II Calendar No. 267 111th CONGRESS 2d Session S. 1733 [Report No. 111–121] IN THE SENATE OF THE UNITED STATES September 30, 2009 Mr. Kerry (for himself, Mrs. Boxer, and Mr. Kirk) introduced the following bill; which was read twice and referred to the Committee on Environment and Public Works February 2, 2010 Reported by Mrs. Boxer, with an amendment Strike out all after the enacting clause and insert the part printed in italic A BILL To create clean energy jobs, promote 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 Clean Energy Jobs and American Power Act. (b)

Table of contents

The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Findings. Sec. 3. Economy-wide emission reduction goals. Sec. 4. Definitions. DIVISION A—Authorizations for Pollution Reduction, Transition, and Adaptation Sec. 101. Structure of Act. TITLE I—Greenhouse gas reduction programs Subtitle A—Clean transportation Sec. 111. Emission standards. PART B—Mobile Sources Sec. 821. Greenhouse gas emission standards for mobile sources. Sec. 112. Greenhouse gas emission reductions through transportation efficiency. PART C—Transportation emissions Sec. 831. Greenhouse gas emission reductions through transportation efficiency. Sec. 113. Transportation greenhouse gas emission reduction program grants. Sec. 832. Transportation greenhouse gas emission reduction program grants. Sec. 114. SmartWay transportation efficiency program. Sec. 822. SmartWay transportation efficiency program. Subtitle B—Carbon capture and sequestration Sec. 121. National strategy. Sec. 122. Regulations for geological sequestration sites. Sec. 813. Geological storage sites. Sec. 123. Studies and reports. Sec. 124. Performance standards for coal-fueled power plants. Sec. 812. Performance standards for new coal-fired power plants. Sec. 125. Carbon capture and sequestration demonstration and early deployment program. Subtitle C—Nuclear and advanced technologies Sec. 131. Findings and policy. Sec. 132. Nuclear worker training. Sec. 133. Nuclear safety and waste management programs. Subtitle D—Water efficiency Sec. 141. WaterSense. Sec. 142. Federal procurement of water-efficient products. Sec. 143. State residential water efficiency and conservation incentives program. Subtitle E—Miscellaneous Sec. 151. Office of Consumer Advocacy. Sec. 152. Clean technology business competition grant program. Sec. 153. Product carbon disclosure program. Sec. 154. State recycling programs. Sec. 155. Supplemental agriculture and forestry greenhouse gas reduction and renewable energy program. Sec. 156. Economic Development Climate Change Fund. Sec. 219. Economic Development Climate Change Fund. Sec. 157. Study of risk-based programs addressing vulnerable areas. Subtitle F—Energy Efficiency and Renewable Energy Sec. 161. Renewable energy. Sec. 162. Advanced biofuels. Sec. 163. Energy efficiency in building codes. Sec. 164. Retrofit for energy and environmental performance. Subtitle G—Emission Reductions from Public Transportation Vehicles Sec. 171. Short title. Sec. 172. State fuel economy regulation for taxicabs. Sec. 173. State regulation of motor vehicle emissions for taxicabs. Subtitle H—Clean Energy and Natural Gas Sec. 181. Clean Energy and Accelerated Emission Reduction Program. Sec. 182. Advanced natural gas technologies. TITLE II—Research Subtitle A—Energy Research Sec. 201. Advanced energy research. Subtitle B—Drinking water adaptation, technology, education, and research Sec. 211. Effects of climate change on drinking water utilities. TITLE III—Transition and adaptation Subtitle A—Green jobs and worker transition PART 1—Green jobs Sec. 301. Clean energy curriculum development grants. Sec. 302. Development of Information and Resources clearinghouse for vocational education and job training in renewable energy sectors. Sec. 303. Green construction careers demonstration project. PART 2—Climate change worker adjustment assistance Sec. 311. Petitions, eligibility requirements, and determinations. Sec. 312. Program benefits. Sec. 313. General provisions. Subtitle B—International climate change programs Sec. 321. Strategic Interagency Board on International Climate Investment. Sec. 322. Emission reductions from reduced deforestation. PART E—Supplemental emission reductions Sec. 751. Definitions. Sec. 752. Purposes. Sec. 753. Emission reductions from reduced deforestation. Sec. 323. International Clean Energy Deployment Program. Sec. 324. International climate change adaptation and global security program. Sec. 325. Evaluation and reports. Sec. 326. Report on climate actions of major economies. Subtitle C—Adapting to climate change PART 1—Domestic adaptation SUBPART A—National Climate Change Adaptation Program Sec. 341. National Climate Change Adaptation Program. Sec. 342. Climate services. SUBPART B—Public health and climate change Sec. 351. Sense of Congress on public health and climate change. Sec. 352. Relationship to other laws. Sec. 353. National strategic action plan. Sec. 354. Advisory board. Sec. 355. Reports. Sec. 356. Definitions. SUBPART C—Climate change safeguards for natural resources conservation Sec. 361. Purposes. Sec. 362. Natural resources climate change adaptation policy. Sec. 363. Definitions. Sec. 364. Council on Environmental Quality. Sec. 365. Natural Resources Climate Change Adaptation Panel. Sec. 366. Natural Resources Climate Change Adaptation Strategy. Sec. 367. Natural resources adaptation science and information. Sec. 368. Federal natural resource agency adaptation plans. Sec. 369. State natural resources adaptation plans. Sec. 370. Natural Resources Climate Change Adaptation Account. Sec. 371. National Fish and Wildlife Habitat and Corridors Information Program. Sec. 372. Additional provisions regarding Indian tribes. SUBPART D—Additional Climate Change Adaptation Programs Sec. 381. Water system mitigation and adaption partnerships. Sec. 382. Flood control, protection, prevention, and response. Sec. 383. Wildfire. Sec. 384. Coastal and Great Lakes State adaptation program. DIVISION B—Pollution Reduction and Investment TITLE I—Reducing global warming pollution Subtitle A—Reducing global warming pollution Sec. 101. Reducing global warming pollution. TITLE VII—Global warming pollution reduction and investment program PART A—Global warming pollution reduction goals and targets Sec. 701. Findings. 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. Sec. 714. Perfluorocarbon regulation. 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. Market Stability 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. Office of Offsets Integrity. Sec. 744. International offset credits. Sec. 102. Definitions. Sec. 700. Definitions. Sec. 103. Offset reporting requirements. Subtitle B—Disposition of allowances Sec. 111. Disposition of allowances for global warming pollution reduction program. PART H—Disposition of allowances Sec. 771. Allocation of emission allowances. Sec. 772. Electricity consumers. Sec. 773. Natural gas consumers. Sec. 774. Home heating oil and propane consumers. Sec. 775. Domestic fuel production. Sec. 776. Consumer protection. Sec. 777. Exchange for State-issued allowances. Sec. 778. Auction procedures. Sec. 779. Auctioning allowances for other entities. Sec. 780. Commercial deployment of carbon capture and sequestration technologies. Sec. 781. Oversight of allocations. Sec. 782. Early action recognition. Sec. 783. Establishment of Deficit Reduction Fund. Subtitle C—Additional greenhouse gas standards Sec. 121. Greenhouse gas standards. TITLE VIII—Additional greenhouse gas standards Sec. 801. Definitions. PART A—Stationary source standards Sec. 811. Standards of performance. Sec. 122. HFC regulation. Sec. 619. Hydrofluorocarbons (HFCs). Sec. 123. Black carbon. PART E—Black carbon Sec. 851. Black carbon. Sec. 124. States. Sec. 125. State programs. PART F—Miscellaneous Sec. 861. State programs. Sec. 862. Grants for support of air pollution control programs. Sec. 126. Enforcement. Sec. 127. Conforming amendments. Sec. 128. Davis-Bacon compliance. Subtitle D—Carbon Market Assurance Sec. 131. Carbon market assurance. Subtitle E—Ensuring Real Reductions in Industrial Emissions Sec. 141. Ensuring real reductions in industrial emissions. PART F—Ensuring real reductions in industrial emissions Sec. 761. Purposes. Sec. 762. Definitions. Sec. 763. Eligible industrial sectors. Sec. 764. Distribution of emission allowance rebates. Sec. 765. International trade. TITLE II—Program Allocations Sec. 201. Investment in clean vehicle technology. Sec. 202. State and local investment in energy efficiency and renewable energy. Sec. 203. Energy efficiency in building codes. Sec. 204. Building retrofit program. Sec. 205. Energy Innovation Hubs. Sec. 206. ARPA–E research. Sec. 207. International clean energy deployment program. Sec. 208. International climate change adaptation and global security. Sec. 209. Energy efficiency and renewable energy worker training. Sec. 210. Worker transition. Sec. 211. State programs for greenhouse gas reduction and climate adaptation. Sec. 212. Climate Change Health Protection and Promotion Fund. Sec. 213. Climate change safeguards for natural resources conservation. Sec. 214. Nuclear worker training. Sec. 215. Supplemental agriculture, renewable energy, and forestry.

2.

Findings

Congress finds that— (1)the United States can take back control of the energy future of the United States, strengthen economic competitiveness, safeguard the health of families and the environment, and ensure the national security, of the United States by increasing energy independence; (2)creating a clean energy future requires a comprehensive approach that includes support for the improvement of all energy sources, including coal, natural gas, nuclear power, and renewable generation; (3)efficiency in the energy sector also represents a critical avenue to reduce energy consumption and carbon pollution, and those benefits can be captured while generating additional savings for consumers; (4)substantially increasing the investment in the clean energy future of the United States will provide economic opportunities to millions of people in the United States and drive future economic growth in this country; (5)the United States is responsible for many of the initial scientific advances in clean energy technology, but, as of September 2009, the United States has only 5 of the top 30 leading companies in solar, wind, and advanced battery technology; (6)investment in the clean energy sector will allow companies in the United States to retake a leadership position, and the jobs created by those investments will significantly accelerate growth in domestic manufacturing; (7)those opportunities also will result in substantial employment gains in construction, a sector in which the median hourly wage is 17 percent higher than the national median; (8)those jobs are distributed throughout the United States, and the highest clean energy economy employment growth rates in the last 10 years were in the States of Idaho, Nebraska, South Dakota, Oregon, and New Mexico; (9)focusing on clean energy will dramatically reduce pollution and significantly improve the health of families in and the environment of the United States; (10)moving to a low-carbon economy must protect the most vulnerable populations in the United States, including low-income families that are particularly affected by volatility in energy prices; (11)if unchecked, the impact of climate change will include widespread effects on health and welfare, including— (A)increased outbreaks from waterborne diseases; (B)more droughts; (C)diminished agricultural production; (D)severe storms and floods; (E)heat waves; (F)wildfires; and (G)a substantial rise in sea levels, due in part to— (i)melting mountain glaciers; (ii)shrinking sea ice; and (iii)thawing permafrost; (12)the most recent science indicates that the changes described in paragraph (11)(G) are occurring faster and with greater intensity than expected; (13)military officials, including retired admirals and generals, concur with the intelligence community that climate change acts as a threat multiplier for instability and presents significant national security challenges for the United States; (14)massive portions of the infrastructure of the United States, including critical military infrastructure, are at risk from the effects of climate change; (15)impacts are already being felt in local communities within the United States as well as by at-risk populations abroad; (16)the Declaration of the Leaders from the Major Economies Forum on Energy and Climate, representing 17 of the largest economies in the world, recognizes the need to limit the increase in global average temperatures to within 2 degrees Centigrade, as a necessary step to prevent the catastrophic consequences of climate change; and (17)the United States should lead the global community in combating the threat of global climate change and reaching a robust international agreement to address global warming under the United Nations Framework Convention on Climate Change, done at New York on May 9, 1992 (or a successor agreement).

3.

Economy-wide emission reduction goals

The goals of this Act and the amendments made by this Act are to reduce steadily the quantity of United States greenhouse gas emissions such that— (1)in 2012, the quantity of United States greenhouse gas emissions does not exceed 97 percent of the quantity of United States greenhouse gas emissions in 2005; (2)in 2020, the quantity of United States greenhouse gas emissions does not exceed 80 percent of the quantity of United States greenhouse gas emissions in 2005; (3)in 2030, the quantity of United States greenhouse gas emissions does not exceed 58 percent of the quantity of United States greenhouse gas emissions in 2005; and (4)in 2050, the quantity of United States greenhouse gas emissions does not exceed 17 percent of the quantity of United States greenhouse gas emissions in 2005.

4.

Definitions

In this Act: (1)

Administrator

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

Indian tribe

The term Indian tribe has the meaning given the term in section 302 of the Clean Air Act (42 U.S.C. 7602). (3)

State

The term State has the meaning given that term in section 302 of the Clean Air Act (42 U.S.C. 7602).

A

Authorizations for Pollution Reduction, Transition, and Adaptation

101.

Structure of Act

(a)

Authorized and allocated programs

The following programs authorized under this division are eligible to receive an allocation under title VII of the Clean Air Act: (1)The program for greenhouse gas emission reductions through transportation efficiency under part C of title VIII the Clean Air Act (as added by sections 112 and 113 of this division). (2)The program for nuclear worker training under section 132 of this division and 214 of division B. (3)State recycling programs under section 154 of this division and section 211 of division B. (4)The supplemental agriculture and forestry greenhouse gas reduction and renewable energy program under section 155 of this division and section 215 of division B. (5)The program for energy efficiency in building codes under section 163 of this division and section 203 of division B. (6)The program for retrofit for energy and environmental performance under section 164 of this division and section 204 of division B. (7)The program for worker transition under part 2 of subtitle A of title III of this division and section 210 of division B. (8)The program for public health and climate change under subpart B of part 1 of subtitle C of title III of this division and section 212 of division B. (9)The program for climate change safeguards for natural resources conservation under subpart C of part 1 of subtitle C of title III of this division and section 213 of division B. (10)The program for emission reductions from reduced deforestation under section 753 of the Clean Air Act (as added by section 322 of this division) and section 771(d) of the Clean Air Act (as added by section 111 of division B). (11)The International Clean Energy Deployment Program under section 323 of this division and section 207 of division B. (12)The international climate change adaptation and global security program under 324 of this division and section 208 of division B. (13)The program for water system mitigation and adaptation partnerships under section 381 of this division and section 211 of division B. (14)The program for flood control, protection, prevention, and response under section 382 of this division and section 211 of division B. (15)The program for wildfire under section 383 of this division and section 211 of division B. (16)The Coastal and Great Lakes State Adaptation Program under section 384 of this division and section 211 of division B. (b)

Allocated programs

The following allocations are provided under title VII of the Clean Air Act: (1)The Market Stability Reserve Fund under section 726 of the Clean Air Act (as added by section 101 of division B). (2)The program to ensure real reductions in industrial emissions under part F of title VII of the Clean Air Act (as added by section 141 of division B). (3)The program for electricity consumers pursuant to section 772 of the Clean Air Act (as added by section 111 of division B). (4)The program for natural gas consumers pursuant to section 773 of the Clean Air Act (as added by section 111 of division B). (5)The program for home heating oil and propane consumers pursuant to section 774 of the Clean Air Act (as added by section 111 of division B). (6)The program for domestic fuel production, including petroleum refiners and small business refiners, under section 775 of the Clean Air Act (as added by section 111 of division B). (7)The program for climate change consumer refunds and low- and moderate-income consumers pursuant to section 776 of the Clean Air Act (as added by section 111 of division B), including— (A)consumer rebates under section 776(a) of the Clean Air Act (as so added); and (B)energy refunds under section 776(b) of the Clean Air Act (as so added). (8)The program for commercial deployment of carbon capture and storage technology under section 780 of the Clean Air Act (as added by section 111 of division B). (9)The program for early action recognition pursuant to section 782 of the Clean Air Act (as added by section 111 of division B). (10)The program for investment in clean vehicle technology under section 201 of division B. (11)The program for State and local investment in energy efficiency and renewable energy under section 202 of division B. (12)The program for Energy Innovation Hubs pursuant to section 205 of division B. (13)The program for ARPA–E research pursuant to section 206 of division B. (14)The program for energy efficiency and renewable energy worker training under section 209 of division B. (15)The State programs for greenhouse gas reduction and climate adaptation pursuant to section 211 of division B. (c)

Nonallocated programs

The following programs are authorized under this division: (1)The SmartWay Transportation Efficiency Program under section 822 of the Clean Air Act (as added by section 114 of this division). (2)The carbon capture and sequestration demonstration and early deployment program under section 125 of this division. (3)The nuclear safety and waste management programs under section 133 of this division. (4)Water efficiency programs under subtitle D of title I of this division. (5)The Office of Consumer Advocacy under section 151 of this division. (6)The clean technology business competition grant program under section 152 of this division. (7)The product carbon disclosure program under section 153 of this division. (8)The Economic Development Climate Change Fund under section 219 of the Public Works and Economic Development Act of 1965 (as added by section 156 of this division). (9)The program for renewable energy under section 161 of this division. (10)The program for advanced biofuels under section 162 of this division. (11)The program for emission reductions from public transportation vehicles under subtitle G of title I of this division. (12)The Clean Energy and Accelerated Emission Reduction Program under section 181 of this division. (13)The program for advanced natural gas technologies under section 182 of this division. (14)The program for advanced energy research under subtitle A of title II of this division. (15)The program for drinking water adaptation, technology, education, and research under subtitle B of title II of this division. (16)The program for clean energy curriculum development grants under section 301 of this division. (17)The program for Development of Information and Resources clearinghouse for vocational education and job training in renewable energy sectors under section 302 of this division. (18)The green construction careers demonstration project under section 303 of this division.

B

Pollution Reduction and Investment

.

102.

Definitions

Title VII of the Clean Air Act (as added by section 101 of this division) is amended by inserting before part A the following:

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 credit. (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; it includes 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 paragraph (13)(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 paragraph (13)(C), the tons of carbon dioxide equivalent of fossil fuel-based 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 paragraph (13)(J), 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(b)(2) or (8) 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)(i)Any stationary source that produces petroleum-based or coal-based liquid fuel, petroleum coke, or natural gas liquid, the combustion of which would emit 25,000 or more tons of carbon dioxide equivalent, as determined by the Administrator. (ii)Any entity that (or any group of 2 or more affiliated entities that, in the aggregate) imports petroleum-based or coal-based liquid fuel, petroleum coke, or natural gas liquid, the combustion of which would emit 25,000 or more 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 in products designated by the Administrator, 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)except as otherwise provided in section 714, 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 (v). (D)Any stationary source that has emitted 25,000 or more tons of carbon dioxide equivalent of nitrogen trifluoride in 2008 or any subsequent year. (E)Any geologic sequestration site. (F)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. (G)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. (H)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; metal ore production or other processing; 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. (I)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 (D), (F), (G), or (H); and (ii)has emitted 25,000 or more tons of carbon dioxide equivalent in 2008 or any subsequent year. (J)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. (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 or similar entity official, to represent the owners and operators or similar entity official 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

(A)

In general

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

Exclusion

The term domestic offset credit does not include a term 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 compliance must be demonstrated pursuant to section 722(b)(5). (20)

Emission allowance

The term emission allowance means an allowance established under section 721(a) or 726(g)(2). (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, or 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 (e), 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, offset credit, or term 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 offset credit

The term international offset credit means an offset credit issued by the Administrator under section 744. (34)

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. (35)

Market stability reserve allowance

The term market stability reserve allowance means an emission allowance reserved for, transferred to, or deposited in the market stability reserve, or established, under section 726. (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, isobutane, 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

(A)

In general

The term offset credit means an offset credit issued under part D. (B)

Exclusion

The term offset credit does not include a term offset credit. (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 or may be 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)

Qualified R&D facility

The term qualified R&D facility means a facility that conducts research and development, that was in operation as of the date of enactment of this title, and that is part of a covered entity subject to paragraphs (1) through (8) of section 722(b). (43)

Petroleum

The term petroleum includes crude oil, tar sands, oil shale, and heavy oils. (44)

Repeated intentional reversals

The term repeated intentional reversals means at least 3 intentional reversals, as determined by the Administrator or a court under section 734(b)(3)(B)(ii). (45)

Research and development

The term research and development means activities— (A)that are conducted in process units or at laboratory bench-scale settings; (B)whose purpose is to conduct research and development for new processes, technologies, or products that contribute to lower greenhouse gas emissions; and (C)that do not manufacture products for sale. (46)

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 January 1, 2009. (B)Plant material, including waste material, harvested or collected from pastureland that was nonforested on January 1, 2009. (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 January 1, 2009; or (II)on land that, as of January 1, 2009, 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 January 1, 2009, 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 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. (47)

Retire

The term retire, with respect to an allowance, offset credit, or term 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, offset credit, or term offset credit to satisfy a compliance obligation. (48)

Reversal

The term reversal means an intentional or unintentional loss of sequestered greenhouse gases to the atmosphere. (49)

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. (50)

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. (51)

Ton

The term ton means a metric ton. (52)

Uncapped emissions

The term uncapped emissions means emissions of greenhouse gases emitted after December 31, 2011, that are not capped emissions. (53)

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. (54)

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. (55)

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 market stability reserve allowance shall be the year in which such allowance is purchased at auction.

.

103.

Offset reporting requirements

Section 114 of Clean Air Act (42 U.S.C. 7414) is amended by adding at the end the following: (e)

Recordkeeping for carbon offsets program

For the purpose of implementing the carbon offsets program set forth in subtitle D of title VII, the Administrator shall require any person who is an offset project developer, and may require any person who is a third-party verifier, to establish and maintain records, for a period of not less than the crediting period under section 734(c) plus 5 years, relating to— (1)any offset project approval petition submitted to the appropriate officials under section 735; (2)any reversals which occur with respect to an offset project; (3)any verification reports; and (4)any other aspect of the offset project that the appropriate officials determines is appropriate. .

B

Disposition of allowances

111.

Disposition of allowances for global warming pollution reduction program

Title VII of the Clean Air Act (as amended by section 141 of this division) is amended by adding at the end the following: H

Disposition of allowances

771.

Allocation of emission allowances

(a)

Allocation

The Administrator shall allocate emission allowances for the following purposes: (1)The program for electricity consumers pursuant to section 772. (2)The program for natural gas consumers pursuant to section 773. (3)The program for home heating oil and propane consumers pursuant to section 774. (4)The program for domestic fuel production, including petroleum refiners and small business refiners, under section 775. (5)The program to ensure real reductions in industrial emissions under part F. (6)The program for commercial deployment of carbon capture and sequesration technologies under section 780. (7)The program for early action recognition pursuant to section 782. (8)The program for State and local investment in energy efficiency and renewable energy under section 202 of division B of the Clean Energy Jobs and American Power Act. (9)The program for energy efficiency in building codes under section 163 of division A, and section 203 of division B, of the Clean Energy Jobs and American Power Act. (10)The program for retrofit for energy and environmental performance under section 164 of division A, and 204 of division B, of the Clean Energy Jobs and American Power Act. (11)The program for Energy Innovation Hubs pursuant to section 205 of division B of the Clean Energy Jobs and American Power Act. (12)The program for ARPA–E research pursuant to section 206 of division B of the Clean Energy Jobs and American Power Act. (13)The International Clean Energy Deployment Program under section 323 of division A, and section 207 of division B, of the Clean Energy Jobs and American Power Act. (14)The international climate change adaptation and global security program under section 324 of division A, and section 208 of division B, of the Clean Energy Jobs and American Power Act. (b)

Auctions

The Administrator shall auction, pursuant to section 778, emission allowances for the following purposes: (1)The Market Stability Reserve Fund under section 726. (2)The program for climate change consumer refunds and low- and moderate-income consumers pursuant to section 776, including— (A)consumer rebates under section 776(a); and (B)energy refunds under section 776(b). (3)The program for investment in clean vehicle technology under section 201 of division B of the Clean Energy Jobs and American Power Act. (4)The program for State and local investment in energy efficiency and renewable energy under section 202 of division B of the Clean Energy Jobs and American Power Act. (5)The program for energy efficiency and renewable energy worker training under section 209 of division B of the Clean Energy Jobs and American Power Act. (6)The program for worker transition under part 2 of subtitle A of title III of division A, and section 210 of division B, of the Clean Energy Jobs and American Power Act. (7)The State programs for greenhouse gas reduction and climate adaptation pursuant to section 211 of division B of the Clean Energy Jobs and American Power Act. (8)The program for public health and climate change under subpart B of part 1 of subtitle C of title III of division A, and section 212 of division B, of the Clean Energy Jobs and American Power Act. (9)The program for climate change safeguards for natural resources conservation under subpart C of part 1 of subtitle C of title III of division A, and section 213 of division B, of the Clean Energy Jobs and American Power Act. (10)Nuclear worker training under section 132 of division A, and section 214 of division B, of the Clean Energy Jobs and American Power Act. (11)The supplemental agriculture and forestry greenhouse gas reduction and renewable energy program under section 155 of division A, and section 215 of division B, of the Clean Energy Jobs and American Power Act. (c)

Deficit reduction

(1)

In general

The Administrator shall— (A)auction, pursuant to section 778, emission allowances for deficit reduction in the amounts described in paragraph (2); and (B)deposit those proceeds immediately on receipt in the Deficit Reduction Fund established by section 783. (2)

Amounts

For vintage years 2012 through 2050, 25.0 percent of emission allowances established for each year under section 721(a) shall be auctioned and the proceeds deposited pursuant to paragraph (1) to ensure that this title does not contribute to the deficit for that particular calendar year. (d)

Supplemental reductions

(1)

In general

The Administrator shall allocate allowances for each vintage year to achieve supplemental reductions pursuant to section 753. (2)

Adjustment

The Administrator shall modify the allowances allocated under paragraph (1) as necessary to ensure the achievement of the annual supplemental emissions reduction objective for 2020 set forth in section 704.

772.

Electricity consumers

(a)

Definitions

For purposes of this section: (1)

CHP savings

The term CHP savings means— (A)CHP system savings from a combined heat and power system that commences operation after the date of enactment of this section; and (B)the increase in CHP system savings from, at any time after the date of the enactment of this section, upgrading, replacing, expanding, or increasing the utilization of a combined heat and power system that commenced operation on or before the date of enactment of this section. (2)

CHP system savings

The term CHP system savings means the increment of electric output of a combined heat and power system that is attributable to the higher efficiency of the combined system (as compared to the efficiency of separate production of the electric and thermal outputs). (3)

Coal-fueled unit

The term coal-fueled unit means a utility unit that derives at least 85 percent of its heat input from coal, petroleum coke, or any combination of those 2 fuels. (4)

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. (5)

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 an electric cooperative, are regulated or set by— (i)a State regulatory authority; (ii)a State or political subdivision thereof (or an agency or instrumentality of, or corporation wholly owned by, either of the foregoing); or (iii)an Indian tribe pursuant to tribal law. (6)

Electricity savings

The term electricity savings means reductions in electricity consumption, relative to business-as-usual projections, achieved through measures implemented after the date of enactment of this section, limited to— (A)customer facility savings of electricity, adjusted to reflect any associated increase in fuel consumption at the facility; (B)reductions in distribution system losses of electricity achieved by a retail electricity distributor, as compared to losses attributable to new or replacement distribution system equipment of average efficiency; (C)CHP savings; and (D)fuel cell savings. (7)

Fuel cell

The term fuel cell means a device that directly converts the chemical energy of a fuel and an oxidant into electricity by electrochemical processes occurring at separate electrodes in the device. (8)

Fuel cell savings

The term ‘fuel cell savings’ means the electricity saved by a fuel cell that is installed after the date of enactment of this section, or by upgrading a fuel cell that commenced operation on or before the date of enactment of this section, as a result of the greater efficiency with which the fuel cell transforms fuel into electricity as compared with sources of electricity delivered through the grid, provided that— (A)the fuel cell meets such requirements relating to efficiency and other operating characteristics as the Federal Energy Regulatory Commission may promulgate by regulation; and (B)the net sales of electricity from the fuel cell to customers not consuming the thermal output from the fuel cell, if any, do not exceed 50 percent of the total annual electricity generation by the fuel cell. (9)

Independent power production facility

The term independent power production facility means a facility— (A)that is used for the generation of electric energy, at least 80 percent of which is sold at wholesale; and (B)the sales of the output of which are not subject to retail rate regulation or setting of retail rates by— (i)a State regulatory authority; (ii)a State or political subdivision thereof (or an agency or instrumentality of, or corporation wholly owned by, either of the foregoing); (iii)an electric cooperative; or (iv)an Indian tribe pursuant to tribal law. (10)

Long-term contract generator

The term long-term contract generator means a qualifying small power production facility, a qualifying cogeneration facility ), an independent power production facility, or a facility for the production of electric energy for sale to others that is owned and operated by an electric cooperative that is— (A)a covered entity; and (B)as of the date of enactment of this title— (i)a facility with 1 or more sales or tolling agreements executed before March 1, 2007, that govern the facility’s electricity sales and provide 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, provided that such agreements are not between entities that are affiliates of one another; or (ii)a facility consisting of 1 or more cogeneration units that makes useful thermal energy available to an industrial or commercial process with 1 or more sales agreements executed before March 1, 2007, that govern the facility’s useful thermal energy sales and provide for sales at a price (whether a fixed price or price formula) for useful thermal energy that does not allow for recovery of the costs of compliance with the limitation on greenhouse gas emissions under this title, provided that such agreements are not between entities that are affiliates of one another. (11)

Merchant coal unit

The term merchant coal unit means a coal-fueled unit that— (A)is or is part of a covered entity; (B)is not owned by a Federal, State, or regional agency or power authority; and (C)generates electricity solely for sale to others, provided that all or a portion of such sales are made by a separate legal entity that— (i)has a full or partial ownership or leasehold interest in the unit, as certified in accordance with such requirements as the Administrator shall prescribe; and (ii)is not subject to retail rate regulation or setting of retail rates by— (I)a State regulatory authority; (II)a State or political subdivision thereof (or an agency or instrumentality of, or corporation wholly owned by, either of the foregoing); (III)an electric cooperative; or (IV)an Indian tribe pursuant to tribal law. (12)

Merchant coal unit sales

The term merchant coal unit sales means sales to others of electricity generated by a merchant coal unit that are made by the owner or leaseholder described in paragraph (11)(C). (13)

New coal-fueled unit

The term new coal-fueled unit means a coal-fueled unit that commenced operation on or after January 1, 2009 and before January 1, 2013. (14)

New merchant coal unit

The term new merchant coal unit means a merchant coal unit— (A)that commenced operation on or after January 1, 2009 and before January 1, 2013; and (B)the actual, on-site construction of which commenced prior to January 1, 2009. (15)

Qualified hydropower

The term qualified hydropower means— (A)energy produced from increased efficiency achieved, or additions of capacity made, on or after January 1, 1988, at a hydroelectric facility that was placed in service before that date and does not include additional energy generated as a result of operational changes not directly associated with efficiency improvements or capacity additions; or (B)energy produced from generating capacity added to a dam on or after January 1, 1988, provided that the Federal Energy Regulatory Commission certifies that— (i)the dam was placed in service before the date of the enactment of this section and was operated for flood control, navigation, or water supply purposes and was not producing hydroelectric power prior to the addition of such capacity; (ii)the hydroelectric project installed on the dam is licensed (or is exempt from licensing) by the Federal Energy Regulatory Commission and is in compliance with the terms and conditions of the license or exemption, and with other applicable legal requirements for the protection of environmental quality, including applicable fish passage requirements; and (iii)the hydroelectric project installed on the dam is operated so that the water surface elevation at any given location and time that would have occurred in the absence of the hydroelectric project is maintained, subject to any license or exemption requirements that require changes in water surface elevation for the purpose of improving the environmental quality of the affected waterway. (16)

Qualifying small power production facility; qualifying cogeneration facility

The terms qualifying small power production facility and qualifying cogeneration facility have the meanings given those terms in section 3(17)(C) and 3(18)(B) of the Federal Power Act (16 U.S.C. 796(17)(C) and 796(18)(B)). (17)

Renewable energy resource

The term renewable energy resource means each of the following: (A)Wind energy. (B)Solar energy. (C)Geothermal energy. (D)Renewable biomass. (E)Biogas derived exclusively from renewable biomass. (F)Biofuels derived exclusively from renewable biomass. (G)Qualified hydropower. (H)Marine and hydrokinetic renewable energy, as that term is defined in section 632 of the Energy Independence and Security Act of 2007 (42 U.S.C. 17211). (18)

Small ldc

The term small LDC means, for any given year, an electricity local distribution company that delivered less than 4,000,000 megawatt hours of electric energy directly to retail consumers in the preceding year. (19)

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)). (20)

Useful thermal energy

The term useful thermal energy has the meaning given that term in section 371(7) of the Energy Policy and Conservation Act (42 U.S.C. 6341(7)). (b)

Electricity local distribution companies

(1)

Distribution of allowances

The Administrator shall distribute to electricity local distribution companies for the benefit of retail ratepayers the quantity of emission allowances allocated for the following vintage year pursuant to section 771(a)(1). Notwithstanding the preceding sentence, the Administrator shall withhold from distribution under this subsection a quantity of emission allowances equal to the lesser of 14.3 percent of the quantity of emission allowances allocated under section 771(a)(1) for the relevant vintage year, or 105 percent of the emission allowances for the relevant vintage year that the Administrator anticipates will be distributed to merchant coal units and to long-term contract generators, respectively, under subsections (c) and (d). If not required by subsections (c) and (d) to distribute all of these reserved allowances, the Administrator shall distribute any remaining emission allowances to electricity local distribution companies in accordance with this subsection. (2)

