[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4226 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 4226

 To accelerate the reduction of greenhouse gas emissions in the United 
    States by establishing a market-driven system of greenhouse gas 
 tradeable allowances that will limit greenhouse gas emissions in the 
United States, reduce dependence upon foreign oil, and ensure benefits 
    to consumers from the trading in such allowances, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 15, 2007

  Mr. Gilchrest (for himself and Mr. Olver) introduced the following 
 bill; which was referred to the Committee on Energy and Commerce, and 
   in addition to the Committees on Science and Technology, Natural 
  Resources, Foreign Affairs, Agriculture, and Ways and Means, 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 accelerate the reduction of greenhouse gas emissions in the United 
    States by establishing a market-driven system of greenhouse gas 
 tradeable allowances that will limit greenhouse gas emissions in the 
United States, reduce dependence upon foreign oil, and ensure benefits 
    to consumers from the trading in such allowances, 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 ``Climate Stewardship and Economic 
Security Act of 2007''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Definitions.
           TITLE I--MARKET TO REDUCE GREENHOUSE GAS EMISSIONS

                     Subtitle A--Tracking Emissions

Sec. 101. National Greenhouse Gas Database and registry established.
Sec. 102. Inventory of greenhouse gas emissions for covered entities.
Sec. 103. Greenhouse gas reduction registration.
Sec. 104. Measurement and verification.
               Subtitle B--Mandating Emission Reductions

Sec. 121. Covered entities must submit allowances for emissions.
Sec. 122. Compliance.
Sec. 123. Exemption of source categories.
Sec. 124. Establishment of tradeable allowances.
Sec. 125. International reserve allowance program.
Sec. 126. Penalties.
                Subtitle C--Controlling Compliance Costs

                       Part 1--Use of Allowances

Sec. 141. Trading.
Sec. 142. Banking.
Sec. 143. Borrowing against future reductions.
Sec. 144. Domestic offsets.
Sec. 145. International credits plan.
Sec. 146. Outreach initiative on revenue enhancement for agricultural 
                            producers.
                 Part 2--Carbon Market Efficiency Board

Sec. 151. Establishment of Board.
Sec. 152. Duties.
Sec. 153. Powers.
Sec. 154. Estimate of costs to economy of limiting greenhouse gas 
                            emissions.
             Subtitle D--Allocation of Tradeable Allowances

Sec. 161. Determination of tradeable allowance allocations.
Sec. 162. Provision of tradeable allowances.
Sec. 163. Ensuring target adequacy.
Sec. 164. Initial allocations for early participation and accelerated 
                            participation.
Sec. 165. Bonus for accelerated participation.
              TITLE II--CLIMATE CHANGE CREDIT CORPORATION

Sec. 201. Establishment.
Sec. 202. Purposes and functions.
                        TITLE III--MISCELLANEOUS

Sec. 301. NOAA report on climate change effects; preparation 
                            assistance.
Sec. 302. Adaptation technologies.
Sec. 303. Mitigating climate change's impacts on the poor.
Sec. 304. Wildlife conservation.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Environmental Protection Agency.
            (2) Baseline.--The term ``baseline'' means the historic 
        greenhouse gas emission levels of an entity, as adjusted upward 
        by the Administrator to reflect actual reductions that are 
        verified in accordance with--
                    (A) regulations promulgated under section 
                101(c)(1); and
                    (B) relevant standards and methods developed under 
                this Act.
            (3) Board.--The term ``Board'' means the Carbon Market 
        Efficiency Board established under section 151.
            (4) Carbon dioxide equivalents.--The term ``carbon dioxide 
        equivalents'' means, for each greenhouse gas, the amount of 
        each such greenhouse gas that makes the same contribution to 
        global warming as one metric ton of carbon dioxide, as 
        determined by the Administrator.
            (5) Covered sectors.--The term ``covered sectors'' means 
        the electric power, transportation, industrial, and commercial 
        sectors, as such terms are used in the Inventory.
            (6) Covered entity.--The term ``covered entity'' means an 
        entity (including a branch, department, agency, or 
        instrumentality of Federal, State, or local government) that--
                    (A) owns or controls a source of greenhouse gas 
                emissions in the electric power, industrial, or 
                commercial sector of the United States economy (as 
                defined in the Inventory), refines or imports refined 
                petroleum products for use in transportation, or 
                produces or imports hydrofluorocarbons, 
                perfluorocarbons, or sulfur hexafluoride; and
                    (B) emits, from any single facility owned by the 
                entity, over 10,000 metric tons of greenhouse gas per 
                year, measured in units of carbon dioxide equivalents, 
                or--
                            (i) refines or imports refined petroleum 
                        products that, when combusted, will emit;
                            (ii) produces or imports 
                        hydrofluorocarbons, perfluorocarbons, or sulfur 
                        hexafluoride that, when used, will emit; or
                            (iii) produces or imports other greenhouse 
                        gases that, when used, will emit,
                over 10,000 metric tons of greenhouse gas per year, 
                measured in units of carbon dioxide equivalents.
            (7) Database.--The term ``database'' means the National 
        Greenhouse Gas Database established under section 101.
            (8) Direct emissions.--The term ``direct emissions'' means 
        greenhouse gas emissions by an entity from a facility that is 
        owned or controlled by that entity.
            (9) Facility.--The term ``facility'' means a building, 
        structure, or installation located on any 1 or more contiguous 
        or adjacent properties of an entity in the United States.
            (10) Greenhouse gas.--The term ``greenhouse gas'' means--
                    (A) carbon dioxide;
                    (B) methane;
                    (C) nitrous oxide;
                    (D) hydrofluorocarbons;
                    (E) perfluorocarbons; or
                    (F) sulfur hexafluoride.
            (11) Indirect emissions.--The term ``indirect emissions'' 
        means greenhouse gas emissions that are--
                    (A) a result of the activities of an entity; but
                    (B) emitted from a facility owned or controlled by 
                another entity.
            (12) Inventory.--The term ``Inventory'' means the Inventory 
        of U.S. Greenhouse Gas Emissions and Sinks, prepared in 
        compliance with the United Nations Framework Convention on 
        Climate Change Decision 3/CP.5.
            (13) Leakage.--The term ``leakage'' means--
                    (A) a potentially unaccounted increase in 
                greenhouse gas emissions by a facility or entity caused 
                by an offset project that produces an accounted 
                reduction in greenhouse gas emissions; or
                    (B) a potentially unaccounted decrease in 
                sequestration that is caused by an offset project that 
                results in an accounted increase in sequestration.
            (14) Permanence.--The term ``permanence'' means the extent 
        to which greenhouse gases that are sequestered will not later 
        be returned to the atmosphere.
            (15) Registry.--The term ``registry'' means the registry of 
        greenhouse gas emission reductions and increases in 
        sequestration established under section 101(b)(2).
            (16) Secretary.--The term ``Secretary'' means the Secretary 
        of Commerce.
            (17) Sequestration.--
                    (A) In general.--The term ``sequestration'' means 
                the long-term capture, separation, isolation, or 
                removal of greenhouse gases from the atmosphere.
                    (B) Inclusions.--The term ``sequestration'' 
                includes, as the Administrator determines appropriate 
                for carrying out this Act--
                            (i) agricultural and conservation 
                        practices;
                            (ii) reforestation;
                            (iii) forest preservation;
                            (iv) production of cellulosic biomass 
                        crops; and
                            (v) any other method of long-term capture, 
                        separation, isolation, or removal of greenhouse 
                        gases from the atmosphere.
                    (C) Exclusions.--The term ``sequestration'' does 
                not include--
                            (i) any conversion of, or negative impact 
                        on, a native ecosystem; or
                            (ii) any introduction of non-native 
                        species.
            (18) Source category.--The term ``source category'' means a 
        process or activity that leads to direct emissions of 
        greenhouse gases, as listed in the Inventory.
            (19) Stationary source.--The term ``stationary source'' 
        means any source of greenhouse gas emissions except those 
        emissions resulting directly from an engine for transportation 
        purposes.

           TITLE I--MARKET TO REDUCE GREENHOUSE GAS EMISSIONS

                     Subtitle A--Tracking Emissions

SEC. 101. NATIONAL GREENHOUSE GAS DATABASE AND REGISTRY ESTABLISHED.

