 
        subsection. If the Administrator revokes an exemption granted 
        under paragraph (1) or (2), the Administrator shall readjust 
        the total number of allowances issued pursuant to section 3(b) 
        for the calendar year following the year that the exemption is 
        revoked.
            (4) Reduction of greenhouse gas emissions.--If the 
        Administrator grants an exemption under paragraph (1) to a 
        person otherwise required to transfer allowances to the 
        Administrator pursuant to subsection (c), the Administrator 
        shall encourage the reduction of greenhouse gas emissions from 
        the agricultural, industrial, or manufacturing process for 
        which the exemption was granted on a best practices basis until 
        the exemption is revoked.
    (e) Penalties.-- A person who does not transfer the required number 
of allowances to the Administrator pursuant to this Act shall be liable 
to the Administrator a civil penalty. The civil penalty assessed by the 
Administrator shall be equal to three times the market value of the 
number of allowances that the person failed to transfer to the 
Administrator for each day the person has so failed to transfer.
    (f) Pass Through of Costs.--Any Federal, State, or local authority 
with ratemaking regulatory authority over any entity required to submit 
an allowance under this Act, or any entity that the cost of that 
allowance is passed on to, shall allow such entity to recover the full 
market value of such allowances for ratemaking purposes.
    (g) Effective Date.--This section shall take effect on the third 
January 1 after the date of enactment of this Act.

SEC. 7. SEQUESTRATION.

    (a) Sequestration Projects.--The Administrator, in coordination 
with the Secretary of Agriculture and the Secretary of Energy, shall 
review proposals for domestic sequestration projects and provide 
approval, for purposes of subsection (b), to projects that--
            (1) will result in greenhouse gas emission reductions that 
        would not occur in the absence of the project; and
            (2) provide for the sequestration of greenhouse gases in a 
        manner that can be accurately and periodically measured, 
        monitored, and reported in a cost-effective manner.
    (b) Allowances.--The Administrator shall issue to the person 
responsible for submitting a proposal that is approved by the 
Administrator under subsection (a) a number of allowances equal to the 
amount of greenhouse gas, measured in units of carbon equivalents, that 
the person has sequestered. The allowances issued pursuant to this 
subsection shall be in addition to the allowances issued by the 
Administrator pursuant to section 3(b).

SEC. 8. ADVANCED RESEARCH PROJECTS AGENCY-ENERGY.

    (a) Establishment.--
            (1) In general.--The Secretary of Energy shall establish in 
        the Department of Energy the Advanced Research Projects Agency-
        Energy (referred to in this section as ``ARPA-E''), to be 
        headed by a Director who shall be appointed by, and report to, 
        the Secretary.
            (2) Qualifications.--The Director shall be an individual 
        with--
                    (A) an advanced education degree in energy 
                technology; and
                    (B) substantial commercial research and technology 
                development and deployment experience.
    (b) Mission.--The mission of ARPA-E is to implement a radically 
innovative advanced basic and applied energy research and technology 
development and deployment program in order to increase national 
security, improve homeland security, reduce greenhouse gas emissions, 
improve our balance of payments, and develop alternative energy sources 
and improve the efficiency of existing energy sources, by sponsoring a 
diverse portfolio of cutting-edge, high-risk, high-payoff research and 
development and deployment projects.
    (c) Personnel.--In hiring personnel for ARPA-E, the Secretary shall 
have the hiring and management authorities described in section 1101 of 
the Strom Thurmond National Defense Authorization Act for Fiscal Year 
1999 (Public Law 105-261; 5 U.S.C. 3104 note).
    (d) Transactions Other Than Contracts and Grants.--To carry out 
projects under this section, the Director shall have the authority to 
enter into transactions provided under section 646(g) of the Department 
of Energy Organization Act (42 U.S.C. 7256(g)).
    (e) Prizes for Advanced Technology Achievements.--
            (1) In general.--The Director may carry out a program to 
        award cash prizes in recognition of outstanding achievements to 
        advance the mission described in subsection (b).
            (2) Competition requirements.--In carrying out this 
        subsection, the Director shall--
                    (A) use a competitive process for the selection of 
                recipients of cash prizes; and
                    (B) conduct widely-advertised solicitation of 
                submissions.
            (3) Maximum amount for all cash prizes.--The total amount 
        of all cash prizes awarded for a fiscal year under this 
        subsection may not exceed $50,000,000.
            (4) Maximum amount of individual cash prizes.--The amount 
        of an individual cash prize awarded under this subsection may 
        not exceed $10,000,000 unless the amount of the award is 
        approved by the Secretary of Energy.
    (f) Annual Reports.--As soon as practicable after the end of each 
fiscal year, the Director shall submit to the Committee on Energy and 
Natural Resources of the Senate and the Committee on Energy and 
Commerce and the Committee on Science of the House of Representatives a 
report on the progress, challenges, future milestones, and strategic 
plan of ARPA-E, including--
            (1) a description of, and rationale for, any changes in the 
        strategic plan;
            (2) the adequacy of human and financial resources necessary 
        to achieve the mission described in subsection (b); and
            (3) in the case of cash prizes awarded under subsection 
        (e), a description of--
                    (A) the applications of the research, technology, 
                or prototypes for which prizes were awarded;
                    (B) the total amount of the prizes that were 
                awarded;
                    (C) the methods used for solicitation and 
                evaluation of submissions and an assessment of the 
                effectiveness of those methods; and
                    (D) recommendations to improve the prize program.
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