Distribution based on emissions

(A)

In general

For each vintage year, 50 percent of the emission allowances available for distribution under paragraph (1), after reserving allowances for distribution under subsections (c) and (d), 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 delivered at retail by each such company during the base period determined under subparagraph (B). (B)

Base period

(i)

Vintage years 2012 and 2013

For vintage years 2012 and 2013, an electricity local distribution company’s base period shall be— (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)

Vintage years 2014 and thereafter

For vintage years 2014 and thereafter, the base period shall be— (I)the base period selected under clause (i); or (II)calendar year 2012, in the case of an electricity local distribution company that owns, co-owns, or purchases through a power purchase agreement (whether directly or through a cooperative arrangement) a substantial portion of the electricity generated by a new coal-fueled unit, provided that such company timely informs the Administrator of its election to use 2012 as its base period. (C)

Determination of emissions

(i)

Determination for 1999–2008

As part of the regulations promulgated pursuant to subsection (g), the Administrator, after consultation with the Energy Information Administration, shall determine the average amount of carbon dioxide emissions attributable to generation of electricity delivered at retail by each electricity local distribution company for each of the years 1999 through 2008, taking into account entities’ electricity generation, electricity purchases, and electricity sales. In the case of any electricity local distribution company that owns, co-owns, or purchases through a power purchase agreement (whether directly or through a cooperative arrangement) a substantial portion of the electricity generated by, a coal-fueled unit that commenced operation after January 1, 2006, and before December 31, 2008, the Administrator shall adjust the emissions attributable to such company’s retail deliveries in calendar years 2006 through 2008 to reflect the emissions that would have occurred if the relevant unit were in operation during the entirety of such 3-year period. (ii)

Adjustments for new coal-fueled units

(I)

Vintage years 2012 and 2013

For purposes of emission allowance distributions for vintage years 2012 and 2013, in the case of any electricity local distribution company that owns, co-owns, or purchases through a power purchase agreement (whether directly or through a cooperative arrangement) a substantial portion of the electricity generated by, a new coal-fueled unit, the Administrator shall adjust the emissions attributable to such company’s retail deliveries in the applicable base period to reflect the emissions that would have occurred if the new coal-fueled unit were in operation during such period. (II)

Vintage year 2014 and thereafter

Not later than necessary for use in making emission allowance distributions under this subsection for vintage year 2014, the Administrator shall, for any electricity local distribution company that owns, co-owns, or purchases through a power purchase agreement (whether directly or through a cooperative arrangement) a substantial portion of the electricity generated by a new coal-fueled unit and has selected calendar year 2012 as its base period pursuant to subparagraph (B)(ii)(II), determine the amount of carbon dioxide emissions attributable to generation of electricity delivered at retail by such company in calendar year 2012. If the relevant new coal-fueled unit was not yet operational by January 1, 2012, the Administrator shall adjust such determination to reflect the emissions that would have occurred if such unit were in operation for all of calendar year 2012. (iii)

Requirements

Determinations under this paragraph 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. (3)

Distribution based on deliveries

(A)

Initial formula

Except as provided in subparagraph (B), for each vintage year, the Administrator shall distribute 50 percent of the emission allowances available for distribution under paragraph (1), after reserving allowances for distribution under subsections (c) and (d), among individual electricity local distribution companies ratably based on each electricity local distribution company’s annual average retail electricity deliveries for calendar years 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. (B)

Updating

Prior to distributing 2015 vintage year emission allowances under this paragraph and at 3-year intervals thereafter, the Administrator shall update the distribution formula under this paragraph 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 subparagraph (A); 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 subparagraph. (4)

Prohibition against excess distributions

The regulations promulgated under subsection (g) shall ensure that, notwithstanding paragraphs (2) and (3), no electricity local distribution company shall receive a greater quantity of allowances under this subsection than is necessary to offset any increased electricity costs to such company’s retail ratepayers, including increased costs attributable to purchased power costs, due to enactment of this title. Any emission allowances withheld from distribution to an electricity local distribution company pursuant to this paragraph shall be distributed among all remaining electricity local distribution companies ratably based on emissions pursuant to paragraph (2). (5)

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 and may not be used to support electricity sales or deliveries to entities or persons other than such ratepayers. (B)

Ratepayer classes

In using emission allowances distributed under this subsection 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

In general, an electricity local distribution company shall not use the value of emission allowances distributed under this subsection 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 or as a fixed credit or rebate on electricity bills. (D)

Residential and industrial ratepayers

Notwithstanding subparagraph (C), if compliance with the requirements of this title results (or would otherwise result) in an increase in electricity costs for residential or industrial retail ratepayers of any given electricity local distribution company (including entities that receive emission allowances pursuant to part F), such electricity local distribution company— (i)shall pass through to residential retail ratepayers as a class their ratable share (based on deliveries to each ratepayer class) of the value of the emission allowances that reduce electricity cost impacts on such ratepayers; and (ii)shall pass through to industrial ratepayers as a class their ratable share (based on deliveries to each ratepayer class) of the value of the emission allowances that reduce electricity cost impacts on such ratepayers. The electricity local distribution company may do so based on the quantity of electricity delivered to individual industrial retail ratepayers. (E)

Guidelines

As part of the regulations promulgated under subsection (g), the Administrator shall, after consultation with State regulatory authorities, prescribe guidelines for the implementation of the requirements of this paragraph. Such guidelines shall include— (i)requirements to ensure that residential and industrial retail ratepayers (including entities that receive emission allowances under part F) receive their ratable share of the value of the allowances distributed to each electricity local distribution company pursuant to this subsection; and (ii)requirements for measurement, verification, reporting, and approval of methods used to assure the use of allowance values to benefit retail ratepayers. (6)

Regulatory proceedings

(A)

Requirement

No electricity local distribution company shall be eligible to receive emission allowances under this subsection or subsection (e) unless the State regulatory authority with authority over such company’s retail rates, or the entity with authority to regulate or set retail electricity rates of an electricity local distribution company not regulated by a State regulatory authority, has— (i)after public notice and an opportunity for comment, 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 (5) of this subsection and the requirements of subsection (e); and (ii)made available to the Administrator and the public a report describing, in adequate detail, the manner in which the requirements of paragraph (5) and the requirements of subsection (e) 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, after public notice and an opportunity for comment, and a new report be made available to the Administrator and the public, pursuant to subparagraph (A), not less frequently than every 5 years. (7)

Plans and reporting

(A)

Regulations

As part of the regulations promulgated under subsection (g), the Administrator shall prescribe requirements governing plans and reports to be submitted 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 tor setting 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 and subsection (e), in accordance with the requirements of this subsection and subsection (e). Such plan shall include a description of the manner in which the company will provide to industrial retail ratepayers (including entities that receive emission allowances under part F) their ratable share of the value of such allowances. (C)

Reports

Not later than June 30, 2013, and each calendar year thereafter through 2031, each electricity local distribution company shall submit a report to the Administrator, and to the relevant State regulatory authority or other entity charged with regulating or setting the retail electricity rates of such company, describing the disposition of the value of any emission allowances received by such company in the prior calendar year pursuant to this subsection and subsection (e), 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 any such emission allowances; (iii)the manner in which the company’s disposition of any such emission allowances complies with the requirements of this subsection and of subsection (e), including each of the requirements of paragraph (5) of this subsection, including the requirement that industrial retail ratepayers (including entities that receive emission allowances under part F) receive their ratable share of the value of such allowances; 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 under this subsection, including by publishing such plans and reports on the Internet. (8)

Administrator audit reports

(A)

In general

Each year, the Administrator shall audit a representative sample of electricity local distribution companies to ensure that emission allowances distributed under this subsection have been used exclusively for the benefit of retail ratepayers and that such companies are complying with the requirements of this subsection and of subsection (e), including the requirement that residential and industrial retail ratepayers (including entities that receive emission allowances under part F) receive their ratable share of the value of such allowances. The Administrator shall assess the degree to which electric local distribution companies have maintained a marginal electric price signal while protecting consumers on total cost using the value of emissions allowances. In selecting companies for audit, the Administrator shall take into account any credible evidence of noncompliance with such requirements. 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. (B)

GAO audit report

Not later than April 30, 2015, and every 3 years thereafter through 2026, the Comptroller General of the United States, incorporating results from the Administrators’ audit report and other relevant information including distribution company reports, shall conduct an in-depth evaluation and make available to the public a report on the investments made pursuant to paragraph (5). Said report shall be made available to the State regulatory authority, or the entity with authority to regulate or set retail electricity rates in the case of an electricity distribution company that is not regulated by a State regulatory authority, and shall include a description of how the distribution companies in the audit meet or fail to meet the requirement of paragraph (5), including for investments made in cost-effective end-use energy efficiency programs, the lifetime and annual energy saving benefits, and capacity benefits of said programs. (C)

Administrator cost containment report

Not later than April 30, 2015 and every 3 years thereafter through 2026, the Administrator shall transmit a report to Congress containing an evaluation of the disposition of the value of emission allowances received pursuant to this subsection and subsection (e) and recommendations of ways to more effectively direct the value of allowances to reduce costs for consumers, contain the overall costs of the greenhouse gas emissions reduction program, and meet the pollution reduction targets of the Act. The Administrator shall make available to the public such report, including by publishing such report on the Internet. (9)

Enforcement

A violation of any requirement of this subsection or of subsection (e), irrespective of approval by a State regulatory authority, shall be a violation of this Act. Each emission allowance the value of which is used in violation of the requirements of this subsection or of subsection (e) shall be a separate violation. (c)

Merchant coal units

(1)

Qualifying emissions

The qualifying emissions for a merchant coal unit for a given calendar year shall be the product of the number of megawatt hours of merchant coal unit sales generated by such unit in such calendar year and the average carbon dioxide emissions per megawatt hour generated by such unit during the base period under paragraph (2), 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 unit’s carbon dioxide emissions that are either— (A)captured and sequestered in such calendar year; or (B)attributable to the combustion or gasification of biomass, to the extent that the owner or operator of the unit is not required to hold emission allowances for such emissions. (2)

Base period

For purposes of this subsection, the base period for a merchant coal unit shall be— (A)calendar years 2006 through 2008; or (B)in the case of a new merchant coal unit— (i)the first full calendar year of operation of such unit, if such unit commences operation before January 1, 2012; (ii)calendar year 2012, if such unit commences operation on or after January 1, 2012, and before October 1, 2012; or (iii)calendar year 2013, if such unit commences operation on or after October 1, 2012, and before January 1, 2013. (3)

Phase-Down schedule

The Administrator shall identify an annual phase-down factor, applicable to distributions to merchant coal units for each of vintage years 2012 through 2029, that corresponds to the overall decline in the amount of emission allowances allocated to the electricity sector in such years pursuant to section 771(a)(1). Such factor shall— (A)for vintage year 2012, be equal to 1.0; (B)for each of vintage years 2013 through 2029, correspond to the quotient of— (i)the quantity of emission allowances allocated under section 771(a)(1) for such vintage year; divided by (ii)the quantity of emission allowances allocated under section 771(a)(1) for vintage year 2012. (4)

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 the owner or operator of each merchant coal unit described in subsection (a)(11)(C) in an amount equal to the product of— (A)0.5; (B)the qualifying emissions for such merchant coal unit for the preceding year, as determined under paragraph (1); and (C)the phase-down factor for the preceding calendar year, as identified under paragraph (3). (5)

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. (6)

Limitation on allowances

Notwithstanding paragraph (4) or (5), for each 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 771(a)(1). If the quantity of emission allowances that would otherwise be distributed pursuant to paragraph (4) or (5) for any vintage year would exceed such limit, the Administrator shall distribute 10 percent of the total emission allowances available for distribution under section 771(a)(1) for such vintage year ratably among merchant coal generators based on the applicable formula under paragraph (4) or (5). (7)

Eligibility

The owner or operator of a merchant coal unit shall not be eligible to receive emission allowances under this subsection for any vintage year for which such owner or operator has elected to receive emission allowances for the same unit under subsection (d). (d)

Long-Term contract generators

(1)

Distribution

Not later than March 1, 2013, and each calendar year through 2030, the Administrator shall distribute to the owner or operator of each long-term contract generator a quantity of emission allowances of the preceding vintage year that is equal to the sum of— (A)the number of tons of carbon dioxide emitted as a result of a qualifying electricity sales agreement referred to in subsection (a)(10)(B)(i); and (B)the incremental number of tons of carbon dioxide emitted solely as a result of a qualifying thermal sales agreement referred to in subsection (a)(10)(B)(ii), provided that in no event shall the Administrator distribute more than 1 emission allowance for the same ton of emissions. (2)

Limitation on allowances

Notwithstanding paragraph (1), for each vintage year the Administrator shall distribute under this subsection no more than 4.3 percent of the total quantity of emission allowances available for such vintage year for distribution to the electricity sector under section 771(a)(1). If the quantity of emission allowances that would otherwise be distributed pursuant to paragraph (1) for any vintage year would exceed such limit, the Administrator shall distribute 4.3 percent of the total emission allowances available for distribution under section 771(a)(1) for such vintage year ratably among long-term contract generators based on paragraph (1). (3)

Eligibility

(A)

Facility eligibility

The owner or operator of a facility shall cease to be eligible to receive emission allowances under this subsection upon the earliest date on which the facility no longer meets each and every element of the definition of a long-term contract generator under subsection (a)(10). (B)

Contract eligibility

The owner or operator of a facility shall cease to be eligible to receive emission allowances under this subsection based on an electricity or thermal sales agreement referred to in subsection (a)(10)(B) upon the earliest date that such agreement— (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 or thermal energy sold under such agreement, the quantity of electricity or thermal energy sold under the agreement, or the expiration or termination date of the agreement. (4)

Demonstration of eligibility

To be eligible to receive allowance distributions under this subsection, the owner or operator of 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(15). (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 each qualifying electricity or thermal sales agreement referred to in subsection (a)(10)(B). (F)A copy of each qualifying electricity or thermal sales agreement referred to in subsection (a)(10)(B). (5)

Notification

Not later than 30 days after, in accordance with paragraph (3), a facility or an agreement ceases to meet the eligibility requirements for distribution of emission allowances pursuant to this subsection, the designated representative of such facility shall notify the Administrator in writing when, and on what basis, such facility or agreement ceased to meet such requirements. (e)

Small LDCs

(1)

Distribution

The Administrator shall, in accordance with this subsection, distribute emission allowances allocated pursuant to section 771(a)(1) for the following vintage year. Such allowances shall be distributed ratably among small LDCs based on historic emissions in accordance with the same measure of such emissions applied to each such small LDC for the relevant vintage year under subsection (b)(2) of this section. (2)

Uses

A small LDC receiving allowances under this section shall use such allowances exclusively for the following purposes: (A)Cost-effective programs to achieve electricity savings, provided that such savings shall not be transferred or used for compliance with any renewable electricity standard established under the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.). (B)Deployment of technologies to generate electricity from renewable energy resources, provided that any Federal renewable electricity credits issued based on generation supported under this section shall be submitted to the Federal Energy Regulatory Commission for voluntary retirement and shall not be used for compliance with the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.). (C)Assistance programs to reduce electricity costs for low-income residential ratepayers of such small LDC, provided that such assistance is made available equitably to all residential ratepayers below a certain income level, which shall not be higher than 200 percent of the poverty line (as that term is defined in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)). (3)

Requirements

As part of the regulations promulgated under subsection (g), the Administrator shall prescribe— (A)after consultation with the Federal Energy Regulatory Commission, requirements to ensure that programs and projects under paragraph (2)(A) and (B) are consistent with the standards established by, and effectively supplement electricity savings and generation of electricity from renewable energy resources achieved by, the Combined Efficiency and Renewable Electricity Standard established by law; (B)eligibility criteria and guidelines for consumer assistance programs for low-income residential ratepayers under paragraph (2)(C); and (C)such other requirements as the Administrator determines appropriate to ensure compliance with the requirements of this subsection. (4)

Reporting

Reports submitted under subsection (b)(7) shall include, in accordance with such requirements as the Administrator may prescribe— (A)a description of any facilities deployed under paragraph (2)(A), the quantity of resulting electricity generation from renewable energy resources; (B)an assessment demonstrating the cost-effectiveness of, and electricity savings achieved by, programs supported under paragraph (2)(B); and (C)a description of assistance provided to low-income retail ratepayers under paragraph (2)(C). (f)

Certain cogeneration facilities

(1)

Eligible cogeneration facilities

For purposes of this subsection, an eligible cogeneration facility is a facility that— (A)is a qualifying co-generation facility (as that term is defined in section 3(18)(B) of the Federal Power Act (16 U.S.C. 796(18)(B)); (B)derives 80 percent or more of its heat input from coal, petroleum coke, or any combination of these 2 fuels; (C)has a nameplate capacity of 100 megawatts or greater; (D)was in operation as of January 1, 2009, and remains in operation as of the date of any distribution of emission allowances under this subsection; (E)in calendar years 2006 through 2008 sold, and as of the date of any distribution of emission allowances under this section sells, steam or electricity directly and solely to multiple, separately owned industrial or commercial facilities co-located at the same site with the cogeneration facility; and (F)is not eligible to receive allowances under any other subsection of this section or under part F of this title. (2)

Distribution

The Administrator shall distribute the emission allowances allocated pursuant to section 771(a)(1) to owners or operators of eligible cogeneration facilities ratably based on the carbon dioxide emissions of each such facility in calendar years 2006 through 2008. The Administrator— (A)shall not, in any year, distribute emission allowances under this subsection to the owner or operator of any eligible cogeneration facility in excess of the amount necessary to offset such facility’s cost of compliance with the requirements of this title in that year; and (B)may distribute such allowances over a period of years if annual distributions under this subsection would otherwise exceed the limitation in subparagraph (A), provided that in no event shall distributions be made under this subsection after calendar year 2025. (3)

Requirements

The Administrator shall, by regulation, establish requirements to ensure that the value of any emission allowances distributed pursuant to this subsection are passed through, on an equitable basis, to the facilities to which the relevant cogeneration facility provides electricity or steam deliveries, including any facility owned or operated by the owner or operator of the cogeneration facility. (g)

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.

773.

Natural gas consumers

(a)

Definition

For purposes of this section, 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, 2015, and each calendar year thereafter through 2028, the Administrator shall distribute to natural gas local distribution companies for the benefit of retail ratepayers the quantity of emission allowances allocated for the following vintage year pursuant to section 771(a)(2). 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 on a pro rata basis 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 on a pro rata basis 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 and may not be used to support natural gas sales or deliveries to entities or persons other than such ratepayers. (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 on a pro rata basis based on natural gas deliveries to each class; and (B)equitably among individual ratepayers within each ratepayer class. (3)

Limitation

A natural gas local distribution company shall not use the value of emission allowances distributed under this section 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 section to provide rebates, it shall, to the maximum extent practicable, provide such rebates with regard to the fixed portion of ratepayers’ bills or as a fixed creditor rebate on natural gas 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, 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 in accordance with this subsection. (2)

Plans

Not later than April 30, 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 accordance with the requirements of this section. (3)

Reports

Not later than June 30, 2017, and each calendar year thereafter through 2031, each natural gas local distribution company shall submit a report to the Administrator, approved by the relevant State regulatory authority or other entity charged with regulating the retail natural gas rates of such company, describing the disposition of the value of any emission allowances received by such 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)

Auditing

(1)

Administrator audit report

Each year, the Administrator shall audit a significant representative sample of natural gas local distribution companies to ensure that emission allowances distributed under this section have been used exclusively for the benefit of retail ratepayers and that such companies are complying with the requirements of this section. In selecting companies for audit, the Administrator shall take into account any credible evidence of noncompliance with such requirements. 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. (2)

GAO audit report

Not later April 30, 2015 and every 3 years thereafter through April 30, 2026, the Comptroller General of the United States, incorporating results from the Administrators’ audit report and other relevant information including distribution company reports, shall conduct an in-depth evaluation and make available to the public a report on the investments made pursuant to subsection (c). Said report shall be made available to the State regulatory authority, or the entity with authority to regulate or set retail natural gas rates in the case of a natural gas distribution company that is not regulated by a State regulatory authority, and shall include a description how the distribution companies in the audit meet or fail to meet the requirement of subsection (c), including for investments made in cost-effective end-use energy efficiency programs, the lifetime and annual energy saving benefits, and capacity benefits of said programs. (3)

Administrator cost containment report

Not later April 30, 2015, and every 3 years thereafter through April 30, 2026, the Administrator shall transmit a report to Congress containing an evaluation of the disposition of the value of emission allowances received pursuant to this subsection and recommendations of ways to more effectively direct the value of allowances to reduce costs for consumers, contain the overall costs of the greenhouse gas emissions reduction program, and meet the pollution reduction targets of the Act. The Administrator shall make available to the public such report, including by publishing such report on the Internet. (g)

Enforcement

A violation of any requirement of this section, irrespective of approval by a State regulatory authority, 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.

774.

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 would be emitted as a result of the combustion of a fuel. (2)

Cost-effective

The term cost-effective has the meaning given that term in section 773(a). (b)

Allocation

The Administrator shall distribute among the States, in accordance with this section, the quantity of emission allowances allocated pursuant to section 771(a)(3). The Administrator shall distribute a percentage of such allowances determined by the Administrator, after consultation with the Secretary of the Interior, pursuant to subsection (f). (c)

Distribution among States

The Administrator shall distribute emission allowances among the States under this section each year on a pro rata basis 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 energy 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 supported 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 emission allowances, the quantity of which is equal to up to twice the quantity 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 on a pro rata basis in accordance with the formula in subsection (c).

775.

Domestic fuel production

(a)

Purpose

The purpose of this section is to provide emission allowance rebates to petroleum refineries in the United States in a manner that promotes energy efficiency and a reduction in greenhouse gas emissions at such facilities. (b)

Definitions

In this section: (1)

Emissions

The term emissions includes direct emissions from fuel combustion, process emissions, and indirect emissions from the generation of electricity, steam, and hydrogen used to produce the output of a petroleum refinery or the petroleum refinery sector. (2)

Petroleum refinery

The term petroleum refinery means a facility classified under code 324110 of the North American Industrial Classification System of 2002. (3)

Small business refiner

The term small business refiner means a refiner that meets the applicable Federal refinery capacity and employee limitations criteria described in section 45H(c)(1) of the Internal Revenue Code of 1986 (as in effect on the date of enactment of this section and without regard to section 45H(d)). Eligibility of a small business refiner under this paragraph shall not be recalculated or disallowed on account of (i) its merger with another small business refiner or refiners after December 31, 2002, or (ii) its acquisition of another small business refiner (or refinery of such refiner) after December 31, 2002. (c)

In general

The Administrator shall distribute allowances pursuant to this section to owners and operators of petroleum refineries, including small business refiners, in the United States. (d)

Distribution schedule

The Administrator shall distribute emission allowances pursuant to the regulations issued under subsection (e) for each vintage year no later than October 31 of the preceding calendar year. (e)

Regulations

Not later than 3 years after the date of enactment of this title, the Administrator, in consultation with the Administrator of the Energy Information Administration, shall promulgate regulations that establish a formula for distributing emission allowances consistent with the purpose of this section. In establishing such formula, the Administrator shall consider the relative complexity of refinery processes and appropriate mechanisms to take energy efficiency and greenhouse gas reductions into account. If a petroleum refinery’s electricity provider received a free allocation of emission allowances pursuant to section 771(a)(1), the Administrator shall take this free allocation into account when establishing such formula to avoid rebates to a petroleum refinery for costs that the Administrator determines were not incurred by the petroleum refinery because the allowances were freely allocated to the petroleum refinery’s electricity provider and used for the benefit of the petroleum refinery. This formula shall apply separately to the distribution of allowances allocated pursuant to section 771(a)(4), including for petroleum refiners and small business refiners.

776.

Consumer protection

(a)

Consumer rebates

(1)

Establishment of fund

There is established in the Treasury a separate account, to be known as the Consumer Rebate Fund). (2)

Availability of amounts

All amounts deposited in the Consumer Rebate Fund shall be available without further appropriation or fiscal year limitation. (3)

Distribution of amounts

Beginning in 2026, for each year after deposits are made in the Consumer Rebate Fund pursuant to section 771(b)(2)(A), the President shall use the funds in accordance with Federal statutory authority to provide relief to consumers and others affected by the enactment of the Clean Energy Jobs and American Power Act (and amendments made by that Act). (b)

Energy refund program

(1)

Establishment of fund

There is established in the Treasury a separate account, to be known as the Energy Refund Account). (2)

Availability of amounts

All amounts deposited in the Energy Refund Account shall be available without further appropriation or fiscal year limitation. (3)

Distribution of amounts

For each year after deposits are made to the Energy Refund Account pursuant to section 771(b)(2)(B), the President shall use the funds in accordance with Federal statutory authority to offset energy cost impacts on low- and moderate-income households.

777.

Exchange for State-issued allowances

(a)

In general

Not later than 1 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 the later of December 31, 2011, or the date that is 9 months after the first auction under section 778, 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; (3)provide that the Federal emission allowances disbursed pursuant to this section shall be deducted from the allowances to be auctioned pursuant to section 771(b); and (4)require that, once exchanged, the credit or other instrument be retired for purposes of use under the program by or for which it was originally issued. (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.

778.

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 4 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) by promulgating new regulations. 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 (in constant 2005 dollars) 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. (f)

Small business refiner reserve

The Administrator shall, in accordance with this subsection, issue regulations setting aside a specified number of allowances, as determined by the Administrator, that small business refiners may purchase at the average auction price and may use to demonstrate compliance pursuant to section 722. These regulations shall provide the following: (1)

Allowed purchases

From January 1 of the calendar year that matches the vintage year for which allowances have been placed in the reserve, through January 14 of the following year, small business refiners (as defined in section 775(b)) may purchase allowances from this reserve at the price determined pursuant to paragraph (2). (2)

Price

The price for allowances purchased from this reserve shall be the average auction price for allowances of the same vintage year purchased at auctions conducted pursuant to this section during the 12 months preceding the purchase of the allowances. (3)

Use of allowances

Allowances purchased from this reserve shall only be used by the purchaser to demonstrate compliance pursuant to section 722 for attributable greenhouse gas emissions in the calendar year that matches the vintage year of the purchased allowance. Allowances purchased from this reserve may not be banked, traded or borrowed. (4)

Limitations on purchase amount

The Administrator, by regulation adopted after public notice and an opportunity for comment, shall establish procedures to distribute the ability to purchase allowances from the reserve fairly among all small business refiners interested in purchasing allowances from this reserve so as to address the potential that requests to purchase allowances exceed the number of allowances available in the reserve. This regulation may place limits on the number of allowances a small business refiner may purchase from the reserve. (5)

Unsold allowances

Vintage year allowances not sold from the reserve on or before January 15 of the calendar year following the vintage year shall be sold at an auction conducted pursuant to this section no later than March 31 of the calendar year following the vintage year. If significantly more allowances are being placed in the reserve than are being purchased from the reserve several years in a row, the Administrator may adjust either the percent of allowances placed in the reserve or the date by which allowances may be purchased from the reserve.

779.

Auctioning allowances for other entities

(a)

Consignment

Any entity holding emission allowances or compensatory allowances may request that the Administrator auction, pursuant to section 778, 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 778. The Administrator may permit the entity offering the allowance for sale to condition the sale of its allowances pursuant to this section on a minimum reserve price that is different than the reserve auction price set pursuant to section 778(d). (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.

780.

Commercial deployment of carbon capture and sequestration technologies

(a)

Definitions

In this section: (1)

Carbon capture and storage

The term carbon capture and sequestration shall— (A)have such term as Administrator shall determine by regulation; and (B)include— (i)geological sequestration; and (ii)conversion of captured carbon dioxide to a stable form that will safely and permanently sequester the carbon dioxide. (2)

Qualifying electric generating unit

The term qualifying electric generating unit means an electric utility unit that— (A)derives at least 50 percent of the annual fuel input of the unit from— (i)coal or waste coal; (ii)petroleum coke; or (iii)any combination of those 2 fuels; and (B)(i)has a nameplate capacity of 200 megawatts or more; or (ii)in the case of retrofit applications, the carbon capture and sequestration technology is applied to the flue gas or fuel gas stream from at least 200 megawatts of the total nameplate generating capacity of the unit. (3)

Qualifying industrial source

The term qualifying industrial source means a source that— (A)is not a qualifying electric generating unit; (B)absent carbon capture and sequestration, would emit greater than 50,000 tons per year of carbon dioxide; and (C)does not produce a liquid transportation fuel from a solid fossil-based feedstock. (4)

Treated generating capacity

(A)

In general

The term treated generating capacity means the portion of the total generating capacity of an electric generating unit (or industrial source, measured by such method as the Administrator may designate to be equivalent to the calculation under subparagraph (B)) for which the flue gas or fuel gas is treated by the carbon capture and sequestration technology. (B)

Calculation

In determining the treated portion of flue gas or fuel gas of an electric generating unit under subparagraph (A), the Administrator shall multiply the nameplate capacity of the unit by the ratio that— (i)the mass of flue gas or fuel gas that is treated by the carbon capture and sequestration technology; bears to (ii)the total mass of the flue gas or fuel gas that is produced when the unit is operating at maximum capacity. (b)

Regulations

Not later than 2 years after the date of enactment of this title, the Administrator shall promulgate regulations providing for the distribution of emission allowances allocated under section 771(a)(6), pursuant to the requirements of this section, to support the commercial deployment of carbon capture and sequestration technologies in electric power generation and industrial operations. (c)

Eligibility criteria and method of distribution

(1)

Eligibility

For an owner or operator of a project to be eligible to receive emission allowances under this section, the project shall— (A)implement carbon capture and sequestration technology— (i)at a qualifying electric generating unit that, upon implementation of the carbon capture and sequestration technology, will achieve an emission limitation that is at least a 50-percent reduction in emissions of the carbon dioxide produced by— (I)the unit, measured on an annual basis, as determined by the Administrator; or (II)in the case of retrofit applications described in subsection (a)(2)(B)(ii), the treated portion of flue gas from the unit, measured on an annual basis, as determined by the Administrator; or (ii)at a qualifying industrial source that, upon implementation, will achieve an emission limitation that is at least a 50-percent reduction in emissions of the carbon dioxide produced by the emission point, measured on an annual basis, as determined by the Administrator; (B)(i)geologically sequester carbon dioxide at a site that meets all applicable permitting and certification requirements for geological sequestration; or (ii)pursuant to such requirements as the Administrator may prescribe by regulation, convert captured carbon dioxide to a stable form that will safely and permanently sequester the carbon dioxide; (C)meet all other applicable State, tribal, and Federal permitting requirements; and (D)be located in the United States. (2)

Method of distribution

(A)

Period

The Administrator shall distribute emission allowances allocated under section 771(a)(6) to eligible projects for each of the first 10 calendar years for which each eligible project is in commercial operation. (B)

Bonus allowance formula for electric generating units

(i)

Phase I distribution

For each project that is certified under subsection (h), the quantity of emission allowances that the Administrator shall distribute for a calendar year to the owner or operator of the eligible project shall be equal to the quotient obtained by dividing— (I)the product obtained by multiplying— (aa)the number of metric tons of carbon dioxide emissions avoided through capture and sequestration of emissions by the project for a particular year, as determined pursuant to such methodology as the Administrator shall prescribe by regulation; and (bb)a bonus allowance value that is assigned to the project under subsection (d)(2); by (II)the average fair market value of an emission allowance during the calendar year preceding the year during which the project captured and sequestered the carbon dioxide emissions. (ii)

Phase II distribution

For each project that qualifies under subsection (e), the quantity of emission allowances that the Administrator shall distribute for a calendar year to the owner or operator of the eligible project shall be determined through— (I)reverse auction, as prescribed by regulation under subsection (e)(3); or (II)if the Administrator decides not to distribute allowances through a reverse auction, an alternate distribution method established by regulation under subsection (e)(4). (C)

Formula for industrial sources

For each project that qualifies under subsection (g), the quantity of emission allowances that the Administrator shall distribute for a calendar year to the owner or operator of the eligible project shall be determined in accordance with subsection (g)(2). (D)

Consistency

The Administrator shall develop a method of distribution for each category of eligible projects under this paragraph in a manner that is consistent with the certification and distribution requirements under subsection (h). (d)

Phase I distribution to electric generating units

(1)

Applicability

(A)

In general

Subject to subparagraph (B), this subsection shall apply to projects that are undertaken at qualifying electric generating units that the Administrator determines to be eligible to receive emission allowances under this section. (B)

Capacity

The total cumulative generating capacity of the projects described in subparagraph (A) shall be equal to approximately 20 gigawatts of the treated generating capacity. (2)

Bonus allowance values

(A)

First tranche

(i)

In general

The first tranche shall include the first 10 gigawatts of treated generating capacity undertaken at qualifying electric generating units that receive emission allowances under this section. (ii)

Certain units

For an eligible project achieving capture and sequestration of 90 percent or more of the carbon dioxide that otherwise would be emitted by the unit, the bonus allowance value shall be $96 per ton of carbon dioxide emissions avoided through the use of capture and sequestration. (iii)