    (a) Establishment.--As soon as practicable after the date of 
enactment of this Act, the Administrator, in coordination with the 
Secretary, the Secretary of Energy, the Secretary of Agriculture, State 
governments, and private sector and nongovernmental organizations, 
shall establish, operate, and maintain a database, to be known as the 
``National Greenhouse Gas Database'', to collect, verify, and analyze 
data on greenhouse gas emissions by entities.
    (b) National Greenhouse Gas Database Components.--The database 
shall consist of--
            (1) an inventory of greenhouse gas emissions; and
            (2) a registry of greenhouse gas emission reductions and 
        increases in sequestrations.
    (c) Comprehensive System.--
            (1) In general.--Not later than 2 years after the date of 
        enactment of this Act, the Administrator shall promulgate 
        regulations to implement a comprehensive system for greenhouse 
        gas emissions reporting, inventorying, and reduction and 
        sequestration registration.
            (2) Requirements.--The Administrator shall ensure, to the 
        maximum extent practicable, that--
                    (A) the comprehensive system described in paragraph 
                (1) is designed to--
                            (i) maximize completeness, transparency, 
                        and accuracy of data reported; and
                            (ii) minimize costs incurred by entities in 
                        measuring and reporting greenhouse gas 
                        emissions, emission reductions, and 
                        sequestrations; and
                    (B) the regulations promulgated under paragraph (1) 
                establish procedures and protocols necessary--
                            (i) to prevent the double-counting of 
                        greenhouse gas emissions, emission reductions, 
                        or sequestrations reported by more than 1 
                        reporting entity;
                            (ii) to provide for corrections to errors 
                        in data submitted to the database;
                            (iii) to provide for adjustment to data by 
                        reporting entities that have had a significant 
                        organizational change (including mergers, 
                        acquisitions, and divestiture), in order to 
                        maintain comparability among data in the 
                        database over time;
                            (iv) to provide for adjustments to reflect 
                        new technologies or methods for measuring or 
                        calculating greenhouse gas emissions, emission 
                        reductions, or sequestrations;
                            (v) to account for changes in registration 
                        of ownership of emission reductions or 
                        increases in sequestration resulting from a 
                        voluntary private transaction between reporting 
                        entities;
                            (vi) to prevent a covered entity from 
                        avoiding the requirements of this Act by 
                        reorganization into multiple entities that are 
                        under common control; and
                            (vii) to clarify the responsibility for 
                        reporting in the case of any facility owned or 
                        controlled by more than 1 entity.
            (3) Serial numbers.--Through regulations promulgated under 
        paragraph (1), the Administrator shall develop and implement a 
        system that provides--
                    (A) for the provision of unique serial numbers to 
                identify the registered emission reductions or 
                increases in sequestration made by an entity;
                    (B) for the tracking of the registered reductions 
                or sequestrations associated with the serial numbers; 
                and
                    (C) for such action as may be necessary to prevent 
                counterfeiting of the registered reductions or 
                sequestrations.

SEC. 102. INVENTORY OF GREENHOUSE GAS EMISSIONS FOR COVERED ENTITIES.

    (a) In General.--Not later than July 1st of each calendar year 
after 2011, each covered entity shall submit to the Administrator a 
report that states, for the preceding calendar year, the entity-wide 
greenhouse gas emissions in the United States (as reported at the 
facility level), including--
            (1) the total quantity of direct emissions from stationary 
        sources, including process and fugitive emissions, expressed in 
        units of carbon dioxide equivalents, except those reported 
        under paragraph (3);
            (2) the amount of petroleum products refined or refined 
        petroleum products imported by the entity for use in 
        transportation and the amount of greenhouse gases, expressed in 
        units of carbon dioxide equivalents, that would be emitted when 
        these products are used for transportation, as determined by 
        the Administrator under section 121(b);
            (3) the amount of hydrofluorocarbons, perfluorocarbons, or 
        sulfur hexafluoride, expressed in units of carbon dioxide 
        equivalents, that are produced or imported by the entity and 
        will ultimately be emitted in the United States, as determined 
        by the Administrator under section 121(d); and
            (4) such other categories of greenhouse gas emissions in 
        the United States as the Administrator determines in the 
        regulations promulgated under section 101(c)(1) may be 
        practicable and useful for the purposes of this Act, such as 
        indirect emissions.
    (b) Collection and Analysis of Data.--The Administrator shall 
collect and analyze data reported under subsection (a) for use under 
this title.

SEC. 103. GREENHOUSE GAS REDUCTION REGISTRATION.

    (a) In General.--Subject to the requirements described in 
subsection (b)--
            (1) a covered entity may register greenhouse gas emission 
        reductions and increases in sequestration achieved after 1990 
        and before 2012 under this section; and
            (2) an entity that is not a covered entity may register 
        greenhouse gas emission reductions and increases in 
        sequestration achieved at any time since 1990 under this 
        section.
    (b) Requirements.--
            (1) In general.--The requirements referred to in subsection 
        (a) are that an entity (other than an entity described in 
        paragraph (2)) shall--
                    (A) establish a baseline; and
                    (B) submit the report described in section 
                102(a)(1).
            (2) Requirements not applicable to entities entering into 
        certain agreements.--An entity that enters into an agreement 
        with a participant in the registry for the purpose of a carbon 
        sequestration project may register greenhouse gas emission 
        reductions or sequestrations without being required to comply 
        with the requirements specified in paragraph (1), unless that 
        entity is required to comply with those requirements by reason 
        of an activity other than the agreement.
    (c) Procedure.--
            (1) Voluntary reporting.--An entity described in subsection 
        (a) may submit to the Administrator for inclusion in the 
        registry--
                    (A) before January 1, 2012, data that relates to 
                any activity that resulted in the net reduction of the 
                greenhouse gas emissions of the entity or an increase 
                in sequestration by the entity that were carried out 
                during or after 1990 and before the establishment of 
                the database; and
                    (B) with respect to the calendar year preceding the 
                calendar year in which the data is submitted, data that 
                relates to any project or activity that resulted in the 
                net reduction of the greenhouse gas emissions of the 
                entity or a net increase in net sequestration by the 
                entity.
            (2) Provision of verification information by reporting 
        entities.--Each entity that submits a report under section 
        102(a) or this subsection shall provide information sufficient 
        for the Administrator to verify, in accordance with measurement 
        and verification methods and standards developed under section 
        104, that the report--
                    (A) has been accurately reported; and
                    (B) in the case of each voluntary report under 
                paragraph (1), represents--
                            (i) actual reductions in greenhouse gas 
                        emissions relative to historic emission levels 
                        of the entity; or
                            (ii) actual increases in net sequestration.
            (3) Failure to submit report.--An entity that submits data 
        for registration of emission reductions or increases in 
        sequestration in the registry and that fails to submit a report 
        required under this subsection shall be prohibited from using, 
        or allowing another entity to use, its registered emissions 
        reductions or increases in sequestration to satisfy the 
        requirements of section 121.
            (4) Independent third-party verification.--To meet the 
        requirements of this section and section 104, an entity that 
        submits a report under this section may--
                    (A) obtain independent third-party verification; 
                and
                    (B) present the results of the third-party 
                verification to the Administrator.
            (5) Availability of data.--
                    (A) In general.--The Administrator shall ensure 
                that information in the database is--
                            (i) published; and
                            (ii) accessible to the public, including in 
                        electronic format on the Internet.
                    (B) Exception.--Subparagraph (A) shall not apply in 
                any case in which the Administrator determines that 
                publishing or otherwise making available information 
                described in that subparagraph--
                            (i) poses a risk to national security; or
                            (ii) discloses confidential business 
                        information that can not be derived from 
                        information that is otherwise publicly 
                        available and that would cause competitive harm 
                        if published.
            (6) Data infrastructure.--The Administrator shall ensure, 
        to the maximum extent practicable, that the database uses, and 
        is integrated with, Federal, State, and regional greenhouse gas 
        data collection and reporting systems.
            (7) Additional issues to be considered.--In promulgating 
        the regulations under section 101(c)(1) and implementing the 
        database, the Administrator shall take into consideration a 
        broad range of issues involved in establishing an effective 
        database, including--
                    (A) the data and information systems and measures 
                necessary to identify, track, and verify greenhouse gas 
                emissions in a manner that will encourage private 
                sector trading and exchanges;
                    (B) the greenhouse gas reduction and sequestration 
                measurement and estimation methods and standards 
                applied in other countries, as applicable or relevant;
                    (C) the extent to which available data on fossil 
                fuels, greenhouse gas emissions, and greenhouse gas 
                production, refining, and importation are adequate to 
                implement the database; and
                    (D) the differences in, and potential uniqueness 
                of, the facilities, operations, and business and other 
                relevant practices of persons and entities in the 
                private and public sectors that may be expected to 
                participate in the database.
    (d) Annual Report.--The Administrator shall publish an annual 
report that--
            (1) describes the total greenhouse gas emissions, emission 
        reductions, and increases in sequestration reported to the 
        database during the year covered by the report;
            (2) provides entity-by-entity and sector-by-sector analyses 
        of the emissions, emission reductions, and increases in 
        sequestration reported;
            (3) describes the atmospheric concentrations of greenhouse 
        gases;
            (4) provides a comparison of current and past atmospheric 
        concentrations of greenhouse gases; and
            (5) describes the activity during the year covered by the 
        report in the trading of greenhouse gas emission allowances.

SEC. 104. MEASUREMENT AND VERIFICATION.

