I 111th CONGRESS 1st Session H. R. 2454 IN THE HOUSE OF REPRESENTATIVES May 15, 2009 Mr. Waxman (for himself and Mr. Markey of Massachusetts) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on Foreign Affairs, Financial Services, Education and Labor, Science and Technology, Transportation and Infrastructure, Natural Resources, Agriculture, and Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To create clean energy jobs, achieve energy independence, reduce global warming pollution and transition to a clean energy economy.

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the American Clean Energy and Security Act of 2009. (b)

Table of contents

The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Definitions. Title I—Clean Energy Subtitle A—Combined Efficiency and Renewable Electricity Standard Sec. 101. Combined efficiency and renewable electricity standard. Sec. 610. Combined efficiency and renewable electricity standard. Subtitle B—Carbon Capture and Sequestration Sec. 111. National strategy. Sec. 112. Regulations for geologic sequestration sites. Sec. 813. Geologic sequestration sites. Sec. 113. Studies and reports. Sec. 114. Carbon capture and sequestration demonstration and early deployment program. Sec. 115. Commercial deployment of carbon capture and sequestration technologies. Sec. 116. Performance standards for coal-fueled power plants. Sec. 812. Performance standards for new coal-fired power plants. Subtitle C—Clean Transportation Sec. 121. Electric vehicle infrastructure. Sec. 122. Large-scale vehicle electrification program. Sec. 123. Plug-in electric drive vehicle manufacturing. Sec. 124. Investment in clean vehicles. Subtitle D—State Energy and Environment Development Accounts Sec. 131. Establishment of SEED Accounts. Sec. 132. Support of State renewable energy and energy efficiency programs. Subtitle E—Smart Grid Advancement Sec. 141. Definitions. Sec. 142. Assessment of Smart Grid cost effectiveness in products. Sec. 143. Inclusions of Smart Grid capability on appliance ENERGY GUIDE labels. Sec. 144. Smart Grid peak demand reduction goals. Sec. 145. Reauthorization of energy efficiency public information program to include Smart Grid information. Sec. 146. Inclusion of Smart-Grid features in appliance rebate program. Subtitle F—Transmission Planning Sec. 151. Transmission planning. Sec. 216A. Transmission planning. Subtitle G—Technical Corrections to Energy Laws Sec. 161. Technical corrections to Energy Independence and Security Act of 2007. Sec. 162. Technical corrections to Energy Policy Act of 2005. Subtitle H—Clean Energy Innovation Centers Sec. 171. Clean energy innovation centers. Subtitle I—Marine Spatial Planning Sec. 181. Study of ocean renewable energy and transmission planning and siting. Title II—Energy Efficiency Subtitle A—Building Energy Efficiency Programs Sec. 201. Greater energy efficiency in building codes. Sec. 304. Greater energy efficiency in building codes. Sec. 202. Building retrofit program. Sec. 203. Energy efficient manufactured homes. Sec. 204. Building energy performance labeling program. Subtitle B—Lighting and Appliance Energy Efficiency Programs Sec. 211. Lighting efficiency standards. Sec. 212. Other appliance efficiency standards. Sec. 213. Appliance efficiency determinations and procedures. Sec. 334. Jurisdiction and venue. Sec. 214. Best-in-Class Appliances Deployment Program. Sec. 215. Purpose of Energy Star. Subtitle C—Transportation Efficiency Sec. 221. Emissions standards. Part B—Mobile Sources Sec. 821. Greenhouse gas emission standards for mobile sources. Sec. 222. Greenhouse gas emissions reductions through transportation efficiency. Part D—Planning Requirements Sec. 841. Greenhouse gas emissions reductions through transportation efficiency. Sec. 223. SmartWay transportation efficiency program. Sec. 822. SmartWay transportation efficiency program. Sec. 224. State vehicle fleets. Subtitle D—Industrial Energy Efficiency Programs Sec. 241. Industrial plant energy efficiency standards. Sec. 242. Electric and thermal waste energy recovery award program. Sec. 243. Clarifying election of waste heat recovery financial incentives. Subtitle E—Improvements in energy savings performance contracting Sec. 251. Energy savings performance contracts. Subtitle F—Public Institutions Sec. 261. Public institutions. Sec. 262. Community energy efficiency flexibility. Sec. 263. Small community joint participation. Sec. 264. Low income community energy efficiency program. Title III—Reducing Global Warming Pollution Sec. 301. Short title. Subtitle A—Reducing Global Warming Pollution Sec. 311. Reducing global warming pollution. Title VII—Global Warming Pollution Reduction Program Part A—Global Warming Pollution Reduction Goals and Targets Sec. 701. Findings and purpose. Sec. 702. Economy-wide reduction goals. Sec. 703. Reduction targets for specified sources. Sec. 704. Supplemental pollution reductions. Sec. 705. Review and program recommendations. Sec. 706. National academy review. Sec. 707. Presidential response and recommendations. Part B—Designation and registration of greenhouse gases Sec. 711. Designation of greenhouse gases. Sec. 712. Carbon dioxide equivalent value of greenhouse gases. Sec. 713. Greenhouse gas registry. Part C—Program rules Sec. 721. Emission allowances. Sec. 722. Prohibition of excess emissions. Sec. 723. Penalty for noncompliance. Sec. 724. Trading. Sec. 725. Banking and borrowing. Sec. 726. Strategic reserve. Sec. 727. Permits. Sec. 728. International emission allowances. Part D—Offsets Sec. 731. Offsets Integrity Advisory Board. Sec. 732. Establishment of offsets program. Sec. 733. Eligible project types. Sec. 734. Requirements for offset projects. Sec. 735. Approval of offset projects. Sec. 736. Verification of offset projects. Sec. 737. Issuance of offset credits. Sec. 738. Audits. Sec. 739. Program review and revision. Sec. 740. Early offset supply. Sec. 741. Environmental considerations. Sec. 742. Trading. Sec. 743. International offset credits. Part E—Supplemental Emissions Reductions from Reduced Deforestation Sec. 751. Definitions. Sec. 752. Findings. Sec. 753. Supplemental emissions reductions through reduced deforestation. Sec. 754. Requirements for international deforestation reduction program. Sec. 755. Reports and reviews. Sec. 756. Legal effect of part. Sec. 312. Definitions. Sec. 700. Definitions. Subtitle B—Disposition of allowances Sec. 321. Disposition of allowances for global warming pollution reduction program. Part H—Disposition of allowances Sec. 781. Allocation of allowances for supplemental reductions. Sec. 782. Allocation of emission allowances. Sec. 783. Electricity consumers. Sec. 784. Natural gas consumers. Sec. 785. Home heating oil and propane consumers. Sec. 786–788. SECTIONS RESERVED. Sec. 789. Climate change rebates. Sec. 790. Exchange for State-issued allowances. Sec. 791. Auction procedures. Sec. 792. Auctioning allowances for other entities. Sec. 793. Establishment of funds. Subtitle C—Additional greenhouse gas standards Sec. 331. Greenhouse gas standards. Title VIII—Additional Greenhouse Gas Standards Sec. 801. Definitions. Part A—Stationary Source Standards Sec. 811. Standards of performance. Part C—Exemptions From Other Programs Sec. 831. Criteria pollutants. Sec. 832. Hazardous air pollutants. Sec. 833. New source review. Sec. 834. Title V permits. Sec. 835. Existing proceedings. Sec. 332. HFC Regulation. Sec. 619. Hydrofluorocarbons (HFCs). Sec. 333. Black carbon. Part E—Black Carbon Sec. 851. Black carbon. Sec. 334. States. Sec. 335. State programs. Part F—Miscellaneous Sec. 861. State programs. Sec. 336. Enforcement. Sec. 337. Conforming amendments. Subtitle D—Carbon Market Assurance Sec. 341. Carbon market assurance. Part IV—Carbon Market Assurance Sec. 401. Oversight and assurance of carbon markets. Subtitle E—Additional Market Assurance Sec. 351. Regulation of certain transactions in derivatives involving energy commodities. Sec. 352. No effect on authority of the Federal Energy Regulatory Commission. Sec. 353. Inspector general of the Commodity Futures Trading Commission. Sec. 354. Settlement and clearing through registered derivatives clearing organizations. Sec. 355. Limitation on eligibility to purchase a credit default swap. Sec. 356. Transaction fees. Sec. 357. No effect on authority of the Federal Trade Commission. Sec. 358. Regulation of carbon derivatives markets. Title IV—Transitioning to a Clean Energy Economy Subtitle A—Industrial Sector Sec. 401. Ensuring real reductions in industrial emissions. Part F—Ensuring real reductions in industrial emissions Sec. 761. Purposes. Sec. 762. International negotiations. Sec. 763. Definitions. Subpart 1—Emission Allowance Rebate Program Sec. 764. Eligible industrial sectors. Sec. 765. Distribution of emission allowance rebates. Subpart 2—International Reserve Allowance Program Sec. 766. International reserve allowance program. Subpart 3—Presidential Determination Sec. 767. Presidential reports and determinations. Sec. 402. Allocations to petroleum refineries. Part G—Petroleum refineries Sec. 771. Allocations to petroleum refineries. Subtitle B—Green Jobs and Worker Transition Part 1—Green Jobs Sec. 421. Clean energy curriculum development grants. Sec. 422. Increased funding for energy worker training program. Part 2—Climate Change Worker Adjustment Assistance Sec. 425. Petitions, eligibility requirements, and determinations. Sec. 426. Program benefits. Sec. 427. General provisions. Subtitle C—Consumer Assistance Sec. 431. Energy tax credit. Sec. 36B. Energy tax credit. Sec. 432. Energy refund program for low-income consumers. Subtitle D—Exporting Clean Technology Sec. 441. Findings and purposes. Sec. 442. Definitions. Sec. 443. Governance. Sec. 444. Determination of eligible countries. Sec. 445. Qualifying activities. Sec. 446. Assistance. Subtitle E—Adapting to Climate Change Part 1—Domestic Adaptation Subpart A—National Climate Change Adaptation Program Sec. 451. National climate change adaptation program. Sec. 452. Climate services. Sec. 453. State programs to build resilience to climate change impacts. Subpart B—Public Health and Climate Change Sec. 461. Sense of Congress on public health and climate change. Sec. 462. Relationship to other laws. Sec. 463. National strategic action plan. Sec. 464. Advisory board. Sec. 465. Reports. Sec. 466. Definitions. Sec. 467. Climate change health protection and promotion fund. Subpart C—Natural resource adaptation Sec. 471. Purposes. Sec. 472. Natural resources climate change adaptation policy. Sec. 473. Definitions. Sec. 474. Council on Environmental Quality. Sec. 475. Natural Resources Climate Change Adaptation Panel. Sec. 476. Natural Resources Climate Change Adaptation Strategy. Sec. 477. Natural resources adaptation science and information. Sec. 478. Federal natural resource agency adaptation plans. Sec. 479. State natural resources adaptation plans. Sec. 480. Natural Resources Climate Change Adaptation Fund. Sec. 481. National Wildlife Habitat and Corridors Information Program. Sec. 482. Additional provisions regarding Indian tribes. Part 2—International Climate Change Adaptation Program Sec. 491. Findings and purposes. Sec. 492. Definitions. Sec. 493. International Climate Change Adaptation Program. Sec. 494. Distribution of allowances. Sec. 495. Bilateral assistance.

2.

Definitions

For purposes of this Act: (1)

Administrator

The term Administrator means the Administrator of the Environmental Protection Agency. (2)

State

The term State has the meaning given that term in section 700 of the Clean Air Act, as added by section 312 of this Act.

.

312.

Definitions

Title VII of the Clean Air Act, as added by section 311 of this Act, is amended by inserting before part A the following new section:

700.

Definitions

In this title: (1)

Additional

The term additional, when used with respect to reductions or avoidance of greenhouse gas emissions, or to sequestration of greenhouse gases, means reductions, avoidance, or sequestration that result in a lower level of net greenhouse gas emissions or atmospheric concentrations than would occur in the absence of an offset project. (2)

Additionality

The term additionality means the extent to which reductions or avoidance of greenhouse gas emissions, or sequestration of greenhouse gases, are additional. (3)

Advisory board

The term Advisory Board means the Offsets Integrity Advisory Board established under section 731. (4)

Affiliated

The term affiliated— (A)when used in relation to an entity means owned or controlled by, or under common ownership or control with, another entity, as determined by the Administrator; and (B)when used in relation to a natural gas local distribution company, means owned or controlled by, or under common ownership or control with, another natural gas local distribution company, as determined by the Administrator. (5)

Allowance

The term allowance means a limited authorization to emit, or have attributable greenhouse gas emissions in an amount of, 1 ton of carbon dioxide equivalent of a greenhouse gas in accordance with this title, including an emission allowance, a compensatory allowance, or an international emission allowance. (6)

Attributable greenhouse gas emissions

The term attributable greenhouse gas emissions means— (A)for a covered entity that is a fuel producer or importer described in section 700(14)(B), greenhouse gases that would be emitted from the combustion of any petroleum-based or coal-based liquid fuel, petroleum coke, or natural gas liquid, produced or imported by that covered entity for sale or distribution in interstate commerce, assuming no capture and sequestration of any greenhouse gas emissions; (B)for a covered entity that is an industrial gas producer or importer described in section 700(14)(C), the tons of carbon dioxide equivalent of carbon dioxide, nitrous oxide, any fluorinated gas, other than nitrogen trifluoride, that is a greenhouse gas, or any combination thereof— (i)produced or imported by such covered entity during the previous calendar year for sale or distribution in interstate commerce; or (ii)released as fugitive emissions in the production of fluorinated gas; and (C)for a natural gas local distribution company described in section 700(14)(I), greenhouse gases that would be emitted from the combustion of the natural gas, and any other gas meeting the specifications for commingling with natural gas for purposes of delivery, that such entity delivered during the previous calendar year to customers that are not covered entities, assuming no capture and sequestration of that greenhouse gas. (7)

Biological sequestration; biologically sequestered

The terms biological sequestration and biologically sequestered mean the removal of greenhouse gases from the atmosphere by terrestrial biological means, such as by growing plants, and the storage of those greenhouse gases in plants or soils. (8)

Capped emissions

The term capped emissions means greenhouse gas emissions to which section 722 applies, including emissions from the combustion of natural gas, petroleum-based or coal-based liquid fuel, petroleum coke, or natural gas liquid to which section 722(a)(2) or (7) applies. (9)

Capped source

The term capped source means a source that directly emits capped emissions. (10)

Carbon dioxide equivalent

The term carbon dioxide equivalent means the unit of measure, expressed in metric tons, of greenhouse gases as provided under section 711 or 712. (11)

Carbon stock

The term carbon stock means the quantity of carbon contained in a biological reservoir or system which has the capacity to accumulate or release carbon. (12)

Compensatory allowance

The term compensatory allowance means an allowance issued under section 721(f). (13)

Covered entity

The term covered entity means each of the following: (A)Any electricity source. (B)Any stationary source that produces, and any entity that (or any group of two or more affiliated entities that, in the aggregate) imports, for sale or distribution in interstate commerce in 2008 or any subsequent year, petroleum-based or coal-based liquid fuel, petroleum coke, or natural gas liquid, the combustion of which would emit more than 25,000 tons of carbon dioxide equivalent, as determined by the Administrator. (C)Any stationary source that produces, and any entity that (or any group of two or more affiliated entities that, in the aggregate) imports, for sale or distribution in interstate commerce in bulk or products designated by the Administrator for sale or distribution in interstate commerce in 2008 or any subsequent year more than 25,000 tons of carbon dioxide equivalent of— (i)fossil fuel-based carbon dioxide; (ii)nitrous oxide; (iii)perfluorocarbons; (iv)sulfur hexafluoride; (v)any other fluorinated gas, except for nitrogen trifluoride, that is a greenhouse gas, as designated by the Administrator under section 711(b) or (c); or (vi)any combination of greenhouse gases described in clauses (i) through (vi). (D)Any geologic sequestration site. (E)Any stationary source in the following industrial sectors: (i)Adipic acid production. (ii)Primary aluminum production. (iii)Ammonia manufacturing. (iv)Cement production, excluding grinding-only operations. (v)Hydrochlorofluorocarbon production. (vi)Lime manufacturing. (vii)Nitric acid production. (viii)Petroleum refining. (ix)Phosphoric acid production. (x)Silicon carbide production. (xi)Soda ash production. (xii)Titanium dioxide production. (xiii)Coal-based liquid or gaseous fuel production. (F)Any stationary source in the chemical or petrochemical sector that, in 2008 or any subsequent year— (i)produces acrylonitrile, carbon black, ethylene, ethylene dichloride, ethylene oxide, or methanol; or (ii)produces a chemical or petrochemical product if producing that product results in annual combustion plus process emissions of 25,000 or more tons of carbon dioxide equivalent. (G)Any stationary source that— (i)is in one of the following industrial sectors: ethanol production; ferroalloy production; fluorinated gas production; food processing; glass production; hydrogen production; iron and steel production; lead production; pulp and paper manufacturing; and zinc production; and (ii)has emitted 25,000 or more tons of carbon dioxide equivalent in 2008 or any subsequent year. (H)Any fossil fuel-fired combustion device (such as a boiler) or grouping of such devices that— (i)is all or part of an industrial source not specified in subparagraph (E), (F), or (G); and (ii)has emitted 25,000 or more tons of carbon dioxide equivalent in 2008 or any subsequent year. (I)Any natural gas local distribution company that (or any group of 2 or more affiliated natural gas local distribution companies that, in the aggregate) in 2008 or any subsequent year, delivers 460,000,000 cubic feet or more of natural gas to customers that are not covered entities. (J)Any stationary source that has emitted 25,000 or more tons of carbon dioxide equivalent emission of nitrogen trifluoride in 2008 or any subsequent year. (14)

Crediting period

The term crediting period means the period with respect to which an offset project is eligible to earn offset credits under part D, as determined under section 734(c). (15)

Designated representative

The term designated representative means, with respect to a covered entity, a reporting entity, an offset project developer, or any other entity receiving or holding allowances or offset credits under this title, an individual authorized, through a certificate of representation submitted to the Administrator by the owners and operators, to represent the owners and operators in all matters pertaining to this title (including the holding, transfer, or disposition of allowances or offset credits), and to make all submissions to the Administrator under this title. (16)

Developing country

The term developing country means a country eligible to receive official development assistance according to the income guidelines of the Development Assistance Committee of the Organization for Economic Cooperation and Development. (17)

Domestic offset credit

The term domestic offset credit means an offset credit issued under part D, other than an international offset credit. (18)

Electricity source

The term electricity source means a stationary source that includes one or more utility units. (19)

Emission

The term emission means the release of a greenhouse gas into the ambient air. Such term does not include gases that are captured and sequestered, except to the extent that they are later released into the atmosphere, in which case they shall be subject to section 722(a)(4). (20)

Emission allowance

The term emission allowance means an allowance established under section 721(a) or section 726(g)(2) or (h)(1)(C). (21)

Fair market value

The term fair market value means the average daily closing price on registered exchanges or, if such a price is unavailable, the average price as determined by the Administrator, during a specified time period, of an emission allowance. (22)

Federal land

The term Federal land means land that is owned by the United States, other than land held in trust for an Indian or Indian tribe. (23)

Fossil fuel

The term fossil fuel means natural gas, petroleum, coal, or any form of solid, liquid, or gaseous fuel derived from such material, including consumer products that are derived from such materials and are combusted. (24)

Fossil fuel-fired

The term fossil fuel-fired means powered by combustion of fossil fuel, alone or in combination with any other fuel, regardless of the percentage of fossil fuel consumed. (25)

Fugitive emissions

The term fugitive emissions means emissions from leaks, valves, joints, or other small openings in pipes, ducts, or other equipment, or from vents. (26)

Geologic sequestration; geologically sequestered

The terms geologic sequestration and geologically sequestered mean the sequestration of greenhouse gases in subsurface geologic formations for purposes of permanent storage. (27)

