[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1683 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 1683

  To amend the Internal Revenue Code of 1986 to reduce greenhouse gas 
emissions by requiring a Federal emission permit for the sale or use of 
      greenhouse gas emission substances, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 24, 2009

Mr. McDermott (for himself, Mr. Blumenauer, Mr. Larson of Connecticut, 
and Mr. Stark) introduced the following bill; which was referred to the 
Committee on Ways and Means, and in addition to the Committee on Energy 
    and Commerce, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to reduce greenhouse gas 
emissions by requiring a Federal emission permit for the sale or use of 
      greenhouse gas emission substances, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Clean Environment and Stable Energy 
Market Act of 2009''.

SEC. 2. GREENHOUSE GAS EMISSION SUBSTANCES.

    (a) In General.--The Internal Revenue Code of 1986 is amended by 
adding at the end the following:

            ``Subtitle L--Greenhouse Gas Emission Substances

``Sec. 9901. Condition precedent to sale or use of greenhouse gas 
                            emission substance.
``Sec. 9902. Federal emission permit.
``Sec. 9903. Definitions.
``Sec. 9904. Regulations.

``SEC. 9901. CONDITION PRECEDENT TO SALE OR USE OF GREENHOUSE GAS 
              EMISSION SUBSTANCE.

    ``(a) In General.--No covered person may sell any greenhouse gas 
emission substance except pursuant to a Federal emission permit for 
each carbon dioxide equivalent that the Administrator of the 
Environmental Protection Agency determines would be emitted from the 
combustion or other greenhouse gas emitting use of such substance.
    ``(b) Covered Person.--For purposes of this subtitle, the term 
`covered person' means--
            ``(1) in the case of coal (including lignite and peat) 
        produced from a mine in the United States, the producer of such 
        coal,
            ``(2) in the case of crude oil or petroleum products 
        received at a United States refinery, the operator of the 
        United States refinery,
            ``(3) in the case of any greenhouse gas emission substance 
        not described in paragraph (1) or (2) produced in the United 
        States, the producer of such substance, and
            ``(4) in the case of any greenhouse gas emission substance 
        entered into the United States for consumption, use, or 
        warehousing, the person entering such substance for 
        consumption, use, or warehousing.
    ``(c) Use Treated as Sale.--
            ``(1) In general.--If any person uses a greenhouse gas 
        emission substance before the first retail sale of such 
        substance, then such person shall be liable for the purchase of 
        a Federal emission permit under section 9902 in the same manner 
        as if such substance were sold at retail on the date of such 
        use by such person pursuant to a Federal emission permit.
            ``(2) Exemption for use in further manufacture.--Paragraph 
        (1) shall not apply to use of a greenhouse gas emission 
        substance as material in the manufacture or production of, or 
        as a component part of, another article to be manufactured or 
        produced by such person.
    ``(d) Exceptions.--Subsection (a) shall not apply to--
            ``(1) a greenhouse gas emission substance to be used for 
        noncombustion agricultural purposes, or
            ``(2) a greenhouse gas emission substance with respect to 
        which a Federal emission permit has previously been purchased.
    ``(e) Importation of Carbon-Intensive Goods.--
            ``(1) Greenhouse gas emission permit equivalency fees.--The 
        Secretary shall impose a greenhouse gas emission permit 
        equivalency fee on imports of carbon intensive goods that shall 
        be equivalent to the cost that domestic producers of comparable 
        carbon intensive goods incur as a result of--
                    ``(A) permit fees paid by covered persons for 
                greenhouse gas emission substances under this section, 
                and
                    ``(B) greenhouse gas emission permit equivalency 
                fees paid by importers of carbon intensive goods used 
                in the production of the comparable carbon intensive 
                goods in question.
            ``(2) Expiration.--Paragraph (1) and 6633(b) shall cease to 
        have effect at such time as and to the extent that--
                    ``(A) an international agreement requiring 
                countries that emit greenhouse gases and produce 
                carbon-intensive goods for international markets to 
                adopt equivalent measures comes into effect, and
                    ``(B) the country of export has implemented 
                equivalent measures, and the actions provided for by 
                paragraph (1) and 6633(b) are no longer appropriate.