    (a) Methods and Standards.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, the Administrator shall establish by 
        rule, in coordination with the Secretary, the Secretary of 
        Energy, and the Secretary of Agriculture, comprehensive 
        measurement and verification methods and standards to ensure a 
        consistent and technically accurate record of greenhouse gas 
        emissions, emission reductions, sequestration, and atmospheric 
        concentrations for use in the registry.
            (2) Requirements.--The methods and standards established 
        under paragraph (1) shall include--
                    (A) a requirement that an entity submitting data 
                for the database use a continuous emissions monitoring 
                system, or another system of measuring emissions, 
                emission reductions, or increases in sequestration that 
                is determined by the Administrator to provide 
                information with precision, reliability, accessibility, 
                and timeliness similar to that provided by a continuous 
                emissions monitoring system where technologically 
                feasible;
                    (B) establishment of standardized measurement and 
                verification practices for reports made by all entities 
                participating in the registry, taking into account--
                            (i) protocols and standards in use by 
                        entities requiring or desiring to participate 
                        in the registry as of the date of development 
                        of the methods and standards under paragraph 
                        (1);
                            (ii) boundary issues, such as leakage;
                            (iii) avoidance of double counting of 
                        greenhouse gas emissions, emission reductions, 
                        and increases in sequestration; and
                            (iv) such other factors as the 
                        Administrator, in consultation with the 
                        Secretary, the Secretary of Energy, and the 
                        Secretary of Agriculture, determines to be 
                        appropriate;
                    (C) establishment of methods of--
                            (i) estimating greenhouse gas emissions, 
                        for those cases in which the Administrator 
                        determines that methods of monitoring or 
                        measuring such emissions with precision, 
                        reliability, accessibility, and timeliness 
                        similar to that provided by a continuous 
                        emissions monitoring system are not 
                        technologically feasible at present; and
                            (ii) reporting the accuracy of such 
                        estimations;
                    (D) establishment of measurement and verification 
                standards applicable to actions taken to reduce or 
                sequester greenhouse gas emissions;
                    (E) in coordination with the Secretary of 
                Agriculture, standards to measure the results of the 
                use of carbon sequestration, including--
                            (i) soil carbon sequestration practices;
                            (ii) forest preservation and reforestation 
                        activities that adequately address the issues 
                        of permanence, leakage, and verification; and
                            (iii) production of cellulosic biomass 
                        crops;
                    (F) establishment of standards for obtaining the 
                Administrator's approval of the suitability of 
                geological storage sites that include evaluation of 
                both the geology of the site and the entity's capacity 
                to manage the site;
                    (G) establishment of other features that, as 
                determined by the Administrator, will allow entities to 
                adequately establish a fair and reliable measurement 
                and reporting system; and
                    (H) establishment of such other measurement and 
                verification standards as the Administrator, in 
                consultation with the Secretary of Agriculture, the 
                Secretary, and the Secretary of Energy, determines to 
                be appropriate.
    (b) Public Participation.--The Administrator shall make available 
to the public for comment, in draft form and for a period of at least 
90 days, the methods and standards developed under subsection (a) 
before issuing final regulations under this section.
    (c) Experts and Consultants.--
            (1) In general.--The Administrator may obtain the services 
        of experts and consultants in the private and nonprofit sectors 
        for the purpose of carrying out this section in accordance with 
        section 3109 of title 5, United States Code, in the areas of 
        greenhouse gas measurement, certification, and emission 
        trading.
            (2) Available arrangements.--In obtaining any service 
        described in paragraph (1), the Administrator may use any 
        available grant, contract, cooperative agreement, or other 
        arrangement authorized by law.
    (d) Review and Revision.--The Administrator shall periodically 
review, and revise as necessary, the methods and standards developed 
under subsection (a).

               Subtitle B--Mandating Emission Reductions

SEC. 121. COVERED ENTITIES MUST SUBMIT ALLOWANCES FOR EMISSIONS.

    (a) In General.--Beginning with calendar year 2012--
            (1) each covered entity in the electric power, industrial, 
        and commercial sectors shall submit to the Administrator one 
        tradeable allowance for every metric ton of greenhouse gases, 
        measured in units of carbon dioxide equivalents, that it emits 
        from stationary sources, except those described in paragraph 
        (2);
            (2) each producer or importer of hydrofluorocarbons, 
        perfluorocarbons, or sulfur hexafluoride that is a covered 
        entity shall submit to the Administrator one tradeable 
        allowance for every metric ton of hydrofluorocarbons, 
        perfluorocarbons, or sulfur hexafluoride, measured in units of 
        carbon dioxide equivalents, that it produces or imports and 
        that are deemed under subsection (d) to be emitted in the 
        United States; and
            (3) each petroleum product refiner or importer that is a 
        covered entity shall submit one tradeable allowance for every 
        unit of petroleum product it sells that will produce one metric 
        ton of greenhouse gases when used for transportation, measured 
        in units of carbon dioxide equivalents, as determined by the 
        Administrator under subsection (b).
    (b) Determination of Transportation Sector Amount.--For the 
transportation sector, the Administrator shall determine the amount of 
greenhouse gases, measured in units of carbon dioxide equivalents, that 
will be deemed to be emitted when petroleum products are used for 
transportation.
    (c) Exception for Certain Deposited Emissions.--Notwithstanding 
subsection (a), a covered entity is not required to submit a tradeable 
allowance for any amount of greenhouse gas that would otherwise have 
been emitted from a facility under the ownership or control of that 
entity if--
            (1) the emission is deposited in a geological storage 
        facility approved by the Administrator described in section 
        104(a)(2)(F); and
            (2) the entity agrees to submit tradeable allowances for 
        any portion of the deposited emission that is subsequently 
        emitted from that facility.
    (d) Determination of Hydrofluorocarbon, Perfluorocarbon, and Sulfur 
Hexafluoride Amount.--The Administrator shall determine the amounts of 
hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride, measured 
in units of carbon dioxide equivalents, that will be deemed to be 
emitted for purposes of this Act.
    (e) Allowances Retired.--Upon receiving a tradeable allowance 
pursuant to a requirement under this subtitle, the Administrator shall 
retire the serial number assigned to that allowance.

SEC. 122. COMPLIANCE.

    (a) Source of Tradeable Allowances Used.--A covered entity may use 
a tradeable allowance to meet the requirements of this subtitle without 
regard to whether the tradeable allowance was allocated to it under 
subtitle D or acquired from another entity or the Climate Change Credit 
Corporation established under section 201.
    (b) Verification by Administrator.--At various times during each 
year, the Administrator shall determine whether each covered entity has 
met the requirements of this subtitle. In making that determination, 
the Administrator shall take into account the tradeable allowances 
submitted by the covered entity to the Administrator.

SEC. 123. EXEMPTION OF SOURCE CATEGORIES.

    (a) In General.--The Administrator may grant an exemption from the 
requirements of this subtitle to a source category if the Administrator 
determines, after public notice and comment, that it is not feasible to 
measure or estimate emissions from that source category, until such 
time as measurement or estimation becomes feasible.
    (b) Reduction of Limitations.--If the Administrator exempts a 
source category under subsection (a), the Administrator shall also 
reduce the total tradeable allowances under section 124(a)(1), (2), 
(3), or (4), as applicable, by the amount of greenhouse gas emissions 
that the exempted source category emitted in calendar year 2000, as 
identified in the 2000 Inventory.
    (c) Limitation on Exemption.--The Administrator may not grant an 
exemption under subsection (a) to carbon dioxide produced from fossil 
fuel.

SEC. 124. ESTABLISHMENT OF TRADEABLE ALLOWANCES.

    (a) In General.--The Administrator shall promulgate regulations to 
establish tradeable allowances, denominated in units of carbon dioxide 
equivalents, as follows:
            (1) For the first 8 calendar years beginning after 2011, 
        the number of tradeable allowances shall be equal to the number 
        of metric tons of greenhouse gases emitted in 2006, measured in 
        units of carbon dioxide equivalents, reduced by the amount of 
        emissions of greenhouse gases in calendar year 2012 from 
        noncovered entities, as calculated by the Administrator.
            (2) For the first 10 calendar years beginning after 2019, 
        the number of tradeable allowances shall be equal to 85 percent 
        of the number of metric tons of greenhouse gases emitted in 
        2006, measured in units of carbon dioxide equivalents, reduced 
        by the amount of emissions of greenhouse gases in calendar year 
        2020 from noncovered entities, as calculated by the 
        Administrator.
            (3) For the first 10 calendar years beginning after 2029, 
        the number of tradeable allowances shall be equal to 63 percent 
        of the number of metric tons of greenhouse gases emitted in 
        2006, measured in units of carbon dioxide equivalents, reduced 
        by the amount of emissions of greenhouse gases in calendar year 
        2030 from noncovered entities, as calculated by the 
        Administrator.
            (4) For calendar years beginning after 2049, the number of 
        tradeable allowances shall be equal to 25 percent of the number 
        of metric tons of greenhouse gases emitted in 2006, measured in 
        units of carbon dioxide equivalents, reduced by the amount of 
        emissions of greenhouse gases in each such calendar year from 
        noncovered entities, as calculated by the Administrator.
    (b) Serial Numbers.--The Administrator shall assign a unique serial 
number to each tradeable allowance established under subsection (a), 
and shall take such action as may be necessary to prevent 
counterfeiting of tradeable allowances.
    (c) Nature of Tradeable Allowances.--A tradeable allowance is not a 
property right, and nothing in this title or any other provision of law 
limits the authority of the United States to terminate or limit a 
tradeable allowance.
    (d) Noncovered Entity.--For purposes of this section only, the term 
``noncovered entity'' means an entity that--
            (1) owns or controls a source of greenhouse gas emissions 
        in the electric power, industrial, or commercial sector of the 
        United States economy (as defined in the Inventory), refines or 
        imports refined petroleum products for use in transportation, 
        or produces or imports hydrofluorocarbons, perfluorocarbons, or 
        sulfur hexafluoride; and
            (2) is not a covered entity.