Geologic sequestration site

The term geologic sequestration site means a site where carbon dioxide is geologically sequestered. (28)

Greenhouse gas

The term greenhouse gas means any gas described in section 711(a) or designated under section 711(b), (c), or (d), except to the extent that it is regulated under title VI. (29)

High conservation priority land

The term high conservation priority land means land that is not Federal land and is— (A)globally or State ranked as critically imperiled or imperiled under a State Natural Heritage Program; or (B)old-growth or late-successional forest, as identified by the office of the State Forester or relevant State agency with regulatory jurisdiction over forestry activities. (30)

Hold

The term hold means, with respect to an allowance or offset credit, to have in the appropriate account in the allowance tracking system, or submit to the Administrator for recording in such account. (31)

Industrial source

The term industrial source means any stationary source that— (A)is not an electricity source; and (B)is in— (i)the manufacturing sector (as defined in North American Industrial Classification System codes 31, 32, and 33); or (ii)the natural gas processing or natural gas pipeline transportation sector (as defined in North American Industrial Classification System codes 211112 or 486210). (32)

International emission allowance

The term international emission allowance means a tradable authorization to emit 1 ton of carbon dioxide equivalent of greenhouse gas that is issued by a national or supranational foreign government pursuant to a qualifying international program designated by the Administrator pursuant to section 728(a). (33)

International forest carbon activities

The term international forest carbon activities means national or subnational activities in countries other than the United States that are directed at— (A)reducing greenhouse gas emissions from deforestation or forest degradation; or (B)increasing sequestration of carbon through— (i)afforestation or reforestation of acreage not forested as of January 1, 2009; (ii)restoration of degraded land or forest; or (iii)improved forest management. (34)

International offset credit

The term international offset credit means an offset credit issued by the Administrator under section 743. (35)

Leakage

The term leakage means a significant increase in greenhouse gas emissions, or significant decrease in sequestration, which is caused by an offset project and occurs outside the boundaries of the offset project. (36)

Mineral sequestration

The term mineral sequestration means sequestration of carbon dioxide from the atmosphere by capturing carbon dioxide into a permanent mineral, such as the aqueous precipitation of carbonate minerals that results in the storage of carbon dioxide in a mineral form. (37)

Natural gas liquid

The term natural gas liquid means ethane, butane, isobutene natural gasoline, and propane which is ready for commercial sale or use. (38)

Natural gas local distribution company

The term natural gas local distribution company has the meaning given the term local distribution company in section 2(17) of the Natural Gas Policy Act of 1978 (15 U.S.C. 3301(17)). (39)

Offset credit

The term offset credit means a credit issued under part D. (40)

Offset project

The term offset project means a project or activity that reduces or avoids greenhouse gas emissions, or sequesters greenhouse gases, and for which offset credits are issued under part D. (41)

Offset project developer

The term offset project developer means the individual or entity designated as the offset project developer in an offset project approval petition under section 735(c)(1). (42)

Petroleum

The term petroleum includes crude oil, tar sands, oil shale, and heavy oils. (43)

Renewable biomass

The term renewable biomass means any of the following: (A)Plant material, including waste material, harvested or collected from actively managed agricultural land that was in cultivation, cleared, or fallow and nonforested on the date of enactment; (B)Plant material, including waste material, harvested or collected from pastureland that was nonforested on the date of enactment; (C)Nonhazardous vegetative matter derived from waste, including separated yard waste, landscape right-of-way trimmings, construction and demolition debris or food waste (but not municipal solid waste, recyclable waste paper, painted, treated or pressurized wood, or wood contaminated with plastic or metals); (D)Animal waste or animal byproducts, including products of animal waste digesters; (E)Algae; (F)Trees, brush, slash, residues, or any other vegetative matter removed from within 600 feet of any building, campground, or route designated for evacuation by a public official with responsibility for emergency preparedness, or from within 300 feet of a paved road, electric transmission line; utility tower, or water supply line; (G)Residues from or byproducts of milled logs; (H)Any of the following removed from forested land that is not Federal and is not high conservation priority land: (i)Trees, brush, slash, residues, interplanted energy crops, or any other vegetative matter removed from an actively managed tree plantation established— (I)prior to the date of enactment of this section; or (II)on land that, as of the date of enactment of this section, was cultivated or fallow and non-forested. (ii)Trees, logging residue, thinnings, cull trees, pulpwood, and brush removed from naturally regenerated forests or other non-plantation forests, including for the purposes of hazardous fuel reduction or preventative treatment for reducing or containing insect or disease infestation. (iii)Logging residue, thinnings, cull trees, pulpwood, brush and species that are non-native and noxious, from stands that were planted and managed after the enactment of this sentence to restore or maintain native forest types. (iv)Dead or severely damaged trees removed within 5 years of fire, blowdown, or other natural disaster, and badly infested trees. (I)Materials, pre-commercial thinnings, or removed invasive species from National Forest System land and public lands (as defined in section 103 of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702)), including those that are byproducts of preventive treatments (such as trees, wood, brush, thinnings, chips, and slash), that are removed as part of a federally recognized timber sale, or that are removed to reduce hazardous fuels, to reduce or contain disease or insect infestation, or to restore ecosystem health, and that are— (i)not from are not from components of the National Wilderness Preservation System, Wilderness Study Areas, Inventoried Roadless Areas, old growth or mature forest stands, components of the National Landscape Conservation System, National Monuments, National Conservation Areas, Designated Primitive Areas; or Wild and Scenic Rivers corridors; (ii)harvested in environmentally sustainable quantities, as determined by the appropriate Federal land manager; and (iii)are harvested in accordance with Federal and State law, and applicable land management plans. (44)

Retire

The term retire, with respect to an allowance or offset credit established or issued under this title, means to disqualify such allowance or offset credit for any subsequent use under this title, regardless of whether the use is a sale, exchange, or submission of the allowance or offset credit to satisfy a compliance obligation. (45)

Reversal

The term reversal means an intentional or unintentional loss of sequestered greenhouse gases to the atmosphere. (46)

Sequestered and sequestration

The terms sequestered and sequestration mean the separation, isolation, or removal of greenhouse gases from the atmosphere, as determined by the Administrator. The terms include biological, geologic, and mineral sequestration, but do not include ocean fertilization techniques. (47)

Stationary source

The term stationary source means any integrated operation comprising any plant, building, structure, or stationary equipment, including support buildings and equipment, that is located within one or more contiguous or adjacent properties, is under common control of the same person or persons, and emits or may emit a greenhouse gas. (48)

Strategic reserve allowance

The term strategic reserve allowance means an emission allowance reserved for, transferred to, or deposited in the strategic reserve, or established, under section 726. (49)

Ton of carbon dioxide equivalent

The term ton of carbon dioxide equivalent has the meaning specified in section 712(b) or determined by the Administrator under section 711 or 712. (50)

Uncapped emissions

The term uncapped emissions means emissions of greenhouse gases emitted after December 31, 2011, that are not capped emissions. (51)

United States greenhouse gas emissions

The term United States greenhouse gas emissions means the total quantity of annual greenhouse gas emissions from the United States, as calculated by the Administrator and reported to the United Nations Framework Convention on Climate Change Secretariat. (52)

Utility unit

The term utility unit means a combustion device that, on January 1, 2009, or any date thereafter, is fossil fuel-fired and serves a generator that produces electricity for sale, unless such combustion device, during the 12-month period starting the later of January 1, 2009, or the commencement of commercial operation and each calendar year starting after such later date— (A)is part of an integrated cycle system that cogenerates steam and electricity during normal operation and that supplies one-third or less of its potential electric output capacity and 25 MW or less of electrical output for sale; or (B)combusts materials of which more than 95 percent is municipal solid waste on a heat input basis. (53)

Vintage year

The term vintage year means the calendar year for which an emission allowance is established under section 721(a) or which is assigned to an emission allowance under section 726(g)(3)(A), except that the vintage year for a strategic reserve allowance shall be the year in which such allowance is purchased at auction.

.

B

Disposition of allowances

321.

Disposition of allowances for global warming pollution reduction program

Title VII of the Clean Air Act, as added by section 311 of this Act, is amended by adding at the end the following part: H

Disposition of allowances

781.

Allocation of allowances for supplemental reductions

(a)

In General

The Administrator shall allocate for each vintage year the following percentage of the emission allowances established under section 721(a), for distribution in accordance with part E: (1)For vintage years 2012 through 2025, 5 percent. (2)For vintage years 2026 through 2030, 3 percent. (3)For vintage years 2031 through 2050, 2 percent. (b)

Adjustment

The Administrator shall modify the percentages set forth in subsection (a) as necessary to ensure the achievement of the annual supplemental emission reduction objective for 2020, and the cumulative reduction objective through 2025, set forth in section 753(b)(1). (c)

Carryover

If the Administrator has not distributed all of the allowances allocated pursuant to this section for a given vintage year by the end of that year, the Administrator shall— (1)auction the remaining emission allowances under section 791 not later than March 31 of the year following that vintage year; and (2)increase the allocation for the vintage year after the vintage year for which emission allowances were undistributed by the amount of undistributed emission allowances.

782.

Allocation of emission allowances

(a)

Electricity consumers

The Administrator shall allocate emission allowances for the benefit of electricity consumers, to be distributed in accordance with section 783 in the following amounts: (1)For vintage years 2012 and 2013, 43.75 percent of the emission allowances established for each year under section 721(a). (2)For vintage years 2014 and 2015, 38.89 percent of the emission allowances established for each year under section 721(a). (3)For vintage years 2016 through 2025, 35.00 percent of the emission allowances established for each year under section 721(a). (4)For vintage year 2026, 28 percent of the emission allowances established for each year under section 721(a). (5)For vintage year 2027, 21 percent of the emission allowances established for each year under section 721(a). (6)For vintage year 2028, 14 percent of the emission allowances established for each year under section 721(a). (7)For vintage year 2029, 7 percent of the emission allowances established for each year under section 721(a). (b)

Natural gas consumers

The Administrator shall allocate emission allowances for the benefit of natural gas consumers to be distributed in accordance with section 784 in the following amounts: (1)For vintage years 2016 through 2025, 9 percent of the emission allowances established for each year under section 721(a). (2)For vintage year 2026, 7.2 percent of the emission allowances established for each year under section 721(a). (3)For vintage year 2027, 5.4 percent of the emission allowances established for each year under section 721(a). (4)For vintage year 2028, 3.6 percent of the emission allowances established for each year under section 721(a). (5)For vintage year 2029, 1.8 percent of the emission allowances established for each year under section 721(a). (c)

Home heating oil and propane consumers

The Administrator shall allocate emission allowances for the benefit of home heating oil and propane consumers to be distributed in accordance with section 785 in the following amounts: (1)For vintage years 2012 and 2013, 1.875 percent of the emission allowances established for each year under section 721(a). (2)For vintage years 2014 and 2015, 1.67 percent of the emission allowances established for each year under section 721(a). (3)For vintage years 2016 through 2025, 1.5 percent of the emission allowances established for each year under section 721(a). (4)For vintage year 2026, 1.2 percent of the emission allowances established for each year under section 721(a). (5)For vintage year 2027, 0.9 percent of the emission allowances established for each year under section 721(a). (6)For vintage year 2028, 0.6 percent of the emission allowances established for each year under section 721(a). (7)For vintage year 2029, 0.3 percent of the emission allowances established for each year under section 721(a). (d)

Low income consumers

For each vintage year starting in 2012, the Administrator shall auction 15 percent of the emission allowances established for each year under section 721(a), pursuant to section 791, with the proceeds used for the benefit of low income consumers to fund the program set forth in subtitle C of title IV of American Clean Energy and Security Act of 2009. (e)

Trade-vulnerable industries

The Administrator shall allocate emission allowances to energy-intensive, trade-exposed entities, to be distributed in accordance with part F, in the following amounts: (1)For vintage years 2012 and 2013, up to 2.0 percent of the emission allowances established for each year under section 721(a). (2)For vintage years 2014, up to 15 percent of the emission allowances established for that year under section 721(a). (3)For vintage years 2015 through 2025, the maximum number of allowances that shall be distributed shall decline by the same amount that the annual reduction target set forth in section 702 declines (which is 1.75 percentage points annually for 2015 through 2020, and 2.5 percentage points annually from 2021 through 2025). (4)For vintage years 2026 through 2050, the maximum number of allowances that shall be distributed shall decline by the same amount that the annual reduction target set forth in section 702 declines (which is 2.5 percentage points annually for 2026 through 2030, and 1.55 percentage points annually from 2031 through 2050) and shall be multiplied by a factor, which shall be 90 percent in 2026 and decline 10 percentage points a year until it reaches zero, unless the President sets a different factor under section 767(c)(3)(A), that shall not exceed 100 percent. (f)

Deployment of carbon capture and sequestration technology

(1)

Annual allocation

The Administrator shall allocate emission allowances for the deployment of carbon capture and sequestration technology to be distributed in accordance with section 786 in the following amounts: (A)For vintage years 2014 through 2017, 2 percent of the emission allowances established for each year under section 721(a). (B)For vintage years 2018 through 2050, 5 percent of the emission allowances established for each year under section 721(a). (2)

Carryover

If the Administrator has not distributed all of the allowances allocated pursuant to this section for a given vintage year by the end of that year, the Administrator shall— (A)auction those emission allowances under section 791 not later than March 31 of the year following that vintage year; and (B)increase the allocation under this subsection for the vintage year after the vintage year for which emission allowances were undisbursed by the amount of undisbursed emission allowances. (g)

Investment in energy efficiency and renewable energy

The Administrator shall allocate emission allowances to invest in energy efficiency and renewable energy as follows: (1)To be distributed in accordance with section 132 of the American Clean Energy and Security Act of 2009 in the following amounts: (A)For vintage years 2012 through 2015, 9.5 percent of the emission allowances established for each year under section 721(a). (B)For vintage years 2016 through 2017, 7.0 percent of the emission allowances established for each year under section 721(a). (C)For vintage years 2018 through 2021, 6.0 percent of the emission allowances established for each year under section 721(a). (D)For vintage years 2022 through 2025, 1.5 percent of the emission allowances established for each year under section 721(a). (E)For vintage years 2026 through 2050, 4.5 percent of the emission allowances established for each year under section 721(a). (F)At the same time the vintage year 2022 through 2025 allowances are distributed, 3.55 percent of emission allowances established under section 721(a) for the vintage year four years greater shall also be distributed (which shall be in addition to the emission allowances in subparagraph (E)). (2)To be distributed in accordance with section 201 of the American Clean Energy and Security Act of 2009 in the amount of 0.5 percent of emission allowances established under section 721(a) for each vintage year from 2012 through 2050. (h)

Clean energy innovation centers

The Administrator shall allocate 1 percent of emission allowances for each vintage year from 2012 through 2050 to be distributed to Clean Energy Innovation Centers in accordance with section 181 of the American Clean Energy and Security Act of 2009. (i)

Investment in clean vehicle technology

The Administrator shall allocate emission allowances to invest in the development and deployment of clean vehicles, to be distributed in accordance with section 124 of the American Clean Energy and Security Act of 2009 in the following amounts: (1)For vintage years 2012 through 2017, 3 percent of the emission allowances established for each year under section 721(a). (2)For vintage years 2018 through 2025, 1 percent of the emission allowances established for each year under section 721(a). (j)

Domestic fuel production

For vintage years 2014 through 2026, the Administrator shall allocate 2.0 percent of the emission allowances established under section 721(a) to domestic refiners, to be distributed in accordance with part F. (k)

Investment in workers

The Administrator shall auction pursuant to section 791 emission allowances for workers in the following amounts and shall report to the Secretary of Labor the amount of proceeds from the sale of these allowances: (1)For vintage years 2012 through 2021, 0.5 percent of the emission allowances established for each year under section 721(a). (2)For vintage years 2022 through 2050, 1.0 percent of the emission allowances established for each year under section 721(a). (l)

Domestic adaptation

The Administrator shall allocate emission allowances for domestic adaptation as follows: (1)To be distributed in accordance with section 453 of the American Clean Energy and Security Act in the following amounts: (A)For vintage years 2012 through 2021, 0.9 percent of the emission allowances established for each year under section 721(a). (B)For vintage years 2022 through 2026, 1.9 percent of the emission allowances established for each year under section 721(a). (C)For vintage years 2027 through 2050, 3.9 percent of the emission allowances established for each year under section 721(a). (2)For vintage year 2012 and thereafter, the Administrator shall auction 0.1 percent of the emission allowances established for each year under section 721(a), pursuant to section 791, and shall deposit the proceeds in the Climate Change Health Protection and Promotion Fund established by section 467 of the American Clean Energy and Security Act. (m)

Wildlife and natural resource adaptation

The Administrator shall auction pursuant to section 791 emission allowances for domestic wildlife and natural resource adaptation in the amounts listed in paragraphs (1) through (3) and shall deposit the proceeds from the sale of these allowances in the Natural Resources Climate Change Adaptation Account established pursuant to section 480(a) of the American Clean Energy and Security Act. Funds so deposited shall be available for expenditure, without further appropriation or fiscal year limitation. (1)For vintage years 2012 through 2021, 1.0 percent of the emission allowances established for each year under section 721(a). (2)For vintage years 2022 through 2026, 2.0 percent of the emission allowances established for each year under section 721(a). (3)For vintage years 2027 through 2050, 4.0 percent of the emission allowances established for each year under section 721(a). (n)

International adaptation

The Administrator shall allocate emission allowances for international adaptation to be distributed in accordance with part 2 of subtitle E of title IV of the American Clean Energy and Security Act in the following amounts: (1)For vintage years 2012 through 2021, 1.0 percent of the emission allowances established for each year under section 721(a). (2)For vintage years 2022 through 2026, 2.0 percent of the emission allowances established for each year under section 721(a). (3)For vintage years 2027 through 2050, 4.0 percent of the emission allowances established for each year under section 721(a). (o)

International clean technology deployment

The Administrator shall allocate emission allowances for international clean technology deployment for distribution in accordance with subtitle D of title IV of the American Clean Energy and Security Act in the following amounts: (1)For vintage years 2012 through 2021, 1.0 percent of the emission allowances established for each year under section 721(a). (2)For vintage years 2022 through 2026, 2.0 percent of the emission allowances established for each year under section 721(a). (3)For vintage years 2027 through 2050, 4.0 percent of the emission allowances established for each year under section 721(a). (p)

Release of future allowances

The Administrator shall make future year allowances available by auctioning allowances, pursuant to section 791, in the following amounts: (1)In each of calendar years 2015 through 2020, a string of 0.7 billion allowances with vintage years 11 to 16 years after the year of the auction, with an equal number of allowances from each vintage year in the string. (2)In each of calendar years 2021 through 2025, a string of 0.5 billion allowances with vintage years 11 to 16 years after the year of the auction, with an equal number of allowances from each vintage year in the string. (3)In each of calendar years 2026 through 2030, a string of 0.3 billion allowances with vintage years 11 to 16 years after the year of the auction, with an equal number of allowances from each vintage year in the string. (q)

Deficit reduction

(1)For each of vintage years 2012 through 2025, any allowances not designated for distribution or auction pursuant to section 781, subsections (a) through (o) of this section, or section 790 shall be auctioned by the Administrator pursuant to section 791 and the proceeds shall be deposited into the Treasury. (2)Unless otherwise specified, any allowances allocated pursuant to subsections (a) through (o) and not distributed by March 31 of the calendar year following the allowance’s vintage year, shall be auctioned by the Administrator and the proceeds shall be deposited into the Treasury. (3)For auctions conducted through vintage year 2025 pursuant to subsection (p), the auction proceeds shall be deposited into the Treasury. (r)

Climate change consumer dividend

For each of vintage years 2026 through 2050, the Administrator shall auction pursuant to section 791 any allowance established under section 721(a) for that year and not designated for distribution or auction pursuant to subsections (a) through (p), and place the proceeds from the sale of these allowances in the Climate Change Dividend Fund. For auctions conducted in 2026 and thereafter pursuant to subsection (p), the auction proceeds shall be deposited into the Climate Change Dividend Fund. Funds so deposited shall be available for expenditure, without further appropriation or fiscal year limitation.