Bonus allowance value

The Administrator shall establish, by regulation, a bonus allowance value for each rate of capture and sequestration achieved by an eligible project— (I)beginning at a minimum of $50 per ton for a 50-percent rate; and (II)varying in direct proportion with increasing rates of capture and sequestration up to $96 per ton for an 90-percent rate. (B)

Second tranche

(i)

In general

The second tranche shall include the second 10 gigawatts of treated generating capacity undertaken at qualifying electric generating units that receive emission allowances under this section. (ii)

Certain units

For an eligible project achieving the capture and sequestration of 90 percent or more of the carbon dioxide that otherwise would be emitted by the eligible project, the bonus allowance value shall be $85 per ton of carbon dioxide emissions avoided through the use of capture and sequestration. (iii)

Bonus allowance value

The Administrator shall establish, by regulation, a bonus allowance value for each rate of capture and sequestration achieved by an eligible project— (I)beginning at a minimum of $50 per ton for a 50-percent rate; and (II)varying in direct proportion with increasing rates of capture and sequestration up to $85 per ton for a 90-percent rate. (C)

Increase in bonus allowance value

For an eligible project that commences commercial operation by not later than January 1, 2017, and that meets the eligibility criteria under subsection (c), the otherwise-applicable bonus allowance value under this paragraph shall be increased by $10, if the owner or operator of the eligible project submits to the Administrator by not later than January 1, 2012, a notification of the intent to implement carbon capture and sequestration technology at a qualifying electric generating unit in accordance with subsection (c). (D)

Reduction

(i)

In general

For a carbon capture and sequestration project sequestering in a geological formation for purposes of enhanced hydrocarbon recovery, the Administrator, by regulation, shall reduce the applicable bonus allowance value under this paragraph to reflect the lower net cost of the project, as compared to sequestration into geological formations solely for purposes of sequestration. (ii)

Assessment of net cost

For the purpose of this subparagraph, an assessment of net cost of a project shall account for the cost of the injection of carbon dioxide, or other method of enhanced hydrocarbon recovery, that would have otherwise been undertaken in the absence of the carbon capture and sequestration project under consideration. (E)

Adjustments

The Administrator shall annually adjust for monetary inflation the bonus allowance values established under this paragraph. (F)

Measurement

The Administrator shall measure the tranches and capture levels for assigning the bonus allowance values under this subsection based on the treated generating capacity of the qualifying electric generating units and qualifying industrial sources that receive emission allowances under this subsection. (G)

Average fair market value

(i)

In general

The Administrator and the Secretary of Energy may jointly determine that the average fair market value for emission allowances or the bonus allowances have been too low or too high to achieve efficient and cost-effective commercial deployment of carbon capture and sequestration technology in a given calendar year. (ii)

Action on determination

On making a determination under clause (i), the Administrator may— (I)promulgate regulations to adjust the bonus allowance value under this paragraph; or (II)distribute an appropriate quantity of emission allowances allocated under section 771(a)(6) from any future vintage year. (e)

Phase II distribution to electric generating units

(1)

Application

This subsection shall apply only to the distribution of emission allowances for carbon capture and sequestration projects undertaken at qualifying electric generating units and qualifying industrial sources after the treated generating capacity threshold identified under subsection (d)(1) is reached. (2)

Regulations

Not later than 2 years before the date on which the capacity threshold identified in subsection (d)(1) is projected to be reached, the Administrator shall promulgate regulations to govern the distribution of emission allowances to the owners or operators of eligible projects under this subsection. (3)

Reverse auctions

(A)

In general

Except as provided in paragraph (4), the regulations promulgated pursuant to paragraph (2) shall provide for the distribution of emission allowances to the owners or operators of eligible projects under this subsection through at least 2 reverse auctions, each of which shall be held not less frequently than once each calendar year. (B)

Requirements

(i)

Projects at industrial sources

The Administrator shall annually establish a reverse auction for projects at industrial sources, which may not participate in other auctions. (ii)

Other auctions

The Administrator may establish a separate auction for each of not more than 5 different project categories, as defined based on— (I)coal type; (II)capture technology; (III)geological formation type; (IV)new unit versus retrofit application; (V)such other factors as the Administrator may prescribe; or (VI)any combination of the factors described in subclauses (I) through (V). (iii)

Efficient distribution

The Administrator shall establish procedures for the auction of emission allowances under this subparagraph to ensure that the establishment of separate auctions for different project categories will not unduly impede the efficient and expeditious distribution of emission allowances to eligible projects under this subsection. (iv)

Minimum rates

The Administrator may establish appropriate minimum rates of capture and sequestration for the treated generating capacity of a project in implementing this subparagraph. (C)

Auction process

At each reverse auction under this paragraph— (i)the Administrator shall solicit bids from eligible projects; (ii)owners or operators of eligible projects participating in the auction shall submit a bid, including the desired level of carbon dioxide sequestration incentive per ton and the estimated quantity of carbon dioxide that the project will permanently sequester during a 10-year period; and (iii)the Administrator shall select bids within each auction for the sequestration quantity submitted, beginning with the eligible project for which the bid is submitted for the lowest level of sequestration incentive on a per-ton basis and meeting such other requirements as the Administrator may specify, until the amounts available for the reverse auction are committed. (D)

Form of distribution

The Administrator shall distribute emission allowances to the owners or operators of eligible projects selected through a reverse auction under this paragraph pursuant to a formula equivalent to the formula contained in subsection (c)(2)(B), except that the bonus allowance value that is bid by the applicable entity shall be substituted for the bonus allowance values described in subsection (c)(2). (4)

Alternative distribution method

(A)

In general

If the Administrator determines that a reverse auction will not result in efficient and cost-effective commercial deployment of carbon capture and sequestration technologies, the Administrator, pursuant to regulations under paragraph (2) or (5), shall prescribe a schedule for the provision of bonus allowances to the owners or operators of eligible projects under this subsection, in accordance with the requirements of this paragraph. (B)

Multiple tranches

The Administrator shall divide emission allowances available for distribution to the owners or operators of eligible projects into a series of tranches, each of which— (i)shall support the deployment of a specified quantity of cumulative electric generating capacity using carbon capture and sequestration technology; and (ii)shall not be greater than 10 gigawatts of treated generating capacity. (C)

Method of distribution

The Administrator shall distribute emission allowances within each tranche, on a first-come, first-served basis— (i)based on the date of full-scale operation of capture and sequestration technology; and (ii)pursuant to a formula that— (I)is similar to the formula contained in subsection (c)(2)(C), except that the Administrator may prescribe bonus allowance values different than those described in subsection (c)(2) based on the criteria established under subparagraph (E); and (II)establishes the number of emission allowances to be distributed per ton of carbon dioxide sequestered by the project. (D)

Requirements

For each tranche established pursuant to subparagraph (B), the Administrator shall establish a schedule for distributing emission allowances that— (i)is based on a sliding scale that provides higher bonus allowance values for projects achieving higher rates of capture and sequestration for the treated generation capacity at the unit; (ii)for each capture and sequestration rate, establishes a bonus allowance value that is lower than that established for the applicable rate for the previous tranche (or, in the case of the first tranche, than that established for the applicable rate under subsection (d)(2)); and (iii)may establish different bonus allowance levels for not more than 5 different project categories, as defined based on— (I)coal type; (II)capture and transportation technology; (III)geological formation type; (IV)new unit versus retrofit application; (V)such other factors as the Administrator may prescribe; or (VI)any combination of the factors described in subclauses (I) through (V). (E)

Criteria for establishing bonus allowance values

In establishing bonus allowance values under this paragraph, the Administrator shall seek to cover not more than the reasonable incremental capital and operating costs of a project that are attributable to implementation of carbon capture, transportation, and sequestration technologies, taking into account— (i)the reduced cost of compliance with section 722; (ii)the reduced cost associated with sequestering in a geological formation for purposes of enhanced hydrocarbon recovery, as compared to sequestration into geological formations solely for purposes of sequestration; (iii)the relevant factors defining the project category; and (iv)such other factors as the Administrator determines to be appropriate. (5)

Revision of regulations

The Administrator shall review and, as appropriate, revise the applicable regulations under this subsection not less frequently than once every 8 years. (f)

Limits for certain electric generating units

(1)

Definitions

In this subsection, the terms covered EGU and initially permitted have the meanings given those terms in section 812. (2)

Covered egus initially permitted from 2009 through 2014

For a covered EGU that is initially permitted during the period beginning on January 1, 2009, and ending on December 31, 2014, the Administrator shall reduce the quantity of emission allowances that the owner or operator of the covered EGU would otherwise be eligible to receive under this section as follows: (A)In the case of a covered EGU commencing operation on or before January 1, 2019, if the date in clause (ii)(I) is earlier than the date in clause (ii)(II), by the product obtained by multiplying— (i)20 percent; and (ii)the number of years, if any, that have elapsed between— (I)the earlier of— (aa)January 1, 2020; and (bb)the date that is 5 years after the commencement of operation of the covered EGU; and (II)the first year that the covered EGU achieves (and thereafter maintains) an emission limitation that is at least a 50-percent reduction in emissions of carbon dioxide produced by the unit, measured on an annual basis, as determined in accordance with section 812(b)(2). (B)In the case of a covered EGU commencing operation after January 1, 2019, by the product obtained by multiplying— (i)20 percent; and (ii)the number of years, if any, that have elapsed between— (I)the commencement of operation of the covered EGU; and (II)the first year that the covered EGU achieves (and thereafter maintains) an emission limitation that is at least a 50-percent reduction in emissions of carbon dioxide produced by the unit, measured on an annual basis, as determined in accordance with section 812(b)(2). (3)

Covered egus initially permitted from 2015 through 2019

The owner or operator of a covered EGU that is initially permitted during the period beginning on January 1, 2015, and ending on December 31, 2019, shall be ineligible to receive emission allowances under this section if the covered EGU, on commencement of operations (and thereafter), does not achieve and maintain an emission limitation that is at least a 50-percent reduction in emissions of carbon dioxide produced by the covered EGU, measured on an annual basis, as determined in accordance with section 812(b)(2). (g)

Industrial sources

(1)

Emission allowances

The Administrator— (A)may distribute not more than 15 percent of the emission allowances allocated under section 771(a)(6) for any vintage year to the owners or operators of eligible industrial sources to support the commercial-scale deployment of carbon capture and sequestration technologies at those sources; and (B)notwithstanding any other provision of law— (i)may distribute to eligible industrial sources not more than 15 percent of the emission allowances allocated under section 771(a)(6) for any vintage year in the second tranche of phase I; but (ii)may not distribute those allowances for any vintage year in the first tranche of phase I. (2)

Distribution

(A)

In general

The Administrator shall prescribe, by regulation, requirements for the distribution of emission allowances to the owners or operators of industrial sources under this subsection, based on a bonus allowance formula that awards emission allowances to qualifying projects on the basis of tons of carbon dioxide captured and permanently sequestered. (B)

Method

The Administrator may provide for the distribution of emission allowances pursuant to— (i)a reverse auction method similar to the method described in subsection (e)(3), including the use of separate auctions for different project categories; or (ii)an incentive schedule similar to the schedule described in subsection (e)(4), which shall ensure that incentives are established so as to satisfy the requirement described in subsection (e)(4)(E). (3)

Revision of regulations

The Administrator shall review and, as appropriate, revise the regulations under this subsection not less frequently than once every 8 years. (h)

Certification and distribution

(1)

Certification

(A)

Request

(i)

Phase I; alternative distribution method

In the case of a qualifying project that is eligible to receive allowances under phase I or under subsection (e)(4), the owner or operator of the planned project may request from the Administrator a certification that the project is eligible to receive emission allowances under this section. (ii)

Reverse auctions

In the case of a qualifying project that wins a reverse auction under subsection (e) or (g), within a reasonably brief period following completion of the auction (as specified by the Administrator), the owner or operator of the qualifying project shall request from the Administrator a certification that the project is eligible to receive emission allowances under this section. (iii)

Eligible projects

Eligible projects in phase I and phase II may receive certification under this paragraph. (iv)

Issuance

The Administrator shall issue a certification described in this subparagraph if the owner or operator demonstrates a commitment to construct and operate a project that satisfies— (I)the eligibility criteria of subsection (c); and (II)the requirements of this subsection. (B)

Documentation

The Administrator shall prescribe, by regulation, the documentation necessary for making a determination of project eligibility for the certification under subparagraph (A), including— (i)technical information regarding the capture and sequestration technology, coal type, geological formation type (if applicable), and other relevant design features of the project; (ii)the annual reductions in carbon dioxide emissions that the capture and sequestration technology is projected to achieve during each of the first 10 years of the project’s commercial operation; and (iii)a demonstration that the owner or operator is committed to both constructing and operating the planned project on a timeline marked by reasonable capture and sequestration milestones, through the completion of 1 of the actions specified in subparagraph (C)(iii). (C)

Commitment

(i)

In general

Subject to clause (ii), the completion of any 1 of the qualifying actions specified under clause (iii) shall constitute a commitment to construct and operate a planned carbon capture and sequestration project. (ii)

Condition

In the case of a qualifying action specified in subclause (I) or (II) of clause (iii), the completion of such an action may be subject to a condition that the Administrator will issue a certification under this paragraph for the distribution of emission allowances to the project. (iii)

Qualifying actions

Qualifying actions under this subparagraph shall include— (I)the execution of— (aa)a commitment by lenders or other appropriate entities to finance the project, which may be subject to customary closing conditions that are associated with the execution of the commitment; and (bb)a commitment by the owner or operator of the project to execute a surety bond in sufficient amounts by not later than 2 years after the date on which the Administrator issues the certification for the project; or (II)an authorization by a State regulatory authority to allow recovery, from the retail customers of such electric utility, of the costs of the project by a State-regulated electric utility that plans to construct the project. (D)

Failure to request certification

(i)

In general

An owner or operator may elect not to request a certification on the eligibility of a planned project under subparagraph (A) prior to the commercial operation of the project. (ii)

Determination by Administrator

If an owner or operator elects not to request a certification under clause (i), the Administrator shall make a determination regarding whether the project satisfies the eligibility requirements of subsection (c) at the time that the Administrator makes a determination regarding the annual distribution of emission allowances under paragraph (3)(A). (2)

Reservation of emission allowances

(A)

Amount

(i)

In general

For each project that receives a certification of eligibility under paragraph (1), the Administrator shall reserve on a first-come, first-served basis a portion of the emission allowances that are allocated for the deployment of carbon capture and sequestration technology under section 771(a)(6). (ii)

Determination

The reservation of emission allowances for a particular eligible project under this paragraph shall be equal to the number of emission allowances that the project is entitled to receive under the applicable distribution method under this section upon commercial operation of the carbon capture and sequestration technology, as determined by the Administrator based on— (I)the applicable bonus allowance value; (II)the number of tons of carbon dioxide emissions projected to be captured and sequestered each calendar year under paragraph (1)(B)(i)(II); and (III)a discount rate to account for the monetary inflation that may be expected to occur during each of the relevant 10 calendar years, as determined by the Administrator. (B)

Termination of reservation

(i)

In general

A reservation of emission allowances for a particular project under subparagraph (A) shall terminate if the owner or operator fails to achieve reasonable milestones for commencing construction or commercial operation of the project, as specified under paragraph (1)(B)(i)(III). (ii)

Reduced quantity of carbon dioxide captured and sequestered

If the quantity of carbon dioxide captured and sequestered by a project on average over 3 consecutive vintage years is less than the quantity estimated for those vintage years under subparagraph (A), the reservation of emission allowances for the project under subparagraph (A) shall be reduced in future years by the difference between— (I)the quantity of carbon dioxide captured and sequestered on average over the applicable 3 consecutive years; and (II)the quantity estimated under subparagraph (A) for the applicable years. (iii)

Availability

The Administrator shall immediately make available to other eligible projects emission allowances for which the Administrator has terminated an emission allowance reservation for a particular project under this subparagraph. (3)

Distribution process

(A)

Annual distribution

The Administrator shall distribute the emission allowances to eligible projects on an annual basis. (B)

Basis

The annual distribution of emission allowances shall be based on the total tons of carbon dioxide that the project annually captures and sequesters during each of the first 10 years of commercial operation, in accordance with subsection (c)(2). (C)

Total distribution amount

The total amount of emission allowances distributed to an eligible project for each of the first 10 years of commercial operation may be greater than, or less than, the quantity of emissions allowances that the Administrator has reserved for the eligible project under paragraph (2). (D)

Reports

(i)

In general

Except as provided in subparagraph (B), the Administrator shall make each annual distribution of emission allowances by not later than 90 days after the date on which the owner or operator of a project submits to the Administrator a report regarding the carbon dioxide emissions captured and sequestered for a particular year by the project. (ii)

Requirement

A report under subclause (I) shall be verified in accordance with regulations to be promulgated by the Administrator. (i)

Limitations

(1)

In general

Emission allowances shall be distributed under this section only for tons of carbon dioxide emissions that have already been captured and sequestered. (2)

Period

A qualifying project may receive annual emission allowances under this section only for the first 10 years of operation. (3)

Capacity

(A)

In general

Approximately 72 gigawatts of total cumulative treated generating capacity may receive emission allowances under this section. (B)

Allowance surplus

On reaching the cumulative capacity described in subparagraph (A), any emission allowances that are allocated for carbon capture and sequestration deployment under section 771(a)(6) and are not yet obligated under this section shall be treated as emission allowances not designated for distribution for purposes of section 771(b)(2). (j)

Exhaustion of account and annual roll-over of surplus emission allowances

(1)

In general

In distributing emission allowances under this section, the Administrator shall ensure that eligible projects receive distributions of emission allowances for the first 10 years of commercial operation. (2)

Different vintage years

(A)

Determination

If the Administrator determines that the emission allowances allocated under section 771(a)(6) with a vintage year that matches the year of distribution will be exhausted once the estimated full 10-year distributions will be provided to current eligible participants, the Administrator shall provide to new eligible projects emission allowances from vintage years after the year of the distribution. (B)

Diversity factors

If the Administrator provides allowances to new eligible projects under subparagraph (A), the Administrator shall promulgate regulations to prioritize new eligible projects that are distinguished from prior recipients of allowances by 1 or more of the following diversity factors (without regard to order): (i)Location in a coal-producing region that provides a majority of coal to the project. (ii)Coal type, including waste coal. (iii)Capture and transportation technologies. (iv)Geological formations. (v)New units and retrofit applications. (k)

Allocation of allowances for 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 in accordance with this section in the following quantities: (A)For each of vintage years 2014 through 2017, 1.75 percent of the emission allowances established for each year under section 721(a). (B)For each of vintage years 2018 and 2019, 4.75 percent of the emission allowances established for each year under section 721(a). (C)For each of vintage years 2020 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 subsection for a given vintage year by the end of that year, the Administrator shall— (A)auction those emission allowances in accordance with section 778 by 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 quantity of undisbursed emission allowances, but only to the extent that allowances for that later year are to be auctioned. (l)

Davis-Bacon compliance

(1)

In general

All laborers and mechanics employed on projects funded directly by or assisted in whole or in part by this section through the use of emission allowances shall be paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code. (2)

Authority

With respect to the labor standards specified in this subsection, the Secretary of Labor shall have the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) and section 3145 of title 40, United States Code.

781.

Oversight of allocations

(a)

In general

Not later than January 1, 2014, and every 2 years thereafter, the Comptroller General of the United States shall carry out a review of programs administered by the Federal Government that distribute emission allowances or funds from any Federal auction of allowances. (b)

Contents

Each such report shall include a comprehensive evaluation of the administration and effectiveness of each program, including— (1)the efficiency, transparency, and soundness of the administration of each program; (2)the performance of activities receiving assistance under each program; (3)the cost-effectiveness of each program in achieving the stated purposes of the program; and (4)recommendations, if any, for regulatory or administrative changes to each program to improve its effectiveness. (c)

Focus

In evaluating program performance, each review under this section review shall address the effectiveness of such programs in— (1)creating and preserving jobs; (2)ensuring a manageable transition for working families and workers; (3)reducing the emissions, or enhancing sequestration, of greenhouse gases; (4)developing clean technologies; and (5)building resilience to the impacts of climate change.

782.

Early action recognition

(a)

In general

Emission allowances allocated pursuant to section 771(a)(7) shall be distributed by the Administrator in accordance with this section. Not later than 1 year after the date of enactment of this title, the Administrator shall issue regulations allowing— (1)any person in the United States to exchange instruments in the nature of offset credits issued before January 1, 2009, by a State, local, or voluntary offset program with respect to which the Administrator has made an affirmative determination under section 740(a)(2), for emission allowances established by the Administrator under section 721(a); and (2)the Administrator to provide compensation in the form of emission allowances to entities, including units of local government, that do not meet the criteria of paragraph (1) and meet the criteria of this paragraph for documented early reductions or avoidance of greenhouse gas emissions or greenhouse gases sequestered before January 1, 2009, from projects or process improvements begun before January 1, 2009, where— (A)the entity publicly stated greenhouse gas reduction goals and publicly reported against those goals; (B)the entity demonstrated entity-wide net greenhouse gas reductions; and (C)the entity demonstrates the actual projects or process improvements undertaken to make reductions and documents the reductions (such as through documentation of engineering projects). (b)

Regulations

Regulations issued under subsection (a) shall— (1)provide that a person exchanging credits under subsection (a)(1) receive emission allowances established under section 721(a) in an amount for which the monetary value is equivalent to the average monetary value of the credits during the period from January 1, 2006, to January 1, 2009, as adjusted for inflation to reflect current dollar values at the time of the exchange; (2)provide that a person receiving compensation for documented early action under subsection (a)(2) shall receive emission allowances established under section 721(a) in an amount that is approximately equivalent in value to the carbon dioxide equivalent per ton value received by entities in exchange for credits under paragraph (1) (as adjusted for inflation to reflect current dollar values at the time of the exchange), as determined by the Administrator; (3)provide that only reductions or avoidance of greenhouse gas emissions, or sequestration of greenhouse gases, achieved by activities in the United States between January 1, 2001, and January 1, 2009, may be compensated under this section, and only credits issued for such activities may be exchanged under this section; (4)provide that only credits that have not been retired or otherwise used to meet a voluntary or mandatory commitment, and have not expired, may be exchanged under subsection (a)(1); (5)require that, once exchanged, the credit be retired for purposes of use under the program by or for which it was originally issued; and (6)establish a deadline by which persons must exchange the credits or request compensation for early action under this section. (c)

Participation

Participation in an exchange of credits for allowances or compensation for early action authorized by this section shall not preclude any person from participation in an offset credit program established under part D. (d)

Distribution

Of the emission allowances distributed under this section, a quantity equal to 0.75 percent of vintage year 2012 emission allowances established under section 721(a) shall be distributed pursuant to subsection (a)(1), and a quantity equal to 0.25 percent of vintage year 2012 emission allowances established under section 721(a) shall be distributed pursuant to subsection (a)(2).

783.

Establishment of Deficit Reduction Fund

(a)

Deficit reduction fund

There is established in the Treasury of the United States a fund, to be known as the Deficit Reduction Fund. (b)

Disbursements

No disbursement shall be made from the Deficit Reduction Fund except pursuant to an appropriation Act.

.

C

Additional greenhouse gas standards

121.

Greenhouse gas standards

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

122.

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 substance 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 limits

To maintain the integrity of the class II, group II limits, 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 consumption allowance, production allowance, or destruction offset credit 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)(A), 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 metric 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)(A), 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 3 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)(ii)(III), 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 year 2004, 2005, or 2006, less exportation, less transfers and sales to persons who produced class II substances in the United States during calendar year 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 year 2004, 2005, or 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. (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 required to be 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 by promulgating new regulations. 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 by promulgating new regulations. 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 or 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 or consumption is 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 metric 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 limits and the integrity of the class II, group II limits. 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, pursuant to the requirements of part D of title VII and based on the carbon dioxide equivalent value of the substance destroyed, 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. If such projects are added to the list under section 733, the issuance of offset credits for such projects under part D of title VII shall be governed by the requirements of such part D, while the issuance of offset credits for such projects under this paragraph shall be governed by the requirements of this paragraph. 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 shall consider providing exceptions for essential uses under paragraph (1) and may provide exceptions for essential uses under paragraph (2), as follows: (1)

Medical devices

If the Administrator makes the determination under this subsection that a medical device is eligible for an exception, after notice and opportunity for public comment, and in consultation with the Commissioner of Food and Drugs, the Administrator shall provide an exception for the production and consumption of class II, group II substances solely for use in medical devices, such as metered dose inhalers. (2)

Aviation and space vehicle 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 or space vehicle safety if either the Administrator of the Federal Aviation Administration or the Administrator of the National Aeronautics and Space Administration, in consultation with the Administrator, determines that no safe and effective substitute has been developed and that such authorization is necessary for aviation or space flight 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 section 616, 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)

Multilateral 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 multilateral 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 multilateral 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 or 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 year 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 year 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 year 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 or 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)

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 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 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 in the text and heading. (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.

123.

Black carbon

(a)

Study of black carbon emissions

(1)

Definition of black carbon

In this subsection, the term black carbon means any light-absorbing graphitic (or elemental) particle produced by incomplete combustion. (2)

Study

The Administrator, in consultation with the Secretary of Energy, the Secretary of State, and the heads of the National Oceanic and Atmospheric Administration, the National Aeronautics and Space Administration, the United States Agency for International Development, the National Institutes of Health, the Centers for Disease Control and Prevention, National Institute of Standards and Technology, and other relevant Federal departments and agencies and representatives of appropriate industry and environmental groups, shall conduct a 4-phase study of black carbon emissions, the phases of which shall be the following: (A)

Phase I—universal definition

The Administrator shall conduct phase I of the study under this subsection to carry out measures to establish for the scientific community standard definitions of the terms— (i)black carbon; and (ii)organic carbon. (B)

Phase II—sources and technologies

The Administrator shall conduct phase II of the study under this subsection to summarize the available scientific and technical information concerning— (i)the identification of the major sources of black carbon emissions in the United States and throughout the world; (ii)an estimate of— (I)the quantity of current and projected future black carbon emissions from those sources; and (II)the net climate effects of the emissions; (iii)the most recent scientific data relevant to the public health- and climate-related impacts of black carbon emissions and associated emissions of organic carbon, nitrogen oxides, and sulfur oxides from the sources identified under clause (i); (iv)the most effective control strategies for additional domestic and international reductions in black carbon emissions, taking into consideration lifecycle analysis, cost-effectiveness, and the net climate impact of technologies, operations, and strategies, such as— (I)diesel particulate filters on existing diesel on- and off-road engines; and (II)particulate emission reduction measures for marine vessels; (v)carbon dioxide equivalency factors, global/regional modeling, or other metrics to compare the global warming and other climate effects of black carbon emissions with carbon dioxide and other greenhouse gas emissions; and (vi)the health benefits associated with additional black carbon emission reductions. (C)

Phase III—international funding

The Administrator shall conduct phase III of the study under this subsection— (i)to summarize the amount, type, and direction of all actual and potential financial, technical, and related assistance provided by the United States to foreign countries to reduce, mitigate, or otherwise abate— (I)black carbon emissions; and (II)any health, environmental, and economic impacts associated with those emissions; and (ii)to identify opportunities, including action under existing authority, to achieve significant black carbon emission reductions in foreign countries through the provision of technical assistance or other approaches. (D)

Phase IV—research and development opportunities

The Administrator shall conduct phase IV of the study under this subsection for the purpose of providing to Congress recommendations regarding— (i)areas of focus for additional research for cost-effective technologies, operations, and strategies with the highest potential to reduce black carbon emissions and protect public health in the United States and internationally; and (ii)actions that the Federal Government could take to encourage or require additional black carbon emission reductions. (3)

Reports

The Administrator shall submit to Congress— (A)by not later than 180 days after the date of enactment of this Act, a report describing the results of phases I and II of the study under subparagraphs (A) and (B) of paragraph (2); (B)by not later than 270 days after the date of enactment of this Act, a report describing the results of phase III of the study under paragraph (2)(C); and (C)by not later than 1 year after the date of enactment of this Act, a report describing the recommendations developed for phase IV of the study under paragraph (2)(D). (4)

Authorization of appropriations

There are authorized to be appropriated such sums as are necessary to carry out this subsection. (b)

Black carbon mitigation

Title VIII of the Clean Air Act (as amended by section 113 of division A) is amended by adding at the end the following: E

Black carbon

851.

Black carbon

(a)

Domestic black carbon mitigation

(1)

In general

Taking into consideration the public health and environmental impacts of black carbon emissions, including the effects on global and regional warming, the Arctic, and other snow and ice-covered surfaces, the Administrator shall— (A)not later than 2 years after the date of enactment of this part, propose— (i)regulations applicable to emissions of black carbon under the existing authorities of this Act; or (ii)a finding that existing regulations promulgated pursuant to this Act adequately regulate black carbon emissions, which finding may be based on a finding that existing regulations, in the judgment of the Administrator— (I)address those sources that both contribute significantly to the total emissions of black carbon and provide the greatest potential for significant and cost-effective reductions in emissions of black carbon, under the existing authorities; and (II)reflect the greatest degree of emission reduction achievable through application of technology that will be available for such sources, giving appropriate consideration to cost, energy, and safety factors associated with the application of such technology; and (B)not later than 3 years after the date of enactment of this part, promulgate final regulations under the existing authorities of this Act or finalize the proposed finding. (2)

Applicability of regulations

Regulations promulgated under paragraph (1) shall not apply to specific types, classes, categories, or other suitable groupings of emission sources that the Administrator finds are subject to adequate regulation. (b)

Authorization of appropriations

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

.

124.

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: limit 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..

125.

State programs

Title VIII of the Clean Air Act (as amended by section 123(b)) is amended by adding at the end the following: F

Miscellaneous

861.

State programs

(a)

In general

Notwithstanding section 116, if a Federal auction is conducted, by the deadline of March 31, 2011, as established in section 778, no State or political subdivision thereof shall implement or enforce a comprehensive greenhouse gas emission limitation program that covers any capped emissions emitted during the years 2012 through 2017. (b)

Deadline

Notwithstanding section 116, in the event the March 31, 2011 auction is delayed, no State or political subdivision thereof shall enforce a comprehensive greenhouse gas emission limitation program that covers any capped emissions emitted during the period that is at least 9 months from the first auction as set out in section 778, through 2017. (c)

Definition of comprehensive greenhouse gas emission limitation program

For purposes of this section, the term comprehensive greenhouse gas emission limitation 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 comprehensive greenhouse gas emission limitation 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 comprehensive greenhouse gas emission limitation 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.

862.

Grants for support of air pollution control programs

The Administrator is authorized to make grants to air pollution control agencies pursuant to section 105 for purposes of assisting in the implementation of programs to address global warming established under the Clean Energy Jobs and American Power Act.

.

126.

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. (4)If the court determines that any action of the Administrator is arbitrary, capricious, or otherwise unlawful, and remands the matter to the Administrator, the Administrator shall complete final action on remand within an expeditious time period not longer than the time originally allowed for the action or 1 year, whichever is less, unless the court on motion determines that a shorter or longer period is necessary, appropriate, and consistent with the purposes of this Act. The court of appeals shall have jurisdiction to enforce a deadline for action on remand under this paragraph. . (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)).. (c)

Petition for review

Section 307(b)(1) of the Clean Air Act (42 U.S.C. 7607(b)(1)) is amended by inserting after the second sentence the following: Any person may file a petition for review of action by the Administrator as provided in this subsection..

127.

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) of subsection (b), 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, title VII, or title VIII,; and (B)in the first sentence of paragraph (3), by striking or VI and inserting VI, VII, or 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, . (f)

Technical amendment

Title IV of the Clean Air Act (relating to noise pollution) (42 U.S.C. 7641 et seq.)— (1)is amended by redesignating sections 401 through 403 as sections 901 through 903, respectively; and (2)is redesignated as title IX and moved to appear at the end of that Act.

128.

Davis-Bacon compliance

(a)

In general

Notwithstanding any other provision of law and in a manner consistent with other provisions in this Act, to receive emission allowances or funding under this Act, or the amendments made by this Act, the recipient shall provide reasonable assurances that all laborers and mechanics employed by contractors and subcontractors on projects funded directly by or assisted in whole or in part by and through the Federal Government pursuant to this Act, or the amendments made by this Act, or by any entity established in accordance with this Act, or the amendments made by this Act, including the Carbon Storage Research Corporation, will be paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code (commonly known as the Davis-Bacon Act). With respect to the labor standards specified in this section, the Secretary of Labor shall have the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) and section 3145 of title 40, United States Code. (b)

Exemption

Neither subsection (a) nor the requirements of subchapter IV of chapter 31 of title 40, United States Code, shall apply to retrofitting of the following: (1)Single family homes (both attached and detached) under section 164 of division A. (2)Owner-occupied residential units in larger buildings that have their own dedicated space-conditioning systems under section 164 of division A. (3)Residential buildings (as defined in section 164(a) of division A) if designed for residential use by less than 4 families. (4)Nonresidential buildings (as defined in section 164(a) of division A) if the net interior space of such nonresidential building is less than 6,500 square feet.

D

Carbon Market Assurance

131.