SEC. 125. INTERNATIONAL RESERVE ALLOWANCE PROGRAM.

    (a) Purposes.--The purposes of this section are--
            (1) to ensure that greenhouse gas emissions occurring 
        outside the United States do not undermine the objectives of 
        the United States to reduce greenhouse gas emissions and to 
        stabilize greenhouse gas concentrations in the atmosphere at a 
        level that would prevent dangerous anthropogenic interference 
        with the climate system;
            (2) to ensure that manufactured products produced in the 
        United States remain competitive, in international and domestic 
        markets, with comparable products produced in foreign nations 
        that do not have restrictions on greenhouse gas emissions 
        comparable to those described in section 124; and
            (3) to encourage effective international action to achieve 
        the purposes stated in paragraphs (1) and (2) through 
        procedures negotiated between the United States and other 
        countries or through measures taken by the United States that 
        comply with applicable international agreements.
    (b) International Negotiations.--
            (1) Finding.--Congress finds that the purposes described in 
        subsection (a) can be most effectively addressed and achieved 
        through procedures negotiated between the United States and 
        other countries.
            (2) Negotiating objective.--To the extent that the 
        procedures described in paragraph (1) involve measures 
        affecting international trade in goods or services, the climate 
        change negotiating objective of the United States shall be to 
        conclude agreements on the reduction of greenhouse gas 
        emissions that will help to achieve the purposes described in 
        subsection (a).
    (c) International Equity Program.--
            (1) Establishment.--The President may establish a program 
        to require importers to pay the value of greenhouse gases 
        (based on the market price of tradeable allowances issued under 
        this Act) emitted during the production of goods or services 
        imported into the United States from any foreign nation other 
        than those described in paragraph (2).
            (2) Nations not subject to program.--The foreign nations 
        referred to in paragraph (1) are those that--
                    (A) are a party to an agreement with the United 
                States that achieves the purposes of this section; or
                    (B) impose restrictions on greenhouse gas emissions 
                that are comparable to such restrictions imposed in the 
                United States.
            (3) Negotiations.--The President shall not impose the 
        requirements of a program established under paragraph (1) on 
        imports from any foreign nation unless negotiations to achieve 
        an agreement described in paragraph (2)(A) have been attempted 
        by the United States with that foreign nation.
    (d) Consistency With International Agreements.--A program 
established under subsection (c) shall be designed to ensure that the 
United States complies with all applicable international agreements.

SEC. 126. PENALTIES.

    Any covered entity that fails to meet the requirements of this 
subtitle for a year shall be liable for a civil penalty, payable to the 
Administrator, equal to thrice the market value (determined as of the 
last day of the year at issue) of the tradeable allowances that would 
be necessary for that covered entity to meet those requirements on the 
date that the tradeable allowances were due.

                Subtitle C--Controlling Compliance Costs

                       PART 1--USE OF ALLOWANCES

SEC. 141. TRADING.

    (a) In General.--Tradeable allowances may be sold, exchanged, 
purchased, retired, or used as provided in this Act.
    (b) Intersector Trading.--Covered entities may purchase or 
otherwise acquire tradeable allowances from other covered sectors to 
satisfy the requirements of this title, in addition to those from 
within their own sector.

SEC. 142. BANKING.

    Tradeable allowances not used to satisfy the requirements of this 
title in a year may be used to satisfy the requirements in a later 
year.

SEC. 143. BORROWING AGAINST FUTURE REDUCTIONS.

    (a) In General.--The Administrator shall establish a program under 
which a covered entity may--
            (1) receive a credit in the current calendar year for 
        anticipated reductions in emissions in a future calendar year; 
        and
            (2) use the credit in lieu of a tradeable allowance to meet 
        the requirements of this title for the current calendar year, 
        subject to the limitation imposed by subsection (b).
    (b) Determination of Tradeable Allowance Credits.--
            (1) In general.--Except as provided in paragraph (2), the 
        Administrator may make credits available under subsection (a) 
        only for anticipated reductions in emissions that--
                    (A) are attributable to the realization of capital 
                investments in equipment, the construction, 
                reconstruction, or acquisition of facilities, or the 
                deployment of new technologies--
                            (i) for which the covered entity has 
                        executed a binding contract and secured, or 
                        applied for, all necessary permits and 
                        operating or implementation authority;
                            (ii) that will not become operational 
                        within the current calendar year; and
                            (iii) that will become operational and 
                        begin to reduce emissions from the covered 
                        entity within 5 years after the year in which 
                        the credit is used; and
                    (B) will be realized within 5 years after the year 
                in which the credit is used.
            (2) Board.--The Administrator shall make credits available 
        under subsection (a) as instructed by the Board under section 
        153(a)(1) or (2)(A).
    (c) Carrying Cost.--If a covered entity uses a credit under this 
section to meet the requirements of this title for a calendar year (in 
this subsection referred to as the use year), the tradeable allowance 
requirement for the year from which the credit was taken (in this 
subsection referred to as the source year) shall be increased by an 
amount equal to--
            (1) 10 percent for each credit borrowed from the source 
        year; multiplied by
            (2) the number of years after the use year that the source 
        year occurs.
    (d) Maximum Borrowing Period.--A credit from a year beginning more 
than 5 years after the current year may not be used to meet the 
requirements of this title for the current year.
    (e) Failure To Achieve Reductions Generating Credit.--If a covered 
entity that uses a credit under this section fails to achieve the 
anticipated reduction for which the credit was granted for the year 
from which the credit was taken, then--
            (1) the covered entity's requirements under this Act for 
        that year shall be increased by the amount of the credit, plus 
        the amount determined under subsection (c);
            (2) any tradeable allowances submitted by the covered 
        entity for that year shall be counted first against the 
        increase in those requirements; and
            (3) the covered entity may not use credits under this 
        section to meet the increased requirements.

SEC. 144. DOMESTIC OFFSETS.

    (a) Alternative Means of Compliance.--A covered entity may satisfy 
up to 15 percent of its total allowance submission requirement under 
section 121 by any combination of the following:
            (1) Submitting tradeable allowances from another nation's 
        market in greenhouse gas emissions if--
                    (A) the Administrator determines that the other 
                nation's system for trading in greenhouse gas emissions 
                is complete, accurate, and transparent and reviews that 
                determination at least once every 5 years;
                    (B) the other nation has adopted enforceable limits 
                on its greenhouse gas emissions which the tradeable 
                allowances were issued to implement; and
                    (C) the covered entity certifies that the tradeable 
                allowance has been retired unused in the other nation's 
                market.
            (2) Submitting a registered net increase in sequestration, 
        as registered in the database, adjusted, if necessary, to 
        comply with the accounting standards and methods described in 
        subsection (c). An increase in sequestration submitted under 
        this paragraph need not have been registered by the covered 
        entity submitting it.
            (3) Submitting a greenhouse gas emissions reduction (other 
        than a registered net increase in sequestration) that was 
        registered in the database by a person that is not a covered 
        entity.
            (4) Submitting credits obtained by the submitting covered 
        entity from the Administrator under section 143 or section 145.
    (b) Dedicated Program for Sequestration in Agricultural Soils.--If 
a covered entity satisfies a full 15 percent of its total allowance 
submission requirements pursuant to subsection (a), it shall satisfy up 
to 1.5 percent of its total allowance submission requirement by 
submitting registered net increases in sequestration in agricultural 
soils, as registered in the database, adjusted, if necessary, to comply 
with the accounting standards and methods described in subsection (c).
    (c) Sequestration Accounting.--
            (1) Sequestration accounting.--If a covered entity uses a 
        registered net increase in sequestration to satisfy the 
        requirements of section 121 for any year, that covered entity 
        shall submit information to the Administrator every 5 years 
        thereafter sufficient to allow the Administrator to determine, 
        using the methods and standards created under section 104, 
        whether that net increase in sequestration still exists. The 
        covered entity shall offset any loss of sequestration by 
        submitting additional tradeable allowances of equivalent amount 
        in the calender year following that determination.
            (2) Regulations required.--The Administrator, in 
        coordination with the Secretary of Agriculture, the Secretary 
        of Energy, and the Secretary, shall issue regulations 
        establishing the sequestration accounting rules for all classes 
        of sequestration projects.
            (3) Criteria for regulations.--In issuing regulations under 
        this subsection, the Administrator shall use the following 
        criteria:
                    (A) If the range of possible amounts of net 
                increase in sequestration for a particular class of 
                sequestration project is not more than 10 percent of 
                the median of that range, the amount of sequestration 
                credited shall be equal to the median value of that 
                range.
                    (B) If the range of possible amounts of net 
                increase in sequestration for a particular class of 
                sequestration project is more than 10 percent of the 
                median of that range, the amount of sequestration 
                awarded shall be equal to the fifth percentile of that 
                range.
                    (C) The regulations shall include procedures for 
                accounting for potential leakage from sequestration 
                projects and for ensuring that any registered increase 
                in sequestration is in addition that which would have 
                occurred if this Act had not been enacted.
            (4) Updates.--The Administrator shall update the 
        sequestration accounting rules for every class of sequestration 
        project at least once every 5 years.

