[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1177 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 1177

To amend the Clean Air Act to establish a national uniform multiple air 
    pollutant regulatory program for the electric generating sector.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 20, 2007

    Mr. Carper (for himself, Mr. Sununu, Mr. Gregg, Mr. Dodd, Mrs. 
Feinstein, Mrs. Lincoln, Mr. Lieberman, and Ms. Collins) introduced the 
 following bill; which was read twice and referred to the Committee on 
                      Environment and Public Works

_______________________________________________________________________

                                 A BILL


 
To amend the Clean Air Act to establish a national uniform multiple air 
    pollutant regulatory program for the electric generating sector.

    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 ``Clean Air Planning Act of 2007''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds that--
            (1) in 1992, the Unites States became a signatory to the 
        United Nations Framework Convention on Climate Change, done at 
        New York on May 9, 1992, in recognition of the need to begin to 
        reverse the adverse effects of global warming by decreasing 
        greenhouse gas emission levels to 1990 levels;
            (2) fossil fuel-fired electric generating facilities, 
        consisting of facilities fueled by coal, fuel oil, and natural 
        gas, produce nearly \2/3\ of the electricity generated in the 
        United States;
            (3) fossil fuel-fired electric generating facilities 
        produce approximately 67 percent of the total sulfur dioxide 
        emissions, 23 percent of the total nitrogen oxides emissions, 
        40 percent of the total carbon dioxide emissions, and 40 
        percent of the total mercury emissions, in the United States;
            (4)(A) in 1977, in amending the Clean Air Act (42 U.S.C. 
        7401 et seq.), Congress sought to prevent adverse impacts 
        caused by manmade pollution on national parks and wilderness 
        areas designated as class I areas under section 162(a) of that 
        Act (42 U.S.C. 7472(a));
            (B) as of the date of enactment of this Act--
                    (i) many class I areas are impaired by haze 
                pollution;
                    (ii) the ecosystems of many class I areas are 
                impacted by deposits of acidic and toxic compounds; and
                    (iii) the air quality of many class I areas fails 
                to meet national ambient air quality standards; and
            (C)(i) fossil-fuel fired electric generating units are the 
        major source of air pollution impacting class I areas; and
            (ii) proposed new fossil-fuel fired electric generating 
        units threaten to increase air pollution in class I areas 
        throughout the United States;
            (5)(A) on implementing an acid rain program in 1990, the 
        Administrator of the Environmental Protection Agency (referred 
        to in this subsection as the ``Administrator'') overestimated 
        the actual cost of sulfur dioxide permits by more than a factor 
        of 5; and
            (B) after years of carrying out the program, the 
        Administrator acknowledged that ``independent studies show that 
        real life experiences with the program reveal greater cost 
        savings than initially expected, due in large part to the 
        efficiencies achieved through emissions trading'';
            (6)(A) nearly \3/4\ of all powerplant boilers in operation 
        on the date of enactment of this Act are more than 30 years 
        old, and most continue to operate without modern pollution 
        control technology; and
            (B) those older powerplants release approximately 99 
        percent of the sulfur dioxide, 98 percent of the nitrogen 
        oxides, and 91 percent of the carbon dioxide emitted from all 
        powerplants;
            (7)(A) many electric generating facilities have been exempt 
        from the emission limitations applicable to new units based on 
        the expectation that over time the units would be retired or 
        updated with new pollution control equipment; but
            (B) many of the exempted units continue to operate and emit 
        pollutants at relatively high rates;
            (8) according to the analysis by the Administrator of the 
        rule of the Administrator entitled the ``Clean Air Interstate 
        Rule'' (70 Fed. Reg. 25162 (May 12, 2005)), the majority of the 
        1,168 outdated coal-fired powerplant boilers in operation in 
        the eastern United States on the date of enactment of this Act 
        will operate without sulfur dioxide scrubbers and advanced 
        nitrogen oxide controls even after the implementation of that 
        rule is completed in 2020, such that--
                    (A) 858 plants will operate without sulfur dioxide 
                scrubbers; and
                    (B) 915 powerplants will operate without advanced 
                nitrogen oxide controls;
            (9) according to the Energy Outlook for 2006 of the Energy 
        Information Administration, carbon dioxide emissions from 
        electric generating units in the Unites States have increased 
        by 32 percent during the period of 1990 through 2006;
            (10) the deployment by the electric utility sector of zero- 
        and low-emitting generation technologies should be accelerated 
        given the increase in carbon dioxide emissions from the 
        electric utility sector described in paragraph (9);
            (11) the ability of owners of electric generating 
        facilities to plan effectively for the future is impeded by the 
        uncertainties surrounding future environmental regulatory 
        requirements that are imposed inefficiently on a piecemeal 
        basis;
            (12) many owners of electric generating units have failed--
                    (A) to install best available control technology 
                for emissions reductions; and
                    (B) to retire the units, as anticipated by Congress 
                in the new source review provisions of the prevention 
                of significant deterioration and nonattainment programs 
                of the Clean Air Act (42 U.S.C. 7401 et seq.);
            (13) according to the Administrator, many owners of 
        electric generating units carried out projects to extend the 
        economic lives of the units without upgrading the emission 
        controls of the units to best available control technology 
        levels;
            (14) according to the National Energy Technology Laboratory 
        of the Department of Energy--
                    (A) as of the date of enactment of this Act, 159 
                new coal-fired electric generating units are proposed 
                to be constructed, which would produce 96 gigawatts of 
                new electric generating capacity; and
                    (B) if the units described in subparagraph (A) are 
                constructed, the units would produce--
                            (i) an incremental increase of 500,000,000 
                        tons of carbon dioxide per year from the 
                        production by the power sector in the United 
                        States as in existence on the date of enactment 
                        of this Act; and
                            (ii) an estimated 30,000,000,000 additional 
                        tons of carbon dioxide over the course of the 
                        useful lives of the units (assuming a lifespan 
                        of 60 years);
            (15) total emissions of carbon dioxide from the United 
        States should be on a reduction pathway to achieve a 60 percent 
        to 80 percent reduction from current levels by 2050;
            (16) pollution from electric generating facilities in 
        existence on the date of enactment of this Act can be reduced 
        through the adoption of modern technologies and practices;
            (17) a report of the Congressional Budget Office, dated 
        September 19, 2006, concluded that--
                    (A) relying exclusively on research and development 
                funding is not the most effective strategy for reducing 
                greenhouse gas emissions; and
                    (B) combining research and development funding with 
                a gradually-increasing limitation on emissions is a 
                more cost-effective approach;
            (18)(A) agriculture can be part of the solution to reducing 
        greenhouse gas emissions;
            (B) less productive agricultural land can be reforested 
        with carbon dioxide-consuming trees;
            (C) farming practices can be improved to increase the 
        absorption and retention of carbon in agricultural soils;
            (D) biomass from agricultural sources (including corn and 
        grass) could be used to produce biofuels that can take the 
        place of high-carbon fossil fuels used in transportation and 
        power generation; and
            (E) many of the farming practices and land use changes 
        involved in achieving those reductions have multiple benefits, 
        including--
                    (i) improving soil, water, and air quality;
                    (ii) increasing wildlife habitat; and
                    (iii) providing additional recreational 
                opportunities; and
            (19) States and regions have increasingly adopted programs 
        to address carbon dioxide emissions from electric generating 
        facilities, and Federal regulations relating to carbon dioxide 
        emissions should take those programs into consideration.
    (b) Purposes.--The purposes of this Act are--
            (1) to protect and preserve the environment and safeguard 
        public health by ensuring that substantial emission reductions 
        are achieved at fossil fuel-fired electric generating 
        facilities;
            (2) to reduce significantly the quantities of mercury, 
        carbon dioxide, sulfur dioxide, and nitrogen oxides that enter 
        the environment as a result of the combustion of fossil fuels;
            (3) to ensure that air quality of national parks and all 
        other class I areas (as designated by section 162(a) of the 
        Clean Air Act (42 U.S.C. 7472(a))) impacted by emissions from 
        fossil-fuel fired electric generating units is significantly 
        improved by 2016, the year in which the National Park System 
        celebrates its 100th anniversary;
            (4) to encourage the development and use of renewable 
        energy;
            (5) to internalize the cost of protecting the values of 
        public health, air, land, and water quality;
            (6) to provide a period of environmental regulatory 
        stability for owners and operators of electric generating 
        facilities so as to promote improved management of existing 
        assets and new capital investments;
            (7) to achieve emission reductions from electric generating 
        facilities in a cost-effective manner;
            (8) to establish a mandatory cap-and-trade system for the 
        electric power sector that is part of an economy-wide national 
        greenhouse gas trading market;
            (9) to provide for the future integration of additional 
        sectors of the economy into such a greenhouse gas trading 
        market; and
            (10) to establish a regulatory system that, by 2050, will 
        allow for a reduction in United States greenhouse gas emissions 
        to a level of approximately 20 percent to 40 percent of levels 
        of emissions as of the date of enactment of this Act.

SEC. 3. INTEGRATED AIR QUALITY PLANNING FOR THE ELECTRIC GENERATING 
              SECTOR.

    The Clean Air Act (42 U.S.C. 7401 et seq.) is amended by adding at 
the end the following:

     ``TITLE VII--INTEGRATED AIR QUALITY PLANNING FOR THE ELECTRIC 
                           GENERATING SECTOR

     ``TITLE VII--INTEGRATED AIR QUALITY PLANNING FOR THE ELECTRIC 
                           GENERATING SECTOR

``Sec. 701. Definitions.
``Sec. 702. National pollutant tonnage limitations.
``Sec. 703. Nitrogen oxide trading program.
``Sec. 704. Mercury program.
``Sec. 705. Carbon dioxide allowance trading program.
``Sec. 706. Distribution of allowances between auctions and 
                            allocations; nature of allowances.
``Sec. 707. Auction of allowances.
``Sec. 708. Climate Action Trust Fund.

``SEC. 701. DEFINITIONS.