``SEC. 9902. FEDERAL EMISSION PERMIT.

    ``(a) In General.--The Secretary shall, subject to subsection (d), 
issue Federal emission permits, as provided for in this subtitle. A 
Federal emission permit may only be obtained upon making payment to the 
Secretary.
    ``(b) Rules Relating to Permits.--For purposes of this subtitle--
            ``(1) Each Federal emission permit shall be denominated in 
        carbon dioxide equivalents.
            ``(2) A Federal emission permit may only be purchased at 
        the time a greenhouse gas emission substance is produced or 
        entered into the United States, as the case may be.
            ``(3) A Federal emission permit may not be sold, exchanged, 
        or otherwise transferred.
    ``(c) Permit Price.--
            ``(1) In general.--The Secretary, after consultation with 
        the Administrator of the Environmental Protection Agency and 
        the Secretary of Energy, shall establish the price of obtaining 
        a Federal emission permit for a calendar year based on a 
        determination of the dollar amount necessary to ensure that the 
        demand for permits does not exceed the greenhouse gas emission 
        allocations for such calendar year.
            ``(2) 5-year price schedule.--
                    ``(A) In general.--Not later than January 1, 2010, 
                and once every 5 years thereafter, the Secretary shall 
                publish a schedule of the prices determined under 
                paragraph (1) for obtaining a Federal emission permit 
                during any calendar year in the 5-calendar-year period 
                beginning 1 year after any such date.
                    ``(B) Modifications.--If in a given 5-year period--
                            ``(i) the Secretary reasonably expects to 
                        issue Federal emission permits that (in the 
                        aggregate) significantly exceed or fall short 
                        of the national limitation because of the price 
                        set by the Secretary (and not because of 
                        temporary fluctuations in the energy markets or 
                        the weather), and
                            ``(ii) sufficient time remains in such 
                        period,
                the Secretary shall establish a new schedule of prices 
                for the remaining years in such 5-year period. Such 
                schedule may not take effect until after 12 months 
                after the establishment of such schedule.
                    ``(C) Number of modifications permitted.--In the 
                first 5-year period, the Secretary may change the 
                schedule of prices under subparagraph (B) a maximum to 
                two times. In any ensuing 5-year period, the Secretary 
                may change the schedule of prices under subparagraph 
                (B) a maximum of once.
    ``(d) National Limitation.--
            ``(1) In general.--There is a national greenhouse gas 
        emission allocation limitation for any calendar year. Such 
        limitation for a calendar year shall be the sum of--
                    ``(A) the greenhouse gas emission allocations 
                specified in the table in paragraph (3) for such 
                calendar year reduced pursuant to paragraph (2) for 
                such calendar year, plus
                    ``(B) the additional allocation of Federal emission 
                permits issued by the Secretary for such calendar year 
                to the extent that applications for Federal emission 
                permits exceed the greenhouse gas emission allocations 
                specified in the table in paragraph (3) for such 
                calendar year.
            ``(2) Reduction required over remaining years.--After 
        issuing additional allocations under paragraph (1)(B) during 
        any 5-calendar-year period, the number of the greenhouse gas 
        emission allocations specified in the table in paragraph (3) 
        shall be reduced ratably the aggregate number of such 
        additional allocations over the years specified in such table 
        remaining after such period.
            ``(3) Annual economy-wide greenhouse gas emission 
        allocations.--The greenhouse gas emission allocations for a 
        calendar year are those specified in the following table:


----------------------------------------------------------------------------------------------------------------
                                                                                  United States Economy-Wide
                                                                             Greenhouse Gas Emission Allocations
                              ``Calendar Year                                   (in Millions of Carbon Dioxide
                                                                                         Equivalents)
----------------------------------------------------------------------------------------------------------------
2011                                                                                                    6835.29
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2012                                                                                                    6670.58
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2013                                                                                                    6505.87
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2014                                                                                                    6341.16
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2015                                                                                                    6176.45
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2016                                                                                                    6011.74
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2017                                                                                                    5847.03
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2018                                                                                                    5682.32
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2019                                                                                                    5517.61
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2020                                                                                                     5352.9
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2021                                                                                                    5110.99
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2022                                                                                                       4880
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2023                                                                                                     4659.5
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2024                                                                                                    4448.93
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2025                                                                                                    4247.89
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2026                                                                                                    4055.93
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2027                                                                                                    3872.64
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2028                                                                                                    3697.63
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2029                                                                                                    3530.54
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2030                                                                                                    3370.99
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2031                                                                                                    3218.66
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2032                                                                                                     3073.2
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2033                                                                                                    2934.33
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2034                                                                                                    2801.72
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2035                                                                                                    2675.11
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2036                                                                                                    2554.23
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2037                                                                                                     2438.8
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2038                                                                                                    2328.59
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2039                                                                                                    2223.36
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2040                                                                                                    2122.89
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2041                                                                                                    2026.95
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2042                                                                                                    1935.36
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2043                                                                                                     1847.9
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2044                                                                                                    1764.39
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2045                                                                                                    1684.66
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2046                                                                                                    1608.53
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2047                                                                                                    1535.84
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2048                                                                                                    1466.43
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2049                                                                                                    1400.16
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2050                                                                                                   1336.89.
----------------------------------------------------------------------------------------------------------------

    ``(e) Report.--Not later than January 1, 2012, and annually 
thereafter, the Secretary shall publish a report describing the extent 
to which the United States greenhouse gas emission allocations 
specified under subsection (d) are being achieved. Such report shall 
include--
            ``(1) an explanation of the methodology and assumptions the 
        Secretary has used in establishing prices under this section, 
        and
            ``(2) an estimation, or range of estimations, of the price 
        of permits for the 10-year period following the current 5-year 
        period.

``SEC. 9903. DEFINITIONS.

    ``(a) In General.--For purposes of this subtitle--
            ``(1) Administrator.--The term `Administrator' means the 
        Administrator of the Environmental Protection Agency.
            ``(2) Carbon dioxide equivalent.--The term `carbon dioxide 
        equivalent' means, for each greenhouse gas emission substance, 
        the quantity of the greenhouse gas emission substance that the 
        Administrator determines makes the same contribution to global 
        warming as 1 metric ton of carbon dioxide.
            ``(3) Greenhouse gas emission substance.--The term 
        `greenhouse gas emission substance' means--
                    ``(A) coal (including lignite, peat, and 
                derivatives of coal), to be used as a combustion fuel,
                    ``(B) petroleum and any petroleum product, to be 
                used as a combustion fuel,
                    ``(C) natural gas,
                    ``(D) methane,
                    ``(E) nitrous oxide,
                    ``(F) sulfur hexafluoride,
                    ``(G) a perfluorocarbon,
                    ``(H) a hydrofluorocarbon, and
                    ``(I) any other substance that is determined by the 
                Administrator to contribute to global warming to a 
                nonnegligible degree.
            ``(4) Federal emission permit.--The term `Federal emission 
        permit' means a permit required under section 9901.
            ``(5) Carbon-intensive good.--The term `carbon-intensive 
        good' means--
                    ``(A)(i) iron, steel, any steel mill product 
                (including pipe and tube), aluminum, cement, glass 
                (including flat, container, and specialty glass and 
                fiberglass), pulp, paper, chemicals, and industrial 
                ceramics, and
                    ``(ii) any other manufactured product that the 
                Secretary determines--
                            ``(I) is sold for purposes of further 
                        manufacture, and
                            ``(II) generates, in the course of the 
                        manufacture of the product, direct and indirect 
                        greenhouse gas emissions that are comparable 
                        (on an emissions per dollar of output basis) to 
                        emissions generated in the manufacture or 
                        production of a good identified in clause (i), 
                        and
                    ``(B) a manufactured item in which one or more 
                goods identified under subparagraph (A) are inputs and 
                the cost of production of which in the United States 
                the Secretary determines is significantly increased by 
                this subtitle.
            ``(6) Petroleum product.--The term `petroleum product' has 
        the meaning given such term in section 4612(a)(3).
    ``(b) Identification of Carbon-Intensive Goods.--The determinations 
by the Secretary required by subsection (a)(5) shall be by rule.