SEC. 145. INTERNATIONAL CREDITS PLAN.

    (a) Establishment.--The Administrator shall establish a program the 
purposes of which are--
            (1) to assist developing countries in achieving sustainable 
        development and in contributing to the objective of reducing 
        the greenhouse gas emissions; and
            (2) to assist covered entities in achieving compliance with 
        the requirements of section 121.
    (b) Program Components.--
            (1) In general.--The program shall provide for the earning 
        of tradable allowances by covered entities from project 
        activities in developing countries resulting in certified 
        emission reductions. The Administrator shall ensure tradability 
        of emission reductions earned under this program with 
        reductions earned under other similar international programs.
            (2) Approval criteria and review process.--By no later than 
        2011, the Administrator shall--
                    (A) develop criteria for the approval of projects 
                submitted for review; and
                    (B) establish a review process for submitted 
                projects that includes a procedure for providing the 
                results of the review, together with an explanation of 
                the reasons for approving or denying approval of a 
                submitted project, to the entity that submitted the 
                project.
            (3) Fees.--The Administrator may charge an application fee 
        for the review of project proposals to cover the administrative 
        costs of the program.
            (4) Certification of results required.--The Administrator 
        shall require entities participating in this program to obtain 
        independent third-party verification that--
                    (A) participation by all parties involved in the 
                project is voluntary; and
                    (B) the project produces--
                            (i) real, measurable, and long-term 
                        benefits related to the mitigation of climate 
                        change; and
                            (ii) reductions in emissions that are 
                        additional to any that would occur in the 
                        absence of the certified project activity.
    (c) Use of Allowances.--Subject to the limitation in section 
144(a), tradable allowances earned under the program may be used to 
meet the requirements of section 121.
    (d) Study.--Within 3 years after the date of enactment of this Act, 
the Administrator, in coordination with the Secretary, shall conduct a 
study of the impacts of the compliance cost reduction measures of this 
section and section 144 on achieving the purposes of this Act. The 
Administrator shall submit the results of the study to the Congress 
along with any recommendations the Administrator considers appropriate.

SEC. 146. OUTREACH INITIATIVE ON REVENUE ENHANCEMENT FOR AGRICULTURAL 
              PRODUCERS.

    (a) Establishment.--The Secretary of Agriculture, acting through 
the Chief of the Natural Resources Conservation Service, the Chief of 
the Forest Service, the Administrator of the Cooperative State 
Research, Education, and Extension Service, and land-grant colleges and 
universities, in consultation with the Administrator and the heads of 
other appropriate departments and agencies, shall establish an outreach 
initiative to provide information to agricultural producers, 
agricultural organizations, foresters, and other landowners about 
opportunities under sections 144 and 145 to earn new revenue.
    (b) Components.--The initiative under this section--
            (1) shall be designed to ensure that, to the maximum extent 
        practicable, agricultural organizations and individual 
        agricultural producers, foresters, and other landowners receive 
        detailed practical information about--
                    (A) opportunities to earn new revenue under 
                sections 144 and 145;
                    (B) measurement protocols, monitoring, verifying, 
                inventorying, registering, insuring, and marketing 
                offsets under this title;
                    (C) emerging domestic and international markets for 
                energy crops, allowances, and offsets; and
                    (D) local, regional, and national databases and 
                aggregation networks to facilitate achievement, 
                measurement, registration, and sales of offsets;
            (2) shall provide--
                    (A) outreach materials, including the handbook 
                published under subsection (c), to interested parties;
                    (B) workshops; and
                    (C) technical assistance; and
            (3) may include the creation and development of regional 
        marketing centers or coordination with existing centers 
        (including centers within the Natural Resources Conservation 
        Service or the Cooperative State Research, Education, and 
        Extension Service or at land-grant colleges and universities).
    (c) Handbook.--
            (1) In general.--Not later than 2 years after the date of 
        enactment of this Act, the Secretary of Agriculture, in 
        consultation with the Administrator and after an opportunity 
        for public input, shall publish a handbook for use by 
        agricultural producers, agricultural cooperatives, foresters, 
        other landowners, offset buyers, and other stakeholders that 
        provides easy-to-use guidance on achieving, reporting, 
        registering, and marketing offsets.
            (2) Distribution.--The Secretary of Agriculture shall 
        ensure, to the maximum extent practicable, that the handbook is 
        distributed widely through land-grant colleges and universities 
        and other appropriate institutions.

                 PART 2--CARBON MARKET EFFICIENCY BOARD

SEC. 151. ESTABLISHMENT OF BOARD.

    (a) Establishment.--There is established a board, to be known as 
the ``Carbon Market Efficiency Board''.
    (b) Purposes.--The purposes of the Board are--
            (1) to promote the achievement of the environmental 
        objectives of the United States, including national mandatory 
        greenhouse gas emissions cap and reduction targets in this or 
        any other Act;
            (2) to observe the national greenhouse gas tradeable 
        allowance market and evaluate periods during which the cost of 
        tradeable allowances provided under this Act or any other 
        Federal law might pose significant harm to the economy;
            (3) to provide temporary, short-term relief at any time at 
        which a market program for tradeable allowances under this Act 
        or other Federal law is determined to pose a significant harm 
        to the economy, by using the cost relief measures prescribed 
        under section 153; and
            (4) to submit to the President and Congress quarterly 
        reports under section 152(c).
    (c) Membership.--
            (1) Composition.--The Board shall be composed of 7 members, 
        who are citizens of the United States, to be appointed by the 
        President, by and with the advice and consent of the Senate.
            (2) Requirements.--In appointing members of the Board under 
        paragraph (1), the President shall--
                    (A) ensure fair representation of the financial, 
                agricultural, industrial, and commercial sectors, and 
                the geographical regions, of the United States and 
                include a representative of consumer interests; and
                    (B) appoint not more than 1 member from each such 
                geographical region.
            (3) Compensation.--
                    (A) In general.--A member of the Board shall be 
                compensated at a rate equal to the daily equivalent of 
                the annual rate of basic pay prescribed for level II of 
                the Executive Schedule under section 5313 of title 5, 
                United States Code, for each day (including travel 
                time) during which the member is engaged in the 
                performance of the duties of the Board.
                    (B) Chairperson.--The Chairperson of the Board 
                shall be compensated at a rate equal to the daily 
                equivalent of the annual rate of basic pay prescribed 
                for level I of the Executive Schedule under section 
                5312 of title 5, United States Code, for each day 
                (including travel time) during which the member is 
                engaged in the performance of the duties of the Board.
            (4) Prohibitions.--
                    (A) Conflicts of interest.--An individual employed 
                by, or holding any official relationship (including any 
                shareholder) with, any entity engaged in the 
                generation, transmission, distribution, or sale of 
                energy, or an individual who has any pecuniary interest 
                in the generation, transmission, distribution, or sale 
                of energy, shall not be appointed to the Board under 
                this subsection.
                    (B) No other employment.--A member of the Board 
                shall not hold any other employment during the term of 
                service of the member.
    (d) Term; Vacancies.--
            (1) Term.--
                    (A) In general.--The term of a member of the Board 
                shall be 14 years, except that the members first 
                appointed to the Board shall be appointed for terms in 
                a manner that ensures that--
                            (i) the term of not more than 1 member 
                        shall expire during any 2-year period; and
                            (ii) no member serves a term of more than 
                        14 years.
                    (B) Oath of office.--A member shall take the oath 
                of office of the Board by not later than 15 days after 
                the date on which the member is appointed under 
                subsection (c)(1).
                    (C) Removal.--
                            (i) In general.--A member may be removed 
                        from the Board on determination of the 
                        President for cause.
                            (ii) Notification.--The President shall 
                        submit to Congress a notification of any 
                        determination by the President to remove a 
                        member of the Board for cause under clause (i).
            (2) Vacancies.--
                    (A) In general.--A vacancy on the Board--
                            (i) shall not affect the powers of the 
                        Board; and
                            (ii) shall be filled in the same manner as 
                        the original appointment was made.
                    (B) Service until new appointment.--A member of the 
                Board the term of whom has expired or otherwise been 
                terminated shall continue to serve until the date on 
                which a replacement is appointed under subparagraph 
                (A)(ii), as the President determines to be appropriate.
    (e) Chairperson and Vice-Chairperson.--Of members of the Board, the 
President shall appoint--
            (1) 1 member to serve as Chairperson of the Board for a 
        term of 4 years; and
            (2) 1 member to serve as Vice-Chairperson of the Board for 
        a term of 4 years.
    (f) Meetings.--
            (1) Initial meeting.--The Board shall hold the initial 
        meeting of the Board as soon as practicable after the date on 
        which all members have been appointed to the Board under 
        subsection (c)(1).
            (2) Presiding officer.--A meeting of the Board shall be 
        presided over by--
                    (A) the Chairperson;
                    (B) in any case in which the Chairperson is absent, 
                the Vice-Chairperson; or
                    (C) in any case in which the Chairperson and Vice-
                Chairperson are absent, a chairperson pro tempore, to 
                be elected by the members of the Board.
            (3) Quorum.--Four members of the Board shall constitute a 
        quorum for a meeting of the Board.
            (4) Open meetings.--The Board shall be subject to section 
        552b of title 5, United States Code (commonly known as the 
        ``Government in the Sunshine Act'').