    ``In this title:
            ``(1) Affected unit.--
                    ``(A) Carbon dioxide.--
                            ``(i) In general.--The term `affected 
                        unit', with respect to carbon dioxide, means a 
                        fossil fuel-fired electric generating facility 
                        (including a cogeneration facility) that--
                                    ``(I) on or after January 1, 1985, 
                                served as a generator with a nameplate 
                                capacity greater than 25 megawatts; and
                                    ``(II) produces electricity for 
                                sale.
                            ``(ii) Inclusion.--The term `affected 
                        unit', with respect to nuclear facilities, 
                        includes only incremental nuclear generation 
                        facilities.
                    ``(B) Mercury.--The term `affected unit', with 
                respect to mercury, means a coal-fired electric 
                generating facility (including a cogeneration facility) 
                that--
                            ``(i) on or after January 1, 1985, served 
                        as a generator with a nameplate capacity 
                        greater than 25 megawatts; and
                            ``(ii) produces electricity for sale.
                    ``(C) Nitrogen oxides.--The term `affected unit', 
                with respect to nitrogen oxides, means a fossil fuel-
                fired electric generating facility (including a 
                cogeneration facility) that--
                            ``(i) on or after January 1, 1985, served 
                        as a generator with a nameplate capacity 
                        greater than 25 megawatts; and
                            ``(ii) produces electricity for sale.
                    ``(D) Sulfur dioxide.--The term `affected unit', 
                with respect to sulfur dioxide, has the meaning given 
                the term in section 402.
            ``(2) Carbon dioxide allowance.--The term `carbon dioxide 
        allowance' means an authorization allocated by the 
        Administrator under this title to emit 1 ton of carbon dioxide 
        during or after a specified calendar year.
            ``(3) Cogeneration facility.--The term `cogeneration 
        facility' means a facility that--
                    ``(A) cogenerates--
                            ``(i) steam; and
                            ``(ii) electricity; and
                    ``(B) supplies, on a net annual basis, to any 
                utility power distribution system for sale--
                            ``(i) more than \1/3\ of the potential 
                        electric output capacity of the facility; and
                            ``(ii) more than 219,000 megawatt-hours of 
                        electrical output.
            ``(4) Covered unit.--The term `covered unit' means--
                    ``(A) an affected unit;
                    ``(B) with respect to incremental nuclear 
                generation, a nuclear generating unit; and
                    ``(C) a renewable energy unit.
            ``(5) Fossil fuel-fired.--The term `fossil fuel-fired', 
        with respect to an electric generating facility, means the 
        combustion of fossil fuel by the electric generating facility, 
        alone or in combination with any other fuel, in any case in 
        which the fossil fuel combusted comprises, or is projected to 
        comprise, more than 20 percent of the annual heat input of the 
        electric generating facility, on a Btu basis, during any 
        calendar year.
            ``(6) Fund.--The term `Fund' means the Climate Action Trust 
        Fund established by section 708(a)(1).
            ``(7) Greenhouse gas.--The term `greenhouse gas' means--
                    ``(A) carbon dioxide;
                    ``(B) methane;
                    ``(C) nitrous oxide;
                    ``(D) hydrofluorocarbons;
                    ``(E) perfluorocarbons; and
                    ``(F) sulfur hexafluoride.
            ``(8) Incremental nuclear generation.--The term 
        `incremental nuclear generation' means, as determined by the 
        Administrator and measured in megawatt hours, the difference 
        between--
                    ``(A) the quantity of electricity generated by a 
                nuclear generating unit in a calendar year; and
                    ``(B) the quantity of electricity generated by the 
                nuclear generating unit in calendar year 1990.
            ``(9) New unit.--The term `new unit' means an affected unit 
        that has operated for not more than 3 years and is not eligible 
        to receive--
                    ``(A) sulfur dioxide allowances under section 
                417(b);
                    ``(B) nitrogen oxide allowances under section 
                703(c)(2); or
                    ``(C) carbon dioxide allowances under section 
                705(d).
            ``(10) Nitrogen oxide allowance.--The term `nitrogen oxide 
        allowance' means an authorization allocated by the 
        Administrator under this title to emit 1 ton of nitrogen oxides 
        during or after a specified calendar year.
            ``(11) Nuclear generating unit.--The term `nuclear 
        generating unit' means an electric generating facility that--
                    ``(A) uses nuclear energy to supply electricity to 
                the electric power grid; and
                    ``(B) entered operation in calendar year 1990 or 
                earlier.
            ``(12) Renewable energy.--The term `renewable energy' means 
        electric energy generated from solar energy, wind, 
        hydroelectric energy, biomass, landfill gas, ocean energy 
        (including tidal, wave, current, and thermal energy), or 
        geothermal energy.
            ``(13) Sequestration.--The term `sequestration' means the 
        action of sequestering carbon by--
                    ``(A) enhancing a natural carbon sink (such as 
                through afforestation); or
                    ``(B)(i) capturing the carbon dioxide emitted from 
                a fossil fuel-based energy system; and
                    ``(ii)(I) storing the carbon in a geologic 
                formation for not less than 300 years in a manner that 
                prevents any release of the carbon dioxide in a 
                quantity greater than 1 percent of the total quantity 
                so stored; or
                    ``(II) converting the carbon to a benign solid 
                material through a biological or chemical process.
            ``(14) Sulfur dioxide allowance.--The term `sulfur dioxide 
        allowance' has the meaning given the term `allowance' in 
        section 402.

``SEC. 702. NATIONAL POLLUTANT TONNAGE LIMITATIONS.

    ``(a) Sulfur Dioxide.--The annual tonnage limitation for emissions 
of sulfur dioxide from affected units in the United States shall be 
equal to--
            ``(1) for each of calendar years 2012 through 2014, 
        3,500,000 tons; and
            ``(2) for calendar year 2015 and each calendar year 
        thereafter, 2,000,000 tons.
    ``(b) Nitrogen Oxides.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Zone 1 state.--The term `Zone 1 State' means 
                the District of Columbia or any of the States of 
                Alabama, Arkansas, Connecticut, Delaware, Florida, 
                Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, 
                Maine, Maryland, Massachusetts, Michigan, Minnesota, 
                Mississippi, Missouri, New Hampshire, New Jersey, New 
                York, North Carolina, Ohio, Pennsylvania, Rhode Island, 
                South Carolina, Tennessee, Texas, Vermont, Virginia, 
                West Virginia, and Wisconsin.
                    ``(B) Zone 2 state.--The term `Zone 2 State' means 
                any State within the 48 contiguous States that is not a 
                Zone 1 State.
            ``(2) Applicability.--
                    ``(A) Zone 1 prohibition.--
                            ``(i) In general.--Beginning on January 1, 
                        2012, it shall be unlawful for an affected unit 
                        in a Zone 1 State to emit a total amount of 
                        nitrogen oxides during a year in excess of the 
                        number of nitrogen oxide allowances held for 
                        the affected unit for that year by the owner or 
                        operator of the affected unit.
                            ``(ii) Limitation.--Only nitrogen oxide 
                        allowances under paragraph (3)(A) shall be held 
                        in order to meet the requirements of clause 
                        (i).
                    ``(B) Zone 2 prohibition.--
                            ``(i) In general.--Beginning on January 1, 
                        2012, it shall be unlawful for an affected unit 
                        in a Zone 2 State to emit a total amount of 
                        nitrogen oxides during a year in excess of the 
                        number of nitrogen oxide allowances held for 
                        the affected unit for that year by the owner or 
                        operator of the affected unit.
                            ``(ii) Limitation.--Only nitrogen oxide 
                        allowances under paragraph (3)(B) shall be held 
                        in order to meet the requirements of clause 
                        (i).
            ``(3) Limitations on total emissions.--
                    ``(A) Zone 1 limitations.--The Administrator shall 
                allocate an annual tonnage limitation for emissions of 
                nitrogen oxides from affected units in the Zone 1 
                States in an amount equal to--
                            ``(i) for each of calendar years 2012 
                        through 2014, 1,390,000 tons; and
                            ``(ii) for calendar year 2015 and each 
                        calendar year thereafter, 1,300,000 tons.
                    ``(B) Zone 2 limitations.--The Administrator shall 
                allocate an annual tonnage limitation for emissions of 
                nitrogen oxides from affected units in the Zone 2 
                States in an amount equal to--
                            ``(i) for each of calendar years 2012 
                        through 2014, 400,000 tons; and
                            ``(ii) for calendar year 2015 and each 
                        calendar year thereafter, 320,000 tons.
    ``(c) Mercury.--The emission of mercury from affected units shall 
be limited in accordance with section 704.
    ``(d) Carbon Dioxide.--
            ``(1) In general.--The annual tonnage limitation for 
        emissions of carbon dioxide from affected units in the United 
        States shall be equal to, as determined by the Administrator 
        based on certified and quality-assured continuous emissions 
        monitoring data for carbon dioxide reported to the 
        Administrator by affected units in accordance with this Act--
                    ``(A) for each of calendar years 2012 through 2014, 
                the quantity of emissions emitted from affected units 
                in calendar year 2006;
                    ``(B) for calendar year 2015, the quantity of 
                emissions emitted from affected units in calendar year 
                2001;
                    ``(C) for each of calendar years 2016 through 2019, 
                the aggregate quantity of emissions emitted from 
                affected units during the calendar year that is 1 
                percent less than the aggregate quantity of emissions 
                from affected units allowed pursuant to this section 
                during the preceding calendar year; and
                    ``(D) for calendar year 2020 and each calendar year 
                thereafter, the aggregate quantity of emissions emitted 
                during the calendar year that is 1.5 percent less than 
                the aggregate quantity of emissions from affected units 
                allowed pursuant to this section during the preceding 
                calendar year.
            ``(2) Additional limitations.--For calendar year 2030 and 
        each calendar year thereafter, in accordance with subsection 
        (e), the Administrator shall take into consideration the 
        practicability of increasing the reduction in emissions of 
        carbon dioxide required for the calendar year to at least 3 
        percent less than the aggregate quantity of emissions emitted 
        during the preceding calendar year.
    ``(e) Review of Annual Tonnage Limitations and Mercury Emissions 
Requirements.--
            ``(1) Determination by administrator.--Not later than 10 
        years after the date of enactment of this title and every 10 
        years thereafter, the Administrator shall determine--
                    ``(A) after considering impacts on human health, 
                the environment, the economy, and costs, whether 1 or 
                more of the annual tonnage limitations should be 
                revised; and
                    ``(B) whether the mercury emission requirements 
                under section 704 should be revised in accordance with 
                the risk standards described in section 112(f)(2).
            ``(2) Determination not to revise.--If the Administrator 
        determines under paragraph (1) that no annual tonnage 
        limitation or mercury emission requirement should be revised, 
        the Administrator shall publish in the Federal Register--
                    ``(A) a notice of the determination; and
                    ``(B) the reasons for the determination.
            ``(3) Determination to revise.--If the Administrator 
        determines under paragraph (1) that 1 or more of the annual 
        tonnage limitations or mercury emissions requirements should be 
        revised, the Administrator shall publish in the Federal 
        Register--
                    ``(A) not later than 10 years and 180 days after 
                the date of enactment of this title, proposed 
                regulations implementing the revisions; and
                    ``(B) not later than 11 years and 180 days after 
                the date of enactment of this title, final regulations 
                implementing the revisions.
            ``(4) Administration.--The duty of the Administrator to 
        make a determination under paragraph (1) shall be--
                    ``(A) considered to be a nondiscretionary duty;
                    ``(B) enforceable through a citizen suit under 
                section 304; and
                    ``(C) subject to rulemaking procedures and judicial 
                review under section 307.
            ``(5) Requirement.--No revision of an annual tonnage 
        limitation or mercury emission requirement under this 
        subsection shall result in a limitation or emission requirement 
        that is less stringent than an existing applicable requirement 
        under this title.
    ``(f) Reduction of Emissions From Specified Affected Units.--
Notwithstanding the annual tonnage limitations and mercury emissions 
requirements established under this section, the Federal Government or 
a State government may require that emissions from a specified affected 
unit be reduced.
    ``(g) General Enforcement.--
            ``(1) In general.--It shall be unlawful for any individual 
        or entity subject to this title to violate any requirement or 
        prohibition under this title.
            ``(2) Treatment of excess emissions.--In calculating any 
        penalty for violation of this title, each ton of emissions of 
        sulfur dioxide, nitrogen oxides, mercury, or a greenhouse gas 
        emitted by a covered unit during a calendar year in excess of 
        the allowances held for use by the covered unit for the 
        calendar year shall be considered to be a separate violation of 
        the applicable limitation under this title.