783.

Electricity consumers

(a)

Definitions

For purposes of this section: (1)

Electricity local distribution company

The term electricity local distribution company means an electric utility— (A)that has a legal, regulatory, or contractual obligation to deliver electricity directly to retail consumers in the United States, regardless of whether that entity or another entity sells the electricity as a commodity to those retail consumers; and (B)the retail rates of which, except in the case of a registered electric cooperative, are regulated by a State regulatory authority, regulatory commission, municipality, public utility, or by an Indian tribe pursuant to tribal law. (2)

Long-term contract generator

The term long-term contract generator means a qualifying small power production facility or a qualifying cogeneration facility (within the meaning of section 3(17)(C) or 3(18)(B) of the Federal Power Act), or a new independent power production facility (within the meaning of section 416(a)(2) of this Act, except that subparagraph (C) of such definition shall not apply for purposes of this paragraph), that is— (A)a covered entity; (B)as of the commencement of operation, a facility consisting of one or more utility units with total installed net output capacity (in MWe) of no more than 130 percent of the facility’s total planned net output capacity (in MWe); (C)as of the date of enactment of this title, a facility with a power sales agreement executed before January 1, 2007, that governs the facility’s electricity sales and provides for sales at a price (whether a fixed price or a price formula) for electricity that does not allow for recovery of the costs of compliance with the limitation on greenhouse gas emissions under this title; and (B)not a merchant coal generator (within the meaning of paragraph (3)). (3)

Merchant coal generator

The term merchant coal generator means an electric generation facility that— (A)is a covered entity; (B)derives at least 85 percent of its heat input from coal, petroleum coke, or any combination of these 2 fuels; (C)is not owned by a Federal, State, or regional agency or power authority; and (D)generates electricity for sale to others, provided that such sales are not subject to— (i)retail rate regulation by a State public utility commission; or (ii)self-regulation of rates by a local government, State agency, or electric cooperative. (4)

State regulatory authority

The term State regulatory authority has the meaning given that term in section 3(17) of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2602(17)). (b)

Electricity local distribution companies

(1)

Allocation

Not later than June 30 of 2011 and each calendar year thereafter through 2028, the Administrator shall distribute to electricity local distribution companies the quantity of emission allowances allocated for the electricity sector for the following vintage year pursuant to section 782(a), provided that the Administrator shall first subtract from such quantity and distribute or reserve for distribution the quantity of emission allowances for the relevant vintage year that are required for distribution under subsections (c) and (d) of this section. (2)

Distribution of allowances

(A)

Distribution based on emissions

(i)

In general

For each vintage year, 50 percent of the emission allowances available for distribution under paragraph (1) shall be distributed by the Administrator among individual electricity local distribution companies ratably based on the annual average carbon dioxide emissions attributable to generation of electricity sold at retail by each such company during— (I)calendar years 2006 through 2008; or (II)any 3 consecutive calendar years between 1999 and 2008, inclusive, that such company selects, provided that the company timely informs the Administrator of such selection. (ii)

Determination of emissions

As part of the regulations promulgated pursuant to subsection (e), the Administrator, after consultation with the Energy Information Administration, shall determine the average amount of carbon dioxide emissions attributable to generation of electricity sold at retail by each electricity local distribution company for each of the years 1999 through 2008. Such determinations shall be as precise as practicable, taking into account the nature of data currently available and the nature of markets and regulation in effect in various regions of the country. The following requirements shall apply to such determinations: (I)The Administrator shall determine the amount of fossil fuel-based electricity delivered at retail by each electricity local distribution company, and shall use appropriate emission factors to calculate carbon dioxide emissions associated with the generation of such electricity. (II)Where it is not practical to determine the precise fuel mix for the electricity delivered at retail by an individual electricity local distribution company, the Administrator may use the best available data, including average data on a regional basis with reference to Regional Transmission Organizations or regional entities (as that term is defined in section 215(a)(7) of the Federal Power Act (16 U.S.C. 824o(a)(7)), to estimate fuel mix and emissions. Different methodologies may be applied in different regions if appropriate to obtain the most accurate estimate. (B)

Distribution based on deliveries

(i)

Initial allocation formula

Except as provided in clause (ii), for each vintage year, the Administrator shall distribute 50 percent of the emission allowances allocated under paragraph (1) of this subsection among individual electricity local distribution companies ratably based on each electricity local distribution company’s annual average retail electricity deliveries for 2006 through 2008, unless the owner or operator of the company selects 3 other consecutive years between 1999 and 2008, inclusive, and timely notifies the Administrator of its selection. (ii)

Updating

Prior to distributing 2015 vintage emission allowances under this subparagraph and at 3-year intervals thereafter, the Administrator shall update the distribution formula under this subparagraph to reflect changes in each electricity local distribution company’s service territory since the most recent formula was established. For each successive 3-year period, the Administrator shall distribute allowances ratably among individual electricity local distribution companies based on the product of— (I)each electricity local distribution company’s average annual deliveries per customer during calendar years 2006 through 2008, or during the 3 alternative consecutive years selected by such company under clause (i); and (II)the number of customers of such electricity local distribution company in the most recent year in which the formula is updated under this clause. (3)

Use of allowances

(A)

Ratepayer benefit

Emission allowances distributed to an electricity local distribution company under this subsection shall be used exclusively for the benefit of retail ratepayers of such electricity local distribution company. Emission allowances received by an electricity local distribution company under this subsection may not be used to support electricity sales to entities or persons other than the retail ratepayers of such electricity local distribution company. (B)

Ratepayer classes

In using emission allowances distributed under this section for the benefit of ratepayers, an electricity local distribution company shall ensure that ratepayer benefits are distributed— (i)among ratepayer classes ratably based on electricity deliveries to each class; and (ii)equitably among individual ratepayers within each ratepayer class, including entities that receive emission allowances pursuant to part F. (C)

Limitation

No electricity local distribution company may use emission allowances to provide to any ratepayer a rebate that is based solely on the quantity of electricity delivered to such ratepayer. To the extent an electricity local distribution company uses the value of emission allowances distributed under this subsection to provide rebates, it shall, to the maximum extent practicable, provide such rebates with regard to the fixed portion of ratepayers’ bills. (D)

Guidelines

As part of the regulations promulgated under subsection (e), the Administrator shall prescribe specific guidelines for the implementation of the requirements of this paragraph. (4)

Regulatory proceedings

(A)

Requirement

No electricity local distribution company shall be eligible to receive emission allowances under this subsection unless the State regulatory authority with authority over such company, or the entity with authority to regulate retail electricity rates of an electricity local distribution company not regulated by a State regulatory authority, has— (i)promulgated a regulation or completed a rate proceeding (or the equivalent, in the case of a ratemaking entity other than a State regulatory authority) that provides for the full implementation of the requirements of paragraph (3) of this subsection; and (ii)made available to the Administrator and the public a report describing, in adequate detail, the manner in which the requirements of paragraph (3) will be implemented. (B)

Updating

The Administrator shall require, as a condition of continued receipt of emission allowances under this subsection by an electricity local distribution company, that a new regulation be promulgated or rate proceeding be completed, and a new report be made available to the Administrator and the public, pursuant to subparagraph (A), not less frequently than every 5 years. (5)

Plans and reporting

(A)

Regulations

As part of the regulations promulgated under subsection (e), the Administrator shall prescribe requirements governing plans and reports to be submitted by electricity local distribution companies in accordance with this paragraph. (B)

Plans

Not later than April 30 of 2011 and every 5 years thereafter through 2026, each electricity local distribution company shall submit to the Administrator a plan, approved by the State regulatory authority or other entity charged with regulating the retail rates of such company, describing such company’s plans for the disposition of the value of emission allowances to be received pursuant to this subsection, in accord with the requirements of this subsection. (C)

Reports

Not later than June 30 of 2013 and each calendar year thereafter through 2031, each electricity local distribution company that received emission allowances under this subsection in the preceding calendar year shall submit a report to the Administrator, and to the relevant State regulatory authority or the entity with authority to regulate retail electricity rates in the case of an electricity local distribution company not regulated by a State regulatory authority, describing the disposition of the value of any emission allowances received by the company in the prior calendar year pursuant to this subsection, including— (i)a description of sales, transfer, exchange, or use by the company for compliance with obligations under this title, of any such emission allowances; (ii)the monetary value received by the company, whether in money or in some other form, from the sale, transfer, or exchange of emission allowances received by the company under this section; (iii)the manner in which the company’s disposition of emission allowances received under this subsection complies with the requirements of this subsection, including each of the requirements of paragraph (3); and (iv)such other information as the Administrator may require pursuant to subparagraph (A). (D)

Publication

The Administrator shall make available to the public all plans and reports submitted by electricity local distribution companies under this section, including by publishing such plans and reports on the Internet. (6)

Audits

Each year, the Administrator shall conduct an audit of a representative sample of electricity local distribution companies receiving emission allowances under this subsection to ensure compliance with the requirements of this subsection. In selecting electricity local distribution companies for audit, the Administrator shall take into account any credible evidence of noncompliance with the requirements of this subsection. The Administrator shall make available to the public a report describing the results of each such audit, including by publishing such report on the Internet. (7)

Enforcement

A violation of any requirement of this subsection shall be a violation of this Act. Each emission allowance the value of which is used in violation of the requirements of this subsection shall be a separate violation. (c)

Merchant coal generators

(1)

Qualifying emissions

The qualifying emissions for a merchant coal generator for a given calendar year shall be the product of the number of megawatt hours of electricity generated by such generator in such calendar year and the average carbon dioxide emissions per megawatt hour generated by such generator during calendar years 2006 through 2008, provided that the number of megawatt hours in a given calendar year for purposes of such calculation shall be reduced in proportion to the portion of such generator’s carbon dioxide emissions that were captured and sequestered in such calendar year and for which such generator received or will receive bonus emission allowances under section 785. (2)

Phase-down schedule

The Administrator shall identify an annual phase-down factor, applicable to distributions to merchant coal generators for each of calendar years 2012 through 2029, that corresponds to the overall decline in the amount of emission allowances to be allocated to the electricity sector in such years pursuant to section 782(a). Such factor shall— (A)for calendar year 2012, be equal to 1.0; (B)for each of calendar years 2013 through 2029, correspond to the quotient of— (i)the quantity of emission allowances to be allocated to the electricity sector under section 782(a) for such calendar year; divided by (ii)the quantity of emission allowances to be allocated to the electricity sector under section 782(a) for calendar year 2012. (3)

Distribution of emission allowances

Not later than March 1 of 2013 and each calendar year through 2030, the Administrator shall distribute emission allowances of the preceding vintage year to each merchant coal generator equal to the product of— (A)0.5; (B)the qualifying emissions for such merchant coal generator for the preceding year, as determined under paragraph (1); and (C)the phase-down factor for the preceding calendar year, as identified under paragraph (2). (4)

Adjustment

(A)

Study

Not later than July 1, 2014, the Administrator, in consultation with the Federal Energy Regulatory Commission, shall complete a study to determine whether the allocation formula under paragraph (3) is resulting in, or is likely to result in, windfall profits to merchant coal generators or substantially disparate treatment of merchant coal generators operating in different markets or regions. (B)

Regulation

If the Administrator, in consultation with the Federal Energy Regulatory Commission, makes an affirmative finding of windfall profits or disparate treatment under subparagraph (A), the Administrator shall, not later than 18 months after the completion of the study described in subparagraph (A), promulgate regulations providing for the adjustment of the allocation formula under paragraph (3) to mitigate, to the extent practicable, such windfall profits, if any, and such disparate treatment, if any. (5)

Limitation on allowances

Notwithstanding paragraph (3) or (4), for any vintage year the Administrator shall distribute under this subsection no more than 10 percent of the total quantity of emission allowances available for such vintage year for distribution to the electricity sector under section 782(a). If the quantity of emission allowances that would otherwise be distributed pursuant to paragraph (3) or (4) for any vintage year would exceed such limit, the Administrator shall distribute 10 percent of the total emission allowances available for distribution under section 782(a) for such vintage year ratably among merchant coal generators based on the formula in paragraph (3) or (4). (d)

Generators with long-term power purchase agreements

(1)

Reserved allowances

Notwithstanding subsections (b) and (c) of this section, the Administrator shall withhold from distribution to electricity local distribution companies a number of emission allowances equal to 105 percent of the emission allowances the Administrator anticipates will be distributed to long-term contract generators under this subsection. If not required to distribute all of these reserved allowances under this subsection, the Administrator shall distribute any remaining emission allowances to the electricity local distribution companies in accordance with subsection (b). (2)

Distribution

Not later than March 1 of 2013 and each calendar year through 2030, the Administrator shall distribute to the owner or operator of each long-term contract generator the number of emission allowances of the preceding vintage year that are equal to the number of tons of carbon dioxide emitted as a result of a qualifying long-term power purchase agreement referred to in subsection (a)(2)(C). (3)

Duration

A long-term contract generator shall cease to be eligible to receive allocations under this subsection upon the earliest of the following dates: (A)The date when the facility no longer qualifies as a qualifying small power production facility or a qualifying cogeneration facility (within the meaning of section 3(17)(C) or 3(18)(B) of the Federal Power Act), or a new independent power production facility (within the meaning of section 416(a)(2) of this Act, except that subparagraph (C) of such definition shall not apply for purposes of this clause). (B)The date when the facility no longer meets the total installed net output capacity criterion required to be met as of the commencement of operation in subsection (a)(2)(B). (C)The date when the power purchase agreement referred to in subsection (a)(2)(C)— (i)expires; (ii)is terminated; or (iii)is amended in any way that changes the location of the facility, the price (whether a fixed price or price formula) for electricity sold under such agreement, the quantity of electricity sold under the agreement, or the expiration or termination date of the agreement. (4)

Eligibility

To be eligible to receive allowance distributions under this subsection, a long-term contract generator shall submit each of the following in writing to the Administrator within 180 days after the date of enactment of this title, and not later than September 30 of each vintage year for which such generator wishes to receive emission allowances: (A)A certificate of representation described in section 700(16). (B)An identification of each owner and each operator of the facility. (C)An identification of the units at the facility and the location of the facility. (D)A written certification by the designated representative that the facility meets all the requirements of the definition of a long-term contract generator. (E)The expiration date of the power purchase agreement referred to in subsection (a)(2)(C). (F)A copy of the power purchase agreement referred to in subsection (a)(2)(C). (5)

Notification

Not later than 30 days after a facility loses, in accordance with paragraph (3), its eligibility for emission allowances distributed pursuant to this subsection, the designated representative of such facility shall notify the Administrator in writing when, and on what basis, the facility lost its eligibility to receive emission allowances. (e)

Regulations

Not later than 2 years after the date of enactment of this title, the Administrator, in consultation with the Federal Energy Regulatory Commission, shall promulgate regulations to implement the requirements of this section.

784.

Natural gas consumers

(a)

Definitions

For purposes of this section: (1)

Natural gas local distribution company

The term natural gas local distribution company means a natural gas local distribution company that is a covered entity. (2)

Cost-effective

The term cost-effective, with respect to an energy efficiency program, means that the program meets the Total Resource Cost Test, which requires that the net present value of economic benefits over the life of the program, including avoided supply and delivery costs and deferred or avoided investments, is greater than the net present value of the economic costs over the life of the program, including program costs and incremental costs borne by the energy consumer. (b)

Allocation

Not later than June 30 of 2015 and each calendar year thereafter through 2028, the Administrator shall distribute to natural gas local distribution companies the quantity of emission allowances allocated for the following vintage year pursuant to section 782(b). Such allowances shall be distributed among local natural gas distribution companies based on the following formula: (1)

Initial formula

Except as provided in paragraph (2), for each vintage year, the Administrator shall distribute emission allowances among natural gas local distribution companies ratably based on each such company’s annual average retail natural gas deliveries for 2006 through 2008, unless the owner or operator of the company selects 3 other consecutive years between 1999 and 2008, inclusive, and timely notifies the Administrator of its selection. (2)

Updating

Prior to distributing 2019 vintage emission allowances and at 3-year intervals thereafter, the Administrator shall update the distribution formula under this subsection to reflect changes in each natural gas local distribution company’s service territory since the most recent formula was established. For each successive 3-year period, the Administrator shall distribute allowances ratably among natural gas local distribution companies based on the product of— (A)each natural gas local distribution company’s average annual natural gas deliveries per customer during calendar years 2006 through 2008, or during the 3 alternative consecutive years selected by such company under paragraph (1); and (B)the number of customers of such natural gas local distribution company in the most recent year in which the formula is updated under this paragraph. (c)

Use of allowances

(1)

Ratepayer benefit

Emission allowances distributed to a natural gas local distribution company under this section shall be used exclusively for the benefit of retail ratepayers of such natural gas local distribution company. Emission allowances received by a natural gas local distribution company under this section may not be used to support natural gas sales to entities or persons other than the retail ratepayers of such natural gas local distribution company. (2)

Ratepayer classes

In using emission allowances distributed under this section for the benefit of ratepayers, a natural gas local distribution company shall ensure that ratepayer benefits are distributed— (A)among ratepayer classes ratably based on natural gas deliveries to each class; and (B)equitably among individual ratepayers within each ratepayer class. (3)

Limitation

No natural gas local distribution company may use emission allowances to provide to any ratepayer a rebate that is based solely on the quantity of natural gas delivered to such ratepayer. To the extent a natural gas local distribution company uses the value of emission allowances distributed under this subsection to provide rebates, it shall, to the maximum extent practicable, provide such rebates with regard to the fixed portion of ratepayers’ bills. (4)

Energy efficiency programs

The value of no less than one third of the emission allowances distributed to natural gas local distribution companies pursuant to this section in any calendar year shall be used for cost-effective energy efficiency programs for natural gas consumers. Such programs must be authorized and overseen by the State regulatory authority, or by the entity with regulatory authority over retail natural gas rates in the case of a natural gas local distribution company that is not regulated by a State regulatory authority. (5)

Guidelines

As part of the regulations promulgated under subsection (h), the Administrator shall prescribe specific guidelines for the implementation of the requirements of this subsection. (d)

Regulatory proceedings

(1)

Requirement

No natural gas local distribution company shall be eligible to receive emission allowances under this section unless the State regulatory authority with authority over such company, or the entity with authority to regulate retail rates of a natural gas local distribution company not regulated by a State regulatory authority, has— (A)promulgated a regulation or completed a rate proceeding (or the equivalent, in the case of a ratemaking entity other than a State regulatory authority) that provides for the full implementation of the requirements of subsection (c); and (B)made available to the Administrator and the public a report describing, in adequate detail, the manner in which the requirements of subsection (c) will be implemented. (2)

Updating

The Administrator shall require, as a condition of continued receipt of emission allowances under this section by a natural gas local distribution company, that a new regulation be promulgated or rate proceeding be completed, and a new report be made available to the Administrator and the public, pursuant to paragraph (1), not less frequently than every 5 years. (e)

Plans and reporting

(1)

Regulations

As part of the regulations promulgated under subsection (h), the Administrator shall prescribe requirements governing plans and reports to be submitted by natural gas local distribution companies in accordance with this subsection. (2)

Plans

Not later than April 30 of 2015 and every 5 years thereafter through 2025, each natural gas local distribution company shall submit to the Administrator a plan, approved by the State regulatory authority or other entity charged with regulating the retail rates of such company, describing such company’s plans for the disposition of the value of emission allowances to be received pursuant to this section, in accord with the requirements of this section. (3)

Reports

Not later than June 30 of 2017 and each calendar year thereafter through 2031, each natural gas local distribution company that received emission allowances under this section in the preceding calendar year shall submit a report to the Administrator, approved by the relevant State regulatory authority or the entity with authority to regulate retail natural gas rates in the case of a natural gas local distribution company not regulated by a State regulatory authority, describing the disposition of the value of any emission allowances received by the company in the prior calendar year pursuant to this subsection, including— (A)a description of sales, transfer, exchange, or use by the company for compliance with obligations under this title, of any such emission allowances; (B)the monetary value received by the company, whether in money or in some other form, from the sale, transfer, or exchange of emission allowances received by the company under this section; (C)the manner in which the company’s disposition of emission allowances received under this subsection complies with the requirements of this section, including each of the requirements of subsection (c); (D)the cost-effectiveness of, and energy savings achieved by, energy efficiency programs supported through such emission allowances; and (E)such other information as the Administrator may require pursuant to paragraph (1). (4)

Publication

The Administrator shall make available to the public all plans and reports submitted by natural gas local distribution companies under this subsection, including by publishing such plans and reports on the Internet. (f)

Audits

Each year, the Administrator shall conduct an audit of a representative sample of natural gas local distribution companies receiving emission allowances under this section to ensure compliance with the requirements of this section. In selecting natural gas local distribution companies for audit, the Administrator shall take into account any credible evidence of noncompliance with the requirements of this section. The Administrator shall make available to the public a report describing the results of each such audit, including by publishing such report on the Internet. (g)

Enforcement

A violation of any requirement of this section shall be a violation of this Act. Each emission allowance the value of which is used in violation of the requirements of this section shall be a separate violation. (h)

Regulations

Not later than January 1, 2014, the Administrator, in consultation with the Federal Energy Regulatory Commission, shall promulgate regulations to implement the requirements of this section.