SEC. 152. DUTIES.

    (a) Information Gathering.--
            (1) Authority.--The Board shall collect and analyze 
        relevant market information to promote a full understanding of 
        the dynamics of the greenhouse gas emission tradeable allowance 
        market.
            (2) Information.--The Board shall gather such information 
        as the Board determines to be appropriate regarding the status 
        of the market described in paragraph (1), including information 
        relating to--
                    (A) tradeable allowance allocation and 
                availability;
                    (B) the price of tradeable allowances;
                    (C) macroeconomic and microeconomic effects of 
                unexpected significant increases in emission allowance 
                prices, or shifts in the emission allowance market, 
                should those increases or shifts occur;
                    (D) economic effect thresholds that could warrant 
                implementation of cost relief measures described in 
                section 153(a) after the initial 2-year period 
                described in section 153(a)(1);
                    (E) in the event any cost relief measures described 
                in section 153(a) are taken, the effects of those 
                measures on the market;
                    (F) maximum levels of cost relief measures that are 
                necessary to achieve avoidance of economic harm and 
                preserve achievement of the purposes of this Act; and
                    (G) the success of the market in promoting 
                achievement of the purposes of this Act and any other 
                laws of the United States.
    (b) Study.--Not later than January 1, 2014, the Board shall submit 
to Congress a report describing the status of the initial market for 
tradeable allowances to emit greenhouse gases in the United States, 
specifically with respect to volatility within the market and the 
average price of tradeable allowances during the 90-day period 
immediately preceding such report.
    (c) Reports.--The Board shall submit to the President and Congress 
quarterly reports--
            (1) describing--
                    (A) the status of markets for tradeable allowances 
                provided under this Act or other Federal law;
                    (B) the economic effects of the markets;
                    (C) regional, industrial, consumer, and energy 
                investment responses to the markets;
                    (D) any corrective measures that should be carried 
                out to relieve excessive costs of the markets; and
                    (E) plans to compensate for those measures;
            (2) describing any cost relief measures carried out under 
        section 153;
            (3) that are timely and succinct to ensure regular 
        monitoring of market trends; and
            (4) that are prepared independently by the Board, and not 
        in partnership with Federal agencies.

SEC. 153. POWERS.

    (a) Cost Relief Measures.--
            (1) Initial period.--During 2012 and 2013, if the Board 
        determines that the average daily closing price of tradeable 
        allowances during any 90-day period exceeds the upper range of 
        the estimate provided under section 154, the Board shall 
        instruct the Administrator to increase the quantity of credits 
        under section 143 that covered entities may receive.
            (2) Permanent authority.--Beginning on January 1, 2014, if 
        the Board determines that the tradeable allowance market poses 
        a significant harm to the economy of the United States, the 
        Board may carry out 1 or more of the following cost relief 
        measures to ensure a functioning, stable, and efficient market 
        for tradeable allowances to emit greenhouse gases:
                    (A) Instruct the Administrator to increase the 
                quantity of credits under section 143 that covered 
                entities may receive.
                    (B) Expand the period during which a covered entity 
                may repay the allocating agency for a tradeable 
                allowance provided under subparagraph (A).
                    (C) Lower the percentage of carrying costs required 
                under section 143(c)(1) with respect to tradeable 
                allowances provided under subparagraph (A), to a level 
                not less than the percentage of the Moody's seasoned 
                Aaa corporate bond rate most recently published in the 
                Federal Reserve Statistical Release on selected 
                interest rates, commonly referred to as the H.15 
                release.
            (3) Subsequent actions.--On determination by the Board to 
        carry out a cost relief measure pursuant to paragraph (1) or 
        (2), the Board shall--
                    (A) allow the cost relief measure to be used only 
                during the applicable allocation year;
                    (B) exercise the cost relief measure incrementally, 
                and only as needed to avoid significant economic harm 
                during the applicable allocation year; and
                    (C) evaluate, at the end of the applicable 
                allocation year, actions that need to be carried out 
                during subsequent years to compensate for any cost 
                relief measure carried out during the applicable 
                allocation year.
            (4) Increase in quantity of allowances.--
                    (A) In general.--If the Board carries out a cost 
                relief measure pursuant to paragraph (1) or (2) that 
                results in the expansion of borrowing of tradeable 
                allowances under Federal law, and if the Board 
                determines that the average daily closing price of 
                tradeable allowances for the 90-day period beginning on 
                the date on which borrowing is so expanded exceeds the 
                upper limit of the range of the estimate provided under 
                section 154, the Board shall instruct the Administrator 
                to--
                            (i) increase the total quantity of 
                        tradeable allowances provided to all covered 
                        entities in accordance with this paragraph; and
                            (ii) reduce the quantity of tradeable 
                        allowances to be provided for a subsequent year 
                        or years by the same amount.
                    (B) Requirements.--An increase in the quantity of 
                tradeable allowances under subparagraph (A) shall--
                            (i) apply to all covered entities;
                            (ii) be allocated in accordance with the 
                        applicable formulas and procedures established 
                        under this Act;
                            (iii) be equal to not more than 5 percent 
                        of the total quantity of tradeable allowances 
                        otherwise available for the applicable 
                        allocation year under this Act;
                            (iv) be provided only during the 6-month 
                        period immediately following a determination of 
                        the Board under subparagraph (A); and
                            (v) specify the subsequent year or years in 
                        which the quantity of tradeable allowances will 
                        be reduced in accordance with subparagraph (A), 
                        which shall be not more than 15 years after the 
                        year in which the increase in the quantity of 
                        tradeable allowances is provided.
    (b) Limitations.--Nothing in this section gives the Board the 
authority--
            (1) to consider or prescribe entity-level petitions for 
        relief from the costs of a tradeable allowance allocation or 
        trading program established under this Act or other Federal 
        law;
            (2) to carry out any investigative or punitive process 
        under the jurisdiction of any Federal or State court;
            (3) to interfere with, modify, or adjust any tradeable 
        allowance allocation scheme established under this Act or other 
        Federal law; or
            (4) to modify the goals of any limit on greenhouse gas 
        emissions.

SEC. 154. ESTIMATE OF COSTS TO ECONOMY OF LIMITING GREENHOUSE GAS 
              EMISSIONS.

    (a) Initial Report.--The Administrator shall enter into an 
arrangement with the National Academy of Sciences for a report, to be 
submitted to Congress not later than December 31, 2011. Such report 
shall, using economic and scientific analyses, describe the projected 
price range at which tradeable allowances are expected to trade during 
the period with respect to which this Act applies.
    (b) Reassessments.--The Board may instruct the Administrator to 
arrange for a reassessment and new report under subsection (a) as 
necessary.

             Subtitle D--Allocation of Tradeable Allowances

SEC. 161. DETERMINATION OF TRADEABLE ALLOWANCE ALLOCATIONS.

    (a) In General.--The Administrator shall annually determine--
            (1) the amount of tradeable allowances to be allocated to 
        each covered sector; and
            (2) the amount of tradeable allowances to be allocated to 
        the Climate Change Credit Corporation established under section 
        201.
    (b) Allocation Factors.--In making the determination required by 
subsection (a), the Administrator shall consider--
            (1) the distributive effect of the allocations on household 
        income and net worth of individuals;
            (2) the impact of the allocations on corporate income, 
        taxes, and asset value;
            (3) the impact of the allocations on income levels of 
        consumers and on their energy consumption;
            (4) the effects of the allocations in terms of economic 
        efficiency;
            (5) the ability of covered entities to pass through 
        compliance costs to their customers;
            (6) the degree to which the amount of allocations to the 
        covered sectors should decrease over time;
            (7) the need to maintain the international competitiveness 
        of United States manufacturing and avoid the additional loss of 
        United States manufacturing jobs; and
            (8) the necessary funding levels for the initiatives and 
        programs described in section 202.
    (c) Allocation Recommendations and Implementation.--Not later than 
24 months after the date of enactment of this Act, and annually 
thereafter, the Administrator shall submit the determinations under 
subsection (a) to the Committee on Commerce, Science, and 
Transportation and the Committee on Environment and Public Works of the 
Senate, and to the Committee on Science and Technology and the 
Committee on Energy and Commerce of the House of Representatives. The 
Administrator's determinations under subsection (a)(1), and the 
allocations and provision of tradeable allowances pursuant to that 
determination, are deemed to be a major rule (as defined in section 
804(2) of title 5, United States Code), and subject to the provisions 
of chapter 8 of that title.

SEC. 162. PROVISION OF TRADEABLE ALLOWANCES.