``SEC. 703. NITROGEN OXIDE TRADING PROGRAM.

    ``(a) Regulations.--
            ``(1) In general.--Not later than January 1, 2010, the 
        Administrator shall promulgate regulations to establish for 
        affected units in the United States a nitrogen oxide allowance 
        trading program.
            ``(2) Requirements.--Regulations promulgated under 
        paragraph (1) shall establish requirements for the allowance 
        trading program under this section, including requirements 
        concerning--
                    ``(A)(i) the generation, allocation, issuance, 
                recording, tracking, transfer, and use of nitrogen 
                oxide allowances; and
                    ``(ii) the public availability of all information 
                concerning the activities described in clause (i) that 
                is not confidential;
                    ``(B) compliance with subsection (e)(1);
                    ``(C) the monitoring and reporting of emissions 
                under paragraphs (2) and (3) of subsection (e); and
                    ``(D) excess emission penalties under subsection 
                (e)(4).
            ``(3) Mixed fuel, cogeneration facilities and combined heat 
        and power facilities.--The Administrator shall promulgate such 
        regulations as the Administrator determines to be necessary to 
        ensure the equitable issuance of allowances to--
                    ``(A) facilities that use more than 1 energy source 
                to produce electricity; and
                    ``(B) facilities that produce electricity in 
                addition to another service or product.
    ``(b) New Unit Reserves.--
            ``(1) Establishment.--For each calendar year, based on 
        projections of electricity output from new units, the 
        Administrator, in consultation with the Secretary of Energy, 
        shall establish by regulation a reserve of nitrogen oxide 
        allowances to be set aside for use by new units in Zone 1 
        States, and a reserve of nitrogen oxide allowances to be set 
        aside for use by new units in Zone 2 States, that is not less 
        than 5 percent of the total allowances allocated to affected 
        units for the calendar year.
            ``(2) Unused allowances.--For each calendar year, the 
        Administrator shall reallocate, to all affected units, any 
        unused nitrogen oxide allowances from the new unit reserve 
        established under paragraph (1) in the proportion that--
                    ``(A) the number of allowances allocated to each 
                affected unit for the calendar year; bears to
                    ``(B) the number of allowances allocated to all 
                affected units for the calendar year.
    ``(c) Nitrogen Oxide Allocations.--
            ``(1) Timing of allocations.--The Administrator shall 
        allocate nitrogen oxide allowances to affected units by not 
        later than December 31 of calendar year 2008 and each calendar 
        year thereafter, for the fourth calendar year that begins after 
        that December 31.
            ``(2) Allocations to affected units that are not new 
        units.--
                    ``(A) Zone 1 states.--The Administrator shall 
                allocate, to each affected unit in a Zone 1 State that 
                is not a new unit, a quantity of nitrogen oxide 
                allowances that is equal to the product obtained by 
                multiplying--
                            ``(i) the quantity of nitrogen oxide 
                        allowances available for allocation under 
                        paragraph (3)(A); and
                            ``(ii) the quotient obtained by dividing--
                                    ``(I) the annual average quantity 
                                of electricity generated by the unit 
                                during the most recent 3-calendar year 
                                period for which data are available, 
                                updated each calendar year and measured 
                                in megawatt hours; and
                                    ``(II) the total of the average 
                                quantities described in subclause (I) 
                                with respect to all affected units in 
                                all Zone 1 States.
                    ``(B) Zone 2 states.--The Administrator shall 
                allocate, to each affected unit in a Zone 2 State that 
                is not a new unit, a quantity of nitrogen oxide 
                allowances that is equal to the product obtained by 
                multiplying--
                            ``(i) the quantity of nitrogen oxide 
                        allowances available for allocation under 
                        paragraph (3)(B); and
                            ``(ii) the quotient obtained by dividing--
                                    ``(I) the annual average quantity 
                                of electricity generated by the unit 
                                during the most recent 3-calendar year 
                                period for which data are available, 
                                updated each calendar year and measured 
                                in megawatt hours; and
                                    ``(II) the total of the average 
                                quantities described in subclause (I) 
                                with respect to all affected units in 
                                all Zone 2 States.
            ``(3) Quantity to be allocated.--
                    ``(A) Zone 1 states.--For each calendar year, the 
                quantity of nitrogen oxide allowances allocated under 
                paragraph (2)(A) to affected units that are not new 
                units shall be equal to the difference between--
                            ``(i) the annual tonnage limitation for 
                        emissions of nitrogen oxides from affected 
                        units specified in section 702(b)(3)(A) for the 
                        calendar year; and
                            ``(ii) the quantity of nitrogen oxide 
                        allowances placed in the new unit reserve 
                        established under subsection (b) for the 
                        calendar year.
                    ``(B) Zone 2 states.--For each calendar year, the 
                quantity of nitrogen oxide allowances allocated under 
                paragraph (2)(B) to affected units that are not new 
                units shall be equal to the difference between--
                            ``(i) the annual tonnage limitation for 
                        emissions of nitrogen oxides from affected 
                        units specified in section 702(b)(3)(B) for the 
                        calendar year; and
                            ``(ii) the quantity of nitrogen oxide 
                        allowances placed in the new unit reserve 
                        established under subsection (b) for the 
                        calendar year.
            ``(4) Adjustment of allocations.--If, for any calendar 
        year, the total quantities of allowances allocated under 
        paragraph (2) are not equal to the applicable quantities 
        determined under paragraph (3), the Administrator shall adjust 
        the quantities of allowances allocated to affected units that 
        are not new units on a pro-rata basis so that the quantities 
        are equal to the applicable quantities determined under 
        paragraph (3).
            ``(5) Allocation to new units.--
                    ``(A) Methodology.--The Administrator shall 
                promulgate regulations to establish a methodology for 
                allocating nitrogen oxide allowances to new units.
                    ``(B) Quantity of nitrogen oxide allowances 
                allocated.--The Administrator shall determine the 
                quantity of nitrogen oxide allowances to be allocated 
                to each new unit based on the projected emissions from 
                the new unit.
            ``(6) Allowance not a property right.--A nitrogen oxide 
        allowance--
                    ``(A) is not a property right; and
                    ``(B) may be terminated or limited by the 
                Administrator.
            ``(7) No judicial review.--An allocation of nitrogen 
        allowances by the Administrator under this subsection shall not 
        be subject to judicial review.
    ``(d) Nitrogen Oxide Allowance Transfer System.--
            ``(1) Use of allowances.--The regulations promulgated under 
        subsection (a)(1) shall--
                    ``(A) prohibit the use (but not the transfer in 
                accordance with paragraph (3)) of any nitrogen oxide 
                allowance before the calendar year for which the 
                allowance is allocated;
                    ``(B) provide that unused nitrogen oxide allowances 
                may be carried forward and added to nitrogen oxide 
                allowances allocated for subsequent years; and
                    ``(C) provide that unused nitrogen oxide allowances 
                may be transferred by--
                            ``(i) the person to which the allowances 
                        are allocated; or
                            ``(ii) any person to which the allowances 
                        are transferred.
            ``(2) Use by persons to which allowances are transferred.--
        Any person to which nitrogen oxide allowances are transferred 
        under paragraph (1)(C)--
                    ``(A) may use the nitrogen oxide allowances in the 
                calendar year for which the nitrogen oxide allowances 
                were allocated, or in a subsequent calendar year, to 
                demonstrate compliance with subsection (e)(1); or
                    ``(B) may transfer the nitrogen oxide allowances to 
                any other person for the purpose of demonstration of 
                that compliance.
            ``(3) Certification of transfer.--A transfer of a nitrogen 
        oxide allowance shall not take effect until a written 
        certification of the transfer, authorized by a responsible 
        official of the person making the transfer, is received and 
        recorded by the Administrator.
            ``(4) Permit requirements.--An allocation or transfer of 
        nitrogen oxide allowances to an affected unit shall, after 
        recording by the Administrator, be considered to be part of the 
        federally enforceable permit of the affected unit under this 
        Act, without a requirement for any further review or revision 
        of the permit.
    ``(e) Compliance and Enforcement.--
            ``(1) In general.--For calendar year 2012 and each calendar 
        year thereafter, the operator of each affected unit shall 
        surrender to the Administrator a quantity of nitrogen oxide 
        allowances that is equal to the total tons of nitrogen oxides 
        emitted by the affected unit during the calendar year.
            ``(2) Monitoring system.--The Administrator shall 
        promulgate regulations requiring--
                    ``(A) operation, reporting, and certification of 
                continuous emissions monitoring systems to accurately 
                measure the quantity of nitrogen oxides that is emitted 
                from each affected unit; and
                    ``(B) verification and reporting of nitrogen oxides 
                emissions at each affected unit.
            ``(3) Reporting.--
                    ``(A) In general.--Not less often than quarterly, 
                the owner or operator of an affected unit shall submit 
                to the Administrator a report on the monitoring of 
                emissions of nitrogen oxides carried out by the owner 
                or operator in accordance with the regulations 
                promulgated under paragraph (2).
                    ``(B) Authorization.--Each report submitted under 
                subparagraph (A) shall be authorized by a responsible 
                official of the affected unit, who shall certify the 
                accuracy of the report.
                    ``(C) Public reporting.--The Administrator shall 
                make available to the public, through 1 or more 
                published reports and 1 or more forms of electronic 
                media, data concerning the emissions of nitrogen oxides 
                from each affected unit.
            ``(4) Excess emissions.--
                    ``(A) In general.--The owner or operator of an 
                affected unit that emits nitrogen oxides in excess of 
                the nitrogen oxide allowances that the owner or 
                operator holds for use for the affected unit for the 
                calendar year shall--
                            ``(i) pay an excess emissions penalty 
                        determined under subparagraph (B); and
                            ``(ii) offset the excess emissions by at 
                        least an equal quantity in the following 
                        calendar year or such other period as the 
                        Administrator shall prescribe.
                    ``(B) Determination of excess emissions penalty.--
                The excess emissions penalty for nitrogen oxides shall 
                be equal to the product obtained by multiplying--
                            ``(i) the number of tons of nitrogen oxides 
                        emitted in excess of the total quantity of 
                        nitrogen oxide allowances held; and
                            ``(ii) 2 times the average price of a 
                        nitrogen oxide allowance for the Zone and 
                        calendar year in which the excess emissions 
                        occurred, as determined by the Administrator.
    ``(f) Treatment of Existing Programs.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        provisions of the rule of the Administrator entitled the `Clean 
        Air Interstate Rule' (70 Fed. Reg. 25162 (May 12, 2005)) (or a 
        successor regulation) providing for the establishment of an 
        annual emissions cap and trading program for oxides of nitrogen 
        shall terminate on the later of--
                    ``(A) the effective date of the regulations 
                promulgated under this section; and
                    ``(B) January 1, 2012.
            ``(2) Exception.--Notwithstanding paragraph (1), any 
        provision of the rule referred to in that paragraph (or a 
        successor regulation) relating to the establishment of a 
        seasonal ozone emission cap-and-trade program for nitrogen 
        oxides shall remain in full force and effect.