Carbon market assurance

It is the sense of the Senate that there shall be a single, integrated carbon market oversight program— (1)to provide for effective and comprehensive market oversight and enforcement; (2)to lower systemic risk and protect consumers; (3)to ensure market liquidity and allowance availability; (4)to enhance the price discovery function of such markets, ensuring that the price for emission allowances and offset credits reflects the marginal cost of abatement; (5)to prevent excessive speculation that contributes to price volatility, including the establishment of robust aggregate position limits and margin requirements; (6)to ensure that market mechanisms and associated oversight support the environmental integrity of the program established under title VII of the Clean Air Act (as added by section 101 of this division); (7)to establish provisions for market transparency that provide authority, resources, and information needed to prevent fraud and manipulation in such markets; (8)to establish standards for trading as, and operation of, trading facilities; (9)to ensure a well-functioning, well-regulated market, including a futures market, designed to manage risk and facilitate investment in emission reductions; (10)to establish clear, professional standards for dealers, traders, and other market participants; (11)to provide for appropriate criminal and civil penalties; and (12)to prevent any excessive leverage by market participants that creates risk to the economy.

E

Ensuring Real Reductions in Industrial Emissions

141.

Ensuring real reductions in industrial emissions

Title VII of the Clean Air Act (as amended by section 322 of division A) is amended by adding at the end the following: F

Ensuring real reductions in industrial emissions

761.

Purposes

The purposes of this part are— (1)to promote a strong global effort to significantly reduce greenhouse gas emissions, and, through this global effort, stabilize greenhouse gas concentrations in the atmosphere at a level that will prevent dangerous anthropogenic interference with the climate system; (2)to prevent an increase in greenhouse gas emissions in countries other than the United States as a result of direct and indirect compliance costs incurred under this title; (3)to provide a rebate to the owners and operators of entities in domestic eligible industrial sectors for their greenhouse gas emission costs incurred under this title, but not for costs associated with other related or unrelated market dynamics; (4)to design such rebates in a way that will prevent carbon leakage while also rewarding innovation and facility-level investments in energy efficiency performance improvements; and (5)to eliminate or reduce distribution of emission allowances under this part when such distribution is no longer necessary to prevent carbon leakage from eligible industrial sectors.

762.

Definitions

In this part: (1)

Carbon leakage

The term carbon leakage means any substantial increase (as determined by the Administrator) in greenhouse gas emissions by industrial entities located in other countries if such increase is caused by an incremental cost of production increase in the United States resulting from the implementation of this title. (2)

Eligible industrial sector

The term eligible industrial sector means an industrial sector determined by the Administrator under section 763(b) to be eligible to receive emission allowance rebates under this part. (3)

Industrial sector

The term industrial sector means any sector that is in the manufacturing sector (as defined in NAICS codes 31, 32, and 33) or that beneficiates or otherwise processes (including agglomeration) metal ores, including iron and copper ores, soda ash, or phosphate. The extraction of metal ores, soda ash, or phosphate shall not be considered to be an industrial sector. (4)

NAICS

The term NAICS means the North American Industrial Classification System of 2002. (5)

Output

The term output means the total tonnage or other standard unit of production (as determined by the Administrator) produced by an entity in an industrial sector. The output of the cement sector is hydraulic cement, and not clinker.

763.

Eligible industrial sectors

(a)

List

(1)

Initial list

Not later than June 30, 2011, the Administrator shall publish in the Federal Register a list of eligible industrial sectors pursuant to subsection (b). Such list shall include the amount of the emission allowance rebate per unit of production that shall be provided to entities in each eligible industrial sector in the following two calendar years pursuant to section 764. (2)

Subsequent lists

Not later than February 1, 2013, and every 4 years thereafter, the Administrator shall publish in the Federal Register an updated version of the list published under paragraph (1). (b)

Eligible industrial sectors

(1)

In general

Not later than June 30, 2011, the Administrator shall promulgate a rule designating, based on the criteria under paragraph (2), the industrial sectors eligible for emission allowance rebates under this part. (2)

Presumptively eligible industrial sectors

(A)

Eligibility criteria

(i)

In general

An owner or operator of an entity shall be eligible to receive emission allowance rebates under this part if such entity is in an industrial sector that is included in a six-digit classification of the NAICS that meets the criteria in both clauses (ii) and (iii), or the criteria in clause (iv). (ii)

Energy or greenhouse gas intensity

As determined by the Administrator, the industrial sector had— (I)an energy intensity of at least 5 percent, calculated by dividing the cost of purchased electricity and fuel costs of the sector by the value of the shipments of the sector, based on data described in subparagraph (D); or (II)a greenhouse gas intensity of at least 5 percent, calculated by dividing— (aa)the number 20 multiplied by the number of tons of carbon dioxide equivalent greenhouse gas emissions (including direct emissions from fuel combustion, process emissions, and indirect emissions from the generation of electricity used to produce the output of the sector) of the sector based on data described in subparagraph (D); by (bb)the value of the shipments of the sector, based on data described in subparagraph (D). (iii)

Trade intensity

As determined by the Administrator, the industrial sector had a trade intensity of at least 15 percent, calculated by dividing the value of the total imports and exports of such sector by the value of the shipments plus the value of imports of such sector, based on data described in subparagraph (D). (iv)

Very high energy or greenhouse gas intensity

As determined by the Administrator, the industrial sector had an energy or greenhouse gas intensity, as calculated under clause (ii)(I) or (II), of at least 20 percent. (B)

Metal and phosphate production classified under more than one naics code

For purposes of this section, the Administrator shall— (i)aggregate data for the beneficiation or other processing (including agglomeration) of metal ores, including iron and copper ores, soda ash, or phosphate with subsequent steps in the process of metal and phosphate manufacturing, regardless of the NAICS code under which such activity is classified; and (ii)aggregate data for the manufacturing of steel with the manufacturing of steel pipe and tube made from purchased steel in a nonintegrated process. (C)

Exclusion

The petroleum refining sector shall not be an eligible industrial sector. (D)

Data sources

(i)

Electricity and fuel costs, value of shipments

The Administrator shall determine electricity and fuel costs and the value of shipments under this subsection from data from the United States Census Annual Survey of Manufacturers. The Administrator shall take the average of data from as many of the years of 2004, 2005, and 2006 for which such data are available. If such data are unavailable, the Administrator shall make a determination based upon 2002 or 2006 data from the most detailed industrial classification level of Energy Information Agency’s Manufacturing Energy Consumption Survey (using 2006 data if it is available) and the 2002 or 2007 Economic Census of the United States (using 2007 data if it is available). If data from the Manufacturing Energy Consumption Survey or Economic Census are unavailable for any sector at the six-digit classification level in the NAICS, then the Administrator may extrapolate the information necessary to determine the eligibility of a sector under this paragraph from available Manufacturing Energy Consumption Survey or Economic Census data pertaining to a broader industrial category classified in the NAICS. If data relating to the beneficiation or other processing (including agglomeration) of metal ores, including iron and copper ores, soda ash, or phosphate are not available from the specified data sources, the Administrator shall use the best available Federal or State government data and may use, to the extent necessary, representative data submitted by entities that perform such beneficiation or other processing (including agglomeration), in making a determination. Fuel cost data shall not include the cost of fuel used as feedstock by an industrial sector. (ii)

Imports and exports

The Administrator shall base the value of imports and exports under this subsection on United States International Trade Commission data. The Administrator shall take the average of data from as many of the years of 2004, 2005, and 2006 for which such data are available. If data from the United States International Trade Commission are unavailable for any sector at the six-digit classification level in the NAICS, then the Administrator may extrapolate the information necessary to determine the eligibility of a sector under this paragraph from available United States International Trade Commission data pertaining to a broader industrial category classified in the NAICS. (iii)

Percentages

The Administrator shall round the energy intensity, greenhouse gas intensity, and trade intensity percentages under subparagraph (A) to the nearest whole number. (iv)

Greenhouse gas emission calculations

When calculating the tons of carbon dioxide equivalent greenhouse gas emissions for each sector under subparagraph (A)(ii)(II)(aa), the Administrator— (I)shall use the best available data from as many of the years 2004, 2005, and 2006 for which such data is available; and (II)may, to the extent necessary with respect to a sector, use economic and engineering models and the best available information on technology performance levels for such sector. (3)

Administrative determination of additional eligible industrial sectors

(A)

Updated trade intensity data

The Administrator shall designate as eligible to receive emission allowance rebates under this part an industrial sector that— (i)met the energy or greenhouse gas intensity criteria in paragraph (2)(A)(ii) as of the date of promulgation of the rule under paragraph (1); and (ii)meets the trade intensity criteria in paragraph (2)(A)(iii), using data from any year after 2006. (B)

Individual showing petition

(i)

Petition

In addition to designation under paragraph (2) or subparagraph (A) of this paragraph, the owner or operator of an entity in an industrial sector may petition the Administrator to designate as eligible industrial sectors under this part an entity or a group of entities that— (I)represent a subsector of a six-digit section of the NAICS code; and (II)meet the eligibility criteria in both clauses (ii) and (iii) of paragraph (2)(A), or the eligibility criteria in clause (iv) of paragraph (2)(A). (ii)

Data

In making a determination under this subparagraph, the Administrator shall consider data submitted by the petitioner that is specific to the entity, data solicited by the Administrator from other entities in the subsector, if such other entities exist, and data specified in paragraph (2)(D). (iii)

Basis of subsector determination

The Administrator shall determine an entity or group of entities to be a subsector of a six-digit section of the NAICS code based only upon the products manufactured and not the industrial process by which the products are manufactured, except that the Administrator may determine an entity or group of entities that manufacture a product from primarily virgin material to be a separate subsector from another entity or group of entities that manufacture the same product primarily from recycled material. (iv)

Use of most recent data

In determining whether to designate a sector or subsector as an eligible industrial sector under this subparagraph, the Administrator shall use the most recent data available from the sources described in paragraph (2)(D), rather than the data from the years specified in paragraph (2)(D), to determine the trade intensity of such sector or subsector, but only for determining such trade intensity. (v)

Final action

The Administrator shall take final action on such petition no later than 6 months after the petition is received by the Administrator.

764.

Distribution of emission allowance rebates

(a)

Distribution schedule

(1)

In general

For each vintage year, the Administrator shall distribute pursuant to this section emission allowances made available under section 771(a)(5), no later than October 31 of the preceding calendar year. The Administrator shall make such annual distributions to the owners and operators of each entity in an eligible industrial sector in the amount of emission allowances calculated under subsection (b), except that— (A)for vintage years 2012 and 2013, the distribution for a covered entity shall be pursuant to the entity’s indirect carbon factor as calculated under subsection (b)(3); (B)for vintage year 2026 and thereafter, the distribution shall be pursuant to the amount calculated under subsection (b) multiplied by, for a sector— (i)90 percent for vintage year 2026; (ii)80 percent for vintage year 2027; (iii)70 percent for vintage year 2028; (iv)60 percent for vintage year 2029; (v)50 percent for vintage year 2030; (vi)40 percent for vintage year 2031; (vii)30 percent for vintage year 2032; (viii)20 percent for vintage year 2033; (ix)10 percent for vintage year 2034; and (x)0 percent for vintage year 2035 and thereafter. (2)

Newly eligible sectors

In addition to receiving a distribution of emission allowances under this section in the first distribution occurring after an industrial sector is designated as eligible under section 763(b)(3), the owner or operator of an entity in that eligible industrial sector may receive a prorated share of any emission allowances made available for distribution under this section that were not distributed for the year in which the petition for eligibility was granted under section 763(b)(3)(A). (3)

Cessation of qualifying activities

If, as determined by the Administrator, a facility is no longer in an eligible industrial sector designated under section 763— (A)the Administrator shall not distribute emission allowances to the owner or operator of such facility under this section; and (B)the owner or operator of such facility shall return to the Administrator all allowances that have been distributed to it for future vintage years and a pro-rated amount of allowances distributed to the facility under this section for the vintage year in which the facility ceases to be in an eligible industrial sector designated under section 763. (b)

Calculation of direct and indirect carbon factors

(1)

In general

(A)

Covered entities

Except as provided in subsection (a), for covered entities that are in eligible industrial sectors, the amount of emission allowance rebates shall be based on the sum of the covered entity’s direct and indirect carbon factors. (B)

Other eligible entities

For entities that are in eligible industrial sectors but are not covered entities, the amount of emission allowance rebates shall be based on the entity’s indirect carbon factor. (C)

New entities

Not later than 2 years after the date of enactment of this title, the Administrator shall issue regulations governing the distribution of emission allowance rebates for the first and second years of operation of a new entity in an eligible industrial sector. These regulations shall provide for— (i)the distribution of emission allowance rebates to such entities based on comparable entities in the same sector; and (ii)an adjustment in the third and fourth years of operation to reconcile the total amount of emission allowance rebates received during the first and second years of operation to the amount the entity would have received during the first and second years of operation had the appropriate data been available. (2)

Direct carbon factor

The direct carbon factor for a covered entity for a vintage year is the product of— (A)the average annual output of the covered entity for the 2 years preceding the year of the distribution; and (B)the most recent calculation of the average direct greenhouse gas emissions (expressed in tons of carbon dioxide equivalent) per unit of output for all covered entities in the sector, as determined by the Administrator under paragraph (4). (3)

Indirect carbon factor

(A)

In general

The indirect carbon factor for an entity for a vintage year is the product obtained by multiplying the average annual output of the entity for the 2 years preceding the year of the distribution by both the electricity emissions intensity factor determined pursuant to subparagraph (B) and the electricity efficiency factor determined pursuant to subparagraph (C) for the year concerned. (B)

Electricity emissions intensity factor

(i)

In general

Each person selling electricity to the owner or operator of an entity in any sector designated as an eligible industrial sector under section 763(b) shall provide the owner or operator of the entity and the Administrator, on an annual basis, the electricity emissions intensity factor for the entity. The electricity emissions intensity factor for the entity, expressed in tons of carbon dioxide equivalents per kilowatt hour, is determined by dividing— (I)the annual sum of the hourly product of— (aa)the electricity purchased by the entity from that person in each hour (expressed in kilowatt hours); multiplied by (bb)the marginal or weighted average tons of carbon dioxide equivalent per kilowatt hour that are reflected in the electricity charges to the entity, as determined by the entity’s retail rate arrangements; by (II)the total kilowatt hours of electricity purchased by the entity from that person during that year. (ii)

Use of other data to determine factor

Where it is not possible to determine the precise electricity emissions intensity factor for an entity using the methodology in clause (i), the person selling electricity shall use the monthly average data reported by the Energy Information Administration or collected and reported by the Administrator for the utility serving the entity to determine the electricity emissions intensity factor. (C)

Electricity efficiency factor

The electricity efficiency factor is the average amount of electricity (in kilowatt hours) used per unit of output for all entities in the relevant sector, as determined by the Administrator based on the best available data, including data provided under paragraph (6). (D)

Indirect carbon factor reduction

If an electricity provider received a free allocation of emission allowances pursuant to section 771(a)(1), the Administrator shall adjust the indirect carbon factor to avoid rebates to the eligible entity for costs that the Administrator determines were not incurred by the eligible entity because the allowances were freely allocated to the eligible entity’s electricity provider and used for the benefit of industrial consumers. (4)

Greenhouse gas intensity calculations

The Administrator shall calculate the average direct greenhouse gas emissions (expressed in tons of carbon dioxide equivalent) per unit of output and the electricity efficiency factor for all covered entities in each eligible industrial sector every 4 years, using an average of the four most recent years of the best available data. For purposes of the lists required to be published no later than February 1, 2013, the Administrator shall use the best available data for the maximum number of years, up to 4 years, for which data are available. (5)

Ensuring efficiency improvements

When making greenhouse gas calculations, the Administrator shall— (A)limit the average direct greenhouse gas emissions per unit of output, calculated under paragraph (4), for any eligible industrial sector to an amount that is not greater than it was in any previous calculation under this subsection; (B)limit the electricity emissions intensity factor, calculated under paragraph (3)(B) and resulting from a change in electricity supply, for any entity to an amount that is not greater than it was during any previous year; and (C)limit the electricity efficiency factor, calculated under paragraph (3)(C), for any eligible industrial sector to an amount that is not greater than it was in any previous calculation under this subsection. (6)

Data sources

For the purposes of this subsection— (A)the Administrator shall use data from the greenhouse gas registry established under section 713, where it is available; and (B)each owner or operator of an entity in an eligible industrial sector and each department, agency, and instrumentality of the United States shall provide the Administrator with such information as the Administrator finds necessary to determine the direct carbon factor and the indirect carbon factor for each entity subject to this section. (c)

Total maximum distribution

Notwithstanding subsections (a) and (b), the Administrator shall not distribute more allowances for any vintage year pursuant to this section than are allocated for use under this part pursuant to section 765 for that vintage year. For any vintage year for which the total emission allowance rebates calculated pursuant to this section exceed the number of allowances allocated pursuant to section 765, the Administrator shall reduce each entity’s distribution on a pro rata basis so that the total distribution under this section equals the number of allowances allocated under section 765. (d)

Iron and steel sector

For purposes of this section, the Administrator shall consider as in different industrial sectors— (1)entities using integrated iron and steelmaking technologies (including coke ovens, blast furnaces, and other iron-making technologies); and (2)entities using electric arc furnace technologies. (e)

Metal, soda ash, or phosphate production classified under more than one naics code

For purposes of this section, the Administrator shall not aggregate data for the beneficiation or other processing (including agglomeration) of metal ores, soda ash, or phosphate with subsequent steps in the process of metal, soda ash, or phosphate manufacturing. The Administrator shall consider the beneficiation or other processing (including agglomeration) of metal ores, soda ash, or phosphate to be in separate industrial sectors from the metal, soda ash, or phosphate manufacturing sectors. Industrial sectors that beneficiate or otherwise process (including agglomeration) metal ores, soda ash, or phosphate shall not receive emission allowance rebates under this section related to the activity of extracting metal ores, soda ash, or phosphate. (f)

Combined heat and power

For purposes of this section, and to achieve the purpose set forth in section 761(4),(the Administrator may consider entities to be in different industrial sectors or otherwise take into account the differences among entities in the same industrial sector, based upon the extent to which such entities use combined heat and power technologies.

765.

International trade

It is the sense of the Senate that this Act will contain a trade title that will include a border measure that is consistent with our international obligations and designed to work in conjunction with provisions that allocate allowances to energy-intensive and trade-exposed industries.

.

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the Clean Energy Jobs and American Power Act. (b)

Table of contents

The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Findings. Sec. 3. Economywide emission reduction goals. Sec. 4. Definitions. DIVISION A—Authorizations for pollution reduction, transition, and adaptation Sec. 101. Structure of Act. Sec. 102. Requirements relating to Federal advisory committees. Sec. 103. Voluntary renewable energy markets. TITLE I—Greenhouse gas reduction programs Subtitle A—Clean transportation Sec. 111. Emission standards. PART B—Mobile Sources Sec. 821. Greenhouse gas emission standards for mobile sources. Sec. 112. Greenhouse gas emission reductions through transportation efficiency. PART C—Transportation emissions Sec. 831. Greenhouse gas emission reductions through transportation efficiency. Sec. 113. Transportation greenhouse gas emission reduction program grants. Sec. 832. Transportation greenhouse gas emission reduction program grants. Sec. 114. Smartway transportation efficiency program. Sec. 822. SmartWay transportation efficiency program. Subtitle B—Carbon capture and sequestration Sec. 121. National strategy. Sec. 122. Regulations for geological sequestration sites. Sec. 813. Geological storage sites. Sec. 123. Studies and reports. Sec. 124. Performance standards for new coal-fueled power plants. Sec. 812. Performance standards for new coal-fired power plants. Sec. 125. Carbon capture and sequestration demonstration and early deployment program. Subtitle C—Nuclear and advanced technologies Sec. 131. Findings and policy. Sec. 132. Nuclear worker training. Sec. 133. Nuclear safety and waste management programs. Subtitle D—Water efficiency Sec. 141. WaterSense. Sec. 142. Federal procurement of water-efficient products. Sec. 143. State residential water efficiency and conservation incentives program. Subtitle E—Miscellaneous Sec. 151. Office of Consumer Advocacy. Sec. 152. Clean technology business competition grant program. Sec. 153. Product carbon disclosure program. Sec. 154. State recycling programs. Sec. 155. Supplemental agriculture, abandoned mine land, and forestry greenhouse gas reduction and renewable energy program. Sec. 156. Economic Development Climate Change Fund. Sec. 219. Economic Development Climate Change Fund. Sec. 157. Study of risk-based programs addressing vulnerable areas. Sec. 158. Efficient Buildings Program. Subtitle F—Energy Efficiency and Renewable Energy Sec. 161. Renewable energy. Sec. 162. Advanced biofuels. Sec. 163. Energy efficiency in building codes. Sec. 164. Retrofit for energy and environmental performance. Sec. 165. Certified stoves program. Sec. 166. Renewable fuel standard. Sec. 167. Tree planting programs. Subtitle G—Emission Reductions from Public Transportation Vehicles Sec. 171. Short title. Sec. 172. State fuel economy regulation for taxicabs. Sec. 173. State regulation of motor vehicle emissions for taxicabs. Subtitle H—Clean Energy and Natural Gas Sec. 181. Clean Energy and Accelerated Emission Reduction Program. Sec. 182. Advanced natural gas technologies. TITLE II—Research Subtitle A—Energy Research Sec. 201. Advanced energy research. Subtitle B—Drinking water adaptation, technology, education, and research Sec. 211. Effects of climate change on drinking water utilities. TITLE III—Transition and adaptation Subtitle A—Green jobs and worker transition PART 1—Green jobs Sec. 301. Clean energy curriculum development grants. Sec. 302. Development of Information and Resources clearinghouse for vocational education and job training in renewable energy sectors. Sec. 303. Green construction careers demonstration project. PART 2—Climate change worker adjustment assistance Sec. 311. Petitions, eligibility requirements, and determinations. Sec. 312. Program benefits. Sec. 313. General provisions. Subtitle B—International climate change programs Sec. 321. Strategic Interagency Board on International Climate Investment. Sec. 322. Emission reductions from reduced deforestation. PART E—Supplemental emission reductions Sec. 751. Definitions. Sec. 752. Purposes. Sec. 753. Emission reductions from reduced deforestation. Sec. 323. International Clean Energy Deployment Program. Sec. 324. International climate change adaptation and global security program. Sec. 325. Evaluation and reports. Sec. 326. Report on climate actions of major economies. Subtitle C—Adapting to climate change PART 1—Domestic adaptation SUBPART A—National Climate Change Adaptation Program Sec. 341. National Climate Change Adaptation Program. Sec. 342. Climate services. SUBPART B—Public health and climate change Sec. 351. Sense of Congress on public health and climate change. Sec. 352. Relationship to other laws. Sec. 353. National strategic action plan. Sec. 354. Advisory board. Sec. 355. Reports. Sec. 356. Definitions. SUBPART C—Climate change safeguards for natural resources conservation Sec. 361. Purposes. Sec. 362. Natural resources climate change adaptation policy. Sec. 363. Definitions. Sec. 364. Council on Environmental Quality. Sec. 365. Natural Resources Climate Change Adaptation Panel. Sec. 366. Natural Resources Climate Change Adaptation Strategy. Sec. 367. Natural resources adaptation science and information. Sec. 368. Federal natural resource agency adaptation plans. Sec. 369. State natural resources adaptation plans. Sec. 370. Natural Resources Climate Change Adaptation Account. Sec. 371. National Fish and Wildlife Habitat and Corridors Information Program. Sec. 372. Additional provisions regarding Indian tribes. SUBPART D—Additional Climate Change Adaptation Programs Sec. 381. Water system mitigation and adaptation partnerships. Sec. 382. Flood control, protection, prevention, and response. Sec. 383. Wildfire. Sec. 384. Coastal and Great Lakes State adaptation program. DIVISION B—Pollution Reduction and Investment TITLE I—Reducing global warming pollution Subtitle A—Reducing global warming pollution Sec. 101. Reducing global warming pollution. TITLE VII—Global warming pollution reduction and investment program PART A—Global warming pollution reduction goals and targets Sec. 701. Findings. Sec. 702. Economywide 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. Sec. 708. Consultation with States. 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. Sec. 714. Perfluorocarbon and other nonhydrofluorocarbon fluorinated substance production regulation. 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. Market Stability 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. Office of Offsets Integrity. Sec. 744. International offset credits. Sec. 102. Definitions. Sec. 700. Definitions. Sec. 103. Offset reporting requirements. Subtitle B—Disposition of allowances Sec. 111. Disposition of allowances for global warming pollution reduction program. PART G—Disposition of allowances Sec. 771. Allocation of emission allowances. Sec. 772. Electricity consumers. Sec. 773. Natural gas consumers. Sec. 774. Home heating oil and propane consumers. Sec. 775. Domestic fuel production. Sec. 776. Consumer protection. Sec. 777. Exchange for State-issued allowances. Sec. 778. Auction procedures. Sec. 779. Auctioning allowances for other entities. Sec. 780. Commercial deployment of carbon capture and permanent sequestration technologies. Sec. 781. Oversight of allocations. Sec. 782. Early action recognition. Sec. 783. Establishment of Deficit Reduction Fund. Subtitle C—Additional greenhouse gas standards Sec. 121. Greenhouse gas standards. TITLE VIII—Additional greenhouse gas standards Sec. 801. Definitions. PART A—Stationary source standards Sec. 811. Standards of performance. Sec. 122. HFC regulation. Sec. 619. Hydrofluorocarbons (HFCs). Sec. 123. Black carbon. PART E—Black carbon Sec. 851. Black carbon. Sec. 124. States. Sec. 125. State programs. PART F—Miscellaneous Sec. 861. State programs. Sec. 862. Grants for support of air pollution control programs. Sec. 863. Reducing acid rain and mercury pollution. Sec. 126. Enforcement. Sec. 127. Forestry sector greenhouse gas accounting. Sec. 128. Conforming amendments. Sec. 508. Emissions of greenhouse gases. Sec. 129. Davis-Bacon compliance. Subtitle D—Carbon Market Assurance Sec. 131. Carbon market assurance. Subtitle E—Ensuring Real Reductions in Industrial Emissions Sec. 141. Ensuring real reductions in industrial emissions. PART F—Ensuring real reductions in industrial emissions Sec. 761. Purposes. Sec. 762. Definitions. Sec. 763. Eligible industrial sectors. Sec. 764. Distribution of emission allowance rebates. Sec. 765. International trade. TITLE II—Program Allocations Sec. 201. Distribution of allowances for investment in clean vehicles. Sec. 795A. Black carbon reduction grant program. Sec. 202. State and local investment in energy efficiency and renewable energy. Sec. 203. Energy efficiency in building codes. Sec. 204. Energy Innovation Hubs. Sec. 205. ARPA–E research. Sec. 206. International clean energy deployment program. Sec. 207. International climate change adaptation and global security. Sec. 208. Energy efficiency and renewable energy worker training. Sec. 209. Worker transition. Sec. 210. State programs for greenhouse gas reduction and climate adaptation. Sec. 211. Climate Change Health Protection and Promotion Fund. Sec. 212. Climate change safeguards for natural resources conservation. Sec. 213. Nuclear worker training. Sec. 214. Supplemental agriculture, abandoned mine land, renewable energy, and forestry. Sec. 215. Investment in greenhouse gas reductions from the transportation sector. Sec. 216. State programs for natural resource adaptation activities.

2.

Findings

Congress finds that— (1)the United States can take back control of the energy future of the United States, strengthen economic competitiveness, safeguard the health of families and the environment, and ensure the national security, of the United States by increasing energy independence; (2)creating a clean energy future requires a comprehensive approach that includes support for the improvement of all energy sources, including coal, natural gas, nuclear power, and renewable generation; (3)efficiency in the energy sector also represents a critical avenue to reduce energy consumption and carbon pollution, and those benefits can be captured while generating additional savings for consumers; (4)substantially increasing the investment in the clean energy future of the United States will provide economic opportunities to millions of people in the United States and drive future economic growth in this country; (5)the United States is responsible for many of the initial scientific advances in clean energy technology, but, as of September 2009, the United States has only 5 of the top 30 leading companies in solar, wind, and advanced battery technology; (6)investment in the clean energy sector will allow companies in the United States to retake a leadership position, and the jobs created by those investments will significantly accelerate growth in domestic manufacturing; (7)those opportunities also will result in substantial employment gains in construction, a sector in which the median hourly wage is 17 percent higher than the national median; (8)those jobs are distributed throughout the United States, and the highest clean energy economy employment growth rates in the last 10 years were in the States of Idaho, Nebraska, South Dakota, Oregon, and New Mexico; (9)focusing on clean energy will dramatically reduce pollution and significantly improve the health of families in and the environment of the United States; (10)moving to a low-carbon economy must protect the most vulnerable populations in the United States, including low-income families that are particularly affected by volatility in energy prices; (11)if unchecked, the impact of climate change will include widespread effects on health and welfare, including— (A)increased outbreaks from waterborne diseases; (B)more droughts; (C)diminished agricultural production; (D)severe storms and floods; (E)heat waves; (F)wildfires; and (G)a substantial rise in sea levels, due in part to— (i)melting mountain glaciers; (ii)shrinking sea ice; and (iii)thawing permafrost; (12)the most recent science indicates that the changes described in paragraph (11)(G) are occurring faster and with greater intensity than expected; (13)military officials, including retired admirals and generals, concur with the intelligence community that climate change acts as a threat multiplier for instability and presents significant national security challenges for the United States; (14)massive portions of the infrastructure of the United States, including critical military infrastructure, are at risk from the effects of climate change; (15)impacts are already being felt in local communities within the United States as well as by at-risk populations abroad; (16)the Declaration of the Leaders from the Major Economies Forum on Energy and Climate, representing 17 of the largest economies in the world, recognizes the need to limit the increase in global average temperatures to within 2 degrees Centigrade, as a necessary step to prevent the catastrophic consequences of climate change; and (17)the United States should lead the global community in combating the threat of global climate change and reaching a robust international agreement to address global warming under the United Nations Framework Convention on Climate Change, done at New York on May 9, 1992 (or a successor agreement).

3.

Economywide emission reduction goals

The goals of this Act and the amendments made by this Act are to reduce steadily the quantity of United States greenhouse gas emissions such that— (1)in 2012, the quantity of United States greenhouse gas emissions does not exceed 97 percent of the quantity of United States greenhouse gas emissions in 2005; (2)in 2020, the quantity of United States greenhouse gas emissions does not exceed 80 percent of the quantity of United States greenhouse gas emissions in 2005; (3)in 2030, the quantity of United States greenhouse gas emissions does not exceed 58 percent of the quantity of United States greenhouse gas emissions in 2005; and (4)in 2050, the quantity of United States greenhouse gas emissions does not exceed 17 percent of the quantity of United States greenhouse gas emissions in 2005.

4.

Definitions

In this Act: (1)

Administrator

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

Indian tribe

The term Indian tribe has the meaning given the term in section 302 of the Clean Air Act (42 U.S.C. 7602). (3)

State

The term State has the meaning given that term in section 302 of the Clean Air Act (42 U.S.C. 7602).

A

Authorizations for pollution reduction, transition, and adaptation

101.