    (a) In General.--The Administrator shall, by regulation, establish 
a process for providing tradeable allowances without cost to covered 
entities described in subparagraphs (A) and (B)(i) and (ii) of section 
3(5) that will--
            (1) encourage investments that increase the efficiency of 
        the processes that produce greenhouse gas emissions;
            (2) minimize the costs to the Government of providing the 
        tradeable allowances;
            (3) give credit to covered entities for emissions 
        reductions made before 2012 and registered with the database; 
        and
            (4) provide sufficient tradeable allowances for new 
        entrants into the sector.
    (b) Allocation to Covered Entities in States Adopting Mandatory 
Greenhouse Gas Emissions Reduction Programs.--For a covered entity 
operating in any State that has adopted a legally binding and 
enforceable program to achieve and maintain greenhouse gas emission 
reductions that are consistent with, or more stringent than, reductions 
mandated by this Act, and which requirements are effective prior to 
2012, the Administrator shall consider such binding State actions in 
making the final determination of allocation to such covered entities.

SEC. 163. ENSURING TARGET ADEQUACY.

    (a) In General.--Beginning 2 years after the date of enactment of 
this Act, the Under Secretary of Commerce for Oceans and Atmosphere 
shall review the amount of allowances established under section 124 no 
less frequently than biennially--
            (1) to re-evaluate the levels established by that section, 
        after taking into account the best available science and the 
        most currently available data; and
            (2) to re-evaluate the environmental and public health 
        impacts of specific concentration levels of greenhouse gases,
to determine whether the amount of those allowances continues to be 
consistent with the objective of the United Nations' Framework 
Convention on Climate Change of stabilizing levels of greenhouse gas 
emissions at a level that will prevent dangerous anthropogenic 
interference with the climate system.
    (b) Review of 2012 Levels.--The Under Secretary of Commerce for 
Oceans and Atmosphere shall specifically review in 2010 the level 
established under section 124(a)(1), and transmit a report on his 
reviews, together with any recommendations, including legislative 
recommendations, for modification of the levels, to the Committee on 
Commerce, Science, and Transportation and the Committee on Environment 
and Public Works of the Senate, and to the Committee on Science and 
Technology and the Committee on Energy and Commerce of the House of 
Representatives.

SEC. 164. INITIAL ALLOCATIONS FOR EARLY PARTICIPATION AND ACCELERATED 
              PARTICIPATION.

    Before providing any tradeable allowances under section 162, the 
Administrator shall allocate--
            (1) to any covered entity an amount of tradeable allowances 
        equivalent to the amount of greenhouse gas emission reductions 
        registered by that covered entity in the database if--
                    (A) the covered entity has requested to use the 
                registered reduction in the year of allocation;
                    (B) the reduction was registered prior to 2012; and
                    (C) the Administrator retires the unique serial 
                number assigned to the reduction under section 
                101(c)(3); and
            (2) to any covered entity that has entered into an 
        accelerated participation agreement under section 165, such 
        tradeable allowances as the Administrator has determined to be 
        appropriate under that section.

SEC. 165. BONUS FOR ACCELERATED PARTICIPATION.

    (a) In General.--If a covered entity executes an agreement with the 
Administrator under which it agrees to reduce its level of greenhouse 
gas emissions to a level no greater than the level of its greenhouse 
gas emissions for calendar year 1990 by the year 2012, then, for the 6-
year period beginning with calendar year 2012, the Administrator 
shall--
            (1) provide additional tradeable allowances to that entity 
        when allocating allowances under section 164 in order to 
        recognize the additional emission reductions that will be 
        required of the covered entity;
            (2) allow that entity to satisfy 20 percent (in addition to 
        the amount authorized under section 144(a)) of its requirements 
        under section 121 by any combination of--
                    (A) submitting tradeable allowances from another 
                nation's market in greenhouse gas emissions under the 
                conditions described in section 144(a)(1);
                    (B) submitting a registered net increase in 
                sequestration, as registered in the database, adjusted, 
                if necessary, to comply with the accounting standards 
                and methods described in section 144(c); and
                    (C) submitting a greenhouse gas emission reduction 
                (other than a registered net increase in sequestration) 
                that was registered in the database by a person that is 
                not a covered entity.
    (b) Termination.--An entity that executes an agreement described in 
subsection (a) may terminate the agreement at any time.
    (c) Failure To Meet Commitment.--If an entity that executes an 
agreement described in subsection (a) fails to achieve the level of 
emissions to which it committed by calendar year 2012, including 
through termination under subsection (b)--
            (1) its requirements under section 121 shall be increased 
        by the amount of any tradeable allowances provided to it under 
        subsection (a)(1) of this section; and
            (2) any tradeable allowances submitted thereafter shall be 
        counted first against the increase in those requirements.

              TITLE II--CLIMATE CHANGE CREDIT CORPORATION

SEC. 201. ESTABLISHMENT.

    (a) In General.--The Climate Change Credit Corporation (in this 
title referred to as the ``Corporation'') is established as a nonprofit 
corporation without stock. The Corporation shall not be considered to 
be an agency or establishment of the United States Government.
    (b) Applicable Laws.--The Corporation shall be subject to the 
provisions of this Act and, to the extent consistent with this Act, to 
the District of Columbia Business Corporation Act.
    (c) Board of Directors.--The Corporation shall have a board of 
directors of 5 individuals who are citizens of the United States, of 
whom 1 shall be elected annually by the board to serve as chairman. No 
more than 3 members of the board serving at any time may be affiliated 
with the same political party. The members of the board shall be 
appointed by the President of the United States, by and with the advice 
and consent of the Senate, and shall serve for terms of 5 years.

SEC. 202. PURPOSES AND FUNCTIONS.

    (a) Trading.--The Corporation--
            (1) shall receive and manage tradeable allowances allocated 
        to it under section 161(a)(2);
            (2) shall buy and sell tradeable allowances, whether 
        allocated to it under that section or obtained by purchase, 
        trade, or donation from other entities; and
            (3) may not retire tradeable allowances unused.
    (b) Use of Tradeable Allowances and Proceeds.--
            (1) In general.--The Corporation shall use the tradeable 
        allowances, and proceeds derived from its trading activities in 
        tradeable allowances, to reduce costs borne by consumers as a 
        result of the greenhouse gas reduction requirements of this 
        Act. The reductions--
                    (A) may be obtained by buy-down, subsidy (including 
                through the Low-Income Home Energy Assistance Act of 
                1981, part A of title IV of the Energy Conservation and 
                Production Act, or the provision of financial 
                assistance to promote the availability of reasonably-
                priced electricity in off-grid rural regions in which 
                electricity prices exceed 150 percent of the national 
                average), negotiation of discounts, consumer rebates, 
                or otherwise;
                    (B) shall be, as nearly as possible, equitably 
                distributed across all regions of the United States; 
                and
                    (C) may include arrangements for preferential 
                treatment to consumers who can least afford any such 
                increased costs.
            (2) Transition assistance to dislocated workers and 
        communities.--The Corporation shall allocate a percentage of 
        the proceeds derived from its trading activities in tradeable 
        allowances to provide transition assistance to dislocated 
        workers and communities. Transition assistance may take the 
        form of--
                    (A) grants to employers, employer associations, and 
                representatives of employees--
                            (i) to provide training, adjustment 
                        assistance, and employment services to 
                        dislocated workers; and
                            (ii) to make income-maintenance and needs-
                        related payments to dislocated workers; and
                    (B) grants to State and local governments to assist 
                communities in attracting new employers or providing 
                essential local government services.
            (3) Phase-out of transition assistance.--The percentage 
        allocated by the Corporation under paragraph (2)--
                    (A) shall be 20 percent for 2012; and
                    (B) shall be reduced by 2 percentage points each of 
                the next 10 years thereafter.
            (4) Technology deployment programs.--The Corporation shall 
        establish and carry out a program, through direct grants, 
        revolving loan programs, or other financial measures, to 
        provide support for the deployment of technology to assist in 
        compliance with this Act by distributing the proceeds from no 
        less than 10 percent of the total allowances allocated to it 
        for each year. The support shall include the following:
                    (A) Coal gasification combined-cycle and geological 
                carbon storage program.--The Corporation shall 
                establish and carry out a program, through direct 
                grants, to provide incentives for the repowering of 
                existing facilities or construction of new facilities 
                producing electricity or other products from coal 
                gasification combined-cycle plants that capture and 
                geologically store at least 90 percent of the carbon 
                dioxide produced at the facility in accordance with 
                requirements established by the Administrator to ensure 
                the permanence of the storage and that such storage 
                will not cause or contribute to significant adverse 
                effects on public health or the environment. The 
                Corporation shall ensure that no less than 20 percent 
                of the funding under this program is distributed to 
                rural electric cooperatives.
                    (B) Agricultural programs.--The Corporation shall 
                establish and carry out a program, through direct 
                grants, revolving loan programs, or other financial 
                measures, to provide incentives for greenhouse gas 
                emissions reductions or net increases in sequestration 
                on agricultural lands. The program shall include 
                incentives for--
                            (i) production of wind energy on 
                        agricultural lands;
                            (ii) agricultural management practices that 
                        achieve verified, incremental increases in net 
                        carbon sequestration, in accordance with the 
                        requirements established by the Administrator 
                        under section 144(c); and
                            (iii) production of renewable fuels that, 
                        after consideration of the energy needed to 
                        produce such fuels, result in a net reduction 
                        in greenhouse gas emissions.
            (5) Adaptation assistance for fish and wildlife habitat.--
        The Corporation shall fund efforts to strengthen and restore 
        habitat that improve the ability of fish and wildlife to adapt 
        successfully to climate change. The Corporation shall deposit 
        the proceeds from no less than 10 percent of the total 
        allowances allocated to it in the wildlife restoration fund 
        subaccount known as the Wildlife Conservation and Restoration 
        Account established under section 3 of the Pittman-Robertson 
        Wildlife Restoration Act (16 U.S.C. 669b). Amounts deposited in 
        the subaccount under this paragraph shall be available without 
        further appropriation for obligation and expenditure under that 
        Act.
            (6) Large-scale aquatic ecosystems.--The Corporation shall 
        use 25 percent of the total allowances allocated to it for each 
        fiscal year for projects to restore--
                    (A) large-scale freshwater aquatic ecosystems, such 
                as the Great Lakes and the Everglades; and
                    (B) large-scale estuarine ecosystems, such as 
                Chesapeake Bay, California Bay Delta, Coastal 
                Louisiana, Long Island Sound, and Puget Sound.
            (7) Operations of board.--The Corporation shall provide 
        funding for the operations of the Board.