``SEC. 704. MERCURY PROGRAM.

    ``(a) Definition of Inlet Mercury.--In this section, the term 
`inlet mercury' means the quantity of mercury found--
            ``(1) in the as-fired coal of an affected unit; or
            ``(2) for an affected unit using coal that is subjected to 
        an advanced coal cleaning technology, in the as-mined coal of 
        the affected unit.
    ``(b) Annual Limitation for Certain Units.--On an annual average 
calendar year basis with respect to inlet mercury, an affected unit 
that commences operation on or after the date of enactment of this 
title shall be subject to the less stringent emission limitation of--
            ``(1) 90 percent capture of inlet mercury; or
            ``(2) an emission rate of 0.0060 lbs/GWh.
    ``(c) Annual Limitation for Existing Units.--An affected unit in 
operation on the date of enactment of this title shall be subject to 
the following emission limitations on an annual average calendar year 
basis with respect to inlet mercury:
            ``(1) Calendar years 2012 through 2014.--For the period 
        beginning on January 1, 2012, and ending on December 31, 2014, 
        the less stringent limitation of--
                    ``(A) 60 percent capture of inlet mercury; and
                    ``(B) an emission rate of 0.02 lbs/GWh.
            ``(2) Calendar year 2015 and thereafter.--For calendar year 
        2015 and each calendar year thereafter, the less stringent 
        limitation of--
                    ``(A) 90 percent capture of inlet mercury; and
                    ``(B) an emission rate of 0.0060 lbs/GWh.
    ``(d) Averaging Across Units.--An owner or operator of an affected 
unit may demonstrate compliance with the annual average limitations 
under subsections (b) and (c) by averaging emissions from all affected 
units at a single facility.
    ``(e) Monitoring System.--The Administrator shall promulgate 
regulations requiring--
            ``(1) operation, reporting, and certification of continuous 
        emissions monitoring systems to accurately measure the quantity 
        of mercury that is emitted from each affected unit; and
            ``(2) verification and reporting of mercury emissions at 
        each affected unit.
    ``(f) Reporting.--
            ``(1) In general.--Not less often than quarterly, the owner 
        or operator of an affected unit shall submit to the 
        Administrator a report on the monitoring of emissions of 
        mercury carried out by the owner or operator in accordance with 
        the regulations promulgated under subsection (e).
            ``(2) Authorization.--Each report submitted under paragraph 
        (1) shall be authorized by a responsible official of the 
        affected unit, who shall certify the accuracy of the report.
            ``(3) Public reporting.--The Administrator shall make 
        available to the public, through 1 or more published reports 
        and 1 or more forms of electronic media, data concerning the 
        emission of mercury from each affected unit.
    ``(g) Excess Emissions.--
            ``(1) In general.--The owner or operator of an affected 
        unit that emits mercury in excess of the emission limitation 
        described in subsection (b) or (c) shall pay an excess 
        emissions penalty determined under paragraph (2).
            ``(2) Determination of excess emissions penalty.--The 
        excess emissions penalty for mercury shall be an amount equal 
        to $50,000 for each pound of mercury emitted in excess of the 
        emission limitation described in subsection (b) or (c), as pro-
        rated for each fraction of a pound.

``SEC. 705. CARBON DIOXIDE ALLOWANCE TRADING PROGRAM.