``SEC. 9904. REGULATIONS.

    ``The Secretary shall issue such regulations as may be necessary or 
appropriate to carry out this subtitle, including regulations relating 
to the timely and efficient issuance of permits and collection of 
payments for such permits.''.
    (b) Refund of Federal Emission Permit Fee.--Subchapter B of chapter 
65 of such Code is amended by adding at the end the following new 
section:

``SEC. 6633. REFUNDS OF FEDERAL EMISSION PERMIT FEE FOR CERTAIN USES.

    ``(a) In General.--If a Federal emission permit has been acquired 
with respect to a greenhouse gas emission substance pursuant to section 
9902 and the acquirer of such permit uses such substance in a manner 
that will make a negligible or no contribution to global warming, as 
determined by the Secretary in consultation with the Administrator of 
the Environmental Protection Agency, the Secretary shall pay (without 
interest) to the acquirer of such substance pursuant to such permit an 
amount equal to the amount paid for the applicable Federal emission 
permit.
    ``(b) Payments to Exporters.--The Secretary shall pay (without 
interest) to the exporter of a carbon-intensive good (as defined in 
section 9903(5)) produced in the United States an amount equal to the 
cost that domestic producers of such carbon-intensive goods incur as a 
result of--
            ``(1) the dollar amount paid by covered persons for Federal 
        emission permits for greenhouse gas emission substances under 
        this section 9902, and
            ``(2) greenhouse gas emission permit equivalency fees paid 
        under section 9901(e) by importers of carbon-intensive goods 
        used in the production of the comparable carbon-intensive goods 
        in question.''.
    (c) Failure To Obtain Permit.--Subtitle D of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new chapter:

            ``CHAPTER 48--GREENHOUSE GAS EMISSION SUBSTANCES

``Sec. 5000A. Greenhouse gas emission substances.

``SEC. 5000A. GREENHOUSE GAS EMISSION SUBSTANCES.

    ``(a) Imposition of Tax.--There is hereby imposed on any covered 
person who fails to obtain a Federal emission permit pursuant to 
subtitle L a tax equal to 300 percent of the dollar amount of the fee 
that would have been charged for such permit but for such failure.
    ``(b) Covered Person.--The term `covered person' has the meaning 
given such term by section 9901(b).
    ``(c) Federal Emission Permit.--The term `Federal emission permit' 
means a permit required under section 9901.''.
    (d) Establishment of Climate Protection and Economic Security Trust 
Fund.--
            (1) Finding.--The Congress finds that revenue generated 
        from the sale of Federal emission permits must be recycled into 
        the American economy--
                    (A) to facilitate economic growth and clean energy 
                production, and
                    (B) to protect the economic security of vulnerable 
                families and communities.
            (2) Establishment of trust fund.--Subchapter A of chapter 
        98 of such Code (relating to trust fund code) is amended by 
        adding at the end the following:

``SEC. 9511. CLIMATE PROTECTION AND ECONOMIC SECURITY TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Climate 
Protection and Economic Security Trust Fund' (referred to in this 
section as the `Trust Fund'), consisting of such amounts as may be 
appropriated or credited to the Trust Fund as provided in this section 
or section 9602(b).
    ``(b) Transfers to Trust Fund.--There is hereby appropriated to the 
Trust Fund an amount equivalent to the amounts received in the Treasury 
pursuant to subtitle L.''.
    (e) Conforming and Clerical Amendments.--
            (1) The table of chapters for subtitle D of such Code is 
        amended by adding at the end the following new item:

          ``Chapter 48--Greenhouse Gas Emission Substances.''.

            (2) The table of subtitles for the Internal Revenue Code of 
        1986 is amended by adding at the end the following new item:

          ``Subtitle L--Greenhouse Gas Emission Substances.''.

            (3) The table of sections for subchapter A of chapter 98 of 
        such Code is amended by adding at the end the following:

``Sec. 9511. Climate Protection and Economic Security Trust Fund.''.
    (f) Effective Date.--The amendments made by this section shall 
apply with respect to the sale of any greenhouse gas emission substance 
after December 31, 2010.
                                 <all>