785.

Home heating oil and propane consumers

(a)

Definitions

For purposes of this section: (1)

Carbon content

The term carbon content means the amount of carbon dioxide that will be emitted as a result of the combustion of a fuel. (2)

Cost-effective

The term cost-effective, with respect to an energy efficiency program, means that the program meets the Total Resource Cost Test, which requires that the net present value of economic benefits over the life of the program, including avoided supply and delivery costs and deferred or avoided investments, is greater than the net present value of the economic costs over the life of the program, including program costs and incremental costs borne by the energy consumer. (b)

Allocation

Not later than September 30 of each of calendar years 2012 through 2030, the Administrator shall distribute among the States, in accordance with this section, the quantity of emission allowances allocated pursuant to section 782(c). (c)

Distribution among States

The Administrator shall distribute allowances among the States under this section each year ratably based on the ratio of— (1)the carbon content of home heating oil and propane sold to consumers within each State in the preceding year for residential or commercial uses; to (2)the carbon content of home heating oil and propane sold to consumers within the United States in the preceding year for residential or commercial uses. (d)

Use of allowances

(1)

In general

States shall use emission allowances distributed under this section exclusively for the benefit of consumers of home heating oil or propane for residential or commercial purposes. Such proceeds shall be used exclusively for— (A)cost-effective energy efficiency programs for consumers that use home heating oil or propane for residential or commercial purposes; or (B)rebates or other direct financial assistance programs for consumers of home heating oil or propane used for residential or commercial purposes. (2)

Administration and delivery mechanisms

In administering programs supported by this section, States shall— (A)use no less than 50 percent of the value of emission allowances received under this section for cost-effective efficiency programs to reduce consumers’ overall fuel costs; (B)to the extent practicable, deliver consumer support under this section through existing energy efficiency and consumer energy assistance programs or delivery mechanisms, including, where appropriate, programs or mechanisms administered by parties other than the State; and (C)seek to coordinate the administration and delivery of energy efficiency and consumer energy assistance programs funded under this section, with one another and with existing programs for various fuel types, so as to deliver comprehensive, fuel-blind, coordinated programs to consumers. (e)

Reporting

Each State receiving emission allowances under this section shall submit to the Administrator, within 12 months of each receipt of such allowances, a report, in accordance with such requirements as the Administrator may prescribe, that— (1)describes the State’s use of emission allowances distributed under this section, including a description of the energy efficiency and consumer assistance programs supported with such allowances; (2)demonstrates the cost-effectiveness of, and the energy savings achieved by, energy efficiency programs supported under this section; and (3)includes a report prepared by an independent third party, in accordance with such regulations as the Administrator may promulgate, evaluating the performance of the energy efficiency and consumer assistance programs supported under this section. (f)

Enforcement

If the Administrator determines that a State is not in compliance with this section, the Administrator may withhold a portion of the allowances, the value of which is equal to up to twice the value of the allowances that the State failed to use in accordance with the requirements of this section, that such State would otherwise be eligible to receive under this section in later years. Allowances withheld pursuant to this subsection shall be distributed among the remaining States ratably in accordance with the formula in subsection (c).

786–788.

SECTIONS RESERVED

789.

Climate change rebates

(a)

Rebate

Not later than October 31 of each calendar year, the President, or such Federal agency or department as the President may designate, shall distribute the funds in the Consumer Climate Change Rebate Fund on a per capita basis to each household in the United States. (b)

Limitations

The President, or such Federal agency or department as the President may designate, shall establish procedures to ensure that individuals who are not— (1)citizens or nationals of the United States; or (2)immigrants lawfully residing in the United States, are excluded for the purpose of calculating and distributing rebates under this section.

790.

Exchange for State-issued allowances

(a)

In general

Not later than one year after the date of enactment of this title, the Administrator shall issue regulations allowing any person in the United States to exchange greenhouse gas emission allowances issued before December 31, 2011, by the State of California or for the Regional Greenhouse Gas Initiative, or the Western Climate Initiative (in this section referred to as State allowances) for emission allowances established by the Administrator under section 721(a). (b)

Regulations

Regulations issued under subsection (a) shall— (1)provide that a person exchanging State allowances under this section receive emission allowances established under section 721(a) in the amount that is sufficient to compensate for the cost of obtaining and holding such State allowances; (2)establish a deadline by which persons must exchange the State allowances; and (3)provide that the Federal emission allowances disbursed pursuant to this section shall be deducted from the allowances to be auctioned pursuant to section 782(b). (c)

Cost of obtaining State allowance

For purposes of this section, the cost of obtaining a State allowance shall be the average auction price, for emission allowances issued in the year in which the State allowance was issued, under the program under which the State allowance was issued.

791.

Auction procedures

(a)

In general

To the extent that auctions of emission allowances by the Administrator are authorized by this part, such auctions shall be carried out pursuant to this section and the regulations established hereunder. (b)

Initial regulations

Not later than 12 months after the date of enactment of this title, the Administrator, in consultation with other agencies, as appropriate, shall promulgate regulations governing the auction of allowances under this section. Such regulations shall include the following requirements: (1)

Frequency; first auction

Auctions shall be held four times per year at regular intervals, with the first auction to be held no later than March 31, 2011. (2)

Auction schedule; current and future vintages

The Administrator shall, at each quarterly auction under this section, offer for sale both a portion of the allowances with the same vintage year as the year in which the auction is being conducted and a portion of the allowances with vintage years from future years. The preceding sentence shall not apply to auctions held before 2012, during which period, by necessity, the Administrator shall auction only allowances with a vintage year that is later than the year in which the auction is held. Beginning with the first auction and at each quarterly auction held thereafter, the Administrator may offer for sale allowances with vintage years of up to four years after the year in which the auction is being conducted. (3)

Auction format

Auctions shall follow a single-round, sealed-bid, uniform price format. (4)

Participation; financial assurance

Auctions shall be open to any person, except that the Administrator may establish financial assurance requirements to ensure that auction participants can and will perform on their bids. (5)

Disclosure of beneficial ownership

Each bidder in the auction shall be required to disclose the person or entity sponsoring or benefitting from the bidder’s participation in the auction if such person or entity is, in whole or in part, other than the bidder. (6)

Purchase limits

No person may, directly or in concert with another participant, purchase more than 5 percent of the allowances offered for sale at any quarterly auction. (7)

Publication of information

After the auction, the Administrator shall, in a timely fashion, publish the identities of winning bidders, the quantity of allowances obtained by each winning bidder, and the auction clearing price. (8)

Other requirements

The Administrator may include in the regulations such other requirements or provisions as the Administrator, in consultation with other agencies, as appropriate, considers appropriate to promote effective, efficient, transparent, and fair administration of auctions under this section. (c)

Revision of regulations

The Administrator may, in consultation with other agencies, as appropriate, at any time, revise the initial regulations promulgated under subsection (b). Such revised regulations need not meet the requirements identified in subsection (b) if the Administrator determines that an alternative auction design would be more effective, taking into account factors including costs of administration, transparency, fairness, and risks of collusion or manipulation. In determining whether and how to revise the initial regulations under this subsection, the Administrator shall not consider maximization of revenues to the Federal Government. (d)

Reserve auction price

The minimum reserve auction price shall be $10 for auctions occurring in 2012. The minimum reserve price for auctions occurring in years after 2012 shall be the minimum reserve auction price for the previous year increased by 5 percent plus the rate of inflation (as measured by the Consumer Price Index for all urban consumers). (e)

Delegation or contract

Pursuant to regulations under this section, the Administrator may by delegation or contract provide for the conduct of auctions under the Administrator’s supervision by other departments or agencies of the Federal Government or by nongovernmental agencies, groups, or organizations.

792.

Auctioning allowances for other entities

(a)

Consignment

Any entity holding emission allowances or compensatory allowances may request that the Administrator auction, pursuant to section 791, the allowances on consignment. (b)

Pricing

When the Administrator acts under this section as the agent of an entity in possession of emission allowances, the Administrator is not obligated to obtain the highest price possible for the emission allowances, and instead shall auction consignment allowances in the same manner and pursuant to the same rules as auctions of other allowances under section 791. The Administrator may permit emission allowance owners to condition the sale of their allowances pursuant to this section on a minimum reserve price. (c)

Proceeds

For emission allowances and compensatory allowances auctioned pursuant to this section, notwithstanding section 3302 of title 31, United States Code, or any other provision of law, within 90 days of receipt, the United States shall transfer the proceeds from the auction to the entity which held the allowances auctioned. No funds transferred from a purchaser to a seller of emission allowances or compensatory allowances under this subsection shall be held by any officer or employee of the United States or treated for any purpose as public monies. (d)

Regulations

The Administrator shall issue regulations within 24 months after the date of enactment of this title to implement this section.

793.

Establishment of funds

There is established in the Treasury of the United States the following funds: (1)The Strategic Reserve Fund. (2)The Climate Change Rebate Fund.

.

C

Additional greenhouse gas standards

331.

Greenhouse gas standards

The Clean Air Act (42 U.S.C. 7401 and following), as amended by subtitles A and B of this title, is further amended by adding the following new title after title VII: .

332.

HFC Regulation

(a)

In general

Title VI of the Clean Air Act (42 U.S.C. 7671 et seq.) (relating to stratospheric ozone protection) is amended by adding at the end the following:

619.

Hydrofluorocarbons (HFCs)

(a)

Treatment as class II, group II substances

Except as otherwise provided in this section, hydrofluorocarbons shall be treated as class II substances for purposes of applying the provisions of this title. The Administrator shall establish two groups of class II substances. Class II, group I substances shall include all hydrochlorofluorocarbons (HCFCs) listed pursuant to section 602(b). Class II, group II substances shall include each of the following: (1)Hydrofluorocarbon-23 (HFC-23). (2)Hydrofluorocarbon-32 (HFC-32). (3)Hydrofluorocarbon-41 (HFC-41). (4)Hydrofluorocarbon-125 (HFC-125). (5)Hydrofluorocarbon-134 (HFC-134). (6)Hydrofluorocarbon-134a (HFC-134a). (7)Hydrofluorocarbon-143 (HFC-143). (8)Hydrofluorocarbon-143a (HFC-143a). (9)Hydrofluorocarbon-152 (HFC-152). (10)Hydrofluorocarbon-152a (HFC-152a). (11)Hydrofluorocarbon-227ea (HFC-227ea). (12)Hydrofluorocarbon-236cb (HFC-236cb). (13)Hydrofluorocarbon-236ea (HFC-236ea). (14)Hydrofluorocarbon-236fa (HFC-236fa). (15)Hydrofluorocarbon-245ca (HFC-245ca). (16)Hydrofluorocarbon-245fa (HFC-245fa). (17)Hydrofluorocarbon-365mfc (HFC-365mfc). (18)Hydrofluorocarbon-43-10mee (HFC-43-10mee). (19)Hydrofluoroolefin-1234yf (HFO-1234yf). (20)Hydrofluoroolefin-1234ze (HFO-1234ze). Not later than 6 months after the date of enactment of this title, the Administrator shall publish an initial list of class II, group II substances, which shall include the substances listed in this subsection. The Administrator may add to the list of class II, group II substances any other substance used as a substitute for a class I or II substance if the Administrator determines that 1 metric ton of the gas makes the same or greater contribution to global warming over 100 years as 1 metric ton of carbon dioxide. Within 24 months after the date of enactment of this section, the Administrator shall amend the regulations under this title (including the regulations referred to in sections 603, 608, 609, 610, 611, 612, and 613) to apply to class II, group II substances.(b)

Consumption and production of Class II, Group II substances

(1)

In general

(A)

Consumption phase down

In the case of class II, group II substances, in lieu of applying section 605 and the regulations thereunder, the Administrator shall promulgate regulations phasing down the consumption of class II, group II substances in the United States, and the importation of products containing any class II, group II substance, in accordance with this subsection within 18 months after the date of enactment of this section. Effective January 1, 2012, it shall be unlawful for any person to produce any class II, group II substance, import any class II, group II substance, or import any product containing any class II, group II substance without holding one consumption allowance or one destruction offset credit for each carbon dioxide equivalent ton of the class II, group II substance. Any person who exports a class II, group II substance for which a consumption allowance was retired may receive a refund of that allowance from the Administrator following the export. (B)

Production

If the United States becomes a party or otherwise adheres to a multilateral agreement, including any amendment to the Montreal Protocol on Substances That Deplete the Ozone Layer, that restricts the production of class II, group II substances, the Administrator shall promulgate regulations establishing a baseline for the production of class II, group II substances in the United States and phasing down the production of class II, group II substances in the United States, in accordance with such multilateral agreement and subject to the same exceptions and other provisions as are applicable to the phase down of consumption of class II, group II substances under this section (except that the Administrator shall not require a person who obtains production allowances from the Administrator to make payment for such allowances if the person is making payment for a corresponding quantity of consumption allowances of the same vintage year). Upon the effective date of such regulations, it shall be unlawful for any person to produce any class II, group II substance without holding one consumption allowance and one production allowance, or one destruction offset credit, for each carbon dioxide equivalent ton of the class II, group II substance. (C)

Integrity of cap

To maintain the integrity of the class II, group II cap, the Administrator may, through rulemaking, limit the percentage of each person’s compliance obligation that may be met through the use of destruction offset credits or banked allowances. (D)

Counting of violations

Each emission allowance not held as required by this section shall be a separate violation of this section. (2)

Schedule

Pursuant to the regulations promulgated pursuant to paragraph (1), the number of class II, group II consumption allowances established by the Administrator for each calendar year beginning in 2012 shall be the following percentage of the baseline, as established by the Administrator pursuant to paragraph (3): Calendar YearPercent of Baseline 201290 2013 87.5 201485 201582.5 201680 201777.5 201875 201971 202067 202163 202259 202354 202450 202546 202642 202738 202834 202930 203025 203121 203217 after 203215 (3)

Baseline

(A)Within 12 months after the date of enactment of this section, the Administrator shall promulgate regulations to establish the baseline for purposes of paragraph (2). The baseline shall be the sum, expressed in tons of carbon dioxide equivalents, of— (i)the annual average consumption of all class II substances in calendar years 2004, 2005, and 2006; plus (ii)the annual average quantity of all class II substances contained in imported products in calendar years 2004, 2005, and 2006. (B)Notwithstanding subparagraph (A), if the Administrator determines that the baseline is higher than 370 million metric tons of carbon dioxide equivalents, then the Administrator shall establish the baseline at 370 million metric tons of carbon dioxide equivalents. (C)Notwithstanding subparagraph (A), if the Administrator determines that the baseline is lower than 280 million metric tons of carbon dioxide equivalents, then the Administrator shall establish the baseline at 280 million metric tons of carbon dioxide equivalents. (4)

Distribution of allowances

(A)

In general

Pursuant to the regulations promulgated under paragraph (1), for each calendar year beginning in 2012, the Administrator shall sell consumption allowances in accordance with this paragraph. (B)

Establishment of pools

The Administrator shall establish two allowance pools. Eighty percent of the consumption allowances available for a calendar year shall be placed in the producer-importer pool, and 20 percent of the consumption allowances available for a calendar year shall be placed in the secondary pool. (C)

Producer-importer pool

(i)

Auction

(I)For each calendar year, the Administrator shall offer for sale at auction the following percentage of the consumption allowances in the producer-importer pool: Calendar YearPercent Available for Auction 201210 2013 20 201430 201540 201650 201760 201870 201980 2020 and thereafter90 (II)Any person who produced or imported any class II substance during calendar year 2004, 2005, or 2006 may participate in the auction. No other persons may participate in the auction unless permitted to do so pursuant to subclause (III). (III)Not later than three years after the date of the initial auction and from time to time thereafter, the Administrator shall determine through rulemaking whether any persons who did not produce or import a class II substance during calendar year 2004, 2005, or 2006 will be permitted to participate in future auctions. The Administrator shall base this determination on the duration, consistency, and scale of such person’s purchases of consumption allowances in the secondary pool under subparagraph (D), as well as economic or technical hardship and other factors deemed relevant by the Administrator. (IV)The Administrator shall set a minimum bid per consumption allowance of the following: (aa)For vintage year 2012, $1.00. (bb)For vintage year 2013, $1.20. (cc)For vintage year 2014, $1.40. (dd)For vintage year 2015, $1.60. (ee)For vintage year 2016, $1.80. (ff)For vintage year 2017, $2.00. (gg)For vintage year 2018 and thereafter, $2.00 adjusted for inflation after vintage year 2017 based upon the producer price index as published by the Department of Commerce. (ii)

Non-auction sale

(I)For each calendar year, as soon as practicable after auction, the Administrator shall offer for sale the remaining consumption allowances in the producer-importer pool at the following prices: (aa)A fee of $1.00 per vintage year 2012 allowance. (bb)A fee of $1.20 per vintage year 2013 allowance. (cc)A fee of $1.40 per vintage year 2014 allowance. (dd)For each vintage year 2015 allowance, a fee equal to the average of $1.10 and the auction clearing price for vintage year 2014 allowances. (ee)For each vintage year 2016 allowance, a fee equal to the average of $1.30 and the auction clearing price for vintage year 2015 allowances. (ff)For each vintage year 2017 allowance, a fee equal to the average of $1.40 and the auction clearing price for vintage year 2016 allowances. (gg)For each allowance of vintage year 2018 and subsequent vintage years, a fee equal to the auction clearing price for that vintage year. (II)The Administrator shall offer to sell the remaining consumption allowances in the producer-importer pool to producers of class II, group II substances and importers of class II, group II substances in proportion to their relative allocation share. (III)Such allocation share for such sale shall be determined by the Administrator using such producer’s or importer’s annual average data on class II substances from calendar years 2004, 2005, and 2006, on a carbon dioxide equivalent basis, and— (aa)shall be based on a producer’s production, plus importation, plus acquisitions and purchases from persons who produced class II substances in the United States during calendar years 2004, 2005, or 2006, less exportation, less transfers and sales to persons who produced class II substances in the United States during calendar years 2004, 2005, or 2006; and (bb)for an importer of class II substances that did not produce in the United States any class II substance during calendar years 2004, 2005, and 2006, shall be based on the importer’s importation less exportation. For purposes of item (aa), the Administrator shall account for 100 percent of class II, group II substances and 60 percent of class II, group I substances. For purposes of item (bb), the Administrator shall account for 100 percent of class II, group II substances and 100 percent of class II, group I substances.(IV)Any consumption allowances made available for nonauction sale to a specific producer or importer of class II, group II substances but not purchased by the specific producer or importer shall be made available for sale to any producer or importer of class II substances during calendar years 2004, 2005, and 2006. If demand for such consumption allowances exceeds supply of such consumption allowances, the Administrator shall develop and utilize criteria for the sale of such consumption allowances that may include pro rata shares, historic production and importation, economic or technical hardship, or other factors deemed relevant by the Administrator. If the supply of such consumption allowances exceeds demand, the Administrator may offer such consumption allowances for sale in the secondary pool as set forth in subparagraph (D). (D)