    ``(a) Definitions.--In this section:
            ``(1) Allowance.--The term `allowance' means--
                    ``(A) a carbon dioxide allowance;
                    ``(B) an offset allowance; or
                    ``(C) an early reduction allowance.
            ``(2) Early reduction allowance.--The term `early reduction 
        allowance' means a carbon dioxide allowance issued under 
        subsection (g) for a project in the United States to reduce 
        emissions of greenhouse gases or to sequester greenhouse gases 
        that is carried out in calendar years 2000 through 2012.
            ``(3) Offset allowance.--The term `offset allowance' means 
        a carbon dioxide allowance issued under subsection (e) for a 
        project to reduce emissions of greenhouse gases or to sequester 
        greenhouse gases.
    ``(b) Regulations.--
            ``(1) In general.--Not later than 2 years after the date of 
        enactment of this title, the Administrator shall promulgate 
        regulations to establish an allowance trading program for 
        covered units in the United States.
            ``(2) Requirements.--Regulations promulgated under 
        paragraph (1) shall establish requirements for the carbon 
        dioxide allowance trading program under this section, including 
        requirements concerning--
                    ``(A) the allocation, issuance, and use of carbon 
                dioxide allowances;
                    ``(B) the reserve and allocation of carbon dioxide 
                allowances for new units and new renewable energy 
                units;
                    ``(C) the issuance, certification, and use of 
                offset allowances;
                    ``(D) the issuance, certification, and use of early 
                reduction allowances;
                    ``(E) the transfer of allowances;
                    ``(F) the monitoring, tracking, and reporting of 
                carbon dioxide emissions;
                    ``(G) compliance and enforcement; and
                    ``(H) the public availability of carbon dioxide 
                emissions information.
            ``(3) Interaction with department of agriculture.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the Administrator shall promulgate 
                all regulations relating to offsets under this title.
                    ``(B) Offsets.--The Administrator shall promulgate 
                regulations relating to offsets produced by 
                agricultural sequestration practices in consultation 
                with the Secretary of Agriculture.
    ``(c) New Unit Reserve.--
            ``(1) Establishment.--For each calendar year, based on 
        projections of electricity output from new units, the 
        Administrator, in consultation with the Secretary of Energy, 
        shall establish by regulation a reserve of carbon dioxide 
        allowances to be allocated to new covered units for the 
        calendar year.
            ``(2) Limitations.--
                    ``(A) In general.--The number of allowances 
                allocated under paragraph (1) during a calendar year 
                shall be not more than 2 percent of the total number of 
                allowances allocated to covered units for the calendar 
                year.
                    ``(B) Requirement.--Notwithstanding any other 
                provision of this Act, no allowance shall be allocated 
                to any coal-fired covered unit or any coal-fired new 
                unit unless that covered unit or new unit--
                            ``(i) is powered by a qualifying advanced 
                        clean coal technology (as defined pursuant to 
                        subsection (d)(2)); or
                            ``(ii) entered operation before January 1, 
                        2007.
            ``(3) Unused allowances.--For each calendar year, the 
        Administrator shall reallocate, to all covered units, any 
        unused carbon dioxide allowances from the new unit reserve 
        established under paragraph (1) in the proportion that--
                    ``(A) the number of allowances allocated to each 
                covered unit for the calendar year; bears to
                    ``(B) the number of allowances allocated to all 
                covered units for the calendar year.
    ``(d) Incentives for Clean Coal Technology.--
            ``(1) Establishment.--The Administrator shall establish by 
        regulation a reserve of carbon dioxide allowances to be set 
        aside during a calendar year to encourage the deployment of 
        clean coal technologies.
            ``(2) Defining qualifying advanced clean coal 
        technologies.--
                    ``(A) Definition of available technology.--In this 
                paragraph, the term `available technology' means any 
                coal combustion technology that achieves an output-
                based emission rate of, as applicable--
                            ``(i) 1,100 pounds of carbon dioxide per 
                        megawatt-hour; and
                            ``(ii) 0.0060 pounds of mercury per 
                        gigawatt-hour.
                    ``(B) Criteria and standards.--Not later than July 
                1, 2009, the Administrator shall establish criteria and 
                standards to define the term `qualifying advanced clean 
                coal technology' with respect to electric power 
                generation.
                    ``(C) Requirement.--In establishing criteria and 
                standards under subparagraph (B), the Administrator 
                shall ensure that the qualifying advanced clean coal 
                technologies represent an advance in available 
                technology, taking into consideration--
                            ``(i) net thermal efficiency;
                            ``(ii) measures to capture and sequester 
                        carbon dioxide; and
                            ``(iii) output-based emission rates for--
                                    ``(I) carbon dioxide;
                                    ``(II) sulfur dioxide;
                                    ``(III) oxides of nitrogen;
                                    ``(IV) filterable and condensable 
                                particulate matter; and
                                    ``(V) mercury.
                    ``(D) Review and revision.--
                            ``(i) In general.--Not later than July 1, 
                        2010, and each July 1 thereafter, the 
                        Administrator shall review and, if appropriate, 
                        revise the criteria and standards under 
                        subparagraph (B) based on technological 
                        advances during the preceding calendar year.
                            ``(ii) Notice and comment not required.--
                        Subject to clause (iii), after the initial 
                        criteria and standards are established under 
                        subparagraph (B), no subsequent review or 
                        revision under this subparagraph shall be 
                        subject to the notice and comment provisions of 
                        section 553 of title 5, United States Code.
                            ``(iii) Effect.--Nothing in clause (ii) 
                        precludes the application of the notice and 
                        comment provisions of section 553 of title 5, 
                        United States Code, as the Administrator 
                        determines to be practicable.
            ``(3) Quantity and distribution of allowances.--
                    ``(A) Quantity.--The Administrator shall set aside 
                by regulation an annual quantity of carbon dioxide 
                allowances for qualifying advanced clean coal 
                technologies equal to 3 percent of the annual tonnage 
                limitation established under section 702(d) for the 
                period beginning on January 1, 2012, and ending on 
                December 31, 2025.
                    ``(B) Distribution.--
                            ``(i) In general.--The Administrator shall 
                        establish by regulation a methodology for 
                        distributing the carbon dioxide allowances set 
                        aside under subparagraph (A) to encourage the 
                        deployment of advanced clean coal technologies.
                            ``(ii) Review and revision.--
                                    ``(I) In general.--Not later than 
                                July 1, 2009, and each July 1 
                                thereafter, the Administrator shall 
                                review and, if appropriate, revise the 
                                criteria and standards under clause (i) 
                                based on technological advances during 
                                the preceding calendar year.
                                    ``(II) Notice and comment not 
                                required.--Subject to subclause (III), 
                                after the initial criteria and 
                                standards are established under clause 
                                (i), no subsequent review or revision 
                                under this subparagraph shall be 
                                subject to the notice and comment 
                                provisions of section 553 of title 5, 
                                United States Code.
                                    ``(III) Effect.--Nothing in 
                                subclause (II) precludes the 
                                application of the notice and comment 
                                provisions of section 553 of title 5, 
                                United States Code, as the 
                                Administrator determines to be 
                                practicable.
            ``(4) Treatment of correspondence.--The correspondence of 
        the Office of Air Quality Planning and Standards addressing 
        best available control technology requirements for proposed 
        coal-fired power plant projects and dated December 13, 2005--
                    ``(A) shall be considered to be inconsistent with 
                section 169(3); and
                    ``(B) shall be treated as void and of no effect as 
                of the date of issuance of the correspondence.
    ``(e) Carbon Dioxide Allowance Allocation to Covered Units That Are 
Not New Units and Clean Coal Technology Reserve.--
            ``(1) Timing of allocations.--The Administrator shall 
        allocate carbon dioxide allowances to covered units that are 
        not new units--
                    ``(A) not later than December 31, 2008, for 
                calendar year 2012; and
                    ``(B) not later than December 31 of calendar year 
                2009 and each calendar year thereafter, for the fourth 
                calendar year that begins after that December 31.
            ``(2) Allocations.--
                    ``(A) In general.--The Administrator shall allocate 
                to each covered unit that is not a new unit a quantity 
                of carbon dioxide allowances that is equal to the 
                product obtained by multiplying--
                            ``(i) the quantity of carbon dioxide 
                        allowances available for allocation under 
                        subparagraph (B); and
                            ``(ii) the quotient obtained by dividing--
                                    ``(I) the annual average quantity 
                                of electricity generated by the unit 
                                during the most recent 3-calendar year 
                                period for which data are available, 
                                updated each calendar year and measured 
                                in megawatt hours; and
                                    ``(II) the total of the average 
                                quantities described in subclause (I) 
                                with respect to all such units.
                    ``(B) Quantity to be allocated.--For each calendar 
                year, the quantity of carbon dioxide allowances 
                allocated under subparagraph (A) to covered units that 
                are not new units shall be equal to the difference 
                between--
                            ``(i) the annual tonnage limitation for 
                        emissions of carbon dioxide from covered units 
                        specified in section 702(d) for the calendar 
                        year; and
                            ``(ii) the sum of--
                                    ``(I) the quantity of carbon 
                                dioxide allowances placed in the new 
                                unit reserve established under 
                                subsection (c) for the calendar year; 
                                and
                                    ``(II) the quantity of carbon 
                                dioxide allowances reserved to provide 
                                incentives for advanced clean coal 
                                technologies under subsection (d) for 
                                the calendar year.
                    ``(C) Requirement.--Notwithstanding any other 
                provision of this title, no allowance shall be 
                allocated to any coal-fired unit that was previously a 
                new unit unless the unit--
                            ``(i) is powered by a qualifying advanced 
                        clean coal technology (as defined pursuant to 
                        subsection (d)(2)); or
                            ``(ii) entered operation before January 1, 
                        2007.
    ``(f) Offset Allowances.--
            ``(1) Regulations.--Regulations promulgated pursuant to 
        subsection (b)(1) shall establish requirements for the 
        issuance, certification, and use of offset allowances for 
        greenhouse gas reduction or sequestration projects carried out 
        in the United States or any other country, including 
        requirements--
                    ``(A) that projects not cause or contribute to 
                adverse effects on human health or the environment;
                    ``(B) that projects result in greenhouse gas 
                reductions that are real, surplus, enforceable, 
                verifiable, permanent, and not used more than once, as 
                determined by the Administrator;
                    ``(C) for methodology for calculating the carbon 
                dioxide equivalent reductions attributable to projects;
                    ``(D) for the monitoring, reporting, and 
                verification of the greenhouse gas reductions from 
                projects; and
                    ``(E) for accounting principles used to quantify 
                the greenhouse gas reductions of projects that 
                require--
                            ``(i) the consideration of all greenhouse 
                        gas impacts of a project;
                            ``(ii) the consistent application of 
                        accounting principles;
                            ``(iii) transparency;
                            ``(iv) to the maximum extent practicable, 
                        accuracy; and
                            ``(v) the use of conservative assumptions 
                        in cases in which uncertainties require the use 
                        of assumptions.
            ``(2) State offset methods.--In promulgating regulations 
        pursuant to subsection (b)(1), the Administrator shall take 
        into consideration offset methods developed, as of the date of 
        enactment of this title, by the State of California or any 
        other State pursuant to the Regional Greenhouse Gas Initiative 
        or a similar regulatory program of comparable rigor, as 
        determined by the Administrator.
            ``(3) Approved categories of offset projects.--
                    ``(A) In general.--Greenhouse gas reduction or 
                sequestration projects from the following types of 
                operations and projects shall be eligible to create 
                offsets for use under this section:
                            ``(i) Landfill operations.
                            ``(ii) Agricultural manure management 
                        projects.
                            ``(iii) Agricultural soil sequestration 
                        projects.
                            ``(iv) Forest based projects, including 
                        conservation-based forest management projects, 
                        reforestation projects, and conservation 
                        projects.
                            ``(v) Reduction in emission of sulfur 
                        hexafluoride projects.
                            ``(vi) Energy efficiency projects.
                            ``(vii) Wastewater treatment facilities.
                            ``(viii) Coal mining operations.
                            ``(ix) Natural gas transmission and 
                        distribution systems.
                            ``(x) Electrical transmission and 
                        distribution systems.
                            ``(xi) Fossil fuel combustion at commercial 
                        and residential buildings.
                    ``(B) Protocols.--
                            ``(i) Initial protocols.--Not later than 
                        January 1, 2009, the Administrator shall 
                        develop specific offset protocols for at least 
                        a majority of the project types described in 
                        subparagraph (A), with priority given to 
                        project types with the greatest greenhouse gas 
                        reduction or sequestration potential, as 
                        determined by the Administrator.
                            ``(ii) Subsequent protocols.--Not later 
                        than January 1, 2010, the Administrator shall 
                        develop a specific offset protocol for each 
                        project type for which a protocol was not 
                        developed under clause (i).
            ``(4) Creation of additional categories of greenhouse gas 
        emissions reduction offset projects.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Administrator, by regulation, may create additional 
                categories of greenhouse gas emissions reduction or 
                sequestration offset projects for types of projects for 
                which the Administrator determines that compliance with 
                the regulations promulgated pursuant to subsection 
                (b)(1) is feasible.
                    ``(B) Exclusions.--Regulations promulgated pursuant 
                to subparagraph (A) shall not include any greenhouse 
                gas emission reduction or sequestration offset project 
                (or type of project) that affects--
                            ``(i) a motor vehicle (as defined in 
                        section 216);
                            ``(ii) a nonroad engine (as defined in 
                        section 216); or
                            ``(iii) a stationary source (as defined in 
                        section 302) that is not a covered unit.
            ``(5) Prohibition on use.--Notwithstanding paragraphs (3) 
        and (4), a greenhouse gas emissions reduction or sequestration 
        offset project shall not be eligible to receive an offset 
        credit for use under this section beginning on the date on 
        which the reduction or sequestration achieved by the project is 
        required by law (including regulations) or another legally 
        binding requirement.
    ``(g) Early Reduction Allowances.--
            ``(1) In general.--Not later than January 1, 2009, the 
        Administrator shall promulgate regulations for the issuance, 
        certification, and use of early reduction allowances for 
        greenhouse gas reduction or sequestration projects carried out 
        during calendar years 2000 through 2012.
            ``(2) Eligible projects.--A greenhouse gas reduction or 
        sequestration project shall be eligible for early reduction 
        allowances if the project--
                    ``(A) is carried out in the United States;
                    ``(B) meets the regulations promulgated by the 
                Administrator under paragraph (1) that the 
                Administrator determines to be applicable to the 
                project; and
                    ``(C) was reported--
                            ``(i) under section 1605(b) of the Energy 
                        Policy Act of 1992 (42 U.S.C. 13385(b));
                            ``(ii) under a voluntary climate change 
                        program of the Environmental Protection Agency, 
                        such as the Climate Leaders program; or
                            ``(iii) to a State or regional greenhouse 
                        gas registry.
            ``(3) Limitation.--The quantity of early reduction 
        allowances available for greenhouse gas reduction or 
        sequestration projects in calendar years 2000 through 2012 
        shall not exceed 10 percent of the carbon dioxide emission 
        tonnage limitation for calendar year 2012 under section 702(d).
    ``(h) Use and Transfer of Allowances.--
            ``(1) Use in other carbon dioxide allowance trading 
        programs.--
                    ``(A) In general.--Allowances may be used in any 
                other carbon dioxide allowance trading program that is 
                approved by the Administrator for use of the 
                allowances.
                    ``(B) Monitoring.--The Administrator shall review 
                each transfer of an allowance into or out of the 
                allowance trading program under this section.
            ``(2) Use before applicable calendar year.--Allowances may 
        not be used before the calendar year for which the allowance 
        was allocated.
            ``(3) Transfer.--
                    ``(A) In general.--Notwithstanding paragraph (2), 
                allowances may be transferred before the calendar year 
                for which the allowances were allocated.
                    ``(B) Limitation.--The transfer of an allowance 
                shall not take effect until receipt and recording by 
                the Administrator of a written certification of the 
                transfer, which is executed by an authorized official 
                of the person making the transfer.
            ``(4) Use by persons to which carbon dioxide allowances are 
        transferred.--Any person to which carbon dioxide allowances are 
        transferred under paragraph (3)(A) may use the carbon dioxide 
        allowances in the calendar year for which the carbon dioxide 
        allowances were allocated, or in a subsequent calendar year, to 
        demonstrate compliance with subsection (i)(1).
            ``(5) Permit requirements.--An allocation or transfer of 
        allowances to a covered unit shall be considered to be part of 
        the federally enforceable permit of the covered unit under this 
        Act, without a requirement for further review or revision of 
        the permit.
    ``(i) Compliance and Enforcement.--
            ``(1) In general.--For the period of calendar years 2012 
        and 2013, and for each 2-calendar-year period thereafter, the 
        owner of each covered unit shall surrender to the Administrator 
        a quantity of allowances that is equal to the total tons of 
        carbon dioxide emitted by the covered unit during the 2-
        calendar-year period.
            ``(2) Excess emissions.--
                    ``(A) In general.--The owner or operator of a 
                covered unit that emits carbon dioxide in excess of the 
                allowances that the owner or operator holds for use for 
                the covered unit for the 2-calendar-year period shall--
                            ``(i) pay an excess emissions penalty 
                        determined under subparagraph (B); and
                            ``(ii) offset the excess emissions by at 
                        least an equal quantity in the following 2-
                        calendar-year period or such other period as 
                        the Administrator shall prescribe.
                    ``(B) Determination of excess emissions penalty.--
                The excess emissions penalty for carbon dioxide shall 
                be equal to the product obtained by multiplying--
                            ``(i) the number of tons of carbon dioxide 
                        emitted in excess of the total quantity of 
                        allowances held; and
                            ``(ii) 2 times the average price of a 
                        carbon dioxide allowance for the 2-calendar-
                        year period in which the excess emissions 
                        occurred, as determined by the Administrator.
            ``(3) Monitoring system.--The Administrator shall 
        promulgate regulations requiring--
                    ``(A) operation, reporting, and certification of 
                continuous emissions monitoring systems to accurately 
                measure the quantity of carbon dioxide that is emitted 
                from each covered unit; and
                    ``(B) verification and reporting of carbon dioxide 
                emissions at each covered unit.
            ``(4) Reporting.--
                    ``(A) In general.--Not less often than quarterly, 
                the owner or operator of a covered unit shall submit to 
                the Administrator a report on the monitoring of 
                emissions of carbon dioxide carried out by the owner or 
                operator in accordance with the regulations promulgated 
                under paragraph (3).
                    ``(B) Authorization.--Each report submitted under 
                subparagraph (A) shall be authorized by a responsible 
                official of the covered unit, who shall certify the 
                accuracy of the report.
                    ``(C) Public reporting.--The Administrator shall 
                make available to the public, through 1 or more 
                published reports and 1 or more forms of electronic 
                media, data concerning the emission of carbon dioxide 
                from each covered unit.
    ``(j) Allowance Not a Property Right.--An allowance--
            ``(1) is not a property right; and
            ``(2) may be terminated or limited by the Administrator.
    ``(k) No Judicial Review.--An allocation or issuance of an 
allowance by the Administrator shall not be subject to judicial review.

