[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1862 Introduced in House (IH)]
111th CONGRESS
1st Session
H. R. 1862
To cap the emissions of greenhouse gases through a requirement to
purchase carbon permits, to distribute the proceeds of such purchases
to eligible individuals, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 1, 2009
Mr. Van Hollen (for himself, Mr. Thompson of California, Mr.
Blumenauer, and Mr. Doggett) 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 cap the emissions of greenhouse gases through a requirement to
purchase carbon permits, to distribute the proceeds of such purchases
to eligible individuals, 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 ``Cap and Dividend Act of 2009''.
SEC. 2. AUCTION OF CARBON PERMITS AND DISTRIBUTION OF CONSUMER
DIVIDENDS.
(a) In General.--The Internal Revenue Code of 1986 is amended by
adding at the end the following new subtitle:
``Subtitle L--Auction of Carbon Permits and Distribution of Consumer
Dividends
``Chapter 101. Cap and Dividend Program Rules.
``Chapter 102. Consumer Dividends.
``Chapter 103. Border Adjustments.
``CHAPTER 101--CAP AND DIVIDEND PROGRAM RULES
``Sec. 9901. Definitions.
``Sec. 9902. Carbon permits.
``Sec. 9903. Auctions.
``Sec. 9904. Compliance obligation.
``Sec. 9905. Penalty for noncompliance.
``Sec. 9906. Carbon capture and sequestration.
``Sec. 9907. Trading.
``Sec. 9908. Banking and borrowing.
``SEC. 9901. DEFINITIONS.
``For purposes of this subtitle:
``(1) Administrator.--The term `Administrator' means the
Administrator of the Environmental Protection Agency.
``(2) Carbon permit.--The term `carbon permit' means a
carbon permit established by the Secretary under section
9902(a).
``(3) Covered entity.--The term `covered entity' means a
person who makes the first sale in United States markets of a
covered fuel, as determined by the Secretary, in consultation
with the Administrator.
``(4) Covered fuel.--The term `covered fuel' means oil,
natural gas, coal, or any other product derived therefrom for
use as a combustible fuel offered for sale in United States
markets.
``(5) Fair market value.--The term `fair market value'
means the average auction price for carbon permits during the 4
quarters immediately preceding a failure to surrender, when
required under section 9904, the required number of carbon
permits under such section.
``(6) State.--The term `State' means the several States,
the District of Columbia, the Commonwealth of Puerto Rico, the
United States Virgin Islands, Guam, American Samoa, the
Commonwealth of the Northern Mariana Islands, and any other
commonwealth, territory, or possession of the United States.
``(7) Vintage year.--The term `vintage year' means the
calendar year for which a carbon permit is established under
section 9902.
``SEC. 9902. CARBON PERMITS.
``(a) In General.--The Secretary, in consultation with the
Administrator, shall establish a separate quantity of carbon permits
for calendar year 2012 and each calendar year thereafter, as set forth
under subsection (b).
``(b) Emissions Reduction Schedule.--
``(1) In general.--The quantity of carbon permits
established by the Secretary, in consultation with the
Administrator, under subsection (a) shall represent equal, pro
rata increments that meet the targets described in paragraph
(2).
``(2) Targets.--
``(A) Initial target.--The quantity of carbon
permits established for 2012 shall be equal to the
number of metric tons of carbon dioxide emitted in the
United States in 2005.
``(B) Decadal targets.--The quantity of carbon
permits established for--
``(i) 2020 shall be equal to 25 percent
less than the number of metric tons of carbon
dioxide emitted in the United States in 2005;
``(ii) 2030 shall be equal to 45 percent
less than the number of metric tons of carbon
dioxide emitted in the United States in 2005;
``(iii) 2040 shall be equal to 65 percent
less than the number of metric tons of carbon
dioxide emitted in the United States in 2005;
and
``(iv) 2050 shall be equal to 85 percent
less than the number of metric tons of carbon
dioxide emitted in the United States in 2005.
``(3) Report.--The Secretary shall report to Congress if
the Secretary, after consultation with the Administrator,
determines the emissions reductions targets under this
subsection should be revised in order to avert catastrophic
climate impacts. Such report shall include recommended
revisions to the existing emissions reduction schedule and the
basis for those recommendations.
``(c) Identification Numbers.--The Secretary shall assign to each
carbon permit established under subsection (a) a unique identification
number that includes the vintage year for that carbon permit.
``(d) Legal Status of Carbon Permits.--
``(1) In general.--A carbon permit does not constitute a
property right.