Structure of Act

(a)

Authorized and allocated programs

The following programs authorized under this division are eligible to receive an allocation under title VII of the Clean Air Act: (1)The program for greenhouse gas emission reductions through transportation efficiency under part C of title VIII the Clean Air Act (as added by sections 112 and 113 of this division) and section 215 of division B. (2)The program for nuclear worker training under section 132 of this division and 213 of division B. (3)State recycling programs under section 154 of this division and section 210 of division B. (4)The supplemental agriculture and forestry greenhouse gas reduction and renewable energy program under section 155 of this division and section 214 of division B. (5)The program for energy efficiency in building codes under section 163 of this division and section 203 of division B. (6)The program for retrofit for energy and environmental performance under section 164 of this division. (7)The program for worker transition under part 2 of subtitle A of title III of this division and section 209 of division B. (8)The program for public health and climate change under subpart B of part 1 of subtitle C of title III of this division and section 211 of division B. (9)The program for climate change safeguards for natural resources conservation under subpart C of part 1 of subtitle C of title III of this division, sections 212 and 216 of division B, including— (A)State programs for natural resource adaptation under section 370(a)(1) of division A, and section 216 of division B; and (B)the Natural Resources Climate Change Adaptation Account under paragraphs (2) through (6) of section 370(a) of division A, and section 212 of division B. (10)The program for emission reductions from reduced deforestation under section 753 of the Clean Air Act (as added by section 322 of this division). (11)The International Clean Energy Deployment Program under section 323 of this division and section 206 of division B. (12)The international climate change adaptation and global security program under 324 of this division and section 207 of division B. (13)The program for water system mitigation and adaptation partnerships under section 381 of this division and section 210 of division B. (14)The program for flood control, protection, prevention, and response under section 382 of this division and section 210 of division B. (15)The program for wildfire under section 383 of this division and section 210 of division B. (16)The Coastal and Great Lakes State Adaptation Program under section 384 of this division and section 210 of division B. (b)

Allocated programs

The following allocations are provided under title VII of the Clean Air Act: (1)The Market Stability Reserve Fund under section 726 of the Clean Air Act (as added by section 101 of division B). (2)The program to ensure real reductions in industrial emissions under part F of title VII of the Clean Air Act (as added by section 141 of division B). (3)The program for electricity consumers pursuant to section 772 of the Clean Air Act (as added by section 111 of division B). (4)The program for natural gas consumers pursuant to section 773 of the Clean Air Act (as added by section 111 of division B). (5)The program for home heating oil and propane consumers pursuant to section 774 of the Clean Air Act (as added by section 111 of division B). (6)The program for domestic fuel production, including petroleum refiners and small business refiners, under section 775 of the Clean Air Act (as added by section 111 of division B). (7)The program for climate change consumer refunds and low- and moderate-income consumers pursuant to section 776 of the Clean Air Act (as added by section 111 of division B), including— (A)consumer rebates under section 776(a) of the Clean Air Act (as so added); and (B)energy refunds under section 776(b) of the Clean Air Act (as so added). (8)The program for commercial deployment of carbon capture and storage technology under section 780 of the Clean Air Act (as added by section 111 of division B). (9)The program for early action recognition pursuant to section 782 of the Clean Air Act (as added by section 111 of division B). (10)The program for investment in clean vehicle technology under section 201 of division B. (11)The program for State and local investment in energy efficiency and renewable energy under section 202 of division B. (12)The program for Energy Innovation Hubs pursuant to section 204 of division B. (13)The program for ARPA–E research pursuant to section 205 of division B. (14)The program for energy efficiency and renewable energy worker training under section 208 of division B. (15)The State programs for greenhouse gas reduction and climate adaptation pursuant to section 210 of division B. (16)The program for greenhouse gas emission reductions from the transportation sector under section 215 of division B. (c)

Nonallocated programs

The following programs are authorized under this division: (1)The SmartWay Transportation Efficiency Program under section 822 of the Clean Air Act (as added by section 114 of this division). (2)The carbon capture and sequestration demonstration and early deployment program under section 125 of this division. (3)The nuclear safety and waste management programs under section 133 of this division. (4)Water efficiency programs under subtitle D of title I of this division. (5)The Office of Consumer Advocacy under section 151 of this division. (6)The clean technology business competition grant program under section 152 of this division. (7)The product carbon disclosure program under section 153 of this division. (8)The Economic Development Climate Change Fund under section 219 of the Public Works and Economic Development Act of 1965 (as added by section 156 of this division). (9)The program for renewable energy under section 161 of this division. (10)The program for advanced biofuels under section 162 of this division. (11)The program for emission reductions from public transportation vehicles under subtitle G of title I of this division. (12)The Clean Energy and Accelerated Emission Reduction Program under section 181 of this division. (13)The program for advanced natural gas technologies under section 182 of this division. (14)The program for advanced energy research under subtitle A of title II of this division. (15)The program for drinking water adaptation, technology, education, and research under subtitle B of title II of this division. (16)The program for clean energy curriculum development grants under section 301 of this division. (17)The program for Development of Information and Resources clearinghouse for vocational education and job training in renewable energy sectors under section 302 of this division. (18)The green construction careers demonstration project under section 303 of this division.

102.

Requirements relating to Federal advisory committees

(a)

Appointment qualifications

Each appointment of a member to an advisory committee established under this Act or an amendment made by this Act shall be— (1)based on the qualifications, competence, and experience of the member; and (2)except as otherwise required by Federal law (including regulations), made without regard to the political affiliation of the member. (b)

Designation of members

(1)

In general

An individual appointed to serve on an advisory committee established under this Act or an amendment made by this Act who is not a full-time or permanent part-time officer or employee of the Federal Government shall be designated by the Federal department or agency to which the relevant advisory committee reports as— (A)a special employee of the Federal Government, if the individual is providing advice based substantially on the expertise or experience of the individual; or (B)a representative, if the individual is substantially representing the views of individuals or entities outside the Federal Government. (2)

Reviews

(A)

In general

The head of each Federal department or agency shall review the membership of each advisory committee that reports to the department or agency— (i)to determine whether the designation of the members is appropriate; and (ii)if the designation of any member is not appropriate, to redesignate the member. (B)

Timing

A review under subparagraph (A) shall be conducted— (i)on the date on which the charter of the relevant advisory committee expires; or (ii)for any advisory committee with an indefinite charter, not less frequently than once every 2 years. (c)

Ensuring independent advice and expertise

(1)

Appointment

To the maximum extent practicable, except as provided in subsection (b)(1)(B), the head of each Federal department and agency shall appoint members of advisory committees established under this Act or an amendment made by this Act as special employees of the Federal Government. (2)

Action by agency heads

The head of each Federal department or agency shall ensure, to the maximum extent practicable, that— (A)no individual appointed to serve on an applicable advisory committee has a conflict of interest that is relevant to the functions to be performed by the individual, unless— (i)the conflict is promptly and publicly disclosed; and (ii)the head of the department or agency determines that the conflict is unavoidable; and (B)each report of an applicable advisory committee— (i)is the result of the independent judgment of the advisory committee; and (ii)includes a statement indicating the process used by the advisory committee in formulating the recommendations or conclusions contained in the report. (3)

Requirement

The head of each Federal department or agency shall require that individuals appointed or considered for appointment to serve on an applicable advisory committee shall inform the head of any conflict of interest of the individual that is relevant to the advisory committee functions to be performed by the individual. (4)

Representative members

If the head of a Federal department or agency determines that a member described in subsection (b)(1)(B) is required to serve on an applicable advisory committee, the advisory committee management officer of the department or agency shall consult with the designated ethics official of the department or agency to ensure that the designation of the member is appropriate and necessary to fulfilling the purpose of the advisory committee. (5)

Action by ethics officials

The designated ethics official of each applicable Federal department or agency shall issue guidance to ensure that the applicable advisory committees are providing sufficiently independent advice and expertise. (6)

Reports

The Administrator of General Services shall— (A)conduct an annual review of compliance by Federal departments and agencies with the requirements of this subsection; and (B)submit to the Committee on Environment and Public Works of the Senate and the Committee on Energy and Commerce of the House of Representatives annual reports describing the results of the reviews. (d)

Disclosure of information

(1)

Items required to be disclosed

The head of each Federal department or agency to which an advisory committee established under this Act or an amendment made by this Act reports shall make available as described in paragraph (2) the following information, at a minimum: (A)The charter of the advisory committee. (B)A description of the formation process of the advisory committee, including— (i)the process for identifying prospective members; (ii)the process of selecting members for balance of viewpoints or expertise; and (iii)a justification of the need for representative members, if any. (C)A list of all current members of the advisory committee, updated regularly, including, for each member— (i)the name of any individual or entity that nominated the member; (ii)whether the member is designated as a special employee of the Federal Government or a representative member; and (iii)in the case of a representative member, the individuals or entity the viewpoint of which the member represents. (D)A list of all special employees of the Federal Government who have received conflict of interest waivers under section 208(b) of title 18, United States Code, pursuant to regulations promulgated by the Office of Government Ethics, a description of the conflict necessitating the waiver, and the reason for granting the waiver. (E)A summary of the decisionmaking process of the advisory committee. (F)A complete report of all meetings of the advisory committee. (G)Notices of future meetings of the advisory committee. (2)

Methods of disclosure

(A)

Availability

(i)

In general

Subject to clause (ii), the information required to be disclosed by a Federal department or agency under this subsection shall be made available electronically, including on the official public Internet website of the department or agency, not later than 7 calendar days before the applicable meeting of the advisory committee. (ii)

Complete reports

Each complete report of a meeting of an advisory committee established under this Act or an amendment made by this Act— (I)shall be disclosed by the relevant Federal department or agency under this subsection by not later than 7 calendar days after the date of the meeting; and (II)may take the form of an electronic recording of the meeting, a transcript, or any other substantively complete accounting of the meeting. (B)

Action by GSA

The Administrator of General Services shall provide, on the official public Internet website of the General Services Administration, electronic access to the information made available by each Federal department or agency under subparagraph (A).

103.

Voluntary renewable energy markets

(a)

Findings

Congress finds that— (1)voluntary renewable energy markets can be efficient and effective programs for allowing consumers and businesses to voluntarily use or support renewable energy; (2)more than 1,000,000 businesses, households, government agencies, farms, and others voluntarily purchase renewable electricity or renewable energy certificates; and (3)according to the Department of Energy— (A)voluntary renewable energy purchases totaled 24,000,000,000 kilowatt-hours during calendar year 2008, representing 0.6 percent of total United States electricity sales; and (B)voluntary renewable energy purchases have increased at an average annual rate of 32 percent since calendar year 2004. (b)

Statement of policy

It is the policy of the United States— (1)to support the continued growth of voluntary renewable energy markets; and (2)that nothing in this Act or the amendments made by this Act is intended to interfere with or prevent the continued operation and growth of the voluntary renewable energy market. (c)

Report to Congress

Not later than 2 years after the date of enactment of this Act, the Comptroller General of the United States shall submit to Congress a report describing the efficacy of the voluntary renewable energy market in the context of the pollution reduction and investment programs under this Act and the amendments made by this Act, including— (1)whether meaningful reductions in carbon dioxide emissions have occurred in response to investments in the voluntary renewable energy market; (2)whether the voluntary market continues to grow; and (3)a list of recommended strategies for ensuring that— (A)meaningful emissions reductions may occur; and (B)the voluntary renewable energy market may continue to grow.

B

Pollution Reduction and Investment

.

102.

Definitions

Title VII of the Clean Air Act (as added by section 101 of this division) is amended by inserting before part A the following:

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 credit. (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; it includes 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 paragraph (13)(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 paragraph (13)(C), the tons of carbon dioxide equivalent of fossil fuel-based 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 paragraph (13)(J), 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(b)(2) or (8) 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)(i)Any stationary source that produces petroleum-based or coal-based liquid fuel, petroleum coke, or natural gas liquid, the combustion of which would emit 25,000 or more tons of carbon dioxide equivalent, as determined by the Administrator. (ii)Any entity that (or any group of 2 or more affiliated entities that, in the aggregate) imports petroleum-based or coal-based liquid fuel, petroleum coke, or natural gas liquid, the combustion of which would emit 25,000 or more 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 in products designated by the Administrator, 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 (v). (D)Any stationary source that has emitted 25,000 or more tons of carbon dioxide equivalent of nitrogen trifluoride in 2008 or any subsequent year. (E)Any geologic sequestration site. (F)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. (G)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. (H)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; beneficiation or other processing (including agglomeration) of metal ores; 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. (I)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 (D), (F), (G), or (H); and (ii)has emitted 25,000 or more tons of carbon dioxide equivalent in 2008 or any subsequent year. (J)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. (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 or similar entity official, to represent the owners and operators or similar entity official 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

(A)

In general

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

Exclusion

The term domestic offset credit does not include a term 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 compliance must be demonstrated pursuant to section 722(b)(5). (20)

Emission allowance

The term emission allowance means an allowance established under section 721(a) or 726(g)(2). (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, or 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 (e), 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, offset credit, or term 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 offset credit

The term international offset credit means an offset credit issued by the Administrator under section 744. (34)

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. (35)

Market stability reserve allowance

The term market stability reserve allowance means an emission allowance reserved for, transferred to, or deposited in the market stability reserve, or established, under section 726. (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, isobutane, 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

(A)

In general

The term offset credit means an offset credit issued under part D. (B)

Exclusion

The term offset credit does not include a term offset credit. (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 or may be 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)

Qualified R&D facility

The term qualified R&D facility means a facility that conducts research and development, that was in operation as of the date of enactment of this title, and that is part of a covered entity subject to paragraphs (1) through (8) of section 722(b). (43)

Petroleum

The term petroleum includes crude oil, tar sands, oil shale, and heavy oils. (44)

Repeated intentional reversals

The term repeated intentional reversals means at least 3 intentional reversals, as determined by the Administrator or a court under section 734(b)(3)(B)(ii). (45)

Research and development

The term research and development means activities— (A)that are conducted in process units or at laboratory bench-scale settings; (B)whose purpose is to conduct research and development for new processes, technologies, or products that contribute to lower greenhouse gas emissions; and (C)that do not manufacture products for sale. (46)

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 January 1, 2009. (B)Plant material, including waste material, harvested or collected from pastureland that was nonforested on January 1, 2009. (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 January 1, 2009; or (II)on land that, as of January 1, 2009, 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 January 1, 2009, 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 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. (47)

Retire

The term retire, with respect to an allowance, offset credit, or term 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, offset credit, or term offset credit to satisfy a compliance obligation. (48)

Reversal

The term reversal means an intentional or unintentional loss of sequestered greenhouse gases to the atmosphere. (49)

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. (50)

Small business refiner

(A)

In general

The term small business refiner means a refiner that meets the applicable Federal refinery capacity and employee limitations criteria described in section 45H(c)(1) of the Internal Revenue Code of 1986 (as in effect on the date of enactment of this section and without regard to section 45H(d)). (B)

Eligibility

Eligibility of a small business refiner under this paragraph shall not be recalculated or disallowed on account of— (i)a merger of the small business refiner with 1 or more other small business refiners after December 31, 2002; or (ii)the acquisition by a small business refiner of another small business refiner (or refinery of such refiner) after December 31, 2002. (51)

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. (52)

Ton

The term ton means a metric ton. (53)

Uncapped emissions

The term uncapped emissions means emissions of greenhouse gases emitted after December 31, 2011, that are not capped emissions. (54)

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. (55)

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 thermal energy and electricity during normal operation and that supplies 1/3 or less of its potential electric output capacity and 25 megawatts 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. (56)

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 market stability reserve allowance shall be the year in which such allowance is purchased at auction.

.

103.

Offset reporting requirements

Section 114 of Clean Air Act (42 U.S.C. 7414) is amended by adding at the end the following: (e)

Recordkeeping for carbon offsets program

For the purpose of implementing the carbon offsets program set forth in subtitle D of title VII, the Administrator shall require any person who is an offset project developer, and may require any person who is a third party verifier, to establish and maintain records, for a period of not less than the crediting period under section 734(c) plus 5 years, relating to— (1)any offset project approval petition submitted to the appropriate officials under section 735; (2)any reversals which occur with respect to an offset project; (3)any verification reports; and (4)any other aspect of the offset project that the appropriate officials determines is appropriate. .

B

Disposition of allowances

111.

Disposition of allowances for global warming pollution reduction program

Title VII of the Clean Air Act (as amended by section 141 of this division) is amended by adding at the end the following: G

Disposition of allowances

771.

Allocation of emission allowances

(a)

Allocation

Subject to subsection (d), of the total quantity of emission allowances established for each vintage year under section 721(a), the Administrator shall allocate emission allowances for the purposes and for the vintage years and corresponding percentages specified as follows: (1)For the program for electricity consumers pursuant to section 772, as described in the following tables: (A)For distribution to electricity consumers in accordance with subsections (b), (c), and (d) of section 772, the percentages specified in the following table: Electricity consumers Vintage YearPercentage of ­allowances 201243.75 201343.75 201438.89 201538.89 201635.00 201735.00 201835.00 201935.00 202035.00 202135.00 202235.00 202335.00 202435.00 202535.00 202628.00 202721.00 202814.00 20297.00 (B)For distribution to small LDCs under section 772(e), the percentages specified in the following table: Small LDCs Vintage YearPercentage of ­allowances 20120.50 20130.50 20140.50 20150.50 20160.50 20170.50 20180.50 20190.50 20200.50 20210.50 20220.50 20230.50 20240.50 20250.50 20260.40 20270.30 20280.20 20290.10 (2)For the program for natural gas consumers pursuant to section 773, as described in the following table: Natural gas consumers Vintage YearPercentage of ­allowances 20120.00 20130.00 20140.00 20150.00 20169.00 20179.00 20189.00 20199.00 20209.00 20219.00 20229.00 20239.00 20249.00 20259.00 20267.20 20275.40 20283.60 20291.80 (3)For the program for home heating oil and propane consumers pursuant to section 774, as described in the following table: Home heating oil and propane consumers Vintage YearPercentage of ­allowances 20121.88 20131.88 20141.67 20151.67 20161.50 20171.50 20181.50 20191.50 20201.50 20211.50 20221.50 20231.50 20241.50 20251.50 20261.20 20270.90 20280.60 20290.30 (4)For the program for domestic fuel production, including petroleum refiners and small business refiners, under section 775, for each of vintage years 2014 through 2026, for allocation and distribution in accordance with section 775— (A)1.25 percent of the emission allowances established for each vintage year under section 721(a) to domestic petroleum refineries that are covered entities described in section 700(13)(F)(viii); and (B)an additional 1.0 percent of the emission allowances established for each vintage year under section 721(a) to small business refiners that are covered entities described in section 700(13)(F)(viii). (5)In addition to emission allowances reserved under subsection (d)(5), subject to subparagraph (G), for the program to ensure real reductions in industrial emissions under part F, as follows: (A)For each of vintage years 2012 and 2013, up to 4.0 percent of the emission allowances established for each year under section 721(a). (B)For vintage year 2014, up to 15 percent of the emission allowances established for that year under section 721(a). (C)For vintage year 2015, up to the product of— (i)the quantity specified in subparagraph (B); multiplied by (ii)the quantity of emission allowances established for 2015 under section 721(a) divided by the quantity of emission allowances established for 2014 under section 721(a). (D)For vintage year 2016, up to the lesser or 13.45 percent or the product obtained by multiplying— (i)the quantity specified in subparagraph (C); and (ii)the quantity of emission allowances established for 2015 under section 721(a) divided by the quantity of emission allowances established for 2014 under section 721(a). (E)For vintage years 2017 through 2025, up to the lesser or 13.45 percent or the product obtained by multiplying— (i)the quantity specified in subparagraph (D); and (ii)the quantity of emission allowances established for that year under section 721(a) divided by the quantity of emission allowances established for 2016 under section 721(a). (F)For vintage years 2026 through 2050, up to the product of the quantity specified in subparagraph (D)— (i)multiplied by the quantity of emission allowances established for the applicable year during 2026 through 2050 under section 721(a) divided by the quantity of emission allowances established for 2016 under section 721(a); and (ii)multiplied by a factor that shall equal 90 percent for 2026 and decline 10 percent for each year thereafter until reaching 0. (G)If the Administrator has not distributed all of the allowances allocated pursuant to this paragraph for a given vintage year by the end of that year, any emission allowances allocated to entities in eligible industrial sectors pursuant to this paragraph that have not been so distributed shall, in accordance with subsection (e), be exchanged for allowances from the following vintage year and treated as part of the allocation to such entities for that later vintage year. (6)(A)Subject to subparagraph (B), for the program for commercial deployment of carbon capture and sequestration technologies under section 780, as described in the following table: Deployment of carbon capture and sequestration technology Vintage YearPercentage of ­allowances 20120.00 20130.00 20141.75 20151.75 20161.75 20171.75 20184.75 20194.75 Each of vintage years 2020 through 20505.00 (B)If the Administrator has not distributed all of the allowances allocated pursuant to this paragraph for a given vintage year by the end of that year, all such undistributed emission allowances shall, in accordance with subsection (e), be exchanged for allowances from the following vintage year and treated as part of the allocation for the deployment of carbon capture and sequestration technology under this subsection for that later vintage year. (7)For the program for early action recognition pursuant to section 782, 2.0 percent of the emission allowances for each of vintage years 2012 and 2013. (8)For the program for investment in clean vehicle technology under section 201 of division B of the Clean Energy Jobs and American Power Act— (A)for each of vintage years 2012 through 2017, 2.4 percent of the emission allowances; and (B)for each of vintage years 2018 through 2025, 0.8 percent of the emission allowances. (9)(A)In addition to the emission allowances reserved under subsection (d)(6), subject to subparagraph (B), for the program for State and local investment in energy efficiency and renewable energy under section 202 of division B of the Clean Energy Jobs and American Power Act, as described in the following table: Investment in energy efficiency and renewable energy Vintage YearPercentage of ­allowances 201210.35 201310.35 20148.55 20158.55 20165.85 20176.12 20185.22 20195.22 20204.95 20214.95 20220.90 20230.90 20240.90 20250.90 Each of vintage years 2026 through 20504.05 (B)At the time at which allowances are distributed under subparagraph (A) for each of vintage years 2022 through 2025, 3.2 percent of emission allowances established under section 721(a) for the vintage year that is 4 years after that vintage year shall also be distributed (which shall be in addition to the emission allowances distributed under subparagraph (A) for vintage years 2026 through 2050. (10)For the program for energy efficiency in building codes under section 163 of division A, and section 203 of division B, of the Clean Energy Jobs and American Power Act, 0.50 percent of the emission allowances for each of vintage years 2012 through 2050. (11)For the program for Energy Innovation Hubs pursuant to section 204 of division B of the Clean Energy Jobs and American Power Act— (A)for each of vintage years 2012 through 2015, 0.75 percent of the emission allowances; and (B)for each of vintage years 2016 through 2050, 0.45 percent of the emission allowances. (12)For the program for ARPA–E research pursuant to section 205 of division B of the Clean Energy Jobs and American Power Act— (A)for each of vintage years 2012 and 2013, 3.25 percent of the emission allowances; and (B)for each of vintage years 2014 through 2050, 1.25 percent of the emission allowances. (13)For the International Clean Energy Deployment Program under section 323 of division A, and section 206 of division B, of the Clean Energy Jobs and American Power Act— (A)for each of vintage years 2012 through 2021, 1.0 percent of the emission allowances; (B)for each of vintage years 2022 through 2026, 2.0 percent of the emission allowances; and (C)for each of vintage years 2027 through 2050, 3.0 percent of the emission allowances. (14)In addition to the emission allowances reserved under subsection (d)(8), for the international climate change adaptation and global security program under section 324 of division A, and section 207 of division B, of the Clean Energy Jobs and American Power Act— (A)for each of vintage years 2012 through 2021, 1.0 percent of the emission allowances; (B)for each of vintage years 2022 through 2026, 2.0 percent of the emission allowances; and (C)for each of vintage years 2027 through 2050, 5.0 percent of the emission allowances. (15)For State programs for greenhouse gas reduction and climate adaptation pursuant to section 210(c) of division B of the Clean Energy Jobs and American Power Act, as described in the following table: State programs for greenhouse gas reduction and adaptation Vintage YearPercentage of ­allowances 20121.34 20131.34 20140.50 20150.50 20160.50 20170.50 20180.50 20190.50 20200.50 20210.50 20221.06 20231.06 20241.06 20251.06 20261.06 Each of vintage years 2027 through 20502.18 (16)For State programs for natural resource adaptation activities under the program for climate change safeguards for natural resources conservation under section 370(a)(1) of division A, and section 216 of division B, of the Clean Energy Jobs and American Power Act, as described in the following table: State programs for natural resource adaptation Vintage YearPercentage of ­allowances 20120.39 20130.39 20140.39 20150.39 20160.39 20170.39 20180.39 20190.39 20200.39 20210.39 20220.77 20230.77 20240.77 20250.77 20260.77 Each of vintage years 2027 through 20501.54 (b)

Auctions

Subject to subsection (d), of the total quantity of emission allowances established for each calendar year under section 721(a), the Administrator shall auction, pursuant to section 778, emission allowances for the purposes and for the vintage or calendar years and corresponding percentages specified as follows: (1)Emission allowances reserved under subsection (d)(9) for the Market Stability Reserve Fund under section 726. (2)For the program for climate change consumer refunds and low- and moderate-income consumers pursuant to section 776— (A)emission allowances for consumer rebates under section 776(a), pursuant to subsection (f)(2); and (B)emission allowances for energy refunds under section 776(b), as follows: (i)For each of calendar years 2012 through 2029, 15.00 percent of the emission allowances. (ii)For each of calendar years 2030 through 2050, 18.50 percent of the emission allowances. (iii)For calendar year 2051 and each calendar year thereafter, 15.00 percent of the emission allowances. (3)For the program for investment in clean vehicle technology under section 201 of division B of the Clean Energy Jobs and American Power Act— (A)for each of calendar years 2012 through 2017, 0.6 percent of the emission allowances; and (B)for each of calendar years 2018 through 2025, 0.2 percent of the emission allowances. (4)For the program for energy efficiency and renewable energy worker training under section 208 of division B of the Clean Energy Jobs and American Power Act— (A)for each of calendar years 2012 and 2013, 1.0 percent of the emission allowances; and (B)for each of calendar years 2014 and 2015, 0.05 percent of the emission allowances. (5)For the program for worker transition under part 2 of subtitle A of title III of division A, and section 209 of division B, of the Clean Energy Jobs and American Power Act— (A)for each of calendar years 2012 through 2021, 0.5 percent of the emission allowances; and (B)for each of calendar years 2022 through 2050, 1.0 percent of the emission allowances. (6)For the program for public health and climate change under subpart B of part 1 of subtitle C of title III of division A, and section 211 of division B, of the Clean Energy Jobs and American Power Act, 0.10 percent of the emission allowances for each of calendar years 2012 through 2050. (7)For the Natural Resources Climate Change Adaptation Account under the program for climate change safeguards for natural resources conservation under paragraphs (2) through (6) of section 370(a) of division A, and section 212 of division B, of the Clean Energy Jobs and American Power Act, as described in the following table: Natural Resources Climate Change Adaptation Account Calendar YearPercentage of ­allowances 20120.62 20130.62 20140.62 20150.62 20160.62 20170.62 20180.62 20190.62 20200.62 20210.62 20221.23 20231.23 20241.23 20251.23 20261.23 Each of calendar years 2027 through 20502.46 (8)For nuclear worker training under section 132 of division A, and section 213 of division B, of the Clean Energy Jobs and American Power Act— (A)for each of calendar years 2012 and 2013, 0.5 percent of the emission allowances; and (B)for each of calendar years 2014 and 2015, 0.05 percent of the emission allowances. (9)In addition to the emission allowances reserved under subsection (d)(3), for the supplemental agriculture, abandoned mine land, renewable energy, and forestry greenhouse gas reduction and renewable energy program under section 155 of division A, and section 214 of division B, of the Clean Energy Jobs and American Power Act— (A)for each of calendar years 2012 and 2013, 1.0 percent of the emission allowances; and (B)for each of calendar years 2014 through 2016, 0.28 percent of the emission allowances. (10)

Transportation greenhouse gas reduction

In addition to the emission allowances reserved under subsection (d)(4), for the transportation greenhouse gas reduction program under sections 831 and 832 of this Act, and 215 of division B, of the Clean Energy Jobs and American Power Act, as described in the following table: Transportation greenhouse gas reduction Calendar YearPercentage of ­allowances 20122.21 20132.21 20141.35 20151.35 20161.05 20171.08 20180.98 20190.98 20200.95 20210.95 20220.94 20230.94 20240.94 20250.94 20261.64 20272.52 20282.52 20292.52 Each of calendar years 2030 through 20502.17 (c)

Supplemental reductions

(1)

In general

Subject to subsection (d) and paragraphs (2) and (3), the Administrator shall allocate allowances for each vintage year to achieve supplemental reductions pursuant to section 753, as follows: (A)For each of calendar years 2012 through 2025, 5.0 percent of the emission allowances. (B)For each of calendar years 2026 through 2030, 3.0 percent of the emission allowances. (C)For each of calendar years 2031 through 2050, 2.0 percent of the emission allowances. (2)

Adjustment

The Administrator shall modify the allowances allocated under paragraph (1) as necessary to ensure the achievement of the annual supplemental emissions reduction objective for 2020 and the cumulative reduction objective through 2025 set forth in section 753(b)(1). (3)

Carryover

If the Administrator has not distributed all of the allowances allocated pursuant to this subsection for a given vintage year by the end of that year, all such undistributed emission allowances shall, in accordance with subsection (e), be exchanged for allowances from the following vintage year and treated as part of the allocation for supplemental reductions under this section for that later vintage year. (d)

Initial reservation of allowances

(1)

In general

Before allocating emission allowances under subsections (a) through (c) for each calendar year, the Administrator shall reserve from the total quantity of emission allowances established for the calendar year under section 721(a) the percentages of allowances specified in paragraphs (2) through (9), for use for the purposes described in those paragraphs. (2)

Deficit reduction

For auction pursuant to section 778 to ensure that this title does not contribute to the deficit for a calendar year, with proceeds of the auction to be deposited immediately upon receipt in the Deficit Reduction Fund established by section 783, the Administrator shall reserve— (A)for each of calendar years 2012 through 2029, 10 percent of the emission allowances; (B)for each of calendar years 2030 through 2039, 22 percent of the emission allowances; and (C)for each of calendar years 2040 through 2050, 25 percent of the emission allowances. (3)

Supplemental agriculture, abandoned mine land, renewable energy, and forestry

For the supplemental agriculture, abandoned mine land, renewable energy, and forestry greenhouse gas reduction and renewable energy program under section 155 of division A, and section 214 of division B, of the Clean Energy Jobs and American Power Act, the Administrator shall reserve 1.0 percent of the emission allowances for each of calendar years 2012 through 2050. (4)

Transportation greenhouse gas reduction

For the transportation greenhouse gas reduction program under sections 831 and 832 of this Act, and section 215 of division B of the Clean Energy Jobs and American Power Act, the Administrator shall reserve for each of calendar years 2012 through 2050, 1.0 percent of the emission allowances. (5)

Industrial emissions

For the program to ensure real reductions in industrial emissions under part F, the Administrator shall reserve 0.50 percent of the emission allowances for each of calendar years 2012 through 2050. (6)

State and local investment in energy efficiency and renewable energy

For the program for State and local investment in energy efficiency and renewable energy under section 202 of division B of the Clean Energy Jobs and American Power Act, the Administrator shall reserve 0.50 percent of the emission allowances for each of calendar years 2012 through 2050. (7)

Electricity consumers; small LDCs

For distribution to small LDCs under the program for electricity consumers under section 772(f), the Administrator shall reserve— (A)for each of calendar years 2012 through 2025, 0.50 percent of the emission allowances; (B)for calendar year 2026, 0.40 percent of the emission allowances; (C)for calendar year 2027, 0.30 percent of the emission allowances; (D)for calendar year 2028, 0.20 percent of the emission allowances; and (E)for calendar year 2029, 0.10 percent of the emission allowances. (8)

International climate change adaptation and global security program

For the international climate change adaptation and global security program under section 324 of division A, and section 207 of division B, of the Clean Energy Jobs and American Power Act, the Administrator shall reserve 0.25 percent of the emission allowances for each of calendar years 2012 through 2026. (9)

Market stability reserve fund

For the Market Stability Reserve Fund under section 726, the Administrator shall reserve— (A)for each of calendar years 2012 through 2019, 2.0 percent of the emission allowances; and (B)for each of calendar years 2020 through 2050, 3.0 percent of the emission allowances. (e)

Treatment of carryover allowances

(1)

In general

If there are undistributed allowances from a vintage year for eligible industrial sectors pursuant to subsection (a)(5), deployment of carbon capture and sequestration technology pursuant to subsection (a)(6), or supplemental reductions pursuant to subsection (c), the Administrator shall— (A)use the undistributed allowances to increase for the same vintage year— (i)the allocation of allowances to be auctioned, with the proceeds to be deposited immediately upon receipt in the Deficit Reduction Fund established by section 783; (ii)the allocation of allowances for the program for climate change consumer refunds and low- and moderate-income consumers pursuant to subsection (b)(2); or (iii)a combination the purposes described in clauses (i) and (ii); and (B)except as provided in paragraph (2)— (i)decrease by the same quantity for the following vintage year the allocation for the purpose for which the allocation was increased pursuant to subparagraph (A); and (ii)increase by the same quantity for the following vintage year the allocation for the purpose for which the undistributed allowances were originally allocated. (2)

Excess undistributed allowances

(A)

In general

For each vintage year for which this subsection applies, the Administrator shall determine whether— (i)the total quantity of undistributed allowances for that vintage year that were allocated pursuant to paragraphs (5)(G) and (6)(B) of subsection (a), and subsection (c); exceeds (ii)the total quantity of allowances allocated pursuant to subsections (b)(2) and (d)(2) for the following vintage year, decreased by the quantity of allowances for that following vintage year set aside for the reserve established by section 778(f). (B)

Determination of exceedance

If the Administrator determines under subparagraph (A) that the quantity described in subparagraph (A)(i) exceeds the quantity described in subparagraph (A)(ii)— (i)paragraph (1)(B)(ii) shall not apply; and (ii)for each purpose described in paragraphs (5)(G) and (6)(B) of subsection (a), and subsection (c), for which undistributed allowances for a given vintage year were allocated, the Administrator shall increase the allocation for the following vintage year by the quantity that equals the product obtained by multiplying— (iii)the number of undistributed allowances for that purpose; and (iv)the quantity described in subparagraph (A)(ii) divided by the quantity described in subparagraph (A)(i). (f)

Remaining allowances

After making the allocations of emission allowances under subsections (a) through (e) for a calendar year, the Administrator shall allocate any emission allowances remaining from the total quantity of emission allowances established for the calendar year under section 721(a)— (1)for each of calendar years 2012 through 2025, for auction in accordance with section 778 and deposit in the Deficit Reduction Fund established by section 783; and (2)for each of calendar years 2026 through 2050, for the program for climate change consumer refunds and low- and moderate-income consumers pursuant to section 776.

772.