``SEC. 706. DISTRIBUTION OF ALLOWANCES BETWEEN AUCTIONS AND 
              ALLOCATIONS; NATURE OF ALLOWANCES.

    ``(a) Distribution of Allowances Between Auctions and 
Allocations.--
            ``(1) In general.--For each calendar year, the total 
        quantity of allowances to be auctioned and allocated under this 
        title shall be equal to the annual tonnage limitation for 
        emissions of greenhouse gases from affected units specified in 
        section 702 for the calendar year.
            ``(2) Distribution.--The proportion of allowances to be 
        auctioned pursuant to section 707 and allocated pursuant to 
        section 705 for each calendar year beginning in calendar year 
        2012 shall be as follows:


        ``Percentages of Allowances To Be Auctioned and Allocated
------------------------------------------------------------------------
                                     Percentage to be     Percentage to
          Calendar year                  auctioned         be allocated
------------------------------------------------------------------------
2012.............................  18..................  82
2013.............................  21..................  79
2014.............................  24..................  76
2015.............................  27..................  73
2016.............................  30..................  70
2017.............................  33..................  67
2018.............................  36..................  64
2019.............................  39..................  61
2020.............................  42..................  58
2021.............................  45..................  55
2022.............................  48..................  52
2023.............................  51..................  49
2024.............................  54..................  46
2025.............................  57..................  43
2026.............................  60..................  40
2027.............................  63..................  37
2028.............................  66..................  34
2029.............................  69..................  41
2030.............................  72..................  28
2031.............................  75..................  25
2032.............................  80..................  20
2033.............................  85..................  15
2034.............................  90..................  10
2035.............................  95..................  5
2036 and thereafter..............  100.................  0
------------------------------------------------------------------------

    ``(b) Nature of Allowances.--An allowance--
            ``(1) shall not be considered to be a property right; and
            ``(2) may be terminated or limited by the Administrator.
    ``(c) No Judicial Review.--An auction or allocation of an allowance 
by the Administrator shall not be subject to judicial review.

``SEC. 707. AUCTION OF ALLOWANCES.

    ``(a) In General.--Not later than 2 years after the date of 
enactment of this title, the Administrator shall promulgate regulations 
establishing a procedure for the auction of the quantity of allowances 
specified in section 706(a) for each calendar year.
    ``(b) Deposit of Proceeds.--The Administrator shall deposit all 
proceeds from auctions conducted under this section in the Fund for use 
in accordance with section 708.

``SEC. 708. CLIMATE ACTION TRUST FUND.