``(2) Termination or limitation.--Nothing in this subtitle
or any other provision of law shall be construed to limit or
alter the authority of the United States, including the
Secretary acting pursuant to statutory authority, to terminate
or limit a carbon permit.
``(3) Other provisions unaffected.--Nothing in this
subtitle relating to carbon permits issued under this section
shall affect the application of any other provision of law to a
covered entity, or the responsibility for a covered entity to
comply with any such provision of law. Regional and State
greenhouse gas initiatives are not preempted by this subtitle.
``(e) Regulations.--Not later than 24 months after the date of
enactment of this subtitle, the Secretary shall promulgate regulations
to carry out the provisions of this subtitle.
``SEC. 9903. AUCTIONS.
``(a) Periodic Auctions.--The Secretary shall conduct periodic
public auctions of carbon permits established under section 9902(a).
The Secretary shall conduct at least 4 such auctions in each year for
which carbon permits are established.
``(b) Auction Rules.--The Secretary shall--
``(1) limit auction participation only to owners of covered
entities;
``(2) establish a limit on the amount of carbon permits
that can be purchased by the owner of a single entity at each
auction and an aggregate limit on the total amount of permits
that can be held by the owner of a single entity at any one
time that--
``(A) reflects anticipated sector and participant
demand;
``(B) prevents speculation, manipulation, or
hoarding of permits; and
``(C) does not interfere with normal market
competition; and
``(3) have the authority to set a minimum permit price at
auction.
``SEC. 9904. COMPLIANCE OBLIGATION.
``(a) In General.--Not later than April 1, 2013, and April 1 of
each year thereafter, the owner of a covered entity shall surrender to
the Secretary a quantity of carbon permits at least as great as the
number of metric tons of carbon dioxide that the Secretary, in
consultation with the Administrator, determines would be emitted by the
combustion of covered fuels with respect to which the covered entity
made the first sale in United States markets during the previous
calendar year.
``(b) Exemption.--The owner of a covered entity shall not have to
surrender a carbon permit for the sale of a covered fuel consumed for a
non-emitting use, as defined and verified by the Secretary in
consultation with the Administrator, unless such covered fuel is sold
to a person issued carbon permits under section 9906.
``SEC. 9905. PENALTY FOR NONCOMPLIANCE.
``(a) In General.--The owner of any covered entity that fails for
any year to surrender, by the deadline described in section 9904, one
or more of the carbon permits due pursuant to such section shall be
liable for payment to the Secretary of a penalty in the amount
described in subsection (b).
``(b) Amount.--The amount of a penalty required to be paid under
subsection (a) shall be equal to the product obtained by multiplying--
``(1) the number of carbon permits that the owner failed to
surrender by the deadline; by
``(2) 3 times the fair market value of carbon permits
issued for emissions occurring in the calendar year for which
the carbon permits were due.
``(c) Timing.--A penalty required under this section shall be
immediately due and payable to the Secretary, without demand, in
accordance with regulations promulgated by the Secretary, which shall
be issued not later than 2 years after the date of enactment of this
subtitle.
``(d) No Effect on Liability.--A penalty due and payable by the
owner of a covered entity under this section shall not diminish the
liability of the owner for any fine, penalty, or assessment against the
owner for the same violation under any other provision of law.
``SEC. 9906. CARBON CAPTURE AND SEQUESTRATION.
``The Secretary shall issue, to any person who the Secretary, in
consultation with the Administrator, determines has safely and
verifiably captured and sequestered carbon dioxide from the combustion
of covered fuels in the United States, carbon permits, in addition to
the quantity of permits established under section 9902(a), in an amount
equivalent to the number of metric tons of carbon dioxide so captured
and sequestered.
``SEC. 9907. TRADING.
``(a) Permitted Transactions.--The lawful holder of a carbon permit
may--
``(1) hold the carbon permit, subject to the limits
established by the Secretary under section 9903(b)(2);
``(2) sell, exchange, or transfer the carbon permit to the
owner of a covered entity consistent with the limits
established by the Secretary under section 9903(b)(2); or
``(3) request that the Secretary retire the carbon permit.
``(b) Effectiveness of Carbon Permit Transfers.--No transfer of a
carbon permit shall be effective until a written certification of the
transfer, signed by a responsible official of the transferor, is
received and recorded by the Secretary in accordance with regulations
promulgated under section 9902(e).
``(c) Carbon Permit Tracking System.--The regulations promulgated
under section 9902(e) shall include a system for issuing, recording,
holding, and tracking carbon permits that shall specify all necessary
procedures and requirements for an orderly and competitive functioning
of the carbon permit system. Such regulations shall provide for
appropriate publication of the information in the system on the
Internet.