Secondary pool

(i)For each calendar year, as soon as practicable after the auction required in subparagraph (C), the Administrator shall offer for sale the consumption allowances in the secondary pool at the prices listed in subparagraph (C)(ii). (ii)The Administrator shall accept applications for purchase of secondary pool consumption allowances from— (I)importers of products containing class II, group II substances; (II)persons who purchased any class II, group II substance directly from a producer or importer of class II, group II substances for use in a product containing a class II, group II substance, a manufacturing process, or a reclamation process; (III)persons who did not produce or import a class II substance during calendar year 2004, 2005, or 2006, but who the Administrator determines have subsequently taken significant steps to produce or import a substantial quantity of any class II, group II substance; and (IV)persons who produced or imported any class II substance during calendar year 2004, 2005, or 2006. (iii)If the supply of consumption allowances in the secondary pool equals or exceeds the demand for consumption allowances in the secondary pool as presented in the applications for purchase, the Administrator shall sell the consumption allowances in the secondary pool to the applicants in the amounts requested in the applications for purchase. Any consumption allowances in the secondary pool not purchased in a calendar year may be rolled over and added to the quantity available in the secondary pool in the following year. (iv)If the demand for consumption allowances in the secondary pool as presented in the applications for purchase exceeds the supply of consumption allowances in the secondary pool, the Administrator shall sell the consumption allowances as follows: (I)The Administrator shall first sell the consumption allowances in the secondary pool to any importers of products containing class II, group II substances in the amounts requested in their applications for purchase. If the demand for such consumption allowances exceeds supply of such consumption allowances, the Administrator shall develop and utilize criteria for the sale of such consumption allowances among importers of products containing class II, group II substances that may include pro rata shares, historic importation, economic or technical hardship, or other factors deemed relevant by the Administrator. (II)The Administrator shall next sell any remaining consumption allowances to persons identified in subclauses (II) and (III) of clause (ii) in the amounts requested in their applications for purchase. If the demand for such consumption allowances exceeds remaining supply of such consumption allowances, the Administrator shall develop and utilize criteria for the sale of such consumption allowances among subclauses (II) and (III) applicants that may include pro rata shares, historic use, economic or technical hardship, or other factors deemed relevant by the Administrator. (III)The Administrator shall then sell any remaining consumption allowances to persons who produced or imported any class II substance during calendar year 2004, 2005, or 2006 in the amounts requested in their applications for purchase. If demand for such consumption allowances exceeds remaining supply of such consumption allowances, the Administrator shall develop and utilize criteria for the sale of such consumption allowances that may include pro rata shares, historic production and importation, economic or technical hardship, or other factors deemed relevant by the Administrator. (IV)Each person who purchases consumption allowances in a non-auction sale under this subparagraph shall be required to disclose the person or entity sponsoring or benefitting from the purchases if such person or entity is, in whole or in part, other than the purchaser or the purchaser’s employer. (E)

Discretion to withhold allowances

Nothing in this paragraph prevents the Administrator from exercising discretion to withhold and retire consumption allowances that would otherwise be available for auction or nonauction sale. Not later than 18 months after the date of enactment of this section, the Administrator shall promulgate regulations establishing criteria for withholding and retiring consumption allowances. (5)

Banking

A consumption allowance or destruction offset credit may be used to meet the compliance obligation requirements of paragraph (1) in— (A)the vintage year for the allowance or destruction offset credit; or (B)any calendar year subsequent to the vintage year for the allowance or destruction offset credit. (6)

Auctions

(A)

Initial regulations

Not later than 18 months after the date of enactment of this section, the Administrator shall promulgate regulations governing the auction of allowances under this section. Such regulations shall include the following requirements: (i)

Frequency; first auction

Auctions shall be held one time per year at regular intervals, with the first auction to be held no later than October 31, 2011. (ii)

Auction format

Auctions shall follow a single-round, sealed-bid, uniform price format. (iii)

Financial assurance

The Administrator may establish financial assurance requirements to ensure that auction participants can and will perform on their bids. (iv)

Disclosure of beneficial ownership

Each bidder in the auction shall be required to disclose the person or entity sponsoring or benefitting from the bidder’s participation in the auction if such person or entity is, in whole or in part, other than the bidder or the bidder’s employer. (v)

Publication of information

After the auction, the Administrator shall, in a timely fashion, publish the number of bidders, number of winning bidders, the quantity of allowances sold, and the auction clearing price. (vi)

Bidding limits in 2012

In the vintage year 2012 auction, no auction participant may, directly or in concert with another participant, bid for or purchase more allowances offered for sale at the auction than the greater of— (I)the number of allowances which, when added to the number of allowances available for purchase by the participant in the producer-importer pool non-auction sale, would equal the participant’s annual average consumption of class II, group II substances in calendar years 2004, 2005, and 2006; or (II)the number of allowances equal to the product of— (aa)1.20 multiplied by the participant’s allocation share of the producer-importer pool non-auction sale as determined under paragraph (4)(C)(ii); and (bb)the number of vintage year 2012 allowances offered at auction. (vii)

Bidding limits in 2013

In the vintage year 2013 auction, no auction participant may, directly or in concert with another participant, bid for or purchase more allowances offered for sale at the auction than the product of— (I)1.15 multiplied by the ratio of the total number of vintage year 2012 allowances purchased by the participant from the auction and from the producer-importer pool non-auction sale to the total number of vintage year 2012 allowances in the producer-importer pool; and (II)the number of vintage year 2013 allowances offered at auction. (viii)

Bidding limits in subsequent years

In the auctions for vintage year 2014 and subsequent vintage years, no auction participant may, directly or in concert with another participant, bid for or purchase more allowances offered for sale at the auction than the product of— (I)1.15 multiplied by the ratio of the highest number of allowances held by the participant in any of the three prior vintage years to meet its compliance obligation under paragraph (1) to the total number of allowances in the producer-importer pool for such vintage year; and (II)the number of allowances offered at auction for that vintage year. (ix)

Other requirements

The Administrator may include in the regulations such other requirements or provisions as the Administrator considers necessary to promote effective, efficient, transparent, and fair administration of auctions under this section. (B)

Revision of regulations

The Administrator may, at any time, revise the initial regulations promulgated under subparagraph (A) based on the Administrator’s experience in administering allowance auctions. Such revised regulations need not meet the requirements identified in subparagraph (A) if the Administrator determines that an alternative auction design would be more effective, taking into account factors including costs of administration, transparency, fairness, and risks of collusion or manipulation. In determining whether and how to revise the initial regulations under this paragraph, the Administrator shall not consider maximization of revenues to the Federal Government. (C)

Delegation or contract

Pursuant to regulations under this section, the Administrator may, by delegation or contract, provide for the conduct of auctions under the Administrator’s supervision by other departments or agencies of the Federal Government or by nongovernmental agencies, groups, or organizations. (7)

Payments for allowances

(A)

Initial regulations

Not later than 18 months after the date of enactment of this section, the Administrator shall promulgate regulations governing the payment for allowances purchased in auction and non-auction sales under this section. Such regulations shall include the requirement that, in the event that full payment for purchased allowances is not made on the date of purchase, equal payments shall be made one time per calendar quarter with all payments for allowances of a vintage year made by the end of that vintage year. (B)

Revision of regulations

The Administrator may, at any time, revise the initial regulations promulgated under subparagraph (A) based on the Administrator’s experience in administering collection of payments. Such revised regulations need not meet the requirements identified in subparagraph (A) if the Administrator determines that an alternative payment structure or frequency would be more effective, taking into account factors including cost of administration, transparency, and fairness. In determining whether and how to revise the initial regulations under this paragraph, the Administrator shall not consider maximization of revenues to the Federal Government. (C)

Penalties for non-payment

Failure to pay for purchased allowances in accordance with the regulations promulgated pursuant to this paragraph shall be a violation of the requirements of subsection (b). Section 113(c)(3) shall apply in the case of any person who knowingly fails to pay for purchased allowances in accordance with the regulations promulgated pursuant to this paragraph. (8)

Imported products

If the United States becomes a party or otherwise adheres to a multilateral agreement, including any amendment to the Montreal Protocol on Substances That Deplete the Ozone Layer, which restricts the production and consumption of class II, group II substances— (A)as of the date on which such agreement or amendment enters into force, it shall no longer be unlawful for any person to import from a party to such agreement or amendment any product containing any class II, group II substance whose production and consumption are regulated by such agreement or amendment without holding one consumption allowance or one destruction offset credit for each carbon dioxide equivalent ton of the class II, group II substance; (B)the Administrator shall promulgate regulations within 12 months of the date the United States becomes a party or otherwise adheres to such agreement or amendment, or the date on which such agreement or amendment enters into force, whichever is later, to establish a new baseline for purposes of paragraph (2), which new baseline shall be the original baseline less the carbon dioxide equivalent of the annual average quantity of any class II substances regulated by such agreement or amendment contained in products imported from parties to such agreement or amendment in calendar years 2004, 2005, and 2006; (C)as of the date on which such agreement or amendment enters into force, no person importing any product containing any class II, group II substance may, directly or in concert with another person, purchase any consumption allowances for sale by the Administrator for the importation of products from a party to such agreement or amendment that contain any class II, group II substance restricted by such agreement or amendment; and (D)the Administrator may adjust the two allowance pools established in paragraph (4) such that up to 90 percent of the consumption allowances available for a calendar year are placed in the producer-importer pool with the remaining consumption allowances placed in the secondary pool. (9)

Offsets

(A)

Chlorofluorocarbon destruction

Within 18 months after the date of enactment of this section, the Administrator shall promulgate regulations to provide for the issuance of offset credits for the destruction, in the calendar year 2012 or later, of chlorofluorocarbons in the United States. The Administrator shall establish and distribute to the destroying entity a quantity of destruction offset credits equal to 0.8 times the number of tons of carbon dioxide equivalents of reduction achieved through the destruction. No destruction offset credits shall be established for the destruction of a class II, group II substance. (B)

Definition

For purposes of this paragraph, the term destruction means the conversion of a substance by thermal, chemical, or other means to another substance with little or no carbon dioxide equivalent value and no ozone depletion potential. (C)

Regulations

The regulations promulgated under this paragraph shall include standards and protocols for project eligibility, certification of destroyers, monitoring, tracking, destruction efficiency, quantification of project and baseline emissions and carbon dioxide equivalent value, and verification. The Administrator shall ensure that destruction offset credits represent real and verifiable destruction of chlorofluorocarbons or other class I or class II, group I, substances authorized under subparagraph (D). (D)

Other substances

The Administrator may promulgate regulations to add to the list of class I and class II, group I, substances that may be destroyed for destruction offset credits, taking into account a candidate substance’s carbon dioxide equivalent value, ozone depletion potential, prevalence in banks in the United States, and emission rates, as well as the need for additional cost containment under the class II, group II cap and the integrity of the class II, group II cap. The Administrator shall not add a class I or class II, group I substance to the list if the consumption of the substance has not been completely phased-out internationally (except for essential use exemptions or other similar exemptions) pursuant to the Montreal Protocol. (E)

Extension of offsets

(i)At any time after the Administrator promulgates regulations pursuant to subparagraph (A), the Administrator may add the types of destruction projects authorized to receive destruction offset credits under this paragraph to the list of types of projects eligible for offset credits under section 733. Nothing in this paragraph shall affect the issuance of offset credits under section 740. (ii)The Administrator shall not make the addition under clause (i) unless the Administrator finds that insufficient destruction is occurring or is projected to occur under this paragraph and that the addition would increase destruction. (iii)In no event shall more than one destruction offset credit be issued under title VII and this section for the destruction of the same quantity of a substance. (10)

Legal status of allowances and credits

None of the following constitutes a property right: (A)A production or consumption allowance. (B)A destruction offset credit. (c)

Deadlines for compliance

Notwithstanding the deadlines specified for class II substances in sections 608, 609, 610, 612, and 613 that occur prior to January 1, 2009, the deadline for promulgating regulations under those sections for class II, group II substances shall be January 1, 2012. (d)

Exceptions for essential uses

Notwithstanding any phase down of production and consumption required by this section, to the extent consistent with any applicable multilateral agreement to which the United States is a party or otherwise adheres, the Administrator may provide the following exceptions for essential uses: (1)

Medical devices

The Administrator, after notice and opportunity for public comment, and in consultation with the Commissioner of the Food and Drug Administration, may provide an exception for the production and consumption of class II, group II substances solely for use in medical devices. (2)

Aviation safety

The Administrator, after notice and opportunity for public comment, may authorize the production and consumption of limited quantities of class II, group II substances solely for the purposes of aviation safety if the Administrator of the Federal Aviation Administration, in consultation with the Administrator, determines that no safe and effective substitute has been developed and that such authorization is necessary for aviation safety purposes. (e)

Developing countries

Notwithstanding any phase down of production required by this section, the Administrator, after notice and opportunity for public comment, may authorize the production of limited quantities of class II, group II substances in excess of the amounts otherwise allowable under this section solely for export to, and use in, developing countries. Any production authorized under this subsection shall be solely for purposes of satisfying the basic domestic needs of such countries as provided in applicable international agreements, if any, to which the United States is a party or otherwise adheres. (f)

National security; fire suppression, etc

The provisions of subsection (f) and paragraphs (1) and (2) of subsection (g) of section 604 shall apply to any consumption and production phase down of class II, group II substances in the same manner and to the same extent, consistent with any applicable international agreement to which the United States is a party or otherwise adheres, as such provisions apply to the substances specified in such subsection. (g)

Accelerated schedule

In lieu of section 606, the provisions of paragraphs (1), (2), and (3) of this subsection shall apply in the case of class II, group II substances. (1)

In general

The Administrator shall promulgate initial regulations not later than 18 months after the date of enactment of this section, and revised regulations any time thereafter, which establish a schedule for phasing down the consumption (and, if the condition in subsection (b)(1)(B) is met, the production) of class II, group II substances that is more stringent than the schedule set forth in this section if, based on the availability of substitutes, the Administrator determines that such more stringent schedule is practicable, taking into account technological achievability, safety, and other factors the Administrator deems relevant, or if the Montreal Protocol, or any applicable international agreement to which the United States is a party or otherwise adheres, is modified or established to include a schedule or other requirements to control or reduce production, consumption, or use of any class II, group II substance more rapidly than the applicable schedule under this section. (2)

Petition

Any person may submit a petition to promulgate regulations under this subsection in the same manner and subject to the same procedures as are provided in section 606(b). (3)

Inconsistency

If the Administrator determines that the provisions of this section regarding banking, allowance rollover, or destruction offset credits create a significant potential for inconsistency with the requirements of any applicable international agreement to which the United States is a party or otherwise adheres, the Administrator may promulgate regulations restricting the availability of banking, allowance rollover, or destruction offset credits to the extent necessary to avoid such inconsistency. (h)

Exchange

Section 607 shall not apply in the case of class II, group II substances. Production and consumption allowances for class II, group II substances may be freely exchanged or sold but may not be converted into allowances for class II, group I substances. (i)

Labeling

(1)In applying section 611 to products containing or manufactured with class II, group II substances, in lieu of the words destroying ozone in the upper atmosphere on labels required under section 611 there shall be substituted the words contributing to global warming. (2)The Administrator may, through rulemaking, exempt from the requirements of section 611 products containing or manufactured with class II, group II substances determined to have little or no carbon dioxide equivalent value compared to other substances used in similar products. (j)

Nonessential products

For the purposes of section 610, class II, group II substances shall be regulated under section 610(b), except that in applying section 610(b) the word hydrofluorocarbon shall be substituted for the word chlorofluorocarbon and the term class II, group II shall be substituted for the term class I. Class II, group II substances shall not be subject to the provisions of section 610(d). (k)

International transfers

In the case of class II, group II substances, in lieu of sections 616(a) and 616(b), this subsection shall apply. To the extent consistent with any applicable international agreement to which the United States is a party or otherwise adheres, including any amendment to the Montreal Protocol, the United States may engage in transfers with other parties to such agreement or amendment under the following conditions: (1)The United States may transfer production allowances to another party to such agreement or amendment if, at the time of the transfer, the Administrator establishes revised production limits for the United States accounting for the transfer in accordance with regulations promulgated pursuant to this subsection. (2)The United States may acquire production allowances from another party to such agreement or amendment if, at the time of the transfer, the Administrator finds that the other party has revised its domestic production limits in the same manner as provided with respect to transfers by the United States in the regulations promulgated pursuant to this subsection. (l)

Relationship to other laws

(1)

State laws

For purposes of section 116, the requirements of this section for class II, group II substances shall be treated as requirements for the control and abatement of air pollution. (2)

International agreements

Section 614 shall apply to the provisions of this section concerning class II, group II substances, except that for the words Montreal Protocol there shall be substituted the words Montreal Protocol, or any applicable international agreement to which the United States is a party or otherwise adheres that restricts the production or consumption of class II, group II substances, and for the words Article 4 of the Montreal Protocol there shall be substituted any provision of such international agreement regarding trade with non-parties. (3)

Federal facilities

For purposes of section 118, the requirements of this section for class II, group II substances and corresponding State, interstate, and local requirements, administrative authority, and process and sanctions shall be treated as requirements for the control and abatement of air pollution within the meaning of section 118. (m)

Carbon dioxide equivalent value

(1)In lieu of section 602(e), the provisions of this subsection shall apply in the case of class II, group II substances. Simultaneously with establishing the list of class II, group II substances, and simultaneously with any addition to that list, the Administrator shall publish the carbon dioxide equivalent value of each listed class II, group II substance, based on a determination of the number of metric tons of carbon dioxide that makes the same contribution to global warming over 100 years as 1 metric ton of each class II, group II substance. (2)Not later than February 1, 2017, and not less than every 5 years thereafter, the Administrator shall— (A)review, and if appropriate, revise the carbon dioxide equivalent values established for class II, group II substances based on a determination of the number of metric tons of carbon dioxide that makes the same contributions to global warming over 100 years as 1 metric ton of each class II, group II substance; and (B)publish in the Federal Register the results of that review and any revisions. (3)A revised determination published in the Federal Register under paragraph (2)(B) shall take effect for production of class II, group II substances, consumption of class II, group II substances, and importation of products containing class II, group II substances starting on January 1 of the first calendar year starting at least 9 months after the date on which the revised determination was published. (4)The Administrator may decrease the frequency of review and revision under paragraph (2) if the Administrator determines that such decrease is appropriate in order to synchronize such review and revisions with any similar review process carried out pursuant to the United Nations Framework Convention on Climate Change, an agreement negotiated under that convention, The Vienna Convention for the Protection of the Ozone Layer, or an agreement negotiated under that convention, except that in no event shall the Administrator carry out such review and revision any less frequently than every 10 years. (n)

Reporting requirements

In lieu of subsections (b) and (c) of section 603, paragraphs (1) and (2) of this subsection shall apply in the case of class II, group II substances: (1)

In general

On a quarterly basis, or such other basis (not less than annually) as determined by the Administrator, each person who produced, imported, or exported a class II, group II substance, or who imported a product containing a class II, group II substance, shall file a report with the Administrator setting forth the carbon dioxide equivalent amount of the substance that such person produced, imported, or exported, as well as the amount that was contained in products imported by that person, during the preceding reporting period. Each such report shall be signed and attested by a responsible officer. If all other reporting is complete, no such report shall be required from a person after April 1 of the calendar year after such person permanently ceases production, importation, and exportation of the substance, as well as importation of products containing the substance, and so notifies the Administrator in writing. If the United States becomes a party or otherwise adheres to a multilateral agreement, including any amendment to the Montreal Protocol on Substances That Deplete the Ozone Layer, that restricts the production and consumption of class II, group II substances, then, if all other reporting is complete, no such report shall be required from a person with respect to importation from parties to such agreement or amendment of products containing any class II, group II substance restricted by such agreement or amendment, after April 1 of the calendar year following the year during which such agreement or amendment enters into force. (2)