    ``(a) Establishment and Administration.--
            ``(1) In general.--There is established in the general fund 
        of the Treasury a fund, to be known as the `Climate Action 
        Trust Fund', consisting of--
                    ``(A) such amounts as are deposited in the Fund 
                under paragraph (2); and
                    ``(B) any interest earned on investment of amounts 
                in the Fund under paragraph (4).
            ``(2) Transfers to fund.--The Secretary of the Treasury 
        shall deposit in the Fund amounts equivalent to the proceeds 
        received by the Administrator as a result of the conduct of 
        auctions of allowances under section 707.
            ``(3) Expenditures from fund.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Administrator shall use amounts in the Fund to carry 
                out the programs described in this section.
                    ``(B) Administrative expenses.--Of amounts in the 
                Fund, there shall be made available to pay the 
                administrative expenses necessary to carry out this 
                title, as adjusted for changes beginning on January 1, 
                2007, in accordance with the Consumer Price Index for 
                All-Urban Consumers published by the Department of 
                Labor--
                            ``(i) $90,000,000 for each fiscal year, to 
                        the Administrator; and
                            ``(ii) $30,000,000 for each fiscal year, to 
                        the Secretary of Agriculture.
            ``(4) Investment of amounts.--
                    ``(A) In general.--The Secretary of Treasury shall 
                invest such portion of the Fund as is not, in the 
                judgment of the Administrator, required to meet current 
                withdrawals.
                    ``(B) Interest-bearing obligations.--Investments 
                may be made only in interest-bearing obligations of the 
                United States.
                    ``(C) Acquisition of obligations.--For the purpose 
                of investments under paragraph (1), obligations may be 
                acquired--
                            ``(i) on original issue at the issue price; 
                        or
                            ``(ii) by purchase of outstanding 
                        obligations at the market price.
                    ``(D) Sale of obligations.--Any obligation acquired 
                by the Fund may be sold by the Administrator at the 
                market price.
                    ``(E) Return of proceeds to fund.--The interest on, 
                and the proceeds from the sale or redemption of, any 
                obligations held in the Fund shall be credited to, and 
                form a part of, the Fund.
            ``(5) Regulations.--Not later than 2 years after the date 
        of enactment of this title, the Administrator, in consultation 
        with the Secretary of Energy and the Secretary of Agriculture, 
        shall promulgate such regulations as are necessary to 
        administer the Fund in accordance with this section.
    ``(b) Uses of Fund.--
            ``(1) No further appropriation.--The Administrator shall 
        distribute amounts in the Fund for use in accordance with this 
        section, without further appropriation.
            ``(2) Regulations.--
                    ``(A) In general.--Not later than 3 years after the 
                date of enactment of this title, the Administrator, in 
                consultation with the Secretary of Energy and the 
                Secretary of Agriculture, shall promulgate regulations 
                establishing an innovative low- and zero-emitting 
                carbon technologies program, a clean coal technologies 
                program, a research and analysis program, and an energy 
                efficiency technology program that include--
                            ``(i) the funding mechanisms that will be 
                        available to support the development and 
                        deployment of the technologies addressed by 
                        each program, including low-interest loans, 
                        loan guarantees, grants, and financial awards; 
                        and
                            ``(ii) the criteria for the methods by 
                        which proposals will be funded to develop and 
                        deploy the technologies.
                    ``(B) Revision of criteria.--Not later than January 
                1, 2014, and every 3 years thereafter, the 
                Administrator shall review and, if appropriate, revise, 
                based on technological advances, the criteria referred 
                to in subparagraph (A)(ii).
                    ``(C) Adaptation assistance for workers and 
                communities.--Not later than 3 years after the date of 
                enactment of this title, the Administrator, in 
                consultation with the Secretary of Energy, shall 
                promulgate regulations governing the distribution of 
                funds pursuant to subsection (g).
            ``(3) Progress reports.--Not later than January 1, 2015, 
        and every 5 years thereafter, the Administrator shall prepare 
        and submit to the President and Congress a report containing an 
        evaluation of the effectiveness of the distribution of funds 
        under this section.
    ``(c) Innovative Low- and Zero-Emitting Carbon Electricity 
Generation Technologies Program.--
            ``(1) In general.--For each calendar year, of amounts 
        remaining in the Fund after making the expenditures described 
        in subsection (a)(3)(B), the Administrator shall use not more 
        than 35 percent to support the development and deployment of 
        low- and zero-emitting carbon electricity generation 
        technologies.
            ``(2) Regulations.--The regulations establishing the 
        innovative low- and zero-emitting carbon electricity generation 
        technologies program referred to in subsection (b)(2)(A) shall 
        establish the areas of technology development that will qualify 
        for funding under that program, including technologies for the 
        generation of electricity from renewable energy sources.
    ``(d) Clean Coal Technologies Program.--
            ``(1) In general.--For each calendar year, of amounts 
        remaining in the Fund after making the expenditures described 
        in subsection (a)(3)(B), the Administrator shall use not more 
        than 20 percent to support the development and deployment of 
        clean coal technologies.
            ``(2) Regulations.--The criteria and standards established 
        pursuant to section 705(d)(2) to define the term `clean coal 
        technology' shall establish criteria for use of a technology in 
        the clean coal technologies program under subsection (b)(2)(A).
    ``(e) Energy Efficiency Technology Program.--
            ``(1) In general.--For each calendar year, of amounts 
        remaining in the Fund after making the expenditures described 
        in subsection (a)(3)(B), the Administrator shall use not more 
        than 15 percent to support the development and deployment of 
        technologies for increasing the efficiency of energy end use in 
        buildings and industry.
            ``(2) Regulations.--The regulations establishing the energy 
        efficiency program referred to in subsection (b)(2)(A) shall 
        establish the areas of technology development that will qualify 
        for funding under the energy efficiency program.
    ``(f) Federal Funding of Research Into and Development of Energy 
and Efficiency Technologies, Carbon Lifecycle Analysis, and 
Agricultural Practices.--For each calendar year, the Administrator 
shall use not more than 10 percent of the amounts in the Fund to 
support research into and development of--
            ``(1) energy and efficiency technologies;
            ``(2) carbon lifecycle analyses of energy generation 
        technologies and practices; and
            ``(3) agricultural practices that sequester or reduce 
        atmospheric greenhouse gases.
    ``(g) Adaptation Assistance for Workers and Communities Negatively 
Affected by Climate Change and Greenhouse Gas Regulation.--For each 
calendar year, of amounts remaining in the Fund after making the 
expenditures described in subsection (a)(3)(B), the Administrator shall 
use at least 10 percent to provide adaptation assistance for workers 
and communities--
            ``(1) to address local or regional impacts of climate 
        change and the impacts, if any, from greenhouse gas regulation, 
        including by providing assistance to displaced workers and 
        disproportionately affected communities; and
            ``(2) to mitigate impacts of climate change and the 
        impacts, if any, from greenhouse gas regulation on low-income 
        energy consumers.
    ``(h) Fish and Wildlife Habitat.--
            ``(1) In general.--For each calendar year, of amounts 
        remaining in the Fund after making the expenditures described 
        in subsection (a)(3)(B), the Administrator shall use at least 
        10 percent to mitigate the impacts of climate change on fish 
        and wildlife habitat in accordance with this subsection.
            ``(2) Wildlife restoration fund.--
                    ``(A) In general.--For each calendar year, the 
                Administrator shall transfer not less than 70 percent 
                of the amounts made available under paragraph (1) to 
                the Federal aid to wildlife restoration fund 
                established under section 3(a)(1) of the Pittman-
                Robertson Wildlife Restoration Act (16 U.S.C. 
                669b(a)(1))--
                            ``(i) to carry out climate change impact 
                        mitigation actions pursuant to comprehensive 
                        wildlife conservation strategies; and
                            ``(ii) to provide relevant information, 
                        training, monitoring, and other assistance to 
                        develop climate change impact mitigation and 
                        adaptation plans and integrate the plans into 
                        State comprehensive wildlife conservation 
                        strategies.
                    ``(B) Availability.--Amounts transferred to the 
                Federal aid to wildlife restoration fund under this 
                paragraph shall--
                            ``(i) be available, without further 
                        appropriation, for obligation and expenditure; 
                        and
                            ``(ii) remain available until expended.
            ``(3) Protection of natural resources.--
                    ``(A) In general.--For each calendar year, the 
                Administrator, in consultation with the Secretary of 
                Agriculture, the Secretary of Commerce, the Chief of 
                Engineers, and State and national wildlife conservation 
                organizations, shall transfer not more than 30 percent 
                of the funds made available under paragraph (1) to the 
                Secretary of the Interior for use in carrying out 
                Federal and State programs and projects--
                            ``(i) to protect natural communities that 
                        are most vulnerable to climate change;
                            ``(ii) to restore and protect natural 
                        resources that directly guard against damages 
                        from climate change events; and
                            ``(iii) to restore and protect ecosystem 
                        services that are most vulnerable to climate 
                        change.
                    ``(B) Administration.--Amounts transferred to the 
                Secretary of the Interior under this paragraph shall--
                            ``(i) be available, without further 
                        appropriation, for obligation and expenditure;
                            ``(ii) remain available until expended;
                            ``(iii)(I) be obligated not later than 2 
                        years after the date of transfer; or
                            ``(II) if the amounts are not obligated in 
                        accordance with subclause (I), be transferred 
                        to the Federal aid to wildlife restoration fund 
                        for use in accordance with paragraph (2); and
                            ``(iv) supplement, and not supplant, the 
                        amount of Federal, State, and local funds 
                        otherwise expended to carry out programs and 
                        projects described in subparagraph (A).
                    ``(C) Programs and projects.--Programs and projects 
                for which funds may be used under this paragraph 
                include--
                            ``(i) Federal programs and projects--
                                    ``(I) to identify Federal land and 
                                water at greatest risk of being damaged 
                                or depleted by climate change;
                                    ``(II) to monitor Federal land and 
                                water to allow for early detection of 
                                impacts;
                                    ``(III) to develop adaptation 
                                strategies to minimize the damage; and
                                    ``(IV) to restore and protect 
                                Federal land and water at the greatest 
                                risk of being damaged or depleted by 
                                climate change;
                            ``(ii) Federal programs and projects to 
                        identify climate change risks and develop 
                        adaptation strategies for natural grassland, 
                        wetlands, migratory corridors, and other 
                        habitats vulnerable to climate change on 
                        private land enrolled in--
                                    ``(I) the wetlands reserve program 
                                established under subchapter C of 
                                chapter 1 of subtitle D of title XII of 
                                the Food Security Act of 1985 (16 
                                U.S.C. 3837 et seq.);
                                    ``(II) the grassland reserve 
                                program established under subchapter C 
                                of chapter 2 of subtitle D of title XII 
                                of that Act (16 U.S.C. 3838n et seq.); 
                                and
                                    ``(III) the wildlife habitat 
                                incentive program established under 
                                section 1240N of that Act (16 U.S.C. 
                                3839bb-1);
                            ``(iii) programs and projects under the 
                        North American Wetlands Conservation Act (16 
                        U.S.C. 4401 et seq.), the North American Bird 
                        Conservation Initiative, and the Neotropical 
                        Migratory Bird Conservation Act (16 U.S.C. 6101 
                        et seq.) to protect habitat for migratory birds 
                        that are vulnerable to climate change impacts;
                            ``(iv) programs and projects--
                                    ``(I) to identify coastal and 
                                marine resources (such as coastal 
                                wetlands, coral reefs, submerged 
                                aquatic vegetation, shellfish beds, and 
                                other coastal or marine ecosystems) at 
                                the greatest risk of being damaged by 
                                climate change;
                                    ``(II) to monitor those resources 
                                to allow for early detection of 
                                impacts;
                                    ``(III) to develop adaptation 
                                strategies;
                                    ``(IV) to protect and restore those 
                                resources; and
                                    ``(V) to integrate climate change 
                                adaptation requirements into State 
                                plans developed under the coastal zone 
                                management program established under 
                                the Coastal Zone Management Act of 1972 
                                (16 U.S.C. 1451 et seq.), the national 
                                estuary program established under 
                                section 320 of the Federal Water 
                                Pollution Control Act (33 U.S.C. 1330), 
                                the Coastal and Estuarine Land 
                                Conservation Program established under 
                                the fourth proviso of the matter under 
                                the heading `procurement, acquisition, 
                                and construction (including transfers 
                                of funds)' of title II of the 
                                Departments of Commerce, Justice, and 
                                State, the Judiciary, and Related 
                                Agencies Appropriations Act, 2002 (16 
                                U.S.C. 1456d), or other comparable 
                                State programs;
                            ``(v) programs and projects to conserve 
                        habitat for endangered species and species of 
                        conservation concern that are vulnerable to the 
                        impact of climate change;
                            ``(vi) programs and projects under the 
                        Forest Legacy Program established under section 
                        7 of the Cooperative Forestry Assistance Act 
                        (16 U.S.C. 2103c), to support State efforts to 
                        protect environmentally sensitive forest land 
                        through conservation easements to provide 
                        refuges for wildlife;
                            ``(vii) other Federal or State programs and 
                        projects identified by the heads of agencies 
                        described in subparagraph (A) as high 
                        priorities--
                                    ``(I) to protect natural 
                                communities that are most vulnerable to 
                                climate change;
                                    ``(II) to restore and protect 
                                natural resources that directly guard 
                                against damages from climate change 
                                events; and
                                    ``(III) to restore and protect 
                                ecosystem services that are most 
                                vulnerable to climate change;
                            ``(viii) to address climate change in 
                        Federal land use planning and plan 
                        implementation and to integrate climate change 
                        adaptation strategies into--
                                    ``(I) comprehensive conservation 
                                plans prepared under section 4(e) of 
                                the National Wildlife Refuge System 
                                Administration Act of 1966 (16 U.S.C. 
                                668dd(e));
                                    ``(II) general management plans for 
                                units of the National Park System;
                                    ``(III) resource management plans 
                                of the Bureau of Land Management; and
                                    ``(IV) land and resource management 
                                plans under the Forest and Rangeland 
                                Renewable Resources Planning Act of 
                                1974 (16 U.S.C. 1600 et seq.) and the 
                                National Forest Management Act of 1976 
                                (16 U.S.C. 1600 et seq.); and
                            ``(ix) projects to promote sharing of 
                        information on climate change wildlife impacts 
                        and mitigation strategies across agencies, 
                        including funding efforts to strengthen and 
                        restore habitat that improves the ability of 
                        fish and wildlife to adapt successfully to 
                        climate change through the Wildlife 
                        Conservation and Restoration Account 
                        established by section 3(a)(2) of the Pittman-
                        Robertson Wildlife Restoration Act (16 U.S.C. 
                        669b(a)(2)).''.

SEC. 4. NEW SOURCE REVIEW PROGRAM.