Electricity consumers

(a)

Definitions

In this section: (1)

CHP savings

The term CHP savings means— (A)CHP system savings from a combined heat and power system that commences operation after the date of enactment of this section; and (B)the increase in CHP system savings from, at any time after the date of the enactment of this section, upgrading, replacing, expanding, or increasing the utilization of a combined heat and power system that commenced operation on or before the date of enactment of this section. (2)

CHP system savings

The term CHP system savings means the increment of electric output of a combined heat and power system that is attributable to the higher efficiency of the combined system (as compared to the efficiency of separate production of the electric and thermal outputs). (3)

Coal-fueled unit

The term coal-fueled unit means a utility unit that derives at least 85 percent of its heat input from coal, petroleum coke, or any combination of those 2 fuels. (4)

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. (5)

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 an electric cooperative, are regulated or set by— (i)a State regulatory authority; (ii)a State or political subdivision thereof (or an agency or instrumentality of, or corporation wholly owned by, either of the foregoing); or (iii)an Indian tribe pursuant to tribal law. (6)

Electricity savings

The term electricity savings means reductions in electricity consumption, relative to business-as-usual projections, achieved through measures implemented after the date of enactment of this section, limited to— (A)customer facility savings of electricity, adjusted to reflect any associated increase in fuel consumption at the facility; (B)reductions in distribution system losses of electricity achieved by a retail electricity distributor, as compared to losses attributable to new or replacement distribution system equipment of average efficiency; (C)CHP savings; and (D)fuel cell savings. (7)

Fuel cell

The term fuel cell means a device that directly converts the chemical energy of a fuel and an oxidant into electricity by electrochemical processes occurring at separate electrodes in the device. (8)

Fuel cell savings

The term ‘fuel cell savings’ means the electricity saved by a fuel cell that is installed after the date of enactment of this section, or by upgrading a fuel cell that commenced operation on or before the date of enactment of this section, as a result of the greater efficiency with which the fuel cell transforms fuel into electricity as compared with sources of electricity delivered through the grid, provided that— (A)the fuel cell meets such requirements relating to efficiency and other operating characteristics as the Federal Energy Regulatory Commission may promulgate by regulation; and (B)the net sales of electricity from the fuel cell to customers not consuming the thermal output from the fuel cell, if any, do not exceed 50 percent of the total annual electricity generation by the fuel cell. (9)

Independent power production facility

The term independent power production facility means a facility— (A)that is used for the generation of electric energy, at least 80 percent of which is sold at wholesale; and (B)the sales of the output of which are not subject to retail rate regulation or setting of retail rates by— (i)a State regulatory authority; (ii)a State or political subdivision thereof (or an agency or instrumentality of, or corporation wholly owned by, either of the foregoing); (iii)an electric cooperative; or (iv)an Indian tribe pursuant to tribal law. (10)

Long-term contract generator

(A)

In general

The term long-term contract generator means a qualifying small power production facility, a qualifying cogeneration facility ), an independent power production facility, or a facility for the production of electric energy for sale to others that is owned and operated by an electric cooperative that is— (i)a covered entity; and (ii)as of the date of enactment of this title— (I)a facility with 1 or more sales or tolling agreements executed before March 1, 2007, that govern the facility’s electricity sales and provide 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, provided that such agreements are not between entities that were affiliates of one another at the time at which the agreements were entered into; or (II)a facility consisting of 1 or more cogeneration units that makes useful thermal energy available to an industrial or commercial process with 1 or more sales agreements executed before March 1, 2007, that govern the facility’s useful thermal energy sales and provide for sales at a price (whether a fixed price or price formula) for useful thermal energy that does not allow for recovery of the costs of compliance with the limitation on greenhouse gas emissions under this title, provided that such agreements are not between entities that were affiliates of one another at the time at which the agreements were entered into. (B)

Affiliate

In this paragraph, the term affiliate, when used in relation to a covered entity, means another entity that directly or indirectly owned or controlled, was owned or controlled by, or that had 50 percent or more of its equity interests under common ownership or control with, the covered entity. (11)

Merchant coal unit

The term merchant coal unit means a coal-fueled unit that— (A)is or is part of a covered entity; (B)is not owned by a Federal, State, or regional agency or power authority; and (C)generates electricity solely for sale to others, provided that all or a portion of such sales are made by a separate legal entity that— (i)has a full or partial ownership or leasehold interest in the unit, as certified in accordance with such requirements as the Administrator shall prescribe; and (ii)is not subject to retail rate regulation or setting of retail rates by— (I)a State regulatory authority; (II)a State or political subdivision thereof (or an agency or instrumentality of, or corporation wholly owned by, either of the foregoing); (III)an electric cooperative; or (IV)an Indian tribe pursuant to tribal law. (12)

Merchant coal unit sales

The term merchant coal unit sales means sales to others of electricity generated by a merchant coal unit that are made by the owner or leaseholder described in paragraph (11)(C). (13)

New coal-fueled unit

The term new coal-fueled unit means a coal-fueled unit that commenced operation on or after January 1, 2009 and before January 1, 2013. (14)

New merchant coal unit

The term new merchant coal unit means a merchant coal unit— (A)that commenced operation on or after January 1, 2009 and before January 1, 2013; and (B)the actual, on-site construction of which commenced prior to January 1, 2009. (15)

Qualified hydropower

The term qualified hydropower means— (A)energy produced from increased efficiency achieved, or additions of capacity made, on or after January 1, 1988, at a hydroelectric facility that was placed in service before that date and does not include additional energy generated as a result of operational changes not directly associated with efficiency improvements or capacity additions; or (B)energy produced from generating capacity added to a dam on or after January 1, 1988, provided that the Federal Energy Regulatory Commission certifies that— (i)the dam was placed in service before the date of the enactment of this section and was operated for flood control, navigation, or water supply purposes and was not producing hydroelectric power prior to the addition of such capacity; (ii)the hydroelectric project installed on the dam is licensed (or is exempt from licensing) by the Federal Energy Regulatory Commission and is in compliance with the terms and conditions of the license or exemption, and with other applicable legal requirements for the protection of environmental quality, including applicable fish passage requirements; and (iii)the hydroelectric project installed on the dam is operated so that the water surface elevation at any given location and time that would have occurred in the absence of the hydroelectric project is maintained, subject to any license or exemption requirements that require changes in water surface elevation for the purpose of improving the environmental quality of the affected waterway. (16)

Qualifying small power production facility; qualifying cogeneration facility

The terms qualifying small power production facility and qualifying cogeneration facility have the meanings given those terms in section 3(17)(C) and 3(18)(B) of the Federal Power Act (16 U.S.C. 796(17)(C) and 796(18)(B)). (17)

Renewable energy resource

The term renewable energy resource means each of the following: (A)Wind energy. (B)Solar energy. (C)Geothermal energy. (D)Renewable biomass. (E)Biogas derived exclusively from renewable biomass. (F)Biofuels derived exclusively from renewable biomass. (G)Qualified hydropower. (H)Marine and hydrokinetic renewable energy, as that term is defined in section 632 of the Energy Independence and Security Act of 2007 (42 U.S.C. 17211). (18)

Small ldc

The term small LDC means, for any given year, an electricity local distribution company that delivered less than 4,000,000 megawatt hours of electric energy directly to retail consumers in the preceding year. (19)

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)). (20)

Useful thermal energy

The term useful thermal energy has the meaning given that term in section 371(7) of the Energy Policy and Conservation Act (42 U.S.C. 6341(7)). (b)

Electricity local distribution companies

(1)

Distribution of allowances

The Administrator shall distribute to electricity local distribution companies for the benefit of retail ratepayers the quantity of emission allowances allocated for the following vintage year pursuant to section 771(a)(1)(A). Notwithstanding the preceding sentence, the Administrator shall withhold from distribution under this subsection a quantity of emission allowances equal to the lesser of 14.3 percent of the quantity of emission allowances allocated under section 771(a)(1) for the relevant vintage year, or 105 percent of the emission allowances for the relevant vintage year that the Administrator anticipates will be distributed to merchant coal units and to long-term contract generators, respectively, under subsections (c) and (d), on the condition that the Administrator shall be authorized to distribute future vintage year allowances available to long-term contract generators under subsection (d) in the case of a shortfall of allowances in any vintage year, subject to section 772(d)(2). If not required by subsections (c) and (d) to distribute all of these reserved allowances, the Administrator shall distribute any remaining emission allowances to electricity local distribution companies in accordance with this subsection. (2)

Distribution based on emissions

(A)

In general

For each vintage year, 50 percent of the emission allowances available for distribution under paragraph (1), after reserving allowances for distribution under subsections (c) and (d), 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 delivered at retail by each such company during the base period determined under subparagraph (B). (B)

Base period

(i)

Vintage years 2012 and 2013

For vintage years 2012 and 2013, an electricity local distribution company’s base period shall be— (I)calendar years 2006 through 2008; (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; or (III)calendar year 2012, in the case of a local distribution company that— (aa)is located outside of the Pacific Northwest (as defined in section 3 of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839a)), and purchased long-term excess Federal power and Hungry Horse Reservation power from the Bonneville Power Administration; and (bb)will no longer have long-term excess Federal power or Hungry Horse Reservation power from the Bonneville Power Administration after October 1, 2011. (ii)

Vintage years 2014 and thereafter

For vintage years 2014 and thereafter, the base period shall be— (I)the base period selected under clause (i); or (II)calendar year 2012, in the case of— (aa)an electricity local distribution company that owns, co-owns, or purchases through a power purchase agreement (whether directly or through a cooperative arrangement) a substantial portion of the electricity generated by a new coal-fueled unit, on the condition that such company timely informs the Administrator of its election to use 2012 as its base period; or (bb)any small local distribution company that is located outside of the Pacific Northwest (as defined in section 3 of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839a)), that purchased long-term excess Federal power and Hungry Horse Reservation power from the Bonneville Power Administration, and that will no longer have long-term excess Federal power or Hungry Horse Reservation power from the Bonneville Power Administration after October 1, 2011, on the condition that such company timely informs the Administrator of its election to use 2012 as its base period. (C)

Determination of emissions

(i)

Determination for 1999–2008

As part of the regulations promulgated pursuant to subsection (g), the Administrator, after consultation with the Energy Information Administration, shall determine the average amount of carbon dioxide emissions attributable to generation of electricity delivered at retail by each electricity local distribution company for each of the years 1999 through 2008, taking into account entities’ electricity generation, electricity purchases, and electricity sales. In the case of any electricity local distribution company that owns, co-owns, or purchases through a power purchase agreement (whether directly or through a cooperative arrangement) a substantial portion of the electricity generated by, a coal-fueled unit that commenced operation after January 1, 2006, and before December 31, 2008, the Administrator shall adjust the emissions attributable to such company’s retail deliveries in calendar years 2006 through 2008 to reflect the emissions that would have occurred if the relevant unit were in operation during the entirety of such 3-year period. (ii)

Adjustments for new coal-fueled units

(I)

Vintage years 2012 and 2013

For purposes of emission allowance distributions for vintage years 2012 and 2013, in the case of any electricity local distribution company that owns, co-owns, or purchases through a power purchase agreement (whether directly or through a cooperative arrangement) a substantial portion of the electricity generated by, a new coal-fueled unit, the Administrator shall adjust the emissions attributable to such company’s retail deliveries in the applicable base period to reflect the emissions that would have occurred if the new coal-fueled unit were in operation during such period. (II)

Vintage year 2014 and thereafter

Not later than necessary for use in making emission allowance distributions under this subsection for vintage year 2014, the Administrator shall, for any electricity local distribution company that owns, co-owns, or purchases through a power purchase agreement (whether directly or through a cooperative arrangement) a substantial portion of the electricity generated by a new coal-fueled unit and has selected calendar year 2012 as its base period pursuant to subparagraph (B)(ii)(II), determine the amount of carbon dioxide emissions attributable to generation of electricity delivered at retail by such company in calendar year 2012. If the relevant new coal-fueled unit was not yet operational by January 1, 2012, the Administrator shall adjust such determination to reflect the emissions that would have occurred if such unit were in operation for all of calendar year 2012. (iii)

Requirements

Determinations under this paragraph 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. (3)

Distribution based on deliveries

(A)

Initial formula

Except as provided in subparagraph (B), for each vintage year, the Administrator shall distribute 50 percent of the emission allowances available for distribution under paragraph (1), after reserving allowances for distribution under subsections (c) and (d), among individual electricity local distribution companies ratably based on each electricity local distribution company’s annual average retail electricity deliveries for calendar years 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. (B)

Updating

Prior to distributing 2015 vintage year emission allowances under this paragraph and at 3-year intervals thereafter, the Administrator shall update the distribution formula under this paragraph 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 subparagraph (A); 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 subparagraph. (4)

Prohibition against excess distributions

The regulations promulgated under subsection (g) shall ensure that, notwithstanding paragraphs (2) and (3), no electricity local distribution company shall receive a greater quantity of allowances under this subsection than is necessary to offset any increased electricity costs to such company’s retail ratepayers, including increased costs attributable to purchased power costs, due to enactment of this title. Any emission allowances withheld from distribution to an electricity local distribution company pursuant to this paragraph shall be distributed among all remaining electricity local distribution companies ratably based on emissions pursuant to paragraph (2). (5)

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 and may not be used to support electricity sales or deliveries to entities or persons other than such ratepayers. (B)

Ratepayer classes

In using emission allowances distributed under this subsection 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

In general, an electricity local distribution company shall not use the value of emission allowances distributed under this subsection 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 or as a fixed credit or rebate on electricity bills. (D)

Residential and industrial ratepayers

Notwithstanding subparagraph (C), if compliance with the requirements of this title results (or would otherwise result) in an increase in electricity costs for residential or industrial retail ratepayers of any given electricity local distribution company (including entities that receive emission allowances pursuant to part F), such electricity local distribution company— (i)shall pass through to residential retail ratepayers as a class their ratable share (based on deliveries to each ratepayer class) of the value of the emission allowances that reduce electricity cost impacts on such ratepayers; and (ii)shall pass through to industrial ratepayers as a class their ratable share (based on deliveries to each ratepayer class) of the value of the emission allowances that reduce electricity cost impacts on such ratepayers. The electricity local distribution company may do so based on the quantity of electricity delivered to individual industrial retail ratepayers. (E)

Guidelines

As part of the regulations promulgated under subsection (g), the Administrator shall, after consultation with State and tribal regulatory authorities, prescribe guidelines for the implementation of the requirements of this paragraph. Such guidelines shall include— (i)requirements to ensure that residential and industrial retail ratepayers (including entities that receive emission allowances under part F) receive their ratable share of the value of the allowances distributed to each electricity local distribution company pursuant to this subsection; and (ii)requirements for measurement, verification, reporting, and approval of methods used to assure the use of allowance values to benefit retail ratepayers. (6)

Regulatory proceedings

(A)

Requirement

No electricity local distribution company shall be eligible to receive emission allowances under this subsection or subsection (e) unless the State regulatory authority with authority over such company’s retail rates, or the entity with authority to regulate or set retail electricity rates of an electricity local distribution company not regulated by a State regulatory authority, has— (i)after public notice and an opportunity for comment, 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 (5) of this subsection and the requirements of subsection (e); and (ii)made available to the Administrator and the public a report describing, in adequate detail, the manner in which the requirements of paragraph (5) and the requirements of subsection (e) 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 , after public notice and an opportunity for comment, and a new report be made available to the Administrator and the public, pursuant to subparagraph (A), not less frequently than every 5 years. (7)

Plans and reporting

(A)

Regulations

As part of the regulations promulgated under subsection (g), the Administrator shall prescribe requirements governing plans and reports to be submitted 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 tor setting 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 and subsection (e), in accordance with the requirements of this subsection and subsection (e). Such plan shall include a description of the manner in which the company will provide to industrial retail ratepayers (including entities that receive emission allowances under part F) their ratable share of the value of such allowances. (C)

Reports

Not later than June 30, 2013, and each calendar year thereafter through 2031, each electricity local distribution company shall submit a report to the Administrator, and to the relevant State regulatory authority or other entity charged with regulating or setting the retail electricity rates of such company, describing the disposition of the value of any emission allowances received by such company in the prior calendar year pursuant to this subsection and subsection (e), 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 any such emission allowances; (iii)the manner in which the company’s disposition of any such emission allowances complies with the requirements of this subsection and of subsection (e), including each of the requirements of paragraph (5) of this subsection, including the requirement that industrial retail ratepayers (including entities that receive emission allowances under part F) receive their ratable share of the value of such allowances; 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 under this subsection, including by publishing such plans and reports on the Internet. (8)

Administrator audit reports

(A)

In general

Each year, the Administrator shall audit a representative sample of electricity local distribution companies to ensure that emission allowances distributed under this subsection have been used exclusively for the benefit of retail ratepayers and that such companies are complying with the requirements of this subsection and of subsection (e), including the requirement that residential and industrial retail ratepayers (including entities that receive emission allowances under part F) receive their ratable share of the value of such allowances. The Administrator shall assess the degree to which electric local distribution companies have maintained a marginal electric price signal while protecting consumers on total cost using the value of emissions allowances. In selecting companies for audit, the Administrator shall take into account any credible evidence of noncompliance with such requirements. 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. (B)

GAO audit report

Not later than April 30, 2015, and every 3 years thereafter through 2026, the Comptroller General of the United States, incorporating results from the Administrators’ audit report and other relevant information including distribution company reports, shall conduct an in-depth evaluation and make available to the public a report on the investments made pursuant to paragraph (5). Said report shall be made available to the State regulatory authority, or the entity with authority to regulate or set retail electricity rates in the case of an electricity distribution company that is not regulated by a State regulatory authority, and shall include a description of how the distribution companies in the audit meet or fail to meet the requirement of paragraph (5), including for investments made in cost-effective end-use energy efficiency programs, the lifetime and annual energy saving benefits, and capacity benefits of said programs. (C)

Administrator cost containment report

Not later than April 30, 2015 and every 3 years thereafter through 2026, the Administrator shall transmit a report to Congress containing an evaluation of the disposition of the value of emission allowances received pursuant to this subsection and subsection (e) and recommendations of ways to more effectively direct the value of allowances to reduce costs for consumers, contain the overall costs of the greenhouse gas emissions reduction program, and meet the pollution reduction targets of the Act. The Administrator shall make available to the public such report, including by publishing such report on the Internet. (9)

Enforcement

A violation of any requirement of this subsection or of subsection (e), irrespective of approval by a State regulatory authority, shall be a violation of this Act. Each emission allowance the value of which is used in violation of the requirements of this subsection or of subsection (e) shall be a separate violation. (c)

Merchant coal units

(1)

Qualifying emissions

The qualifying emissions for a merchant coal unit for a given calendar year shall be the product of the number of megawatt hours of merchant coal unit sales generated by such unit in such calendar year and the average carbon dioxide emissions per megawatt hour generated by such unit during the base period under paragraph (2), 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 unit’s carbon dioxide emissions that are either— (A)captured and sequestered in such calendar year; or (B)attributable to the combustion or gasification of biomass, to the extent that the owner or operator of the unit is not required to hold emission allowances for such emissions. (2)

Base period

For purposes of this subsection, the base period for a merchant coal unit shall be— (A)calendar years 2006 through 2008; or (B)in the case of a new merchant coal unit— (i)the first full calendar year of operation of such unit, if such unit commences operation before January 1, 2012; (ii)calendar year 2012, if such unit commences operation on or after January 1, 2012, and before October 1, 2012; or (iii)calendar year 2013, if such unit commences operation on or after October 1, 2012, and before January 1, 2013. (3)

Phase-down schedule

The Administrator shall identify an annual phase-down factor, applicable to distributions to merchant coal units for each of vintage years 2012 through 2029, that corresponds to the overall decline in the amount of emission allowances allocated to the electricity sector in such years pursuant to section 771(a)(1). Such factor shall— (A)for vintage year 2012, be equal to 1.0; (B)for each of vintage years 2013 through 2029, correspond to the quotient of— (i)the quantity of emission allowances allocated under section 771(a)(1) for such vintage year; divided by (ii)the quantity of emission allowances allocated under section 771(a)(1) for vintage year 2012. (4)

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 the owner or operator of each merchant coal unit described in subsection (a)(11)(C) in an amount equal to the product of— (A)0.5; (B)the qualifying emissions for such merchant coal unit for the preceding year, as determined under paragraph (1); and (C)the phase-down factor for the preceding calendar year, as identified under paragraph (3). (5)

Adjustment

(A)

Study

Not later than 5 years after the date of enactment of the Clean Energy Jobs and American Power Act, the Administrator, in consultation with the Federal Energy Regulatory Commission, shall issue a study to determine whether the allocation formula under paragraph (3) is resulting 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. (6)

Limitation on allowances

Notwithstanding paragraph (4) or (5), for each 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 771(a)(1). If the quantity of emission allowances that would otherwise be distributed pursuant to paragraph (4) or (5) for any vintage year would exceed such limit, the Administrator shall distribute 10 percent of the total emission allowances available for distribution under section 771(a)(1) for such vintage year ratably among merchant coal generators based on the applicable formula under paragraph (4) or (5). (7)

Eligibility

The owner or operator of a merchant coal unit shall not be eligible to receive emission allowances under this subsection for any vintage year for which such owner or operator has elected to receive emission allowances for the same unit under subsection (d). (d)

Long-term contract generators

(1)

Distribution

Not later than March 1, 2013, and each calendar year through 2030, the Administrator shall distribute to the owner or operator of each long-term contract generator a quantity of emission allowances of the preceding vintage year that is equal to the sum of— (A)the number of tons of carbon dioxide emitted as a result of a qualifying electricity sales agreement referred to in subsection (a)(10)(B)(i); and (B)the incremental number of tons of carbon dioxide emitted solely as a result of a qualifying thermal sales agreement referred to in subsection (a)(10)(B)(ii), provided that in no event shall the Administrator distribute more than 1 emission allowance for the same ton of emissions. (2)

Limitation on allowances

(A)

In general

Notwithstanding paragraph (1), for each vintage year the Administrator shall distribute under this subsection no more than 4.3 percent of the total quantity of emission allowances available for such vintage year for distribution to the electricity sector under section 771(a)(1). (B)

Future vintage year allowances

(i)

In general

To the extent that any quantity of allowances that would otherwise be distributed pursuant to paragraph (1) would exceed 4.3 percent in any vintage year, the Administrator shall distribute future vintage year allowances reserved for long-term contract generators under this section to satisfy any such shortfall in available allowances, subject to projections by the Administrator of required allowance needs for long-term contract generators in future vintage years. (ii)

Maintenance of year

Future vintage year allowances distributed pursuant to this subsection shall maintain the future vintage year assigned to those allowances. (C)

Shortfall

If the quantity of emission allowances that would otherwise be distributed pursuant to paragraph (1) for any vintage year would result in a shortfall based on a consideration of available allowances under this subsection over the entire allocation period, as determined by the Administrator, the Administrator shall distribute the emission allowances available for distribution under section 771(a)(1) for such vintage year ratably among long-term contract generators in accordance with paragraph (1). (3)

Eligibility

(A)

Facility eligibility

The owner or operator of a facility shall cease to be eligible to receive emission allowances under this subsection upon the earliest date on which the facility no longer meets each and every element of the definition of a long-term contract generator under subsection (a)(10). (B)

Contract eligibility

The owner or operator of a facility shall cease to be eligible to receive emission allowances under this subsection based on an electricity or thermal sales agreement referred to in subsection (a)(10)(B) upon the earliest date that such agreement— (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 or thermal energy sold under such agreement, the quantity of electricity or thermal energy sold under the agreement, or the expiration or termination date of the agreement. (4)

Demonstration of eligibility

To be eligible to receive allowance distributions under this subsection, the owner or operator of 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(15). (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 each qualifying electricity or thermal sales agreement referred to in subsection (a)(10)(B). (F)A copy of each qualifying electricity or thermal sales agreement referred to in subsection (a)(10)(B). (5)

Notification

Not later than 30 days after, in accordance with paragraph (3), a facility or an agreement ceases to meet the eligibility requirements for distribution of emission allowances pursuant to this subsection, the designated representative of such facility shall notify the Administrator in writing when, and on what basis, such facility or agreement ceased to meet such requirements. (e)

Small LDCs

(1)

Distribution

The Administrator shall, in accordance with this subsection, distribute emission allowances allocated pursuant to section 771(a)(1)(B) for the following vintage year. Such allowances shall be distributed ratably among small LDCs based on historic emissions in accordance with the same measure of such emissions applied to each such small LDC for the relevant vintage year under subsection (b)(2) of this section. (2)

Uses

A small LDC receiving allowances under this section shall use such allowances exclusively for the following purposes: (A)Cost-effective programs to achieve electricity savings, provided that such savings shall not be transferred or used for compliance with any renewable electricity standard established under the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.). (B)Deployment of technologies to generate electricity from renewable energy resources, provided that any Federal renewable electricity credits issued based on generation supported under this section shall be submitted to the Federal Energy Regulatory Commission for voluntary retirement and shall not be used for compliance with the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.). (C)Assistance programs to reduce electricity costs for low-income residential ratepayers of such small LDC, provided that such assistance is made available equitably to all residential ratepayers below a certain income level, which shall not be higher than 200 percent of the poverty line (as that term is defined in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)). (D)Costs of compliance associated with the enactment of this title. (3)

Requirements

As part of the regulations promulgated under subsection (g), the Administrator shall prescribe— (A)after consultation with the Federal Energy Regulatory Commission, requirements to ensure that programs and projects under paragraph (2)(A) and (B) are consistent with the standards established by, and effectively supplement electricity savings and generation of electricity from renewable energy resources achieved by, the Combined Efficiency and Renewable Electricity Standard established by law; (B)eligibility criteria and guidelines for consumer assistance programs for low-income residential ratepayers under paragraph (2)(C); and (C)such other requirements as the Administrator determines appropriate to ensure compliance with the requirements of this subsection. (4)

Reporting

Reports submitted under subsection (b)(7) shall include, in accordance with such requirements as the Administrator may prescribe— (A)a description of any facilities deployed under paragraph (2)(A), the quantity of resulting electricity generation from renewable energy resources; (B)an assessment demonstrating the cost-effectiveness of, and electricity savings achieved by, programs supported under paragraph (2)(B); and (C)a description of assistance provided to low-income retail ratepayers under paragraph (2)(C). (f)

Rural electric cooperatives, consumer, or publicly owned small LDCs

(1)

Distribution

(A)

In general

The Administrator shall, in accordance with this subsection, distribute emission allowances allocated pursuant to section 771(d)(7) for the following vintage year. (B)

Method

Allowances described in subparagraph (A) shall be distributed ratably, among rural electric cooperatives and consumer-owned or publicly owned electricity local distribution companies that meet the definition of the term small LDC based on historic emissions, in accordance with the same measure of those emissions applied to each such rural electric cooperative for the relevant vintage year under subsection (b)(2). (2)

Uses

A small LDC receiving allowances under this section shall use the allowances only for— (A)cost-effective programs to achieve electricity savings, on the condition that such savings shall not be transferred or used for compliance with any renewable electricity standard established under the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.); (B)deployment of technologies to generate electricity from renewable energy resources, on the condition that any Federal renewable electricity credits issued based on generation supported under this section shall— (i)be submitted to the Federal Energy Regulatory Commission for voluntary retirement; and (ii)not be used for compliance with the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.); and (C)assistance programs to reduce electricity costs for low-income residential ratepayers of the small LDC, on the condition that the assistance is made available equitably to all residential ratepayers below a certain income level, which shall not be higher than 200 percent of the poverty line (as defined in section 673 of the Community Services Block Grant Act (42 U.S.C. 9902). (g)

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.

773.

Natural gas consumers

(a)

Definition

For purposes of this section, 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, 2015, and each calendar year thereafter through 2028, the Administrator shall distribute to natural gas local distribution companies for the benefit of retail ratepayers the quantity of emission allowances allocated for the following vintage year pursuant to section 771(a)(2). 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 on a pro rata basis 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 on a pro rata basis 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 and may not be used to support natural gas sales or deliveries to entities or persons other than such ratepayers. (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 on a pro rata basis based on natural gas deliveries to each class; and (B)equitably among individual ratepayers within each ratepayer class. (3)

Limitation

A natural gas local distribution company shall not use the value of emission allowances distributed under this section 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 section to provide rebates, it shall, to the maximum extent practicable, provide such rebates with regard to the fixed portion of ratepayers’ bills or as a fixed creditor rebate on natural gas 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)

Certain intracompany deliveries

If a natural gas local distribution company makes an intracompany delivery of natural gas to a customer that is not a covered entity, for which such company is required to hold emission allowances under section 722, such customer shall, for purposes of this section, be considered to be a retail ratepayer and a member of a ratepayer class to be determined by the relevant State regulatory authority (or other entity with authority to regulate or set natural gas rates, in the case of a company not regulated by a State regulatory authority). (6)

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, 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 in accordance with this subsection. (2)

Plans

Not later than April 30, 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 accordance with the requirements of this section. (3)

Reports

Not later than June 30, 2017, and each calendar year thereafter through 2031, each natural gas local distribution company shall submit a report to the Administrator, approved by the relevant State regulatory authority or other entity charged with regulating the retail natural gas rates of such company, describing the disposition of the value of any emission allowances received by such 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)

Auditing

(1)

Administrator audit report

Each year, the Administrator shall audit a significant representative sample of natural gas local distribution companies to ensure that emission allowances distributed under this section have been used exclusively for the benefit of retail ratepayers and that such companies are complying with the requirements of this section. In selecting companies for audit, the Administrator shall take into account any credible evidence of noncompliance with such requirements. 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. (2)

GAO audit report

Not later April 30, 2015 and every 3 years thereafter through April 30, 2026, the Comptroller General of the United States, incorporating results from the Administrators’ audit report and other relevant information including distribution company reports, shall conduct an in-depth evaluation and make available to the public a report on the investments made pursuant to subsection (c). Said report shall be made available to the State regulatory authority, or the entity with authority to regulate or set retail natural gas rates in the case of a natural gas distribution company that is not regulated by a State regulatory authority, and shall include a description how the distribution companies in the audit meet or fail to meet the requirement of subsection (c), including for investments made in cost-effective end-use energy efficiency programs, the lifetime and annual energy saving benefits, and capacity benefits of said programs. (3)

Administrator cost containment report

Not later April 30, 2015, and every 3 years thereafter through April 30, 2026, the Administrator shall transmit a report to Congress containing an evaluation of the disposition of the value of emission allowances received pursuant to this subsection and recommendations of ways to more effectively direct the value of allowances to reduce costs for consumers, contain the overall costs of the greenhouse gas emissions reduction program, and meet the pollution reduction targets of the Act. The Administrator shall make available to the public such report, including by publishing such report on the Internet. (g)

Enforcement

A violation of any requirement of this section, irrespective of approval by a State regulatory authority, 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.

774.

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 would be emitted as a result of the combustion of a fuel. (2)

Cost-effective

The term cost-effective has the meaning given that term in section 773(a). (b)

Allocation

The Administrator shall distribute among the States, in accordance with this section, the quantity of emission allowances allocated pursuant to section 771(a)(3). The Administrator shall distribute a percentage of such allowances determined by the Administrator, after consultation with the Secretary of the Interior, pursuant to subsection (f). (c)

Distribution among States

The Administrator shall distribute emission allowances among the States under this section each year on a pro rata basis 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 energy 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 supported 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)

Distribution to Indian tribes

Not later than 18 months after the date of enactment of this title, the Administrator shall, in consultation with the Secretary of the Interior and Indian tribes, promulgate regulations establishing a program to distribute the emission allowances made available to Indian tribes under this section. (g)

Enforcement

(1)

In general

If the Administrator determines that a State or Indian tribe is not in compliance with this section, the Administrator may withhold a portion of the emission allowances, the quantity of which is equal to up to twice the quantity of the allowances that the State or Indian tribe failed to use in accordance with the requirements of this section, that such State or Indian tribe would otherwise be eligible to receive under this section in later years. (2)

Withheld allowances

(A)

States

Allowances withheld from States pursuant to this subsection shall be distributed among the remaining States on a pro rata basis in accordance with the formula in subsection (c). (B)

Indian tribes

Allowances withheld from Indian tribes pursuant to this subsection shall be distributed among the remaining Indian tribes on a pro rata basis in accordance with the program established under subsection (f).

775.

Domestic fuel production

(a)

Purpose

The purpose of this section is to provide emission allowance rebates to petroleum refineries in the United States in a manner that promotes energy efficiency and a reduction in greenhouse gas emissions at such facilities. (b)

Definitions

In this section: (1)

Emissions

The term emissions includes direct emissions from fuel combustion, process emissions, and indirect emissions from the generation of electricity, steam, and hydrogen used to produce the output of a petroleum refinery or the petroleum refinery sector. (2)

Petroleum refinery

The term petroleum refinery means a facility classified under code 324110 of the North American Industrial Classification System of 2002. (3)

Small business refiner

The term small business refiner means a refiner that meets the applicable Federal refinery capacity and employee limitations criteria described in section 45H(c)(1) of the Internal Revenue Code of 1986 (as in effect on the date of enactment of this section and without regard to section 45H(d)). Eligibility of a small business refiner under this paragraph shall not be recalculated or disallowed on account of (i) its merger with another small business refiner or refiners after December 31, 2002 or (ii) its acquisition of another small business refiner (or refinery of such refiner) after December 31, 2002. (c)

Distribution of allowances

The Administrator shall distribute allowances pursuant to this section to owners and operators of petroleum refineries, including small business refiners, in the United States. (d)

Distribution schedule

The Administrator shall distribute emission allowances pursuant to the regulations issued under subsection (e) for each vintage year no later than October 31 of the preceding calendar year. (e)

Regulations

(1)

In general

Not later than 3 years after the date of enactment of this title, the Administrator, in consultation with the Administrator of the Energy Information Administration, shall promulgate regulations in accordance with the purpose of this section that establish separate formulas for distribution of emission allowances provided to— (A)petroleum refineries pursuant to section 771(a)(4)(A); and (B)small business refiners pursuant to section 771(a)(4)(B). (2)

Considerations

In establishing the formulas under paragraph (1), the Administrator shall consider— (A)the relative complexity of refinery processes and appropriate mechanisms to take energy efficiency and greenhouse gas reductions into account; (B)direct emissions from fuel combustion; (C)process emissions; (D)indirect emissions for the generation of electricity, steam, and hydrogen used to produce the output of a petroleum refinery; and (E)emissions from the combustion of products produced at a petroleum refinery or by the petroleum refinery sector. (3)

Excess distribution

If the electricity provider for a petroleum refinery received a free allocation of emission allowances pursuant to section 771(a)(1), the Administrator shall take the free allocation into account when establishing the applicable formula under this subsection to avoid rebates to a petroleum refinery for costs that the Administrator determines were not incurred by the petroleum refinery because the allowances were— (A)freely allocated to the electricity provider of the petroleum refinery; and (B)used for the benefit of the petroleum refinery.