Baseline reports for class II, group II substances

(A)

In general

Unless such information has been previously reported to the Administrator, on the date on which the first report under paragraph (1) of this subsection is required to be filed, each person who produced, imported, or exported a class II, group II substance, or who imported a product containing a class II substance, (other than a substance added to the list of class II, group II substances after the publication of the initial list of such substances under this section), shall file a report with the Administrator setting forth the amount of such substance that such person produced, imported, exported, or that was contained in products imported by that person, during each of calendar years 2004, 2005, and 2006. (B)

Producers

In reporting under subparagraph (A), each person who produced in the United States a class II substance during calendar years 2004, 2005, or 2006 shall— (i)report all acquisitions or purchases of class II substances during each of calendar years 2004, 2005, and 2006 from all other persons who produced in the United States a class II substance during calendar years 2004, 2005, or 2006, and supply evidence of such acquisitions and purchases as deemed necessary by the Administrator; and (ii)report all transfers or sales of class II substances during each of calendar years 2004, 2005, and 2006 to all other persons who produced in the United States a class II substance during calendar years 2004, 2005, or 2006, and supply evidence of such transfers and sales as deemed necessary by the Administrator. (C)

Added substances

In the case of a substance added to the list of class II, group II substances after publication of the initial list of such substances under this section, each person who produced, imported, exported, or imported products containing such substance in calendar year 2004, 2005, or 2006 shall file a report with the Administrator within 180 days after the date on which such substance is added to the list, setting forth the amount of the substance that such person produced, imported, and exported, as well as the amount that was contained in products imported by that person, in calendar years 2004, 2005, and 2006. (o)

Stratospheric ozone and climate protection fund

(1)

In general

There is established in the Treasury of the United States a Stratospheric Ozone and Climate Protection Fund. (2)

Deposits

The Administrator shall deposit all proceeds from the auction and non-auction sale of allowances under this section into the Stratospheric Ozone and Climate Protection Fund. (3)

Use

Amounts deposited into the Stratospheric Ozone and Climate Protection Fund shall be available, subject to appropriations, exclusively for the following purposes: (A)

Recovery, recycling, and reclamation

The Administrator may utilize funds to establish a program to incentivize the recovery, recycling, and reclamation of any Class II substances in order to reduce emissions of such substances. (B)

Multilateral fund

If the United States becomes a party or otherwise adheres to a multilateral agreement, including any amendment to the Montreal Protocol on Substances That Deplete the Ozone Layer, which restricts the production and consumption of class II, group II substances, the Administrator may utilize funds to meet any related contribution obligation of the United States to the Multilateral Fund for the Implementation of the Montreal Protocol or similar multilateral fund established under such multilateral agreement. (C)

Best-in-class appliances deployment program

The Secretary of Energy is authorized to utilize funds to carry out the purposes of section 214 of the American Clean Energy and Security Act of 2009. (D)

Low global warming product transition assistance program

(i)

In general

The Administrator, in consultation with the Secretary of Energy, may utilize funds in fiscal years 2012 through 2022 to establish a program to provide financial assistance to manufacturers of products containing class II, group II substances to facilitate the transition to products that contain or utilize alternative substances with no or low carbon dioxide equivalent value and no ozone depletion potential. (ii)

Definition

In this subparagraph, the term products means refrigerators, freezers, dehumidifiers, air conditioners, foam insulation, technical aerosols, fire protection systems, and semiconductors. (iii)

Financial assistance

The Administrator may provide financial assistance to manufacturers pursuant to clause (i) for— (I)the design and configuration of new consumer products that use alternative substances with no or low carbon dioxide equivalent value and no ozone depletion potential; and (II)the redesign and retooling of facilities for the manufacture of consumer products in the United States that use alternative substances with no or low carbon dioxide equivalent value and no ozone depletion potential. (iv)

Reports

For any fiscal year during which the Administrator provides financial assistance pursuant to this subparagraph, the Administrator shall submit a report to the Congress within 3 months of the end of such fiscal year detailing the amounts, recipients, specific purposes, and results of the financial assistance provided.

(b)

Table of contents

The table of contents of title VI of the Clean Air Act (42 U.S.C. 7671 et seq.) is amended by adding the following new item at the end thereof: Sec. 619. Hydrofluorocarbons (HFCs). . (c)

Fire suppression agents

Section 605(a) of the Clean Air Act (42 U.S.C. 7671(a)) is amended— (1)by striking or at the end of paragraph (2); (2)by striking the period at the end of paragraph (3) and inserting ; or; and (3)by adding the following new paragraph after paragraph (3): (4)is listed as acceptable for use as a fire suppression agent for nonresidential applications in accordance with section 612(c). . (d)

Motor vehicle air conditioners

(1)Section 609(e) of the Clean Air Act (42 U.S.C. 7671h(e)) is amended by inserting , group I after each reference to class II. (2)Section 609 of the Clean Air Act (42 U.S.C. 7671h) is amended by adding the following new subsection after subsection (e): (f)

Class II, group II substances

(1)

Repair

The Administrator may promulgate regulations establishing requirements for repair of motor vehicle air conditioners prior to adding a class II, group II substance. (2)

Small containers

(A)The Administrator may promulgate regulations establishing servicing practices and procedures for recovery of class II, group II substances from containers which contain less than 20 pounds of such class II, group II substances. (B)Not later than 18 months after enactment of this subsection, the Administrator shall either promulgate regulations requiring that containers which contain less than 20 pounds of a class II, group II substance be equipped with a device or technology that limits refrigerant emissions and leaks from the container and limits refrigerant emissions and leaks during the transfer of refrigerant from the container to the motor vehicle air conditioner or issue a determination that such requirements are not necessary or appropriate. (C)Not later than 18 months after enactment of this subsection, the Administrator shall promulgate regulations establishing requirements for consumer education materials on best practices associated with the use of containers which contain less than 20 pounds of a class II, group II substance and prohibiting the sale or distribution, or offer for sale or distribution, of any class II, group II substance in any container which contains less than 20 pounds of such class II, group II substance, unless consumer education materials consistent with such requirements are displayed and available at point-of-sale locations, provided to the consumer, or included in or on the packaging of the container which contain less than 20 pounds of a class II, group II substance. (D)The Administrator may, through rulemaking, extend the requirements established under this paragraph to containers which contain 30 pounds or less of a class II, group II substance if the Administrator determines that such action would produce significant environmental benefits. (3)

Restriction of sales

Effective January 1, 2014, no person may sell or distribute or offer to sell or distribute or otherwise introduce into interstate commerce any motor vehicle air conditioner refrigerant in any size container unless the substance has been found acceptable for use in a motor vehicle air conditioner under section 612. . (e)

Safe alternatives policy

Section 612(e) of the Clean Air Act (42 U.S.C. 7671k(e)) is amended by inserting or class II after each reference to class I.

333.

Black carbon

(a)

Definition

As used in this section, the term black carbon means the light absorbing component of carbonaceous aerosols. (b)

Black Carbon Abatement Report

Not later than one year after the date of enactment of this section, the Administrator shall, in consultation with other appropriate Federal agencies, submit to Congress a report regarding black carbon emissions. The report shall include the following: (1)A summary of the current research that identifies— (A)an inventory of the major sources of black carbon emissions in the United States and throughout the world, including— (i)an estimate of the quantity of current and projected future emissions; and (ii)the net climate forcing of the emissions from such sources, including consideration of co-emissions of other pollutants; (B)effective and cost-effective control technologies, operations, and strategies for additional domestic and international black carbon emissions reductions, such as diesel retrofit technologies on existing on-road and off-road engines and programs to address residential cookstoves, forest burning, and other agriculture-based burning; (C)potential metrics quantifying the climatic effects of black carbon emissions, including its radiative forcing and warming effects, that may be used to compare the climate benefits of different mitigation strategies, including an assessment of the uncertainty in such metrics; and (D)the public health and environmental benefits associated with additional controls for black carbon emissions. (2)Recommendations regarding— (A)development of additional emissions monitoring techniques and capabilities, modeling, and other black carbon-related areas of study; (B)areas of focus for additional study of technologies, operations, and strategies with the greatest potential to reduce emissions of black carbon; and (C)actions, in addition to those identified by the Administrator under section 851 of the Clean Air Act (as amended by subsection (c)), the Federal Government may take to encourage or require reductions in black carbon emissions. (c)

Black Carbon Mitigation

Title VIII of the Clean Air Act, as added by section 331 of this Act, and amended by section 222 of this Act, is further amended by adding after part D the following new part: E

Black Carbon

851.

Black carbon

(a)

Domestic Black Carbon Mitigation

Not later than one year after the date of enactment of this section, the Administrator, taking into consideration the public health and environmental impacts of black carbon emissions, including the effects on global warming, the Arctic, and other snow and ice-covered surfaces, shall propose regulations under the existing authorities of this Act to reduce emissions of black carbon or propose a finding that existing regulations promulgated pursuant to this Act adequately regulate black carbon emissions. Not later than two years after the date of enactment of this section, the Administrator shall promulgate final regulations under the existing authorities of this Act or finalize the proposed finding. (b)

International Black Carbon Mitigation

(1)

Report

Not later than one year after the date of enactment of this section, the Administrator, in coordination with the Secretary of State and other appropriate Federal agencies, shall transmit a report to Congress on the amount, type, and direction of all present United States financial, technical, and related assistance to foreign countries to reduce, mitigate, and otherwise abate black carbon emissions. (2)

Other opportunities

The report required under paragraph (1) shall also identify opportunities and recommendations, including action under existing authorities, to achieve significant black carbon emission reductions in foreign countries through technical assistance or other approaches to— (A)promote sustainable solutions to bring clean, efficient, safe, and affordable stoves, fuels, or both stoves and fuels to residents of developing countries that are reliant on solid fuels such as wood, dung, charcoal, coal, or crop residues for home cooking and heating, so as to help reduce the public health, environmental, and economic impacts of black carbon emissions from these sources by— (i)identifying key regions for large-scale demonstration efforts, and key partners in each such region; and (ii)developing for each such region a large-scale implementation strategy with a goal of collectively reaching 20,000,000 homes over 5 years with interventions that will— (I)increase stove efficiency by over 50 percent (or such other goal as determined by the Administrator); (II)reduce emissions of black carbon by over 60 percent (or such other goal as determined by the Administrator); and (III)reduce the incidence of severe pneumonia in children under 5 years old by over 30 percent (or such other goal as determined by the Administrator); (B)make technological improvements to diesel engines and provide greater access to fuels that emit less or no black carbon; (C)reduce unnecessary agricultural or other biomass burning where feasible alternatives exist; (D)reduce unnecessary fossil fuel burning that produces black carbon where feasible alternatives exist; (E)reduce other sources of black carbon emissions; and (F)improve capacity to achieve greater compliance with existing laws to address black carbon emissions.

. (d)

Authorization of appropriations

There are authorized to be appropriated such sums as are necessary to carry out this section.

334.

States

Section 116 of the Clean Air Act (42 U.S.C. 7416) is amended by adding the following at the end thereof: For the purposes of this section, the phrases standard or limitation respecting emissions of air pollutants and requirements respecting control or abatement of air pollution shall include any provision to: cap greenhouse gas emissions, require surrender to the State or a political subdivision thereof of emission allowances or offset credits established or issued under this Act, and require the use of such allowances or credits as a means of demonstrating compliance with requirements established by a State or political subdivision thereof..

335.

State programs

Title VIII of the Clean Air Act, as added by section 331 of this Act and amended by several sections of this Act, is further amended by adding after part E (as added by section 333 of this Act) the following new part: F

Miscellaneous

861.

State programs

Notwithstanding section 116, no State or political subdivision thereof shall implement or enforce a cap and trade program that covers any capped emissions emitted during the years 2012 through 2017. For purposes of this section, the term cap and trade program means a system of greenhouse gas regulation under which a State or political subdivision issues a limited number of tradable instruments in the nature of emission allowances and requires that sources within its jurisdiction surrender such tradeable instruments for each unit of greenhouse gases emitted during a compliance period. For purposes of this section, a cap-and-trade program does not include a target or limit on greenhouse gas emissions adopted by a State or political subdivision that is implemented other than through the issuance and surrender of a limited number of tradable instruments in the nature of emission allowances, nor does it include any other standard, limit, regulation, or program to reduce greenhouse gas emissions that is not implemented through the issuance and surrender of a limited number of tradeable instruments in the nature of emission allowances. For purposes of this section, the term cap and trade program does not include, among other things, fleet-wide motor vehicle emission requirements that allow greater emissions with increased vehicle production, or requirements that fuels, or other products, meet an average pollution emission rate or lifecycle greenhouse gas standard.

.

336.

Enforcement

(a)

Remand

Section 307(b) of the Clean Air Act (42 U.S.C. 7607(b)) is amended by adding the following new paragraph at the end thereof: (3)If the court determines that any action of the Administrator is arbitrary, capricious, or otherwise unlawful, the court may remand such action, without vacatur, if vacatur would impair or delay protection of the environment or public health or otherwise undermine the timely achievement of the purposes of this Act. . (b)

Petition for reconsideration

Section 307(d)(7)(B) of the Clean Air Act (42 U.S.C. 7607(d)(7)(B)) is amended as follows: (1)By inserting after the second sentence If a petition for reconsideration is filed, the Administrator shall take final action on such petition, including promulgation of final action either revising or determining not to revise the action for which reconsideration is sought, within 150 days after the petition is received by the Administrator or the petition shall be deemed denied for the purpose of judicial review.. (2)By amending the third sentence to read as follows: Such person may seek judicial review of such denial, or of any other final action, by the Administrator, in response to a petition for reconsideration, in the United States court of appeals for the appropriate circuit (as provided in subsection (b))..

337.

Conforming amendments

(a)

Federal enforcement

Section 113 of the Clean Air Act (42 U.S.C. 7413) is amended as follows: (1)In subsection (a)(3), by striking or title VI, and inserting title VI, title VII, or title VIII. (2)In subsection (b), by striking or a major stationary source and inserting a major stationary source, or a covered EGU under title VIII, in the material preceding paragraph (1). (3)In paragraph (2), by striking or title VI and inserting title VI, title VII, or title VIII. (4)In subsection (c)— (A)in the first sentence of paragraph (1), by striking or title VI (relating to stratospheric ozone control), and inserting title VI (relating to stratospheric ozone control), or title VII or VIII (relating to reduction of greenhouse gas emissions),; and (B)in the first sentence of paragraph (3), by striking or VI and inserting VI, VII, VIII. (5)In subsection (d)(1)(B), by striking or VI and inserting VI, VII, or VIII. (6)In subsection (f), in the first sentence, by striking or VI and inserting VI, VII, or VIII. (b)

Retention of state authority

Section 116 of the Clean Air Act (42 U.S.C. 7416) is amended as follows: (1)By striking and 233 and inserting 233. (2)By striking of moving sources) and inserting of moving sources), and 861 (preempting certain State greenhouse gas programs for a limited time). (c)

Inspections, monitoring, and entry

Section 114(a) of the Clean Air Act (42 U.S.C. 7414(a)) is amended by striking section 112, and all that follows through (ii) and inserting the following: section 112, or any regulation of greenhouse gas emissions under title VII or VIII, (ii). (d)

Enforcement

Subsection (f) of section 304 of the Clean Air Act (42 U.S.C. 7604(f)) is amended as follows: (1)By striking ; or at the end of paragraph (3) thereof and inserting a comma. (2)By striking the period at the end of paragraph (4) thereof and inserting , or. (3)By adding the following after paragraph (4) thereof: (5)any requirement of title VII or VIII. . (e)

Administrative proceedings and judicial review

Section 307 of the Clean Air Act (42 U.S.C. 7607) is amended as follows: (1)In subsection (a), by striking , or section 306 and inserting section 306, or title VII or VIII. (2)In subsection (b)(1)— (A)by striking ,, and inserting , in each place such punctuation appears; and (B)by striking section 120, in the first sentence and inserting section 120, any final action under title VII or VIII,. (3)In subsection (d)(1) by amending subparagraph (S) to read as follows: (S)the promulgation or revision of any regulation under title VII or VIII, .

D

Carbon Market Assurance

341.

Carbon market assurance

The Federal Power Act (16 U.S.C. 791a and following) is amended by adding at the end the following: IV

Carbon Market Assurance

401.

Oversight and assurance of carbon markets

(a)

Definitions

In this section: (1)

Contract of sale

The term contract of sale includes sales, agreements of sale, and agreements to sell. (2)

Covered entity

The term covered entity shall have the meaning given in section 700 of the Clean Air Act. (3)

Future delivery

The term future delivery does not include any sale of any cash commodity for deferred shipment or delivery. (4)

Offset creation contract

The term offset creation contract mean a written agreement for the origination and development of an offset project, and the related issuance of offset credits, pursuant to title VII of the Clean Air Act. (5)

Regulated allowance

The term regulated allowance means any emission allowance, compensatory allowance, offset credit, or renewable energy credit established or issued under the American Clean Energy and Security Act of 2009. (6)

Regulated allowance derivative

The term regulated allowance derivative means an instrument that is, or includes, an instrument— (A)which— (i)is of the character of, or is commonly known to the trade as, a put option, call option, privilege, indemnity, advance guaranty, decline guaranty, or swap agreement; or (ii)is a contract of sale for future delivery other than an offset creation contract; and (B)the value of which, in whole or in part, is expressly linked to the price of a regulated allowance or another regulated allowance derivative. (7)

Regulated instrument

The term regulated instrument means a regulated allowance or a regulated allowance derivative. (b)

Regulated allowance market

(1)

Authority

The Commission shall promulgate regulations for the establishment, operation, and oversight of markets for regulated allowances not later than 18 months after the date of the enactment of this section, and from time to time thereafter as may be appropriate. (2)

Regulations

The regulations promulgated pursuant to paragraph (1) shall— (A)provide for effective and comprehensive market oversight; (B)prohibit fraud, market manipulation (including an entity’s fraudulent or manipulative conduct with respect to regulated allowance derivatives that benefits the entity in regulated allowance markets), and excess speculation, and provide measures to limit unreasonable fluctuation in the prices of regulated allowances; (C)facilitate compliance with title VII of the Clean Air Act by covered entities; (D)ensure market transparency and recordkeeping deemed necessary and appropriate by the Commission to provide for efficient price discovery; prevention of fraud, market manipulation, and excess speculation; and compliance with title VII of the Clean Air Act and section 610 of the Public Utility Regulatory Policies Act; (E)as necessary, ensure that position limitations for individual market participants are established with respect to each class of regulated allowances; (F)as necessary, ensure that margin requirements are established for each class of regulated allowances; (G)provide for the formation and operation of a fair, orderly and liquid national market system that allows for the best execution in the trading of regulated allowances; (H)limit or eliminate counterparty risks, market power concentration risks, and other risks associated with over-the-counter trading; (I)establish standards for qualification as, and operation of, trading facilities for regulated allowances; (J)establish standards for qualification as, and operation of, clearing organizations for trading facilities for regulated allowances; and (K)include such other requirements as necessary to preserve market integrity and facilitate compliance with title VII of the Clean Air Act and section 610 of the Public Utility Regulatory Policies Act and the regulations promulgated under such title and such section. (3)

Enforcement

(A)