    Section 165 of the Clean Air Act (42 U.S.C. 7475) is amended by 
adding at the end the following:
    ``(f) Revisions to New Source Review Program.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Affected unit.--The term `affected unit' has 
                the meaning given the term in section 701.
                    ``(B) New source review program.--The term `new 
                source review program' means the program to carry out 
                this part and part D.
            ``(2) Performance standards.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), beginning January 1, 2020, and on 
                each January 1 thereafter, each affected unit that has 
                been in operation 40 or more years as of that January 
                1, and that operates for more than 500 hours per 
                calendar year, shall meet performance standards of--
                            ``(i) 2 lbs/MWh for sulfur dioxide; and
                            ``(ii) 1 lbs/MWh for nitrogen oxides.
                    ``(B) Exception.--
                            ``(i) In general.--Notwithstanding 
                        subparagraph (A), an affected unit that, as of 
                        January 1, 2020, is required to meet a more 
                        stringent performance standard than the 
                        applicable standard under subparagraph (A) 
                        shall continue to meet the more stringent 
                        standard.
                            ``(ii) Modification of affected units.--The 
                        requirements of this section shall not affect 
                        in any way any requirement under section 
                        111(a)(4), this part, or part D governing 
                        modifications of major stationary sources.
            ``(3) No effect on other requirements and retention of 
        state authority.--Nothing in this subsection affects--
                    ``(A) any State authority under section 116; or
                    ``(B) the obligation of any State or local 
                government or any major emitting facility to comply 
                with the requirements of this section.''.

SEC. 5. REVISIONS TO SULFUR DIOXIDE ALLOWANCE PROGRAM.

    (a) In General.--Title IV of the Clean Air Act (relating to acid 
deposition control) (42 U.S.C. 7651 et seq.) is amended by adding at 
the end the following:

``SEC. 417. REVISIONS TO SULFUR DIOXIDE ALLOWANCE PROGRAM.

    ``(a) Definitions.--In this section, the terms `affected unit' and 
`new unit' have the meanings given the terms in section 701.
    ``(b) Regulations.--Not later than January 1, 2008, the 
Administrator shall promulgate such revisions to the regulations to 
implement this title as the Administrator determines to be necessary to 
implement section 702(a).
    ``(c) New Unit Reserve.--
            ``(1) Establishment.--Subject to the annual tonnage 
        limitation for emissions of sulfur dioxide from affected units 
        specified in section 702(a), the Administrator shall establish 
        by regulation a reserve of allowances to be set aside for use 
        by new units.
            ``(2) Determination of quantity.--The Administrator, in 
        consultation with the Secretary of Energy, shall determine, 
        based on projections of electricity output for new units--
                    ``(A) not later than June 30, 2008, the quantity of 
                allowances required to be held in reserve for new units 
                for each of calendar years 2012 through 2014; and
                    ``(B) not later than June 30 of each fifth calendar 
                year thereafter, the quantity of allowances required to 
                be held in reserve for new units for the following 5-
                calendar year period.
            ``(3) Allocation.--
                    ``(A) Regulations.--The Administrator shall 
                promulgate regulations to establish a methodology for 
                allocating allowances to new units.
                    ``(B) No judicial review.--An allocation of 
                allowances by the Administrator under this subsection 
                shall not be subject to judicial review.
    ``(d) Existing Units.--
            ``(1) Allocation.--
                    ``(A) Regulations.--Subject to the annual tonnage 
                limitation for emissions of sulfur dioxide from 
                affected units specified in section 702(a), and subject 
                to the reserve of allowances for new units under 
                subsection (c), the Administrator shall promulgate 
                regulations to govern the allocation of allowances to 
                affected units that are not new units.
                    ``(B) Required elements.--The regulations shall 
                provide for--
                            ``(i) the allocation of allowances on a 
                        fair and equitable basis between affected units 
                        that received allowances under section 405 and 
                        affected units that are not new units and that 
                        did not receive allowances under that section, 
                        using for both categories of units the same or 
                        similar allocation methodology as was used 
                        under section 405; and
                            ``(ii) the pro-rata distribution of 
                        allowances to all units described in clause 
                        (i), subject to the annual tonnage limitation 
                        for emissions of sulfur dioxide from affected 
                        units specified in section 702(a).
            ``(2) Timing of allocations.--The Administrator shall 
        allocate allowances to affected units--
                    ``(A) not later than December 31, 2007, for 
                calendar years 2010 and 2011; and
                    ``(B) not later than December 31 of calendar year 
                2008 and each calendar year thereafter, for the fourth 
                calendar year that begins after that December 31.
            ``(3) No judicial review.--An allocation of allowances by 
        the Administrator under this subsection shall not be subject to 
        judicial review.''.
    (b) Definition of Allowance.--Section 402 of the Clean Air Act 
(relating to acid deposition control) (42 U.S.C. 7651a) is amended by 
striking paragraph (3) and inserting the following:
            ``(3) Allowance.--The term `allowance' means an 
        authorization, allocated by the Administrator to an affected 
        unit under this title, to emit, during or after a specified 
        calendar year, a quantity of sulfur dioxide determined by the 
        Administrator and specified in the regulations promulgated 
        under section 417(b).''.
    (c) Excess Emissions.--Section 411 of the Clean Air Act (relating 
to acid deposition control) (42 U.S.C. 7651j) is amended by striking 
subsections (a) and (b) and inserting the following:
    ``(a) In General.--The owner or operator of a new unit or an 
affected unit that emits sulfur dioxide in excess of the sulfur dioxide 
allowances that the owner or operator holds for use for the new unit or 
affected unit for the calendar year shall--
            ``(1) pay an excess emissions penalty determined under 
        subsection (b); and
            ``(2) offset the excess emissions by at least an equal 
        quantity in the following calendar year or such other period as 
        the Administrator shall prescribe.
    ``(b) Determination of Excess Emissions Penalty.--
            ``(1) In general.--The excess emissions penalty for sulfur 
        dioxide shall be equal to the product obtained by multiplying--
                    ``(A) the quantity of sulfur dioxide emitted in 
                excess of the total quantity of sulfur dioxide 
                allowances held; and
                    ``(B) 2 times the average price of a sulfur dioxide 
                allowance for the calendar year in which the excess 
                emissions occurred, as determined by the Administrator.
            ``(2) Treatment.--An excess emissions penalty under 
        paragraph (1)--
                    ``(A) shall be due and payable without demand to 
                the Administrator, in accordance with applicable 
                regulations promulgated by the Administrator, by not 
                later than 18 months after the date of enactment of the 
                Clean Air Planning Act of 2007; and
                    ``(B) shall not diminish the liability of the owner 
                or operator of the affected unit with respect to any 
                fine, penalty, or assessment applicable to the affected 
                unit for the same violation under any other provision 
                of this Act.''.
    (d) Technical Amendments.--
            (1) Title IV of the Clean Air Act (relating to noise 
        pollution) (42 U.S.C. 7641 et seq.)--
                    (A) is amended by redesignating sections 401 
                through 403 as sections 801 through 803, respectively; 
                and
                    (B) is redesignated as title VIII and moved to 
                appear at the end of that Act.
            (2) The table of contents for title IV of the Clean Air Act 
        (relating to acid deposition control) (42 U.S.C. prec. 7651) is 
        amended by adding at the end the following:

``Sec. 417. Revisions to sulfur dioxide allowance program.''.

SEC. 6. ENVIRONMENTAL PROTECTION AGENCY PROGRAM TO REDUCE CARBON 
              DIOXIDE FROM NEW COAL-FIRED ELECTRIC GENERATING UNITS.

    Section 111 of the Clean Air Act (42 U.S.C. 7411) is amended by 
adding at the end the following:
    ``(k) Standards of Performance for New Electric Generating Units.--
            ``(1) Standard of performance.--
                    ``(A) In general.--Each covered unit that commences 
                operation on or after January 1, 2015, shall meet the 
                following standards of performance:
                            ``(i) For each of calendar years 2015 
                        through 2025, an emission limitation of 1,100 
                        pounds of carbon dioxide per megawatt-hour or 
                        less.
                            ``(ii) For calendar year 2025 and each 
                        calendar year thereafter, an emission 
                        limitation of 285 pounds of carbon dioxide per 
                        megawatt-hour or less.
                    ``(B) Review and revision.--
                            ``(i) In general.--Not later than January 
                        1, 2015, and every 5 years thereafter, the 
                        Administrator shall complete a review of the 
                        standard of performance under subparagraph (A) 
                        (or a modified standard, if applicable) to 
                        determine whether the standard requires 
                        revision, based on the best available 
                        technological system of continuous emission 
                        reduction on the date on which the review is 
                        conducted.
                            ``(ii) Publication.--The Administrator 
                        shall publish each determination under clause 
                        (i) not later than the deadline for the 
                        determination under that clause.
                            ``(iii) Treatment.--A determination of the 
                        Administrator under clause (i) shall be 
                        considered to be a final agency action for 
                        purposes of section 307(b)(1).
            ``(2) Treatment of certain carbon dioxide.--Carbon dioxide 
        that is injected into a geological formation in a manner that 
        prevents any release of the carbon dioxide into the atmosphere 
        shall not be considered to be a carbon dioxide emission from an 
        electric generating unit for purposes of meeting an applicable 
        standard under paragraph (1).''.

SEC. 7. RELATIONSHIP TO OTHER LAW.

    (a) Regulation of Hazardous Air Pollutants.--Section 112(n)(1) of 
the Clean Air Act (42 U.S.C. 7412(n)(1)) is amended by striking 
subparagraph (A) and inserting the following:
                    ``(A) Regulations.--
                            ``(i) In general.--Not later than 18 months 
                        after the date of enactment of the Clean Air 
                        Planning Act of 2007, the Administrator shall 
                        promulgate regulations under this section 
                        limiting the emission from electric utility 
                        steam generating units of hazardous air 
                        pollutants, other than mercury, as the 
                        Administrator determines to be appropriate and 
                        necessary in accordance with the standards 
                        under this section, including subsections 
                        (b)(2) and (f).
                            ``(ii) Requirements.--The regulations under 
                        clause (i) shall--
                                    ``(I) require compliance with 
                                applicable standards as expeditiously 
                                as practicable, but not later than 3 
                                years after the effective date of the 
                                regulations; and
                                    ``(II) be in accordance with other 
                                applicable requirements under this 
                                section.
                            ``(iii) Effective date.--The regulations 
                        under clause (i) shall be effective on the date 
                        of promulgation of the regulations.''.
    (b) No Effect on Other Federal and State Requirements.--Except as 
otherwise specifically provided in this Act, nothing in this Act or an 
amendment made by this Act--
            (1) affects any permitting, monitoring, or enforcement 
        obligation of the Administrator of the Environmental Protection 
        Agency under the Clean Air Act (42 U.S.C. 7401 et seq.) or any 
        remedy provided under that Act;
            (2) affects any requirement applicable to, or liability of, 
        an electric generating facility under that Act;
            (3) requires a change in, affects, or limits any State law 
        that regulates electric utility rates or charges, including 
        prudence review under State law; or
            (4) precludes a State or political subdivision of a State 
        from adopting and enforcing any requirement for the control or 
        abatement of air pollution, except that a State or political 
        subdivision may not adopt or enforce any emission standard or 
        limitation that is less stringent than the requirements imposed 
        under that Act.
                                 <all>