776.

Consumer protection

(a)

Consumer rebates

(1)

Establishment of fund

There is established in the Treasury a separate account, to be known as the Consumer Rebate Fund). (2)

Availability of amounts

All amounts deposited in the Consumer Rebate Fund shall be available without further appropriation or fiscal year limitation. (3)

Distribution of amounts

Beginning in 2026, for each year after deposits are made in the Consumer Rebate Fund pursuant to section 771(b)(2)(A), the President shall use the funds in accordance with Federal statutory authority to provide relief to consumers and others affected by the enactment of the Clean Energy Jobs and American Power Act (and amendments made by that Act). (b)

Energy refund program

(1)

Establishment of fund

There is established in the Treasury a separate account, to be known as the Energy Refund Account). (2)

Availability of amounts

All amounts deposited in the Energy Refund Account shall be available without further appropriation or fiscal year limitation. (3)

Distribution of amounts

For each year after deposits are made to the Energy Refund Account pursuant to section 771(b)(2)(B), the President shall use the funds in accordance with Federal statutory authority to offset energy cost impacts on low- and moderate-income households.

777.

Exchange for State-issued allowances

(a)

In general

Not later than 1 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 the later of December 31, 2011, or the date that is 9 months after the first auction under section 778, 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; (3)provide that the Federal emission allowances disbursed pursuant to this section shall be deducted from the allowances to be auctioned pursuant to section 771(b); and (4)require that, once exchanged, the credit or other instrument be retired for purposes of use under the program by or for which it was originally issued. (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.

778.

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 4 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) by promulgating new regulations. 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 (in constant 2005 dollars) 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. (f)

Small business refiner reserve

The Administrator shall, in accordance with this subsection, issue regulations setting aside a specified number of allowances, as determined by the Administrator, that small business refiners may purchase at the average auction price and may use to demonstrate compliance pursuant to section 722. These regulations shall provide the following: (1)

Amount

The Administrator shall place in the small business refiner reserve account allowances that are to be sold at auction pursuant to the allocations under section 771 in an amount equal to— (A)for each of vintage years 2012 and 2013, 6.2 percent of the emission allowances established under section 721(a); (B)for each of vintage years 2014 and 2015, 5.4 percent of the emission allowances established under section 721(a); and (C)for each of vintage years 2016 through 2024, 4.9 percent of the emission allowances established under section 721(a). (2)

Allowed purchases

From January 1 of the calendar year that matches the vintage year for which allowances have been placed in the reserve, through January 14 of the following year, small business refiners (as defined in section 775(b)) may purchase allowances from this reserve at the price determined pursuant to paragraph (3). (3)

Price

The price for allowances purchased from this reserve shall be the average auction price for allowances of the same vintage year purchased at auctions conducted pursuant to this section during the 12 months preceding the purchase of the allowances. (4)

Use of allowances

Allowances purchased from this reserve shall only be used by the purchaser to demonstrate compliance pursuant to section 722 for attributable greenhouse gas emissions in the calendar year that matches the vintage year of the purchased allowance. Allowances purchased from this reserve may not be banked, traded or borrowed. (5)

Limitations on purchase amount

The Administrator, by regulation adopted after public notice and an opportunity for comment, shall establish procedures to distribute the ability to purchase allowances from the reserve fairly among all small business refiners interested in purchasing allowances from this reserve so as to address the potential that requests to purchase allowances exceed the number of allowances available in the reserve. This regulation may place limits on the number of allowances a small business refiner may purchase from the reserve. (6)

Unsold allowances

Vintage year allowances not sold from the reserve on or before January 15 of the calendar year following the vintage year shall be sold at an auction conducted pursuant to this section no later than March 31 of the calendar year following the vintage year. If significantly more allowances are being placed in the reserve than are being purchased from the reserve several years in a row, the Administrator may adjust either the percent of allowances placed in the reserve or the date by which allowances may be purchased from the reserve.

779.

Auctioning allowances for other entities

(a)

Consignment

Any entity holding emission allowances or compensatory allowances may request that the Administrator auction, pursuant to section 778, 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 778. The Administrator may permit the entity offering the allowance for sale to condition the sale of its allowances pursuant to this section on a minimum reserve price that is different than the reserve auction price set pursuant to section 778(d). (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.

780.

Commercial deployment of carbon capture and permanent sequestration technologies

(a)

Definitions

In this section: (1)

Carbon capture and permanent sequestration

The term carbon capture and permanent sequestration shall— (A)have such meaning as the Administrator shall determine by regulation; and (B)include— (i)permanent geological sequestration; and (ii)conversion of captured carbon dioxide to a stable form that will safely and permanently sequester the carbon dioxide. (2)

Enhanced hydrocarbon recovery

(A)

In general

The term enhanced hydrocarbon recovery means a process by which oil, methane, or other natural gases are recovered by the injection of carbon dioxide into a geologic formation. (B)

Exclusion

The term enhanced hydrocarbon recovery does not include the in situ generation of a new hydrocarbon. (3)

Qualifying electric generating unit

The term qualifying electric generating unit means an electric utility unit— (A)that derives at least 50 percent of the annual fuel input of the unit from— (i)coal or waste coal; (ii)petroleum coke; or (iii)any combination of those 2 fuels; and (B)(i)that has a nameplate capacity of 200 megawatts or more; or (ii)in the case of retrofit applications, the carbon capture and permanent sequestration technology of which is applied to the flue gas or fuel gas stream from at least 200 megawatts of the total nameplate generating capacity of the unit. (4)

Qualifying industrial source

The term qualifying industrial source means a source that— (A)is not a qualifying electric generating unit; (B)absent carbon capture and permanent sequestration, would emit greater than 50,000 tons per year of carbon dioxide; and (C)does not produce a liquid transportation fuel from a solid fossil-based feedstock. (5)

Treated generating capacity

(A)

In general

The term treated generating capacity means the portion of the total generating capacity of an electric generating unit (or industrial source, measured by such method as the Administrator may designate to be equivalent to the calculation under subparagraph (B)) for which the flue gas or fuel gas is treated by the carbon capture and permanent sequestration technology. (B)

Calculation

In determining the treated portion of flue gas or fuel gas of an electric generating unit under subparagraph (A), the Administrator shall multiply the nameplate capacity of the unit by the ratio that— (i)the mass of flue gas or fuel gas that is treated by the carbon capture and permanent sequestration technology; bears to (ii)the total mass of the flue gas or fuel gas that is produced when the unit is operating at maximum capacity. (b)

Regulations

Not later than 2 years after the date of enactment of this title, the Administrator shall promulgate regulations providing for the distribution of emission allowances allocated under section 771(a)(6), pursuant to the requirements of this section, to support the commercial deployment of carbon capture and permanent sequestration technologies in electric power generation and industrial operations. (c)

Eligibility criteria and method of distribution

(1)

Eligibility

For an owner or operator of a project to be eligible to receive emission allowances under this section, the project shall— (A)implement carbon capture and permanent sequestration technology— (i)at a qualifying electric generating unit that, upon implementation of the carbon capture and permanent sequestration technology, will achieve an emission limitation that is at least a 50-percent reduction in emissions of the carbon dioxide produced by— (I)the unit, measured on an annual basis, as determined by the Administrator; or (II)in the case of retrofit applications described in subsection (a)(2)(B)(ii), the treated portion of flue gas from the unit, measured on an annual basis, as determined by the Administrator; or (ii)at a qualifying industrial source that, upon implementation, will achieve an emission limitation that is at least a 50-percent reduction in emissions of the carbon dioxide produced by the emission point, measured on an annual basis, as determined by the Administrator; (B)(i)geologically sequester carbon dioxide at a site that meets all applicable permitting and certification requirements for permanent geological sequestration; or (ii)pursuant to such requirements as the Administrator may prescribe by regulation, convert captured carbon dioxide to a stable form that will safely and permanently sequester the carbon dioxide; (C)meet all other applicable State, tribal, and Federal permitting requirements; and (D)be located in the United States. (2)

Method of distribution

(A)

Period

The Administrator shall distribute emission allowances allocated under section 771(a)(6) to eligible projects for each of the first 10 calendar years for which each eligible project is in commercial operation. (B)

Bonus allowance formula for electric generating units

(i)

Phase i distribution

For each project that is certified under subsection (h), the quantity of emission allowances that the Administrator shall distribute for a calendar year to the owner or operator of the eligible project shall be equal to the quotient obtained by dividing— (I)the product obtained by multiplying— (aa)the number of metric tons of carbon dioxide emissions avoided through carbon capture and permanent sequestration of emissions by the project for a particular year, as determined pursuant to such methodology as the Administrator shall prescribe by regulation; and (bb)a bonus allowance value that is assigned to the project under subsection (d)(2); by (II)the average fair market value of an emission allowance during the calendar year preceding the earlier of— (aa)the year during which the project captured and sequestered the carbon dioxide emissions; or (bb)the year in which the project receives an advanced distribution of emission allowances under subsection (h)(3)(B). (ii)

Phase ii distribution

For each project that qualifies under subsection (e), the quantity of emission allowances that the Administrator shall distribute for a calendar year to the owner or operator of the eligible project shall be determined through— (I)reverse auction, as prescribed by regulation under subsection (e)(3); or (II)if the Administrator decides not to distribute allowances through a reverse auction, an alternate distribution method established by regulation under subsection (e)(4). (C)

Formula for industrial sources

For each project that qualifies under subsection (g), the quantity of emission allowances that the Administrator shall distribute for a calendar year to the owner or operator of the eligible project shall be determined in accordance with subsection (g)(2). (D)

Consistency

The Administrator shall develop a method of distribution for each category of eligible projects under this paragraph in a manner that is consistent with the certification and distribution requirements under subsection (h). (d)

Phase i distribution to electric generating units

(1)

Applicability

(A)

In general

Subject to subparagraph (B), this subsection shall apply to projects that are undertaken at qualifying electric generating units that the Administrator determines to be eligible to receive emission allowances under this section. (B)

Capacity

The total cumulative generating capacity of the projects described in subparagraph (A) shall be equal to approximately 20 gigawatts of the treated generating capacity. (2)

Bonus allowance values

(A)

First tranche

(i)

In general

The first tranche shall include the first 10 gigawatts of treated generating capacity undertaken at qualifying electric generating units that receive emission allowances under this section. (ii)

Certain units

For an eligible project achieving carbon capture and permanent sequestration of 90 percent or more of the carbon dioxide that otherwise would be emitted by the unit, the bonus allowance value shall be $96 per ton of carbon dioxide emissions avoided through the use of carbon capture and permanent sequestration. (iii)

Bonus allowance value

The Administrator shall establish, by regulation, a bonus allowance value for each rate of carbon capture and permanent sequestration achieved by an eligible project— (I)beginning at a minimum of $50 per ton for a 50-percent rate; and (II)varying in direct proportion with increasing rates of carbon capture and permanent sequestration up to $96 per ton for an 90-percent rate. (B)

Second tranche

(i)

In general

The second tranche shall include the second 10 gigawatts of treated generating capacity undertaken at qualifying electric generating units that receive emission allowances under this section. (ii)

Certain units

For an eligible project achieving the carbon capture and permanent sequestration of 90 percent or more of the carbon dioxide that otherwise would be emitted by the eligible project, the bonus allowance value shall be $85 per ton of carbon dioxide emissions avoided through the use of capture and permanent sequestration. (iii)

Bonus allowance value

The Administrator shall establish, by regulation, a bonus allowance value for each rate of carbon capture and permanent sequestration achieved by an eligible project— (I)beginning at a minimum of $50 per ton for a 50-percent rate; and (II)varying in direct proportion with increasing rates of carbon capture and permanent sequestration up to $85 per ton for a 90-percent rate. (C)

Increase in bonus allowance value

For an eligible project that commences commercial operation by not later than January 1, 2017, and that meets the eligibility criteria under subsection (c), the otherwise-applicable bonus allowance value under this paragraph shall be increased by $10, if the owner or operator of the eligible project submits to the Administrator by not later than January 1, 2012, a notification of the intent to implement carbon capture and permanent sequestration technology at a qualifying electric generating unit in accordance with subsection (c). (D)

Reduction

(i)

In general

For a carbon capture and permanent sequestration project sequestering in a geological formation for purposes of enhanced hydrocarbon recovery, the Administrator, by regulation, shall reduce the applicable bonus allowance value under this paragraph to reflect the lower net cost of the project, as compared to permanent sequestration into geological formations solely for purposes of sequestration. (ii)

Assessment of net cost

For the purpose of this subparagraph, an assessment of net cost of a project shall account for the cost of the injection of carbon dioxide, or other method of enhanced hydrocarbon recovery, that would have otherwise been undertaken in the absence of the carbon capture and permanent sequestration project under consideration. (E)

Adjustments

The Administrator shall annually adjust for monetary inflation the bonus allowance values established under this paragraph. (F)

Measurement

The Administrator shall measure the tranches and capture levels for assigning the bonus allowance values under this subsection based on the treated generating capacity of the qualifying electric generating units and qualifying industrial sources that receive emission allowances under this subsection. (G)

Average fair market value

(i)

In general

The Administrator and the Secretary of Energy may jointly determine that the average fair market value for emission allowances or the bonus allowances have been too low or too high to achieve efficient and cost-effective commercial deployment of carbon capture and permanent sequestration technology in a given calendar year. (ii)

Action on determination

On making a determination under clause (i), the Administrator may— (I)promulgate regulations to adjust the bonus allowance value under this paragraph; or (II)distribute an appropriate quantity of emission allowances allocated under section 771(a)(6) from any future vintage year. (e)

Phase II distribution to electric generating units

(1)

Application

This subsection shall apply only to the distribution of emission allowances for carbon capture and permanent sequestration projects undertaken at qualifying electric generating units and qualifying industrial sources after the treated generating capacity threshold identified under subsection (d)(1) is reached. (2)

Regulations

Not later than 2 years before the date on which the capacity threshold identified in subsection (d)(1) is projected to be reached, the Administrator shall promulgate regulations to govern the distribution of emission allowances to the owners or operators of eligible projects under this subsection. (3)

Reverse auctions

(A)

In general

Except as provided in paragraph (4), the regulations promulgated pursuant to paragraph (2) shall provide for the distribution of emission allowances to the owners or operators of eligible projects under this subsection through at least 2 reverse auctions, each of which shall be held not less frequently than once each calendar year. (B)

Requirements

(i)

Projects at industrial sources

The Administrator shall annually establish a reverse auction for projects at industrial sources, which may not participate in other auctions. (ii)

Other auctions

The Administrator may establish a separate auction for each of not more than 5 different project categories, as defined based on— (I)coal type; (II)capture technology; (III)geological formation type; (IV)new unit versus retrofit application; (V)such other factors as the Administrator may prescribe; or (VI)any combination of the factors described in subclauses (I) through (V). (iii)

Efficient distribution

The Administrator shall establish procedures for the auction of emission allowances under this subparagraph to ensure that the establishment of separate auctions for different project categories will not unduly impede the efficient and expeditious distribution of emission allowances to eligible projects under this subsection. (iv)

Minimum rates

The Administrator may establish appropriate minimum rates of carbon capture and permanent sequestration for the treated generating capacity of a project in implementing this subparagraph. (C)

Auction process

At each reverse auction under this paragraph— (i)the Administrator shall solicit bids from eligible projects; (ii)owners or operators of eligible projects participating in the auction shall submit a bid, including the desired level of carbon dioxide permanent sequestration incentive per ton and the estimated quantity of carbon dioxide that the project will permanently sequester during a 10-year period; and (iii)the Administrator shall select bids within each auction for the permanent sequestration quantity submitted, beginning with the eligible project for which the bid is submitted for the lowest level of permanent sequestration incentive on a per-ton basis and meeting such other requirements as the Administrator may specify, until the amounts available for the reverse auction are committed. (D)

Form of distribution

The Administrator shall distribute emission allowances to the owners or operators of eligible projects selected through a reverse auction under this paragraph pursuant to a formula equivalent to the formula contained in subsection (c)(2)(B), except that the bonus allowance value that is bid by the applicable entity shall be substituted for the bonus allowance values described in subsection (c)(2). (4)

Alternative distribution method

(A)

In general

If the Administrator determines that a reverse auction will not result in efficient and cost-effective commercial deployment of carbon capture and permanent sequestration technologies, the Administrator, pursuant to regulations under paragraph (2) or (5), shall prescribe a schedule for the provision of bonus allowances to the owners or operators of eligible projects under this subsection, in accordance with the requirements of this paragraph. (B)

Multiple tranches

The Administrator shall divide emission allowances available for distribution to the owners or operators of eligible projects into a series of tranches, each of which— (i)shall support the deployment of a specified quantity of cumulative electric generating capacity using carbon capture and permanent sequestration technology; and (ii)shall not be greater than 10 gigawatts of treated generating capacity. (C)

Method of distribution

The Administrator shall distribute emission allowances within each tranche, on a first-come, first-served basis— (i)based on the date of full-scale operation of carbon capture and permanent sequestration technology; and (ii)pursuant to a formula that— (I)is similar to the formula contained in subsection (c)(2)(C), except that the Administrator may prescribe bonus allowance values different than those described in subsection (c)(2) based on the criteria established under subparagraph (E); and (II)establishes the number of emission allowances to be distributed per ton of carbon dioxide sequestered by the project. (D)

Requirements

For each tranche established pursuant to subparagraph (B), the Administrator shall establish a schedule for distributing emission allowances that— (i)is based on a sliding scale that provides higher bonus allowance values for projects achieving higher rates of carbon capture and permanent sequestration for the treated generation capacity at the unit; (ii)for each carbon capture and permanent sequestration rate, establishes a bonus allowance value that is lower than that established for the applicable rate for the previous tranche (or, in the case of the first tranche, than that established for the applicable rate under subsection (d)(2)); and (iii)may establish different bonus allowance levels for not more than 5 different project categories, as defined based on— (I)coal type; (II)capture and transportation technology; (III)geological formation type; (IV)new unit versus retrofit application; (V)such other factors as the Administrator may prescribe; or (VI)any combination of the factors described in subclauses (I) through (V). (E)

Criteria for establishing bonus allowance values

In establishing bonus allowance values under this paragraph, the Administrator shall seek to cover not more than the reasonable incremental capital and operating costs of a project that are attributable to implementation of carbon capture and permanent sequestration technologies and carbon transportation technologies, taking into account— (i)the reduced cost of compliance with section 722; (ii)the reduced cost associated with sequestering in a geological formation for purposes of enhanced hydrocarbon recovery, as compared to permanent sequestration into geological formations solely for purposes of sequestration; (iii)the relevant factors defining the project category; and (iv)such other factors as the Administrator determines to be appropriate. (5)

Revision of regulations

The Administrator shall review and, as appropriate, revise the applicable regulations under this subsection not less frequently than once every 8 years. (f)

Limits for certain electric generating units

(1)

Definitions

In this subsection, the terms covered EGU and initially permitted have the meanings given those terms in section 812. (2)

Covered egus initially permitted from 2009 through 2014

For a covered EGU that is initially permitted during the period beginning on January 1, 2009, and ending on December 31, 2014, the Administrator shall reduce the quantity of emission allowances that the owner or operator of the covered EGU would otherwise be eligible to receive under this section as follows: (A)In the case of a covered EGU commencing operation on or before January 1, 2019, if the date in clause (ii)(I) is earlier than the date in clause (ii)(II), by the product obtained by multiplying— (i)20 percent; and (ii)the number of years, if any, that have elapsed between— (I)the earlier of— (aa)January 1, 2020; and (bb)the date that is 5 years after the commencement of operation of the covered EGU; and (II)the first year that the covered EGU achieves (and thereafter maintains) an emission limitation that is at least a 50-percent reduction in emissions of carbon dioxide produced by the unit, measured on an annual basis, as determined in accordance with section 812(b)(2). (B)In the case of a covered EGU commencing operation after January 1, 2019, by the product obtained by multiplying— (i)20 percent; and (ii)the number of years, if any, that have elapsed between— (I)the commencement of operation of the covered EGU; and (II)the first year that the covered EGU achieves (and thereafter maintains) an emission limitation that is at least a 50-percent reduction in emissions of carbon dioxide produced by the unit, measured on an annual basis, as determined in accordance with section 812(b)(2). (3)

Covered egus initially permitted from 2015 through 2019

The owner or operator of a covered EGU that is initially permitted during the period beginning on January 1, 2015, and ending on December 31, 2019, shall be ineligible to receive emission allowances under this section if the covered EGU, on commencement of operations (and thereafter), does not achieve and maintain an emission limitation that is at least a 50-percent reduction in emissions of carbon dioxide produced by the covered EGU, measured on an annual basis, as determined in accordance with section 812(b)(2). (4)

Egus receiving advanced distribution

(A)

In general

For an EGU that receives an advanced distribution of emission allowances, the Administrator shall reduce and recover, as applicable, the quantity of emission allowances that the owner or operator of the EGU has received and remains eligible to receive under this section, which shall be equal to the product obtained by multiplying— (i)20 percent; and (ii)the number of years, if any, that have elapsed between— (I)the date that is 18 months after— (aa)in the case of an EGU that was initially permitted during the period beginning on January 1, 2009, and ending on December 31, 2014, the date of commencement of operation of the EGU; or (bb)in the case of an EGU that was initially permitted prior to January 1, 2009, the date that is 3 years after the date on which the project owner receives an advanced distribution for that EGU under subsection (h)(3)(B); and (II)the first year that the EGU achieves (and thereafter maintains) an emission limitation that is at least a 50-percent reduction in emissions of carbon dioxide produced by the EGU, measured on an annual basis. (B)

Extension

(i)

In general

If an owner or operator of an EGU that receives an advanced distribution of emission allowances determines that the owner or operator will not be able to achieve at least a 50-percent reduction in emissions of carbon dioxide produced by the EGU, as measured on an annual basis, by the date specified in subparagraph (A)(ii)(I), the owner or operator may petition the Administrator to extend that date by not more than 18 months. (ii)

Time of submission of petition

The owner or operator shall submit a petition described in clause (i) to the Administrator as soon as practicable after the date on which the basis for the petition arises. (iii)

Conditions for extension

The Administrator shall prescribe, by regulation, the conditions under which an extension under clause (i) may be granted, including— (I)an inability of an EGU to sequester at the site, despite due diligence having been undertaken; and (II)legal challenges to the implementation of the carbon capture and permanent sequestration technology. (g)

Industrial sources

(1)

Emission allowances

The Administrator— (A)may distribute not more than 15 percent of the emission allowances allocated under section 771(a)(6) for any vintage year to the owners or operators of eligible industrial sources to support the commercial-scale deployment of carbon capture and permanent sequestration technologies at those sources; and (B)notwithstanding any other provision of law— (i)may distribute to eligible industrial sources not more than 15 percent of the emission allowances allocated under section 771(a)(6) for any vintage year in the second tranche of phase I; but (ii)may not distribute those allowances for any vintage year in the first tranche of phase I. (2)

Distribution

(A)

In general

The Administrator shall prescribe, by regulation, requirements for the distribution of emission allowances to the owners or operators of industrial sources under this subsection, based on a bonus allowance formula that awards emission allowances to qualifying projects on the basis of tons of carbon dioxide captured and permanently sequestered. (B)

Method

The Administrator may provide for the distribution of emission allowances pursuant to— (i)a reverse auction method similar to the method described in subsection (e)(3), including the use of separate auctions for different project categories; or (ii)an incentive schedule similar to the schedule described in subsection (e)(4), which shall ensure that incentives are established so as to satisfy the requirement described in subsection (e)(4)(E). (3)

Revision of regulations

The Administrator shall review and, as appropriate, revise the regulations under this subsection not less frequently than once every 8 years. (h)

Certification and distribution

(1)

Certification

(A)

Request

(i)

Phase i; alternative distribution method

In the case of a qualifying project that is eligible to receive allowances under phase I or under subsection (e)(4), at any time prior to placing a carbon capture and permanent sequestration project into commercial operation, the owner or operator of the planned project may request from the Administrator a certification that the project is eligible to receive emission allowances under this section. (ii)

Reverse auctions

In the case of a qualifying project that wins a reverse auction under subsection (e) or (g), within a reasonably brief period following completion of the auction (as specified by the Administrator), the owner or operator of the qualifying project shall request from the Administrator a certification that the project is eligible to receive emission allowances under this section. (iii)

Eligible projects

Eligible projects in phase I and phase II may receive certification under this paragraph. (iv)

Issuance

Not later than 90 days after the date on which the Administrator determines that the owner or operator of the planned project has submitted complete documentation pursuant to subparagraph (B), the Administrator shall issue a certification described in this subparagraph— (I)if the owner or operator demonstrates a commitment to construct and operate a project that satisfies— (aa)the eligibility criteria of subsection (c); and (bb)the requirements of this paragraph; and (II)that is based on the consideration by the Administrator of the documentation submitted pursuant to subparagraph (B), as well as other relevant information, as determined by the Administrator, in consultation with the owner or operator. (B)

Documentation

(i)

In general

The Administrator shall prescribe, by regulation, the documentation necessary for making a determination of project eligibility for the certification under subparagraph (A), including— (I)in the case of a planned project receiving an advanced distribution of emission allowances, a commitment to implement carbon and permanent sequestration technology upon commencement of operation, to meet the eligibility requirements of (c)(1) by not later than 18 months after the date of commencement of operation; (II)technical information regarding the carbon capture and permanent sequestration technology, coal type, geological formation type (if applicable), and other relevant design features that are planned for the project; (III)the annual reductions in carbon dioxide emissions that the carbon capture and permanent sequestration technology is projected to achieve during each of the first 10 years that the project achieves commercial operation; (IV)a demonstration that the owner or operator is committed to both constructing and operating the planned project on a timeline marked by reasonable milestones, through the completion of 1 of the actions specified in subparagraph (C)(iii); (V)the amount of Federal funding the project owner has received, if any, to cover the costs of constructing a project that is eligible under this paragraph; and (VI)an assessment of the costs of constructing the project, which shall serve as a basis for the determination of the Administrator regarding advanced distributions under paragraph (3)(C). (ii)

Nonretrofit application

In the case of a project that is not a retrofit application, the assessment of costs described in clause (i)(VI) shall include an assessment of the costs of constructing the electric generating unit or industrial source that will produce the flue gas or fuel gas to be treated by the carbon capture and permanent sequestration technology. (C)

Commitment

(i)

In general

Subject to clause (ii), the completion of any 1 of the qualifying actions specified under clause (iii) shall constitute a commitment to construct and operate a planned carbon capture and permanent sequestration project. (ii)

Condition

In the case of a qualifying action specified in subclause (I) or (II) of clause (iii), the completion of such an action may be subject to a condition that the Administrator will issue a certification under this paragraph for the distribution of emission allowances to the project. (iii)

Qualifying actions

Qualifying actions under this subparagraph shall include— (I)the execution of— (aa)a commitment by lenders or other appropriate entities to finance the project, which may be subject to customary closing conditions that are associated with the execution of the commitment; (bb)an authorization by a State regulatory authority to allow recovery, from the retail customers of such electric utility, of the costs of the project by a State-regulated electric utility that plans to construct the project; or (cc)an authorization by a State legislature to allow recovery, from the retail customers of electric utilities that are required to purchase some or all of the electricity from the project pursuant to State law, of the costs of the project, on the conditions that the project has been approved by the legislature and, under State law, retail electric providers are required collectively to purchase all of the net electric output from the project; and (II)a commitment by the owner or operator of the project to execute a surety bond in sufficient amounts by not later than 2 years after the date on which the Administrator issues the certification for the project. (D)

Content of certification

The Administrator shall prescribe, by regulation, the required content of each certification issued under this paragraph, including— (i)the annual reductions in carbon dioxide emissions that the carbon capture and sequestration technology the owner or operator of the planned project commits to achieve during each of the first 10 years that the project is in commercial operation, as specified in section 812; (ii)the construction and operating milestones to which the owner or operator of the planned project commits; (iii)a certification that the documentation submitted under subparagraph (B) is true and accurate; (iv)for those sources that have received advanced distribution of emission allowances under paragraph (3)(B), the repayment periods that the Administrator has specified pursuant to paragraph (3)(D)(v) as of the effective date of the certification; and (v)such other requirements as may be necessary to govern the advanced distribution of emission allowances between the Administrator and the owner or operator of the planned project, subject to the requirements of this subsection. (E)

Failure to request certification

(i)

In general

An owner or operator may elect not to request a certification on the eligibility of a planned project under subparagraph (A) prior to the commercial operation of the project. (ii)

Determination by Administrator

If an owner or operator elects not to request a certification under clause (i), the Administrator shall make a determination regarding whether the project satisfies the eligibility requirements of subsection (c) at the time that the Administrator makes a determination regarding the annual distribution of emission allowances under paragraph (3)(A). (2)

Reservation of emission allowances

(A)

Amount

(i)

In general

For each project that receives a certification of eligibility under paragraph (1), the Administrator shall reserve on a first-come, first-served basis a portion of the emission allowances that are allocated for the deployment of carbon capture and permanent sequestration technology under section 771(a)(6). (ii)

Determination

The reservation of emission allowances for a particular eligible project under this paragraph shall be equal to the number of emission allowances that the project would be entitled to receive under the applicable distribution method under this section upon commercial operation of the carbon capture and permanent sequestration technology, as determined by the Administrator based on— (I)the applicable bonus allowance value; (II)the number of tons of carbon dioxide emissions projected to be avoided through the use of carbon capture and permanent sequestration technologies during each calendar year under paragraph (1)(B)(i)(II); and (III)a discount rate to account for the increase in the monetary inflation that may be expected to occur during each of the relevant 10 calendar years, as determined by the Administrator. (B)

Termination of reservation

(i)

In general

A reservation of emission allowances for a particular project under subparagraph (A) shall terminate if the Administrator determines that the owner or operator has failed to achieve a reasonable number of milestones for commencing construction or commercial operation of the project, as specified under paragraph (1)(B)(i)(III). (ii)

Reduced quantity of carbon dioxide captured and sequestered

If the quantity of carbon dioxide emissions avoided through the operation of the carbon capture and permanent sequestration project on average over 3 consecutive calendar years is less than the quantity specified for those calendar years under subparagraph (A), the reservation of emission allowances for the project under subparagraph (A) shall be reduced in future years by the difference between— (I)the quantity of carbon dioxide emissions avoided through operation of the carbon capture and permanent sequestration project on average over the applicable 3 consecutive years; and (II)the quantity specified under subparagraph (A) for the applicable years. (iii)

Availability

The Administrator shall immediately make available to other eligible projects emission allowances for which the Administrator has terminated an emission allowance reservation for a particular project under this subparagraph. (3)

Distribution process

(A)

Annual distribution

(i)

In general

The Administrator shall distribute the emission allowances to eligible projects on an annual basis. (ii)

Basis

The annual distribution of emission allowances shall be based on the total tons of carbon dioxide emissions avoided through operation of the carbon capture and permanent sequestration project during each of the first 10 years of commercial operation, in accordance with subsection (c)(2). (iii)

Total distribution amount

The total amount of emission allowances distributed to an eligible project for each of the first 10 years of commercial operation may be greater than, or less than, the quantity of emissions allowances that the Administrator has reserved for the eligible project under paragraph (2). (iv)

Reports

(I)

In general

Except as provided in subparagraph (B), the Administrator shall make each annual distribution of emission allowances by not later than 90 days after the date on which the owner or operator of a project submits to the Administrator a report regarding the tons of carbon dioxide emissions avoided for that year through operation of the carbon capture and permanent sequestration project. (II)

Requirement

A report under subclause (I) shall be verified in accordance with regulations to be promulgated by the Administrator. (B)

Advanced distribution

(i)

In general

The Administrator may provide an advanced distribution of emission allowances to the projects— (I)that receive emission allowances under the phase I distributions authorized by subsection (d); and (II)for which the Administrator has issued a certification of eligibility under paragraph (1). (ii)

Requirements

An advanced distribution of emission allowances for a particular project shall be provided— (I)prior to the operational phase of the project, at an appropriate milestone that best ensures the expeditious deployment of the carbon capture and permanent sequestration technology, as determined by the Administrator; (II)in a quantity that equals a percentage, as specified in subparagraph (C), of the total number of emission allowances that the Administrator has reserved for that project during the 10-year period of commercial operation; and (III)using allowances that are drawn— (aa)from the current vintage year; or (bb)if the allowances are exhausted from the current vintage year, in order from successive vintage years, beginning with the most proximate future vintage year. (iii)