In general

If the Commission determines, after notice and an opportunity for a hearing on the record, that any entity has violated any rule or order issued by the Commission under this subsection, the Commission may issue an order— (i)prohibiting the entity from trading on a trading facility for regulated allowances registered with the Commission, and requiring all such facilities to refuse the entity all privileges for such period as may be specified in the order; (ii)if the entity is registered with the Commission in any capacity, suspending for a period of not more than 6 months, or revoking, the registration of the entity; (iii)assessing the entity a civil penalty of not more than $1,000,000 per day per violation for as long as the violation continues (and in determining the amount of a civil penalty, the Commission shall take into account the nature and seriousness of the violation and the efforts to remedy the violation); and (iv)requiring disgorgement of unjust profits, restitution to entities harmed by the violation as determined by the Commission, or both. (B)

Authority to suspend or revoke registration

The Commission may suspend for a period of not more than 6 months, or revoke, the registration of a trading facility for regulated allowances or of a clearing organization registered by the Commission if, after notice and opportunity for a hearing on the record, the Commission finds that— (i)the entity violated any rule or order issued by the Commission under this subsection; or (ii)a director, officer, employee, or agent of the entity has violated any rule or order issued by the Commission under this subsection. (C)

Cease and desist proceedings

(i)

In general

If the Commission determines that any entity may be violating, may have violated, or may be about to violate any provision of this part, or any regulation promulgated by, or any restriction, condition, or order made or imposed by, the Commission under this part, and if the Commission finds that the alleged violation or threatened violation, or the continuation of the violation, is likely to result in significant harm to covered entities or market participants, or significant harm to the public interest, the Commission may issue a temporary order requiring the entity— (I)to cease and desist from the violation or threatened violation; (II)to take such action as is necessary to prevent the violation or threatened violation; and (III)to prevent, as the Commission determines to be appropriate— (aa)significant harm to covered entities or market participants; (bb)significant harm to the public interest; and (cc)frustration of the ability of the Commission to conduct the proceedings or to redress the violation at the conclusion of the proceedings. (ii)

Timing of entry

An order issued under clause (i) shall be entered only after notice and opportunity for a hearing, unless the Commission determines that notice and hearing before entry would be impracticable or contrary to the public interest. (iii)

Effective date

A temporary order issued under clause (i) shall— (I)become effective upon service upon the entity; and (II)unless set aside, limited, or suspended by the Commission or a court of competent jurisdiction, remain effective and enforceable pending the completion of the proceedings. (D)

Proceedings regarding dissipation or conversion of assets

(i)

In general

In a proceeding involving an alleged violation of a regulation or order promulgated or issued by the Commission, if the Commission determines that the alleged violation or related circumstances are likely to result in significant dissipation or conversion of assets, the Commission may issue a temporary order requiring the respondent to take such action as is necessary to prevent the dissipation or conversion of assets. (ii)

Timing of entry

An order issued under clause (i) shall be entered only after notice and opportunity for a hearing, unless the Commission determines that notice and hearing before entry would be impracticable or contrary to the public interest. (iii)

Effective date

A temporary order issued under clause (i) shall— (I)become effective upon service upon the respondent; and (II)unless set aside, limited, or suspended by the Commission or a court of competent jurisdiction, remain effective and enforceable pending the completion of the proceedings. (E)

Review of temporary orders

(i)

Application for review

At any time after a respondent has been served with a temporary cease-and-desist order pursuant to subparagraph (C) or order regarding the dissipation or conversion of assets pursuant to subparagraph (D), the respondent may apply to the Commission to have the order set aside, limited, or suspended. (ii)

No prior hearing

If a respondent has been served with a temporary order entered without a prior hearing of the Commission— (I)the respondent may, not later than 10 days after the date on which the order was served, request a hearing on the application; and (II)the Commission shall hold a hearing and render a decision on the application at the earliest practicable time. (iii)

Judicial review

(I)

In general

An entity shall not be required to submit a request for rehearing of a temporary order before seeking judicial review in accordance with this subparagraph. (II)

Timing of review

Not later than 10 days after the date on which a respondent is served with a temporary cease-and-desist order entered with a prior hearing of the Commission, or 10 days after the date on which the Commission renders a decision on an application and hearing under clause (i) with respect to any temporary order entered without such a prior hearing— (aa)the respondent may obtain a review of the order in a United States circuit court having jurisdiction over the circuit in which the respondent resides or has a principal place of business, or in the United States Court of Appeals for the District of Columbia Circuit, for an order setting aside, limiting, or suspending the effectiveness or enforcement of the order; and (bb)the court shall have jurisdiction to enter such an order. (III)

No prior hearing

A respondent served with a temporary order entered without a prior hearing of the Commission may not apply to the applicable court described in subclause (II) except after a hearing and decision by the Commission on the application of the respondent under clauses (i) and (ii). (iv)

Procedures

Section 222 and Part III shall apply to— (I)an application for review of an order under clause (i); and (II)an order subject to review under clause (iii). (v)

No automatic stay of temporary order

The commencement of proceedings under clause (iii) shall not, unless specifically ordered by the court, operate as a stay of the order of the Commission. (F)

Actions to collect civil penalties

If any person fails to pay a civil penalty assessed under this subsection after an order assessing the penalty has become final and unappealable, the Commission shall bring an action to recover the amount of the penalty in any appropriate United States district court. In any such action, the validity or appropriateness of the final assessment order or judgment shall not be subject to review. (4)

Transaction fees

(A)

In general

The Commission shall, in accordance with this paragraph, establish and collect transaction fees designed to recover the costs to the Federal Government of the supervision and regulation of regulated allowance markets and market participants, including related costs for enforcement activities, policy and rulemaking activities, administration, legal services, and international regulatory activities. (B)

Initial fee rate

Each trading facility on or through which regulated allowances are transacted shall pay to the Commission a fee at a rate of not more than $15 per $1,000,000 of the aggregate dollar amount of sales of regulated allowances transacted through the facility. (C)

Annual adjustment of fee rate

The Commission shall, on an annual basis— (i)assess the rate at which fees are to be collected as necessary to meet the cost recovery requirement in subparagraph (A); and (ii)consistent with subparagraph (B), adjust the rate as necessary in order to meet the requirement. (D)

Report on adequacy of fees in recovering costs

The Commission, shall, on an annual basis, report to the Committee on Energy and Commerce of the House of Representatives and the Committee on Energy and Natural Resources of the Senate on the adequacy of the transaction fees in providing funding for the Commission to regulate the regulated allowance markets. (5)

Judicial review

Judicial review of actions taken by the Commission under this subsection shall be pursuant to part III. (6)

Information-sharing

Within 6 months after a Federal agency with jurisdiction over regulated allowance derivatives is delegated authority pursuant to subsection (c)(1), the agency shall enter into a memorandum of understanding with the Commission relating to information sharing, which shall include provisions ensuring that information requests to markets within the respective jurisdiction of the agency are properly coordinated to facilitate, among other things, effective information-sharing while minimizing duplicative information requests, and provisions regarding the treatment of proprietary information. (7)

Additional employees report and appointment

Within 18 months after the date of the enactment of this section, the Commission shall submit to the President, the Committee on Energy and Commerce of the House of Representatives, and the Committee on Energy and Natural Resources of the Senate, a report that contains recommendations as to how many additional employees would be necessary to provide robust oversight and enforcement of the regulations promulgated under this subsection. As soon as practicable after the completion of the report, subject to appropriations, the Commission shall appoint the recommended number of additional employees for such purposes. (c)

Delegation of authority by the President

(1)

Delegation

The President, taking into consideration the recommendations of the interagency working group established in subsection (d), shall delegate to members of the working group and the heads of other appropriate Federal agencies the authority to promulgate regulations for the establishment, operation, and oversight of all markets for regulated allowance derivatives. (2)

Regulations

The regulations promulgated pursuant to paragraph (1) shall— (A)provide for effective and comprehensive market oversight; (B)prohibit fraud, market manipulation, and excess speculation, and provide measures to limit unreasonable fluctuation in the prices of regulated allowance derivatives; (C)facilitate compliance with title VII of the Clean Air Act by covered entities; (D)ensure market transparency and recordkeeping necessary to provide for efficient price discovery; prevention of fraud, market manipulation, and excess speculation; and compliance with title VII of the Clean Air Act and section 610 of the Public Utility Regulatory Policies Act; (E)ensure that position limitations for individual market participants are established with respect to each regulated allowance derivative and aggregate position limitations for individual market participants are established with respect to all regulated allowance derivative markets; (F)ensure that margin requirements are established for each regulated allowance derivative; (G)provide for the formation and operation of a market system that allows for best execution in the trading of regulated allowance derivatives; (H)to the extent the regulations deviate from the rule set forth in paragraph (4)(B), limit or eliminate counterparty risks, market power concentration risks, and other risks associated with over-the-counter trading, and promulgate reporting and market transparency rules for large traders; (I)ensure that market participants do not evade position limits or otherwise undermine the integrity and effectiveness of the regulations promulgated under subparagraph (C) through participation in markets not subject to the position limits and regulations; (J)establish standards, as necessary, for qualification as, and operation of, trading facilities for regulated allowance derivatives; (K)establish standards, as necessary, for qualification as, and operation of, clearing organizations for trading facilities for regulated allowance derivatives; (L)provide boards of trade designated as contract markets under the Commodity Exchange Act, and market participants, with an adequate transition period for compliance with any new regulatory requirements established under this paragraph; (M)determine whether and to what extent offset creation contracts, to the extent incorporating regulated allowance derivatives, should be governed by the same regulations that apply to other regulated allowance derivatives; and (N)include such other requirements as necessary to preserve market integrity and facilitate compliance with title VII of the Clean Air Act and section 610 of the Public Utility Regulatory Policies Act and the regulations promulgated under such title and such section. (3)

Deadline

The agencies authorized to promulgate regulations for the establishment, operation, and oversight of markets for regulated allowance derivatives pursuant to paragraph (1) shall promulgate such regulations not later than 18 months after the date of enactment of this section, and from time to time thereafter as may be appropriate. (4)

Default rules

(A)An individual market participant, directly or in concert with another participant, shall not control more than 10 percent of the open interest in any regulated allowance derivative. (B)All contracts for the purchase or sale of any regulated allowance derivative shall be executed on or through a board of trade designated as a contract market under the Commodity Exchange Act. (C)To the extent that regulations promulgated under this subsection provide different rules with respect to the matters described in subparagraph (A) or (B), the regulations shall supersede subparagraph (A) or (B), as the case may be. (d)

Working group

(1)

Establishment

Not later than 30 days after the date of the enactment of this section, the President shall establish an interagency working group on carbon market oversight, which shall include the Administrator of the Environmental Protection Agency and representatives of other relevant agencies, to make recommendations to the President regarding proposed regulations for the establishment, operation, and oversight of markets for regulated allowance derivatives. (2)

Report

Not later than 180 days after the date of the enactment of this section, and biennially thereafter, the interagency working group shall submit a written report to the President and Congress that includes its recommendations to the President regarding proposed regulations for the establishment, operation, and oversight of markets for regulated allowance derivatives and any recommendations to Congress for statutory changes needed to ensure the establishment, operation, and oversight of transparent, fair, stable, and efficient markets for regulated allowance derivatives. (e)

Enforcement of regulations

Each Federal agency that promulgates under subsection (c) a regulation of conduct with respect to a regulated allowance derivative shall have the same authority to enforce compliance with the regulation as the Commodity Futures Trading Commission has to enforce compliance with any regulation of similar conduct with respect to a contract, agreement, or transaction over which the Commodity Futures Trading Commission has jurisdiction, except that any enforcement by the Federal Energy Regulatory Commission shall be pursuant to section 222 and Part III. (f)

Prohibition on price or market manipulation, fraud, and false or misleading statements or reports

(1)It shall be a felony punishable by a fine of not more than $25,000,000 (or $5,000,000 in the case of a person who is an individual) or imprisonment for not more than 20 years, or both, together with the costs of prosecution for any person, directly or indirectly— (A)in connection with a transaction involving a regulated instrument, to knowingly— (i)use any manipulative or deceptive device or contrivance in violation of regulations promulgated pursuant to this section; (ii)corner or attempt to corner the regulated instrument; or (iii)cheat or defraud, or attempt to cheat or defraud, any other person; (B)to knowingly deliver or cause to be delivered a false, misleading, or inaccurate report concerning information or conditions that affect or tend to affect the price of a regulated instrument; (C)to knowingly make, or cause to be made, in an application, report, or document required to be filed under any regulation promulgated pursuant to this section, a statement which is false or misleading with respect to a material fact, or to omit any material fact required to be stated therein or necessary to make the statements therein not misleading; or (D)to knowingly falsify, conceal, or cover up by any trick, scheme, or artifice a material fact, make any false, fictitious, or fraudulent statements or representations, or make or use any false writing or document that contains a false, fictitious, or fraudulent statement or entry, to an entity on or through which transactions in regulated instruments occur, or are settled or cleared, acting in furtherance of its official duties under this section or regulations promulgated under this section. (2)If a person is found guilty of a felony established in paragraph (1), the person may be prohibited from holding or trading regulated instruments for a period of not more than 5 years pursuant to the regulations promulgated under this section, except that, if the person is a covered entity, the person shall be allowed to hold sufficient regulated allowances to meet its compliance obligations. (g)

Relation to State law

Nothing in this section shall preclude, diminish or qualify any authority of a State or political subdivision thereof to adopt or enforce any unfair competition, antitrust, consumer protection, securities, commodities or any other law or regulation, except that no such State law or regulation may relieve any person of any requirement otherwise applicable under this section. (h)

Market reports

(1)

Collection and analysis of information

The Commission, in conjunction with the Federal agency with jurisdiction over regulated allowance derivatives pursuant to subsection (c)(1), shall, on a continuous basis, collect and analyze the following information on the functioning of the markets for regulated instruments established under this part: (A)The status of, and trends in, the markets, including prices, trading volumes, transaction types, and trading channels and mechanisms. (B)Spikes, collapses, and volatility in prices of regulated instruments, and the causes therefor. (C)The relationship between the market for regulated allowances and allowance derivatives, and the spot and futures markets for energy commodities, including electricity. (D)Evidence of fraud or manipulation in any such market, the effects on any such market of any such fraud or manipulation (or threat of fraud or manipulation) that the Commission, in conjunction with the Federal agency, has identified, and the effectiveness of corrective measures undertaken by the Commission, in conjunction with the Federal agency, to address the fraud, manipulation, or threat. (E)The economic effects of the markets, including to macro- and micro-economic effects of unexpected significant increases and decreases in the price of regulated instruments. (F)Any changes in the roles, activities, or strategies of various market participants. (G)Regional, industrial, and consumer responses to the markets, and energy investment responses to the markets. (H)Any other issue related to the markets that the Commission, in conjunction with the entities, deems appropriate. (2)

Annual reports to the Congress

Not later than 1 month after the end of each calendar year, the Commission, in conjunction with the Federal agency, shall submit to the President, the Committee on Energy and Commerce of the House of Representatives, and the Committee on Energy and Natural Resources of the Senate, and make available to the public, a report on the matters described in paragraph (1) with respect to the year, including recommendations for any administrative or statutory measures the Commission, in conjunction with the Federal agency, considers necessary to address any threats to the transparency, fairness, or integrity of the markets in regulated instruments.

.

E

Additional Market Assurance

351.

Regulation of certain transactions in derivatives involving energy commodities

(a)

Energy commodity defined

Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended— (1)in paragraph (14), by inserting , an energy commodity, after excluded commodity; (2)by redesignating paragraphs (13) through (21) and paragraphs (22) through (34) as paragraphs (14) through (22) and paragraphs (24) through (36), respectively; (3)by inserting after paragraph (12) the following: (13)

Energy commodity

The term energy commodity means— (A)coal; (B)crude oil, gasoline, diesel fuel, jet fuel, heating oil, and propane; (C)electricity (excluding financial transmission rights which are subject to regulation and oversight by the Federal Energy Regulatory Commission); (D)natural gas; and (E)any other substance (other than an excluded commodity, a metal, or an agricultural commodity) that is used as a source of energy, as the Commission, in its discretion, deems appropriate. ; and (4)by inserting after paragraph (22) (as so redesignated by paragraph (2) of this subsection) the following: (23)

Included energy transaction

The term included energy transaction means a contract, agreement, or transaction in an energy commodity for future delivery that provides for a delivery point of the energy commodity in the United States or a territory or possession of the United States, or that is offered or transacted on or through a computer terminal located in the United States. . (b)

Extension of regulatory authority to swaps involving energy transactions

Section 2(g) of such Act (7 U.S.C. 2(g)) is amended by inserting or an energy commodity after agricultural commodity. (c)

Elimination of exemption for over-the-counter swaps involving energy commodities

Section 2(h)(1) of such Act (7 U.S.C. 2(h)(1)) is amended by inserting (other than an energy commodity) after exempt commodity. (d)

Extension of regulatory authority to included energy transactions on foreign boards of trade

Section 4 of such Act (7 U.S.C. 6) is amended— (1)in subsection (a), by inserting , and which is not an included energy transaction after territories or possessions the 2nd place it appears; and (2)in subsection (b), by adding at the end the following: The preceding sentence shall not apply with respect to included energy transactions.. (e)

Limitation of general exemptive authority of the CFTC with respect to included energy transactions

(1)

In general

Section 4(c) of such Act (7 U.S.C. 6(c)) is amended by adding at the end the following: (6)The Commission may not exempt any included energy transaction from the requirements of subsection (a), unless the Commission provides 60 days advance notice to the Congress and the Position Limit Energy Advisory Group and solicits public comment about the exemption request and any proposed Commission action. . (2)

Nullification of no-action letter exemptions to certain requirements applicable to included energy transactions

Beginning 180 days after the date of the enactment of this Act, any exemption provided by the Commodity Futures Trading Commission that has allowed included energy transactions (as defined in section 1a(13) of the Commodity Exchange Act) to be conducted without regard to the requirements of section 4(a) of such Act shall be null and void. (f)

Requirement to establish uniform speculative position limits for energy transactions

(1)

In general

Section 4a(a) of such Act (7 U.S.C. 6a(a)) is amended— (A)by inserting (1) after (a); (B)by inserting after the 2nd sentence the following: With respect to energy transactions, the Commission shall fix limits on the aggregate number of positions which may be held by any person for each month across all markets subject to the jurisdiction of the Commission.; (C)in the 4th sentence by inserting , consistent with the 3rd sentence, after Commission; and (D)by adding after and below the end the following: (2)(A)Not later than 60 days after the date of the enactment of this paragraph, the Commission shall convene a Position Limit Energy Advisory Group consisting of representatives from— (i)7 predominantly commercial short hedgers of the actual energy commodity for future delivery; (ii)7 predominantly commercial long hedgers of the actual energy commodity for future delivery; (iii)4 non-commercial participants in markets for energy commodities for future delivery; and (iv)each designated contract market or derivatives transaction execution facility upon which a contract in the energy commodity for future delivery is traded, and each electronic trading facility that has a significant price discovery contract in the energy commodity. (B)Not later than 60 days after the date on which the advisory group is convened under subparagraph (A), and annually thereafter, the advisory group shall submit to the Commission advisory recommendations regarding the position limits to be established in paragraph (1). (C)The Commission shall have exclusive authority to grant exemptions for bona fide hedging transactions and positions from position limits imposed under this Act on energy transactions. . (2)

Conforming amendments

(A)

Significant price discovery contracts

Section 2(h)(7) of such Act (7 U.S.C. 2(h)(7)) is amended— (i)in subparagraph (A)— (I)by inserting of this paragraph and section 4a(a) after (B) through (D); and (II)by inserting of this paragraph before the period; and (ii)in subparagraph (C)(ii)(IV)— (I)in the heading, by striking limitations or; and (II)by striking position limitations or. (B)

Contracts traded on or through designated contract markets

Section 5(d)(5) of such Act (7 U.S.C. 7(d)(5)) is amended— (i)in the heading by striking limitations or; and (ii)by striking position limitations or. (C)

Contracts traded on or through derivatives transaction execution facilities

Section 5a(d)(4) of such Act (7 U.S.C. 7a(d)(4)) is amended— (i)in the heading by striking limitations or; and (ii)by striking position limits or. (g)