``SEC. 9908. BANKING AND BORROWING.
``(a) Banking.--A carbon permit may be used to meet the compliance
obligation requirements of section 9904 for emissions in--
``(1) the vintage year for the carbon permit; or
``(2) any calendar year subsequent to the vintage year for
the carbon permit.
``(b) Expiration.--A carbon permit shall not expire unless--
``(1) it is surrendered to the Secretary under section 9904
or section 9907(a)(3); or
``(2) the Secretary determines by regulation that
expiration is necessary to ensure the authenticity and
integrity of carbon permits or the carbon permit tracking
system.
``(c) Borrowing Future Vintage Year Carbon Permits.--If the auction
price for carbon permits increases by more than 100 percent above the
average auction price for carbon permits during the preceding two years
(or, if before the third year for which auctions are conducted, the
average auction price for carbon permits during the preceding
auctions), the Secretary shall auction as many additional carbon
permits as are necessary to stabilize the auction price, not to exceed
8 percent of the total amount of carbon permits otherwise available at
that auction. Any carbon permits made available under this subsection
shall result in an equivalent reduction in the aggregate amount of
carbon permits made available in vintage years 2030 through 2050 as set
forth in section 9902, and the Secretary shall reduce the number of
carbon permits by an equal percentage in each of those vintage years.
``CHAPTER 102--CONSUMER DIVIDENDS
``Sec. 9911. Healthy Climate Trust Fund.
``Sec. 9912. Consumer Dividend payment.
``Sec. 9913. Transparency.
``SEC. 9911. HEALTHY CLIMATE TRUST FUND.
``(a) Establishment.--There is established in the Treasury of the
United States a trust fund to be known as the `Healthy Climate Trust
Fund', consisting of such amounts as may be appropriated to such trust
fund as provided for in this section.
``(b) Transfers.--
``(1) Proceed amounts.--There are appropriated to the
Healthy Climate Trust Fund amounts equivalent to funds received
as proceeds under section 9903.
``(2) Penalty amounts.--There are appropriated to the
Healthy Climate Trust Fund amounts equivalent to funds received
as penalties under section 9905.
``(c) Expenditures.--
``(1) Administrative expenses.--Such amounts as may be
necessary from the Healthy Climate Trust Fund shall be
available to pay the administrative expenses necessary to carry
out this section for each month, but not exceeding 0.50 percent
of the amounts appropriated to such trust fund under subsection
(b) in such month.
``(2) Consumer dividend payments.--Amounts in the Healthy
Climate Trust Fund not used under paragraph (1) for any month
shall be available for making Consumer Dividend payments under
section 9912.
``SEC. 9912. CONSUMER DIVIDEND PAYMENTS.
``(a) In General.--For purposes of this section:
``(1) Consumer dividend payment.--The term `Consumer
Dividend payment' means the individual pro-rata share, as
determined by the Secretary, of amounts available for any month
in the Healthy Climate Trust Fund under section 9911(c)(2). For
purposes of the preceding sentence, the amounts available for
any month shall be the fraction of the total amount made
available from an auction conducted under section 9903--
``(A) the numerator of which is 1, and
``(B) the denominator of which is the number of
months in the period beginning with the month in which
such auction is conducted and ending with the month
before the month in which the next such auction is
scheduled to be conducted.
``(2) Eligible individual.--The term `eligible individual'
means, with respect to any month, any individual with a valid
social security number (other than a nonresident alien
individual) who is lawfully present in the United States for
such month, as determined and verified by the Secretary in
consultation with any other Federal entity the Secretary
determines appropriate.
``(b) Payment of Consumer Dividend.--From amounts made available
under section 9911(c)(2), the Secretary shall make a Consumer Dividend
payment not later than the end of the month after the month in which
such amounts are appropriated to the Healthy Climate Trust Fund under
section 9911 to each individual who is an eligible individual for that
month.
``(c) Regulations.--The Secretary shall prescribe such regulations
and other guidance as may be necessary or appropriate to carry out this
section.
``SEC. 9913. TRANSPARENCY.
``(a) Report to Congress.--Not later than February 1, 2013, and at
least annually thereafter, the Secretary shall transmit to Congress a
report accounting for the disposition of amounts in the Healthy Climate
Trust Fund in the previous calendar year.
``(b) Healthy Climate Trust Fund Website.--Not later than 90 days
after the date of the enactment of this subtitle, the Secretary shall
establish and maintain a website to provide the public with information
on the disposition of any amounts in the Healthy Climate Trust Fund.