                        TITLE III--MISCELLANEOUS

SEC. 301. NOAA REPORT ON CLIMATE CHANGE EFFECTS; PREPARATION 
              ASSISTANCE.

    The Coastal Zone Management Act of 1972 (16 U.S.C. 1451 et seq.) is 
amended by adding at the end the following:

                 ``report on effects of climate change

    ``Sec. 320.  (a) In General.--The Secretary shall report to the 
Congress not later than 2 years after the date of enactment of this 
section, and every 5 years thereafter, on the possible and projected 
impacts of climate change on--
            ``(1) oceanic and coastal ecosystems, including marine fish 
        and wildlife and their habitat, and the commercial and 
        recreational fisheries and tourism industries associated with 
        them; and
            ``(2) coastal communities, including private residential 
        and commercial development and public infrastructure in the 
        coastal zone.
    ``(b) Contents.--Each report under this section shall include 
information regarding--
            ``(1) the impacts that may be due to climate change that 
        have occurred as of the date of the submission of the report; 
        and
            ``(2) the projected future impacts of climate change.
    ``(c) Impacts.--The impacts reported on under subsection (b) shall 
include any--
            ``(1) increases in sea level;
            ``(2) increases in storm activity and intensity;
            ``(3) increases in floods, droughts, and other extremes of 
        weather;
            ``(4) increases in the temperature of the air and the water 
        on oceanic and coastal ecosystems, with a particular focus on 
        vulnerable fisheries and ecosystems; and
            ``(5) changes in the acidity of the ocean surface 
        associated with an increase in concentration of carbon dioxide 
        in the atmosphere.

                ``climate change preparation assistance

    ``Sec. 321.  (a) In General.--The Secretary shall provide technical 
assistance to each coastal State that has an approved coastal zone 
management plan under this title, to assist such States in preparing 
persons living within their coastal zones to adapt to climate change.
    ``(b) Identification of Affected Areas and Adaptations.--In 
carrying out this section, the Secretary shall--
            ``(1) identify the projected impacts of climate change to 
        which persons located in coastal zones may need to adapt, 
        including--
                    ``(A) increases in sea level;
                    ``(B) increases in storm activity and intensity; 
                and
                    ``(C) increases in floods, droughts, and other 
                extremes of weather;
            ``(2) identify the specific coastal areas of the United 
        States, and the public and private development in coastal 
        communities and the natural resources of the coastal zone, that 
        are vulnerable to the impacts identified under paragraph (1);
            ``(3) identify the various adaptation measures that may be 
        used to protect the areas and resources identified under 
        paragraph (2) from the impacts identified under paragraph (1); 
        and
            ``(4) estimate the costs of the adaptation measures 
        identified under paragraph (3).''.

SEC. 302. ADAPTATION TECHNOLOGIES.

    (a) In General.--The Director of the Office of Science and 
Technology Policy shall establish a program on adaptation technologies 
as part of the Climate Technology Challenge Program. The Director shall 
perform an assessment of the climate change technological needs of 
various regions of the country. This assessment shall be provided to 
the Committee on Commerce, Science, and Transportation of the Senate 
and the Committee on Science and Technology of the House of 
Representatives within 6 months after the date of enactment of this 
Act.
    (b) Regional Estimates.--The Director of the Office of Science and 
Technology Policy, in consultation with the Secretaries of 
Transportation, Homeland Security, Agriculture, Housing and Urban 
Development, Health and Human Services, Defense, Interior, Energy, and 
Commerce, the Administrator of the Environmental Protection Agency, the 
Director of United States Geological Survey, and other such Federal 
offices as the Director considers necessary, along with relevant State 
agencies, shall perform 6 regional infrastructure cost assessments 
covering the United States, and a national cost assessment, to provide 
estimates of the range of costs that should be anticipated for 
adaptation to the impacts of climate change. The Director shall develop 
those estimates for low, medium, and high probabilities of climate 
change and its potential impacts. The assessments shall be provided to 
the Committee on Commerce, Science, and Transportation of the Senate 
and the Committee on Science and Technology of the House of 
Representatives within 1 year after the date of enactment of this Act.
    (c) Adaptation Plan.--
            (1) In general.--Within 6 months after the date of 
        enactment of this Act, the Secretary of Commerce shall submit a 
        climate change adaptation plan for the United States to the 
        Congress. The adaptation plan shall be based upon assessments 
        performed by the United Nations Intergovernmental Panel on 
        Climate Change, those as required by the 1990 Global Change 
        Research Act, and any other scientific peer-reviewed regional 
        assessments.
            (2) Required components.--The adaptation plan shall 
        include--
                    (A) a prioritized list of vulnerable systems and 
                regions;
                    (B) coordination requirements between Federal, 
                State, and local governments to ensure that key public 
                infrastructure, safety, health, and land use planning 
                and control issues are addressed;
                    (C) coordination requirements among the Federal 
                Government, industry, and communities;
                    (D) an assessment of climate change science 
                research needs including probabilistic assessments as 
                an aid to planning;
                    (E) an assessment of climate change technology 
                needs; and
                    (F) regional and national costs assessments for the 
                range of costs that should be anticipated for adapting 
                to the impacts of climate change.

SEC. 303. MITIGATING CLIMATE CHANGE'S IMPACTS ON THE POOR.

    (a) In General.--The Secretary shall conduct research on the impact 
of climate change on low-income populations everywhere in the world. 
The research shall--
            (1) include an assessment of the adverse impact of climate 
        change on low-income populations in the United States and on 
        developing countries;
            (2) identify appropriate climate change adaptation measures 
        and programs for developing countries and low-income 
        populations and assess the impact of those measures and 
        programs on low-income populations;
            (3) identify appropriate climate change mitigation 
        strategies and programs for developing countries and low-income 
        populations and assess the impact of those strategies and 
        programs on developing countries and on low-income populations 
        in the United States; and
            (4) include an estimate of the costs of developing and 
        implementing those climate change adaptation and mitigation 
        programs.
    (b) Report.--Within 1 year after the date of enactment of this Act, 
the Secretary shall transmit a report on the research conducted under 
subsection (a) to the Committee on Commerce, Science, and 
Transportation and the Committee on Environment and Public Works of the 
Senate, and to the Committee on Science and Technology and the 
Committee on Energy and Commerce of the House of Representatives.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary $2,000,000 to carry out the research 
required by subsection (a).

SEC. 304. WILDLIFE CONSERVATION.

    (a) Funding for Climate Change Impact Mitigation Planning.--Section 
3(c) of the Pittman-Robertson Wildlife Restoration Act (16 U.S.C. 
669b(c)) is amended by adding at the end the following:
            ``(4) Climate change impact mitigation plans.--Amounts 
        deposited in the Wildlife Conservation and Restoration Account 
        under section 202(b)(5) of the Climate Stewardship and Economic 
        Security Act of 2007--
                    ``(A) may be used by States to provide relevant 
                information, training, monitoring, and other assistance 
                to develop climate change impact mitigation plans and 
                integrate them into State Comprehensive Wildlife 
                Conservation Strategies; and
                    ``(B) shall be used by States to implement climate 
                change impact mitigation plans integrated into 
                Comprehensive Wildlife Conservation Strategies.''.
    (b) Conforming Amendment.--Section 3(a)(2) of the Pittman-Robertson 
Wildlife Restoration Act (16 U.S.C. 669b(a)(2)) is amended in the 
second sentence by inserting ``(in addition to amounts deposited under 
section 202(b)(5) of the Climate Stewardship and Economic Security Act 
of 2007)'' after ``Wildlife Conservation and Restoration Account''.
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