Elimination of the swaps loophole

Section 4a(c) of such Act (7 U.S.C. 6a(c)) is amended— (1)by inserting (1) after (c); and (2)by adding after and below the end the following: (2)For the purposes of contracts of sale for future delivery and options on such contracts or commodities, the Commission shall define what constitutes a bona fide hedging transaction or position as a transaction or position that— (A)(i)represents a substitute for transactions made or to be made or positions taken or to be taken at a later time in a physical marketing channel; (ii)is economically appropriate to the reduction of risks in the conduct and management of a commercial enterprise; and (iii)arises from the potential change in the value of— (I)assets that a person owns, produces, manufactures, processes, or merchandises or anticipates owning, producing, manufacturing, processing, or merchandising; (II)liabilities that a person owns or anticipates incurring; or (III)services that a person provides, purchases, or anticipates providing or purchasing; or (B)reduces risks attendant to a position resulting from a transaction that— (i)was executed pursuant to subsection (d), (g), (h)(1), or (h)(2) of section 2, or an exemption issued by the Commission by rule, regulation or order; and (ii)was executed opposite a counterparty for which the transaction would qualify as a bona fide hedging transaction pursuant to paragraph (2)(A) of this subsection. . (h)

Detailed reporting and disaggregation of market data

Section 4 of such Act (7 U.S.C. 6) is amended by adding at the end the following: (e)

Detailed reporting and disaggregation of market data

(1)

Index traders and swap dealers reporting

The Commission shall issue a proposed rule defining and classifying index traders and swap dealers (as those terms are defined by the Commission) for purposes of data reporting requirements and setting routine detailed reporting requirements for any positions of such entities in contracts traded on designated contract markets, over-the-counter markets, derivatives transaction execution facilities, foreign boards of trade subject to section 4(f), and electronic trading facilities with respect to significant price discovery contracts not later than 120 days after the date of the enactment of this subsection, and issue a final rule within 180 days after such date of enactment. (2)

Disaggregation of index funds and other data in markets

Subject to section 8 and beginning within 60 days of the issuance of the final rule required by paragraph (1), the Commission shall disaggregate and make public weekly— (A)the number of positions and total notional value of index funds and other passive, long-only and short-only positions (as defined by the Commission) in all markets to the extent such information is available; and (B)data on speculative positions relative to bona fide physical hedgers in those markets to the extent such information is available. (3)

Disclosure of identity of holders of positions in indexes in excess of position limits

The Commission shall include in its weekly Commitment of Trader reports the identity of each person who holds a position in an index in excess of a limit imposed under section 4i. . (i)

Authority to set limits to prevent excessive speculation in indexes

(1)

In general

Section 4a of such Act (7 U.S.C. 6a) is amended by adding at the end the following: (f)The provisions of this section shall apply to the amounts of trading which may be done or positions which may be held by any person under contracts of sale of an index for future delivery on or subject to the rules of any contract market, derivatives transaction execution facility, or over-the-counter market, or on an electronic trading facility with respect to a significant price discovery contract, in the same manner in which this section applies to contracts of sale of a commodity for future delivery. . (2)

Regulations

The Commodity Futures Trading Commission shall issue regulations under section 4a(f) of the Commodity Exchange Act within 180 days after the date of the enactment of this Act.

352.

No effect on authority of the Federal Energy Regulatory Commission

Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended by adding at the end the following:. (j)

No effect on FERC authority

This Act shall not be interpreted to affect the jurisdiction of the Federal Energy Regulatory Commission with respect to the authority of the Federal Energy Regulatory Commission under the Federal Power Act (16 U.S.C. 791a et seq.), the Natural Gas Act (15 U.S.C. 717 et seq.), or other law to obtain information, carry out enforcement actions, or otherwise carry out the responsibilities of the Federal Energy Regulatory Commission. .

353.

Inspector general of the Commodity Futures Trading Commission

(a)

Elevation of office

(1)

Inclusion of cftc in definition of establishment

(A)Section 11(1) of the Inspector General Act of 1978 (5 U.S.C. App.) is amended by striking or the Federal Cochairpersons of the Commissions established under section 15301 of title 40, United States Code; and inserting the Federal Cochairpersons of the Commissions established under section 15301 of title 40, United States Code; or the Chairman of the Commodity Futures Trading Commission;. (B)Section 11(2) of the Inspector General Act of 1978 (5 U.S.C. App.) is amended by striking or the Commissions established under section 15301 of title 40, United States Code, and inserting the Commissions established under section 15301 of title 40, United States Code, or the Commodity Futures Trading Commission,. (2)

Exclusion of cftc from definition of designated federal entity

Section 8G(a)(2) of the Inspector General Act of 1978 (5 U.S.C. App.) is amended by striking the Commodity Futures Trading Commission,. (b)

Effective date; transition rule

(1)

Effective date

The amendments made by this section shall take effect 30 days after the date of the enactment of this Act. (2)

Transition rule

An individual serving as Inspector General of the Commodity Futures Trading Commission on the effective date of this section pursuant to an appointment made under section 8G of the Inspector General Act of 1978 (5 U.S.C. App.)— (A)may continue so serving until the President makes an appointment under section 3(a) of such Act consistent with the amendments made by this section; and (B)shall, while serving under subparagraph (A), remain subject to the provisions of section 8G of such Act which apply with respect to the Commodity Futures Trading Commission.

354.

Settlement and clearing through registered derivatives clearing organizations

(a)

In general

(1)

Application to excluded derivative transactions

(A)Section 2(d)(1) of the Commodity Exchange Act (7 U.S.C. 2(d)(1)) is amended— (i)by striking and at the end of subparagraph (A); (ii)by striking the period at the end of subparagraph (B) and inserting and; and (iii)by adding at the end the following: (C)except as provided in section 4(f), the agreement, contract, or transaction is settled and cleared through a derivatives clearing organization registered with the Commission. . (B)Section 2(d)(2) of such Act (7 U.S.C. 2(d)(2)) is amended— (i)by striking and at the end of subparagraph (B); (ii)by striking the period at the end of subparagraph (C) and inserting ; and; and (iii)by adding at the end the following: (D)except as provided in section 4(f), the agreement, contract, or transaction is settled and cleared through a derivatives clearing organization registered with the Commission. . (2)

Application to certain swap transactions

Section 2(g) of such Act (7 U.S.C. 2(g)) is amended— (A)by striking and at the end of paragraph (2); (B)by striking the period at the end of paragraph (3) and inserting ; and; and (C)by adding at the end the following: (4)except as provided in section 4(f), settled and cleared through a derivatives clearing organization registered with the Commission. . (3)

Application to certain transactions in exempt commodities

(A)Section 2(h)(1) of such Act ( 7 U.S.C. 2(h)(1)) is amended— (i)by striking and at the end of subparagraph (A); (ii)by striking the period at the end of subparagraph (B) and inserting ; and; and (iii)by adding at the end the following: (C)except as provided in section 4(f), is settled and cleared through a derivatives clearing organization registered with the Commission. . (B)Section 2(h)(3) of such Act (7 U.S.C. 2(h)(3)) is amended— (i)by striking and at the end of subparagraph (A); (ii)by striking the period at the end of subparagraph (B) and inserting ; and; and (iii)by adding at the end the following: (C)except as provided in section 4(f), settled and cleared through a derivatives clearing organization registered with the Commission. . (4)

General exemptive authority

Section 4(c)(1) of such Act (7 U.S.C. 6(c)(1)) is amended by inserting the agreement, contract, or transaction, except as provided in section 4(h), will be settled and cleared through a derivatives clearing organization registered with the Commission and before the Commission determines. (5)

Conforming amendment relating to significant price discovery contracts

Section 2(h)(7)(D) of such Act (7 U.S.C. 2(h)(7)(D)) is amended by striking the heading for the subparagraph and all that follows through As part of and inserting the following: (D)

Review of implementation

As part of . (b)

Alternatives to clearing through designated clearing organizations

Section 4 of such Act (7 U.S.C. 6), as amended by section 351(h) of this Act, is amended by adding at the end the following: (f)

Alternatives to clearing through designated clearing organizations

(1)

Settlement and clearing through certain other regulated entities

An agreement, contract, or transaction, or class thereof, relating to an excluded commodity, that would otherwise be required to be settled and cleared by section 2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), or 2(h)(3)(C) of this Act, or subsection (c)(1) of this section may be settled and cleared through an entity listed in subsections (a) or (b) of section 409 of the Federal Deposit Insurance Corporation Improvement Act of 1991. (2)

Waiver of clearing requirement

(A)The Commission, in its discretion, may exempt an agreement, contract, or transaction, or class thereof, that would otherwise be required by section 2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), or 2(h)(3)(C) of this Act, or subsection (c)(1) of this section to be settled and cleared through a derivatives clearing organization registered with the Commission from such requirement. (B)In granting exemptions pursuant to subparagraph (A), the Commission shall consult with the Securities and Exchange Commission and the Board of Governors of the Federal Reserve System regarding exemptions that relate to excluded commodities or entities for which the Securities Exchange Commission or the Board of Governors of the Federal Reserve System serve as the primary regulator. (C)Before granting an exemption pursuant to subparagraph (A), the Commission shall find that the agreement, contract, or transaction, or class thereof— (i)is highly customized as to its material terms and conditions; (ii)is transacted infrequently; (iii)does not serve a significant price-discovery function in the marketplace; and (iv)is being entered into by parties who can demonstrate the financial integrity of the agreement, contract, or transaction and their own financial integrity, as such terms and standards are determined by the Commission. The standards may include, with respect to any federally regulated financial entity for which net capital requirements are imposed, a net capital requirement associated with any agreement, contract, or transaction subject to an exemption from the clearing requirement that is higher than the net capital requirement that would be associated with such a transaction were it cleared (D)Any agreement, contract, or transaction, or class thereof, which is exempted pursuant to subparagraph (A) shall be reported to the Commission in a manner designated by the Commission, or to such other entity the Commission deems appropriate. (E)The Commission, the Securities and Exchange Commission and the Board of Governors of the Federal Reserve System shall enter into a memorandum of understanding by which the information reported to the Commission pursuant to subparagraph (D) with regard to excluded commodities or entities for which the Securities Exchange Commission or the Board of Governors of the Federal Reserve System serve as the primary regulator may be provided to the other agencies. (g)

Spot and forward exclusion

The settlement and clearing requirements of section 2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), 2(h)(3)(C), or 4(c)(1) shall not apply to an agreement, contract, or transaction of any cash commodity for immediate or deferred shipment or delivery, as defined by the Commission. . (c)

Additional requirements applicable to applicants for registration as a derivative clearing organization

Section 5b(c)(2) of such Act (7 U.S.C. 7a-1(c)(2)) is amended by adding at the end the following: (O)

Disclosure of general information

The applicant shall disclose publicly and to the Commission information concerning— (i)the terms and conditions of contracts, agreements, and transactions cleared and settled by the applicant; (ii)the conventions, mechanisms, and practices applicable to the contracts, agreements, and transactions; (iii)the margin-setting methodology and the size and composition of the financial resource package of the applicant; and (iv)other information relevant to participation in the settlement and clearing activities of the applicant. (P)

Daily publication of trading information

The applicant shall make public daily information on settlement prices, volume, and open interest for contracts settled or cleared pursuant to the requirements of 2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), 2(h)(3)(C) or 4(c)(1) of this Act by the applicant if the Commission determines that the contracts perform a significant price discovery function for transactions in the cash market for the commodity underlying the contracts. (Q)

Fitness standards

The applicant shall establish and enforce appropriate fitness standards for directors, members of any disciplinary committee, and members of the applicant, and any other persons with direct access to the settlement or clearing activities of the applicant, including any parties affiliated with any of the persons described in this subparagraph. . (d)

Amendments

(1)Section 409 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4422) is amended by adding at the end the following: (c)

Clearing requirement

A multilateral clearing organization described in subsections (a) or (b) of this section shall comply with requirements similar to the requirements of sections 5b and 5c or the Commodity Exchange Act. . (2)Section 407 of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27e) is amended by inserting and the settlement and clearing requirements of sections 2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), 2(h)(3)(C), and 4(c)(1) of such Act after the clearing of covered swap agreements. (e)

Effective date

The amendments made by this section shall take effect 150 days after the date of the enactment of this Act. (f)

Transition rule

Any agreement, contract, or transaction entered into before the date of the enactment of this Act or within 150 days after such date of enactment, in reliance on subsection (d), (g), (h)(1), or (h)(3) of section 2 of the Commodity Exchange Act or any other exemption issued by the Commission Futures Trading Commission by rule, regulation, or order shall, within 90 days after such date of enactment, unless settled and cleared through an entity registered with the Commission as a derivatives clearing organization or another clearing entity pursuant to section 4(f) of such Act, be reported to the Commission in a manner designated by the Commission, or to such other entity as the Commission deems appropriate.

355.

Limitation on eligibility to purchase a credit default swap

(a)

In general

Section 4c of the Commodity Exchange Act (7 U.S.C. 6c) is amended by adding at the end the following: (h)

Limitation on eligibility to purchase a credit default swap

It shall be unlawful for any person to enter into a credit default swap unless the person— (1)owns a credit instrument which is insured by the credit default swap; (2)would experience financial loss if an event that is the subject of the credit default swap occurs with respect to the credit instrument; and (3)meets such minimum capital adequacy standards as may be established by the Commission, in consultation with the Board of Governors of the Federal Reserve System, or such more stringent minimum capital adequacy standards as may be established by or under the law of any State in which the swap is originated or entered into, or in which possession of the contract involved takes place. . (b)

Elimination of preemption of State bucketing laws regarding naked credit default swaps

Section 12(e)(2)(B) of such Act (7 U.S.C. 16(e)(2)(B)) is amended by inserting (other than a credit default swap in which the purchaser of the swap would not experience financial loss if an event that is the subject of the swap occurred) before that is excluded. (c)

Definition of credit default swap

Section 1a of such Act (7 U.S.C. 1a), as amended by section 351(a) of this Act, is amended by adding at the end the following: (37)

Credit default swap

the term credit default swap means a contract which insures a party to the contract against the risk that an entity may experience a loss of value as a result of an event specified in the contract, such as a default or credit downgrade. A credit default swap that is traded on or cleared by a registered entity shall be excluded from the definition of a security as defined in this Act and in section 2(a)(1) of the Securities Act of 1933 or section 3(a)(10) of the Securities Exchange Act of 1934, except it shall be deemed a security solely for purpose of enforcing prohibitions against insider trading in sections 10 and 16 of the Securities Exchange Act of 1934. . (d)

Effective date

The amendments made by this section shall be effective for credit default swaps (as defined in section 1a(37) of the Commodity Exchange Act) entered into after 60 days after the date of the enactment of this section.

356.

Transaction fees

(a)

In general

Section 12 of the Commodity Exchange Act (7 U.S.C. 16) is amended by redesignating subsections (e), (f), and (g) as subsections (f), (g), and (h), respectively, and inserting after subsection (d) the following: (e)

Clearing fees

(1)

In general

The Commission shall, in accordance with this subsection, charge and collect from each registered clearing organization, and each such organization shall pay to the Commission, transaction fees at a rate calculated to recover the costs to the Federal Government of the supervision and regulation of futures markets, except those directly related to enforcement. (2)

Fees assessed per side of cleared contracts

(A)

In general

The Commission shall determine the fee rate referred to in paragraph (1), and shall apply the fee rate per side of any transaction cleared. (B)

Authority to delegate

The Commission may determine the procedures by which the fee rate is to be applied on the transactions subject to the fee, or delegate the authority to make the determination to any appropriate derivatives clearing organization. (3)

Exemptions

The Commision may not impose a fee under paragraph (1) on— (A)a class of contracts or transactions if the Commission finds that it is in the public interest to exempt the class from the fee; or (B)a contract or transaction cleared by a registered derivatives clearing organization that is— (i)subject to fees under section 31 of the Securities Exchange Act of 1934; or (ii)a security as defined in the Securities Act of 1933 or the Securities Exchange Act of 1934. (4)

Dates for payment of fees

The fees imposed under paragraph (1) shall be paid on or before— (A)March 15 of each year, with respect to transactions occurring on or after the preceding September 1 and on or before the preceding December 31; and (B)September 15 of each year, with respect to transactions occurring on or after the preceding January 1 and on or before the preceding August 31. (5)

Annual adjustment of fee rates

(A)

In general

Not later than April 30 of each fiscal year, the Commission shall, by order, adjust each fee rate determined under paragraph (2) for the fiscal year to a uniform adjusted rate that, when applied to the estimated aggregate number of cleared sides of transactions for the fiscal year, is reasonably likely to produce aggregate fee receipts under this subsection for the fiscal year equal to the target offsetting receipt amount for the fiscal year. (B)

Definitions

In subparagraph (A): (i)

Estimated aggregate number of cleared sides of transactions

The term estimated aggregate number of cleared sides of transactions means, with respect to a fiscal year, the aggregate number of cleared sides of transactions to be cleared by registered derivatives clearing organizations during the fiscal year, as estimated by the Commission, after consultation with the Office of Management and Budget, using the methodology required for making projections pursuant to section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985. (ii)

Target offsetting receipt amount

The term target offsetting receipt amount means, with respect to a fiscal year, the total level of Commission budget authority for all non-enforcement activities of the Commission, as contained in the regular appropriations Acts for the fiscal year. (C)

No judicial review

An adjusted fee rate prescribed under subparagraph (A) shall not be subject to judicial review. (6)

Publication

Not later than April 30 of each fiscal year, the Commission shall cause to be published in the Federal Register notices of the fee rates applicable under this subsection for the succeeding fiscal year, and any estimate or projection on which the fee rates are based. (7)

Inapplicability of certain procedural rules

Section 553 of title 5, United States Code, shall not apply with respect to any exercise of authority under this subsection. (8)

Establishment of futures and options transaction fee account; deposit of fees

There is established in the Treasury of the United States an account which shall be known as the Futures and Options Transaction Fee Account. All fees collected under this subsection for a fiscal year shall be deposited in the account. Amounts in the account are authorized to be appropriated to fund the expenditures of the Commission. . (b)

Effective date

The amendments made by subsection (a) shall apply to fiscal years beginning 30 or more days after the date of the enactment of this Act. (c)

Transition rule

If this section becomes law after March 31 and before September 1 of a fiscal year, then paragraphs (5)(A) and (6) of section 12(e) of the Commodity Exchange Act shall be applied, in the case of the 1st fiscal year beginning after the date of the enactment of this Act, by substituting August 31 for April 30.

357.

No effect on authority of the Federal Trade Commission

Nothing in this subtitle shall be interpreted to affect or diminish the jurisdiction or authority of the Federal Trade Commission with respect to its authorities under the Federal Trade Commission Act (15 U.S.C. 41 et seq.) or the Energy Independence and Security Act of 2007 (Public Law 110–140) to obtain information, to carry out enforcement activities or otherwise carry out the responsibilities of the Federal Trade Commission.

358.

Regulation of carbon derivatives markets

(a)

Default rule

Section 2 of the Commodity Exchange Act (7 U.S.C. 2), as amended by section 352 of this Act, is amended by adding at the end the following: (k)The Commission shall have jurisdiction over the establishment, operations, and oversight of markets for regulated allowance derivatives (as defined in section 401 of the Federal Power Act (16 U.S.C. 791a and following), and shall provide for the establishment, operation, and oversight of the markets in accordance with the same regulations that apply under this Act to included energy transactions. . (b)

Presidential determinations

To the extent that the President delegates the authority to promulgate regulations for the establishment, operation, and oversight of all markets for regulated allowance derivatives to a Federal agency other than the Commodity Futures Trading Commission pursuant to section 401 of the Federal Power Act, such determination shall supersede subsection (a). To the extent that the President determines that regulations promulgated pursuant to section 401(c)(2) of the Federal Power Act would provide for more stringent and effective market oversight, such regulations shall supersede subsection (a). Nothing in this section shall be construed to affect the operation of the default rules established in section 401(c)(4) of the Federal Power Act.