``CHAPTER 103--BORDER ADJUSTMENTS
``Sec. 9921. Carbon equivalency fee.
``Sec. 9922. Definitions.
``Sec. 9923. Sense of Congress.
``SEC. 9921. CARBON EQUIVALENCY FEE.
``(a) Imports.--The Secretary shall impose carbon equivalency fees
to be collected by the Commissioner responsible for U.S. Customs and
Border Control on imports of carbon-intensive goods. The amount of the
carbon equivalency fee shall be equal to the cost that domestic
producers of a comparable carbon-intensive good incur as a result of--
``(1) prices paid in the acquisition of carbon permits by
covered entities under this subtitle; and
``(2) carbon equivalency fees paid by importers of carbon-
intensive goods used in the production of the comparable
carbon-intensive good.
``(b) Payments to Exporters.--The Secretary shall pay without
interest to persons exporting from the United States carbon-intensive
goods produced in the United States. The amount of the payment shall be
equal to the cost that domestic producers of the carbon-intensive good
incur as a result of--
``(1) prices paid in the acquisition of carbon permits by
covered entities under this subtitle; and
``(2) carbon equivalency fees paid by importers of carbon-
intensive goods used in the production of the comparable
carbon-intensive good.
``(c) Expiration.--This section shall cease to have effect at such
time as and to the extent that--
``(1) an international agreement requiring countries that
emit greenhouse gases and produce carbon-intensive goods for
export markets to adopt equivalent measures comes into effect;
or
``(2) the country of export has implemented equivalent
measures, as determined by the Secretary, in consultation with
the Secretary of State.
``SEC. 9922. DEFINITIONS.
``In this chapter:
``(1) Carbon-intensive good.--The term `carbon-intensive
good' means a good that, as identified by the Secretary, in
consultation with the Administrator, by rule--
``(A) is a primary product; or
``(B) is a manufactured item in which one or more
primary products are inputs and the cost of production
of which in the United States is significantly
increased by reason of the requirements under this
subtitle.
``(2) Primary product.--The term `primary product' means--
``(A) iron, steel, steel mill products (including
pipe and tube), aluminum, cement, glass (including
flat, container, and specialty glass and fiberglass),
pulp, paper, chemicals, or industrial ceramics; and
``(B) any other manufactured product that the
Secretary, in consultation with the Administrator,
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 primary product identified in
subparagraph (A).
``(3) Equivalent measure.--The term `equivalent measure'
means a tax, or other regulatory requirement that imposes a
cost, on manufacturers of carbon-intensive goods located
outside the United States, by reason of greenhouse gas
emissions in the production of such goods by such
manufacturers, approximately equal to the cost imposed by this
subtitle on manufacturers of comparable carbon-intensive goods
located in the United States.
``SEC. 9923. SENSE OF CONGRESS.
``It is the sense of Congress that the United States should work
proactively under the United Nations Framework Convention on Climate
Change and in other appropriate fora, to establish binding agreements
committing all major greenhouse gas emitting countries and countries
with globally competitive producers of carbon-intensive goods to
contribute equitably to the reduction of global greenhouse gas
emissions.''.
(b) Clerical Amendment.--The table of subtitles for the Internal
Revenue Code of 1986 is amended by adding at the end the following new
item:
``Subtitle L. Auction of Carbon Permits and Distribution of Consumer
Dividends.''.
SEC. 3. DISCLOSURE OF INFORMATION.
(a) Limited Disclosure of Identity.--Subsection (l) of section 6103
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new paragraph:
``(21) Limited disclosure of identity information relating
to consumer dividend payments.--
``(A) Department of the treasury.--Individual
identity information shall, without written request, be
open to inspection by or disclosure to officers and
employees of the Department of the Treasury whose
official duties require such inspection or disclosure
for purposes of section 9912.
``(B) Commissioner of social security.--The
Commissioner of Social Security shall, on written
request, disclose to officers and employees of the
Department of the Treasury individual identity
information which has been disclosed to the Social
Security Administration as provided by paragraph (1) or
(5).
``(C) Restriction on disclosure.--Information
disclosed under this paragraph shall be disclosed only
for purposes of, and to the extent necessary in,
carrying out section 9912.''.
(b) Conforming Amendments.--Section 6103(p)(3)(A) of the Internal
Revenue Code of 1986 is amended by striking ``or (18)'' and inserting
``, (18), or (21)''.
SEC. 4. EFFECTIVE DATE.
The amendments made by this Act shall take effect on the date of
the enactment of this Act.
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