Reports

(I)

In general

The owner or operator of a planned project that receives an advanced distribution of emission allowances shall submit to the Administrator, not later than 90 days after the end of each calendar year, a report describing the tons of carbon dioxide emissions avoided for that year through operation of the carbon capture and permanent sequestration project , compared to the total tons of carbon dioxide emissions generated by the unit on which the planned project is implemented. (II)

Requirement

A report under subclause (I) shall be verified in accordance with regulations promulgated by the Administrator. (III)

Avoidance of duplicative reporting

If the unit on which a planned project is implemented already submits the information required by subclause (I) to the Administrator pursuant to another reporting requirement, the owner or operator of the planned project may refer the Administrator to the other submission in which the required information is provided. (C)

Percentages

(i)

In general

Subject to clauses (ii) and (iii), the Administrator shall apply the following percentages for determining the advanced distribution of emission allowances: (I)70 percent of the emission allowance reservation for the first tranche under subsection (d)(2)(A). (II)50 percent of the emission allowance reservation for the second tranche under subsection (d)(2)(B). (ii)

Costs less than value of allowances

If the costs described in clause (iii) are less than the monetary value of allowances represented by the percentages described in clause (i) at the time of advanced distribution, the advanced distribution shall be limited to an amount that is equivalent to the costs described in clause (iii). (iii)

Costs

(I)

In general

For retrofit projects, the advanced distribution shall equate to 100 percent of the costs of permitting, design or engineering, labor, materials, land, and equipment associated with the construction and installation of the system to capture, compress, transport, and store carbon dioxide (including design changes to the associated generating unit needed to accommodate the carbon dioxide capture and compression system). (II)

New electric generating units

For new projects— (aa)the advanced distribution shall equate to 100 percent of the incremental permitting, design or engineering, labor, materials, land, and equipment cost differences between— (AA)a new coal power plant with carbon capture and storage; and (BB)a new coal power plant without carbon capture and storage in the location where the new coal power plant is being constructed, and for the same intended service territory absent carbon capture and storage; and (bb)it shall be the responsibility of the organization that is requesting advanced distributions to provide to the Administrator a cost estimate for both the new coal power plant with carbon capture and storage and a new coal power plant without carbon capture and storage. (III)

Reduction

For the purposes of this subparagraph, the costs under this clause shall be reduced by the amounts documented under paragraph (1)(B)(i)(V). (D)

Reconciliation for advanced payments

(i)

In general

In the case of a project that receives an advanced distribution of emission allowances under this paragraph, the Administrator shall distribute annually the remainder of emission allowances reserved under paragraph (2) once the carbon capture and permanent sequestration technology begins commercial operation. (ii)

Timing of distribution

The annual distribution of emission allowances under clause (i) shall take place not later than 60 days after the end of each calendar year. (iii)

Calculation of remaining distribution

Subject to clauses (iv) and (v), the remaining distribution referred to in clause (i) shall annually be calculated upward or downward as the difference between— (I)the number of allowances that were reserved for the project in the relevant calendar year under paragraph (2)(A)(ii)(II); and (II)the number of allowances that the project would be eligible to receive under the bonus allowance formula described in subsection (c)(2)(B)(i) based on the tons of carbon dioxide emissions that were avoided through operation of the carbon capture and permanent sequestration project during the relevant calendar year. (iv)

Number of allowances

For purposes of clauses (iii)(II) and (viii)(I), for the purposes of calculating the number of allowances under subsection (c)(2)(B)(i), the Administrator shall enter the average fair market value of emission allowances in the year specified under subsection (c)(2)(B)(i)(II)(bb)). (v)

Methods of reconciliation

(I)

In general

If, in any calendar year, the number of tons of carbon dioxide emissions projected to be avoided for that year under paragraph (1)(B)(i)(III) is greater than the number of tons of carbon dioxide emissions that were actually avoided by a project during that year, based on the report submitted to the Administrator under paragraph (3)(B)(iii), the difference may be accounted for by— (aa)the owner or operator of the project capturing and storing an additional quantity of emissions that cumulatively exceeds the difference between— (AA)the number of tons of carbon dioxide emissions that were projected to be avoided for the relevant calendar year under paragraph (1)(B)(i)(II); and (BB)the number of tons of carbon dioxide emissions that were actually avoided through operation of the project during that year; (bb)the Administrator adjusting the annual distributions under clause (iii), on the condition that the reduction shall be sufficient to account for the difference described in this subclause within the period specified by the Administrator in subclause (II); or (cc)the owner or operator of the project making a repayment in accordance with clause (vi). (II)

Period

Compliance with subclause (I)(aa) shall occur over a period to be specified by the Administrator, but not to exceed 18 months. (III)

Interest

The Administrator may apply an appropriate rate of interest to the repayment requirement under this clause. (vi)

Alternate repayment by allowances or cash

If the owner or operator of the project elects to comply by repaying in accordance with clause (v)(I)(aa), during the period specified by the Administrator under clause (v)(II), the owner or operator shall repay the Administrator an amount of allowances or cash (as calculated under clause (viii)) if— (I)the number of tons of carbon dioxide emissions that were actually avoided through operation of the project during that period is less than the number necessary to rectify the difference described in clause (v)(I); and (II)the number of allowances remaining reserved for a project is insufficient to adjust for the difference under clause (iii). (vii)

Milestones

If the Administrator determines that the owner or operator failed to achieve a milestone for commencing construction or commercial operation of the project (as specified in paragraph (1)(B)), the owner or operator shall repay the Administrator an amount of allowances or cash calculated under clause (viii). (viii)

Calculation

The repayments required under clauses (vi)(I) and (vii) shall be equal to, at the option of the owner or operator of the project— (I)the difference between the numbers of allowances described in subclauses (I) and (II) of clause (iii); or (II)a cash payment in an amount equal to the product obtained by multiplying— (aa)the difference between the numbers of allowances described in subclauses (I) and (II) of clause (iii); and (bb)the average fair market value of an emission allowance during the year in which the repayment would be made under clause (vi). (ix)

Use of repaid amounts

The Administrator shall use amounts received as repayments under this subparagraph to support the deployment of carbon capture and permanent sequestration. (i)

Limitations

(1)

In general

Emission allowances shall be distributed under this section only for tons of carbon dioxide emissions that are captured and sequestered in accordance with this section. (2)

Period

A qualifying project may receive annual emission allowances under this section only for the first 10 years of operation. (3)

Capacity

(A)

In general

Approximately 72 gigawatts of total cumulative treated generating capacity may receive emission allowances under this section. (B)

Allowance surplus

On reaching the cumulative capacity described in subparagraph (A), any emission allowances that are allocated for carbon capture and permanent sequestration deployment under section 771(a)(6) and are not yet obligated under this section shall be treated as emission allowances not designated for distribution for purposes of section 771(b)(2). (j)

Exhaustion of account and annual roll-over of surplus emission allowances

(1)

In general

In distributing emission allowances under this section, the Administrator shall ensure that eligible projects receive distributions of emission allowances for the first 10 years of commercial operation. (2)

Different vintage years

(A)

Determination

If the Administrator determines that the emission allowances allocated under section 771(a)(6) with a vintage year that matches the year of distribution will be exhausted once the estimated full 10-year distributions will be provided to current eligible participants, the Administrator shall provide to new eligible projects emission allowances from vintage years after the year of the distribution. (B)

Diversity factors

If the Administrator provides allowances to new eligible projects under subparagraph (A), the Administrator shall promulgate regulations to prioritize new eligible projects that are distinguished from prior recipients of allowances by 1 or more of the following diversity factors (without regard to order): (i)Location in a coal-producing region that provides a majority of coal to the project. (ii)Coal type, including waste coal. (iii)Capture and transportation technologies. (iv)Geological formations. (v)New units and retrofit applications. (k)

Davis-Bacon compliance

(1)

In general

All laborers and mechanics employed on projects funded directly by or assisted in whole or in part by this section through the use of emission allowances shall be paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code. (2)

Authority

With respect to the labor standards specified in this subsection, the Secretary of Labor shall have the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) and section 3145 of title 40, United States Code.

781.

Oversight of allocations

(a)

In general

Not later than January 1, 2014, and every 2 years thereafter, the Comptroller General of the United States shall carry out a review of programs administered by the Federal Government that distribute emission allowances or funds from any Federal auction of allowances. (b)

Contents

Each such report shall include a comprehensive evaluation of the administration and effectiveness of each program, including— (1)the efficiency, transparency, and soundness of the administration of each program; (2)the performance of activities receiving assistance under each program; (3)the cost-effectiveness of each program in achieving the stated purposes of the program; and (4)recommendations, if any, for regulatory or administrative changes to each program to improve its effectiveness. (c)

Focus

In evaluating program performance, each review under this section review shall address the effectiveness of such programs in— (1)creating and preserving jobs; (2)ensuring a manageable transition for working families and workers; (3)reducing the emissions, or enhancing sequestration, of greenhouse gases; (4)developing clean technologies; and (5)building resilience to the impacts of climate change.

782.

Early action recognition

(a)

In general

Emission allowances allocated pursuant to section 771(a)(7) shall be distributed by the Administrator in accordance with this section. Not later than 1 year after the date of enactment of this title, the Administrator shall issue regulations allowing— (1)any person in the United States to exchange instruments in the nature of offset credits issued before January 1, 2009, by a State, local, or voluntary offset program with respect to which the Administrator has made an affirmative determination under section 740(a)(2), for emission allowances established by the Administrator under section 721(a); and (2)the Administrator to provide compensation in the form of emission allowances to entities, including units of local government, that do not meet the criteria of paragraph (1) and meet the criteria of this paragraph for documented early reductions or avoidance of greenhouse gas emissions or greenhouse gases sequestered before January 1, 2009, from projects or process improvements begun before January 1, 2009, where— (A)the entity publicly stated greenhouse gas reduction goals and publicly reported against those goals; (B)the entity demonstrated entity-wide net greenhouse gas reductions; and (C)the entity demonstrates the actual projects or process improvements undertaken to make reductions and documents the reductions (such as through documentation of engineering projects). (b)

Regulations

Regulations issued under subsection (a) shall— (1)provide that a person exchanging credits under subsection (a)(1) receive emission allowances established under section 721(a) in an amount for which the monetary value is equivalent to the average monetary value of the credits during the period from January 1, 2006, to January 1, 2009, as adjusted for inflation to reflect current dollar values at the time of the exchange; (2)provide that a person receiving compensation for documented early action under subsection (a)(2) shall receive emission allowances established under section 721(a) in an amount that is approximately equivalent in value to the carbon dioxide equivalent per ton value received by entities in exchange for credits under paragraph (1) (as adjusted for inflation to reflect current dollar values at the time of the exchange), as determined by the Administrator; (3)provide that only reductions or avoidance of greenhouse gas emissions, or sequestration of greenhouse gases, achieved by activities in the United States between January 1, 2001, and January 1, 2009, may be compensated under this section, and only credits issued for such activities may be exchanged under this section; (4)provide that only credits that have not been retired or otherwise used to meet a voluntary or mandatory commitment, and have not expired, may be exchanged under subsection (a)(1); (5)require that, once exchanged, the credit be retired for purposes of use under the program by or for which it was originally issued; and (6)establish a deadline by which persons must exchange the credits or request compensation for early action under this section. (c)

Participation

Participation in an exchange of credits for allowances or compensation for early action authorized by this section shall not preclude any person from participation in an offset credit program established under part D.

783.

Establishment of Deficit Reduction Fund

(a)

Deficit reduction fund

There is established in the Treasury of the United States a fund, to be known as the Deficit Reduction Fund. (b)

Disbursements

No disbursement shall be made from the Deficit Reduction Fund except pursuant to an appropriation Act.

.

C

Additional greenhouse gas standards

121.

Greenhouse gas standards

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

122.

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 substance 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 limits

To maintain the integrity of the class II, group II limits, 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 consumption allowance, production allowance, or destruction offset credit 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)(A), 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)Not later than 1 year 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 metric 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)(A), 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 3 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)(ii)(III), 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 year 2004, 2005, or 2006, less exportation, less transfers and sales to persons who produced class II substances in the United States during calendar year 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 year 2004, 2005, or 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, or to allocate such allowances for essential uses pursuant to subsection (d). 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 and governing the allocation of withheld allowances for essential uses subject to the criteria under subsection (d). (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. (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 required to be 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 by promulgating new regulations. 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 by promulgating new regulations. 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 or 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 or consumption is 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 metric 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 limits and the integrity of the class II, group II limits. 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, pursuant to the requirements of part D of title VII and based on the carbon dioxide equivalent value of the substance destroyed, 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. If such projects are added to the list under section 733, the issuance of offset credits for such projects under part D of title VII shall be governed by the requirements of such part D, while the issuance of offset credits for such projects under this paragraph shall be governed by the requirements of this paragraph. 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 the provisions of this section regarding auction and nonauction sale of allowances, to the extent consistent with any applicable multilateral agreement to which the United States is a party or otherwise adheres, the Administrator may allocate (and in the case of medical devices, shall determine whether to allocate) allowances withheld from auction or nonauction sale under subsection (b)(4)(E) for essential uses pursuant to the following requirements: (1)

Medical devices

The Administrator, after notice and opportunity for public comment, and in consultation with the Commissioner of Food and Drugs, shall determine whether to allocate withheld allowances for the production and consumption of class II, group II substances solely for use in medical devices approved and determined to be essential by the Commissioner. Not later than 20 months after the date of enactment of this title, the Commissioner shall approve and determine essential medical devices. For purposes of this section, section 601(8)(A) shall not apply to metered dose inhalers. (2)

Aviation and space vehicle safety

The Administrator, after notice and opportunity for public comment, and in consultation with the Administrator of the Federal Aviation Administration or the Administrator of the National Aeronautics and Space Administration, may allocate withheld allowances for the production and consumption of class II, group II substances solely for aviation and space flight safety purposes. (3)

Fire suppression

The Administrator, after notice and opportunity for public comment, may allocate withheld allowances for the production and consumption of class II, group II substances solely for fire suppression purposes. Paragraphs (1) and (2) of subsection (g) of section 604 shall apply to class II, group II substances in the same manner and to the same extent as such provisions apply to the substances specified in such subsection. (4)

National security

The Administrator, after notice and opportunity for public comment, and in consultation with the Secretary of Defense, may allocate withheld allowances for the production and consumption of class II, group II substances for use as may be necessary to protect the national security interests of the United States if the Administrator, in consultation with the Secretary of Defense, finds that adequate substitutes are not available and that the production or consumption of such substance is necessary to protect such national security interest. (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 section 616, 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)

Multilateral 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 multilateral 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 multilateral 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 or 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 year 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 year 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 year 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 use 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 or consumption of class II, group II substances, the Administrator may use 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 may use funds to establish and carry out a program, to be known as the Best-in-Class Appliances Deployment Program— (i)to provide bonus payments to retailers or distributors for sales of best-in-class high-efficiency household appliance models, high-efficiency installed building equipment, and high-efficiency consumer electronics, with the goals of— (I)accelerating the reduction in consumption of hydrochlorofluorocarbons (measured on a global warming potential-weighted basis); (II)reducing life-cycle costs for consumers; (III)encouraging innovation; and (IV)maximizing energy savings and public benefit; (ii)to provide bounties to retailers and manufacturers for the replacement, retirement, and recycling of old, inefficient, and environmentally harmful products; and (iii)to provide premium awards to manufacturers for developing and producing new super-efficient best-in-class products. (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 of products

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 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 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 in the text and heading. (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.

123.

Black carbon

(a)

Study of black carbon emissions

(1)

Definition of black carbon

In this subsection, the term black carbon means any light-absorbing graphitic (or elemental) particle produced by incomplete combustion. (2)

Study

The Administrator, in consultation with the Secretary of Energy, the Secretary of State, and the heads of the National Oceanic and Atmospheric Administration, the National Aeronautics and Space Administration, the United States Agency for International Development, the National Institutes of Health, the Centers for Disease Control and Prevention, National Institute of Standards and Technology, and other relevant Federal departments and agencies and representatives of appropriate industry and environmental groups, shall conduct a 4-phase study of black carbon emissions, the phases of which shall be the following: (A)

Phase I–universal definition

The Administrator shall conduct phase I of the study under this subsection to carry out measures to establish for the scientific community standard definitions of the terms— (i)black carbon; and (ii)organic carbon. (B)

Phase II–sources and technologies

The Administrator shall conduct phase II of the study under this subsection to summarize the available scientific and technical information concerning— (i)the identification of the major sources of black carbon emissions in the United States and throughout the world; (ii)an estimate of— (I)the quantity of current and projected future black carbon emissions from those sources; and (II)the net climate effects of the emissions; (iii)the most recent scientific data relevant to the public health- and climate-related impacts of black carbon emissions and associated emissions of organic carbon, nitrogen oxides, and sulfur oxides from the sources identified under clause (i); (iv)the most effective control strategies for additional domestic and international reductions in black carbon emissions, taking into consideration lifecycle analysis, cost-effectiveness, and the net climate impact of technologies, operations, and strategies, such as— (I)diesel particulate filters on existing diesel on- and off-road engines; and (II)particulate emission reduction measures for marine vessels; (v)carbon dioxide equivalency factors, global/regional modeling, or other metrics to compare the global warming and other climate effects of black carbon emissions with carbon dioxide and other greenhouse gas emissions; and (vi)the health benefits associated with additional black carbon emission reductions. (C)

Phase III–international funding

The Administrator shall conduct phase III of the study under this subsection— (i)to summarize the amount, type, and direction of all actual and potential financial, technical, and related assistance provided by the United States to foreign countries to reduce, mitigate, or otherwise abate— (I)black carbon emissions; and (II)any health, environmental, and economic impacts associated with those emissions; and (ii)to identify opportunities, including action under existing authority, to achieve significant black carbon emission reductions in foreign countries through the provision of technical assistance or other approaches. (D)

Phase IV–research and development opportunities

The Administrator shall conduct phase IV of the study under this subsection for the purpose of providing to Congress recommendations regarding— (i)areas of focus for additional research for cost-effective technologies, operations, and strategies with the highest potential to reduce black carbon emissions and protect public health in the United States and internationally; and (ii)actions that the Federal Government could take to encourage or require additional black carbon emission reductions. (3)

Reports

The Administrator shall submit to Congress— (A)by not later than 180 days after the date of enactment of this Act, a report describing the results of phases I and II of the study under subparagraphs (A) and (B) of paragraph (2); (B)by not later than 270 days after the date of enactment of this Act, a report describing the results of phase III of the study under paragraph (2)(C); and (C)by not later than 1 year after the date of enactment of this Act, a report describing the recommendations developed for phase IV of the study under paragraph (2)(D). (4)

Authorization of appropriations

There are authorized to be appropriated such sums as are necessary to carry out this subsection. (b)

Black carbon mitigation

Title VIII of the Clean Air Act (as amended by section 113 of division A) is amended by adding at the end the following: E

Black carbon

851.

Black carbon

(a)

Domestic black carbon mitigation

(1)

In general

Taking into consideration the public health and environmental impacts of black carbon emissions, including the effects on global and regional warming, the Arctic, and other snow and ice-covered surfaces, the Administrator shall— (A)not later than 2 years after the date of enactment of this part, propose— (i)regulations applicable to emissions of black carbon under the existing authorities of this Act; or (ii)a finding that existing regulations promulgated pursuant to this Act adequately regulate black carbon emissions, which finding may be based on a finding that existing regulations, in the judgment of the Administrator— (I)address those sources that both contribute significantly to the total emissions of black carbon and provide the greatest potential for significant and cost-effective reductions in emissions of black carbon, under the existing authorities; and (II)reflect the greatest degree of emission reduction achievable through application of technology that will be available for such sources, giving appropriate consideration to cost, energy, and safety factors associated with the application of such technology; and (B)not later than 3 years after the date of enactment of this part, promulgate final regulations under the existing authorities of this Act or finalize the proposed finding. (2)

Applicability of regulations

Regulations promulgated under paragraph (1) shall not apply to specific types, classes, categories, or other suitable groupings of emission sources that the Administrator finds are subject to adequate regulation. (b)

Authorization of appropriations

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

.

124.

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: limit 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..

125.

State programs

Title VIII of the Clean Air Act (as amended by section 123(b)) is amended by adding at the end the following: F

Miscellaneous

861.

State programs

(a)

In general

Notwithstanding section 116, if a Federal auction is conducted, by the deadline of March 31, 2011, as established in section 778, no State or political subdivision thereof shall implement or enforce a comprehensive greenhouse gas emission limitation program that covers any capped emissions emitted during the years 2012 through 2017. (b)

Deadline

Notwithstanding section 116, in the event the March 31, 2011 auction is delayed, no State or political subdivision thereof shall enforce a comprehensive greenhouse gas emission limitation program that covers any capped emissions emitted during the period that commences at least 9 months after the date of the first auction as set out in section 778, through 2017. (c)

Definition of comprehensive greenhouse gas emission limitation program

For purposes of this section, the term comprehensive greenhouse gas emission limitation 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 tradable instruments for each unit of greenhouse gases emitted during a compliance period. For purposes of this section, a comprehensive greenhouse gas emission limitation 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 tradable instruments in the nature of emission allowances. For purposes of this section, the term comprehensive greenhouse gas emission limitation 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.

862.

Grants for support of air pollution control programs

The Administrator is authorized to make grants to air pollution control agencies pursuant to section 105 for purposes of assisting in the implementation of programs to address global warming established under the Clean Energy Jobs and American Power Act.

863.

Reducing acid rain and mercury pollution

(a)

In general

Not later than 18 months after the date of enactment of this part, the Administrator shall submit to Congress a report that analyzes the effects of different carbon dioxide reduction strategies and technologies on the emissions of mercury, sulfur dioxide, and nitrogen oxide, which cause acid rain, particulate matter, ground-level ozone, mercury contamination, and other environmental problems. (b)

Inclusions

The report under subsection (a) shall include— (1)an assessment of a variety of carbon reduction technologies, including the application of various carbon capture and sequestration technologies for new and existing power plants; (2)an assessment of the current scientific and technical understanding of the interplay between the various technologies and emissions of air pollutants; (3)identification of hurdles to strategies that could cost-effectively reduce emissions of multiple pollutants; and (4)appropriate recommendations of the Administrator, if any.

.

126.

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. (4)If the court determines that any action of the Administrator is arbitrary, capricious, or otherwise unlawful, and remands the matter to the Administrator, the Administrator shall complete final action on remand within an expeditious time period not longer than the time originally allowed for the action or 1 year, whichever is less, unless the court on motion determines that a shorter or longer period is necessary, appropriate, and consistent with the purposes of this Act. The court of appeals shall have jurisdiction to enforce a deadline for action on remand under this paragraph. . (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)).. (c)

Petition for review

Section 307(b)(1) of the Clean Air Act (42 U.S.C. 7607(b)(1)) is amended by inserting after the second sentence the following: Any person may file a petition for review of action by the Administrator as provided in this subsection..

127.

Forestry sector greenhouse gas accounting

(a)

In general

The Administrator, in consultation with the Secretary of Agriculture and the Secretary of the Interior, shall provide an annual accounting of sequestration and emissions of greenhouse gases from forests and forest products, including— (1)sequestration, including sequestration resulting from natural forest growth or other natural ecosystem processes, forest management practices, afforestation, or reforestation; (2)emissions resulting from forest management practices, timber harvest, deforestation, or conversion between forest types or to cropland or other nonforested uses; and (3)transfers of carbon through forest products from the forest sector to other sectors, including the waste, manufacturing and milling, and energy sectors. (b)

Scale of accounting

Accounting under subsection (a) shall be provided, at a minimum, for— (1)Federal, other public, tribal, and private land of ownerships larger than 5,000 acres on which forestry is regularly practiced; and (2)any forest land on which conversion described in subsection (a)(2) occurs. (c)

Basis of accounting

Accounting under subsection (a) shall be based on information available from existing sources, including information— (1)collected for tax purposes; (2)from the Forest Inventory Analysis of the Forest Service; (3)collected for regulatory purposes; and (4)collected as part of standard industry practices, such as industry updates on inventories of timber. (d)

Authority of Administrator

(1)

In general

Nothing in this section authorizes the Administrator to require new generation of data by forest land owners. (2)

Need for additional information

If the Administrator determines that additional information not available from current sources is necessary to carry out the purposes of this section, the Administrator shall submit to Congress a report that describes the necessary information and new authority that would be required to collect that information.

128.

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) of subsection (b), 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, title VII, or title VIII,; and (B)in the first sentence of paragraph (3), by striking or VI and inserting VI, VII, or 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, . (f)

Technical amendment

Title IV of the Clean Air Act (relating to noise pollution) (42 U.S.C. 7641 et seq.)— (1)is amended by redesignating sections 401 through 403 as sections 901 through 903, respectively; and (2)is redesignated as title IX and moved to appear at the end of that Act. (g)

Amendments clarifying regulation of greenhouse gases under Clean Air Act

(1)

Air quality criteria and control techniques

Section 108(a) of the Clean Air Act (42 U.S.C. 7408(a)) is amended by adding at the end the following: (3)

Prohibition on listing of greenhouse gases

On and after the date of enactment of this paragraph, the Administrator shall not include on the list of pollutants under this subsection any greenhouse gas on the basis of any effect the greenhouse gas may have on climate change. . (2)

Hazardous air pollutants

Section 112 of the Clean Air Act (42 U.S.C. 7412) is amended by adding at the end the following: (20)

Greenhouse gas limitation

No greenhouse gas may be added to the list of hazardous air pollutants under this section unless the greenhouse gas meets the criteria described in subsection (b) independent of the effects of the greenhouse gas on climate change. . (3)

International air pollution

Section 115(c) of the Clean Air Act (42 U.S.C. 7415(c)) is amended— (A)by striking (c) This section and inserting the following: (3)

Applicability

(A)

Foreign countries

This section ; and (B)by adding at the end the following: (B)

Greenhouse gases

This section does not apply to any greenhouse gas with respect to the effects of the greenhouse gas on climate change. . (4)

Definition of major emitting facility

Section 169(1) of the Clean Air Act (42 U.S.C. 7479(1)) is amended— (A)in the first sentence, by inserting (other than any greenhouse gas), or 25,000 tons per year of carbon dioxide equivalent for any greenhouse gas or combination of greenhouse gases after one hundred tons per year or more of any air pollutant,; and (B)in the second sentence, by inserting (other than any greenhouse gas), or 25,000 tons per year of carbon dioxide equivalent for any greenhouse gas or combination of greenhouse gases after two hundred fifty tons per year or more of any air pollutant. (5)

Permits

Title V of the Clean Air Act (42 U.S.C. 7661 et seq.) is amended by adding at the end the following:

508.

Emissions of greenhouse gases

Notwithstanding any provision of this title or title III, no stationary source shall be required to apply for, or operate pursuant to, a permit under this title solely because the stationary source, including an agricultural source, emits less than 25,000 tons per year of any greenhouse gas or combination of greenhouse gases that are regulated solely because of the effect of those gases on climate change.

. (h)

Containers of class I and class II substances

Section 608(c) of the Clean Air Act (42 U.S.C. 7671g(c)) is amended by adding at the end the following: (3)

Containers of class I and class II substances

(A)

Definition of refillable container

In this paragraph, the term refillable container means a container that is designed to be refilled. (B)

Regulations

Not later than 2 years after the date of enactment of this paragraph, the Administrator shall revise regulations promulgated under this section to require that only a refillable container may be used to hold 20 pounds or more of a class I substance or class II substance. .

129.

Davis-Bacon compliance

(a)

In general

Notwithstanding any other provision of law and in a manner consistent with other provisions in this Act, to receive emission allowances or funding under this Act, or the amendments made by this Act, the recipient shall provide reasonable assurances that all laborers and mechanics employed by contractors and subcontractors on projects funded directly by or assisted in whole or in part by and through the Federal Government pursuant to this Act, or the amendments made by this Act, or by any entity established in accordance with this Act, or the amendments made by this Act, including the Carbon Storage Research Corporation, will be paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code (commonly known as the Davis-Bacon Act). With respect to the labor standards specified in this section, the Secretary of Labor shall have the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) and section 3145 of title 40, United States Code. (b)

Exemption

Neither subsection (a) nor the requirements of subchapter IV of chapter 31 of title 40, United States Code, shall apply to retrofitting of the following: (1)Single family homes (both attached and detached) under section 164 of division A. (2)Owner-occupied residential units in larger buildings that have their own dedicated space-conditioning systems under section 164 of division A. (3)Residential buildings (as defined in section 164(a) of division A) if designed for residential use by less than 4 families. (4)Nonresidential buildings (as defined in section 164(a) of division A) if the net interior space of such nonresidential building is less than 6,500 square feet.

D

Carbon Market Assurance

131.

Carbon market assurance

It is the sense of the Senate that there shall be a single, integrated carbon market oversight program— (1)to provide for effective and comprehensive market oversight and enforcement; (2)to lower systemic risk and protect consumers; (3)to ensure market liquidity and allowance availability; (4)to enhance the price discovery function of such markets, ensuring that the price for emission allowances and offset credits reflects the marginal cost of abatement; (5)to prevent excessive speculation that contributes to price volatility, including the establishment of robust aggregate position limits and margin requirements; (6)to ensure that market mechanisms and associated oversight support the environmental integrity of the program established under title VII of the Clean Air Act (as added by section 101 of this division); (7)to establish provisions for market transparency that provide authority, resources, and information needed to prevent fraud and manipulation in such markets; (8)to establish standards for trading as, and operation of, trading facilities; (9)to ensure a well-functioning, well-regulated market, including a futures market, designed to manage risk and facilitate investment in emission reductions; (10)to establish clear, professional standards for dealers, traders, and other market participants; (11)to provide for appropriate criminal and civil penalties; and (12)to prevent any excessive leverage by market participants that creates risk to the economy.

E

Ensuring Real Reductions in Industrial Emissions

141.

Ensuring real reductions in industrial emissions

Title VII of the Clean Air Act (as amended by section 322 of division A) is amended by adding at the end the following: F

Ensuring real reductions in industrial emissions

761.

Purposes

The purposes of this part are— (1)to promote a strong global effort to significantly reduce greenhouse gas emissions, and, through this global effort, stabilize greenhouse gas concentrations in the atmosphere at a level that will prevent dangerous anthropogenic interference with the climate system; (2)to prevent an increase in greenhouse gas emissions in countries other than the United States as a result of direct and indirect compliance costs incurred under this title; (3)to provide a rebate to the owners and operators of entities in domestic eligible industrial sectors for their greenhouse gas emission costs incurred under this title, but not for costs associated with other related or unrelated market dynamics; (4)to design such rebates in a way that will prevent carbon leakage while also rewarding innovation and facility-level investments in energy efficiency performance improvements; and (5)to eliminate or reduce distribution of emission allowances under this part when such distribution is no longer necessary to prevent carbon leakage from eligible industrial sectors.

762.

Definitions

In this part: (1)

Carbon leakage

The term carbon leakage means any substantial increase (as determined by the Administrator) in greenhouse gas emissions by industrial entities located in other countries if such increase is caused by an incremental cost of production increase in the United States resulting from the implementation of this title. (2)

Eligible industrial sector

The term eligible industrial sector means an industrial sector determined by the Administrator under section 763(b) to be eligible to receive emission allowance rebates under this part. (3)

Industrial sector

(A)

In general

The term industrial sector means any sector that— (i)is in the manufacturing sector (as defined in NAICS codes 31, 32, and 33); or (ii)is part of, or an entire, sector that beneficiates or otherwise processes (including agglomeration) metal ores, including iron and copper ores, soda ash, or phosphate. (B)

Exclusion

The term industrial sector does not include any part of a sector that extracts metal ores, soda ash, or phosphate. (4)

NAICS

The term NAICS means the North American Industrial Classification System of 2002. (5)

Output

The term output means the total tonnage or other standard unit of production (as determined by the Administrator) produced by an entity in an industrial sector. The output of the cement sector is hydraulic cement, and not clinker.

763.

Eligible industrial sectors

(a)

List

(1)

Initial list

Not later than June 30, 2011, the Administrator shall publish in the Federal Register a list of eligible industrial sectors pursuant to subsection (b). Such list shall include the amount of the emission allowance rebate per unit of production that shall be provided to entities in each eligible industrial sector in the following two calendar years pursuant to section 764. (2)

Subsequent lists

Not later than February 1, 2013, and every 4 years thereafter, the Administrator shall publish in the Federal Register an updated version of the list published under paragraph (1). (b)

Eligible industrial sectors

(1)

In general

Not later than June 30, 2011, the Administrator shall promulgate a rule designating, based on the criteria under paragraph (2), the industrial sectors eligible for emission allowance rebates under this part. (2)

Presumptively eligible industrial sectors

(A)

Eligibility criteria

(i)

In general

An owner or operator of an entity shall be eligible to receive emission allowance rebates under this part if such entity is in an industrial sector that is included in a six-digit classification of the NAICS that meets the criteria in both clauses (ii) and (iii), or the criteria in clause (iv). (ii)

Energy or greenhouse gas intensity

As determined by the Administrator, the industrial sector had— (I)an energy intensity of at least 5 percent, calculated by dividing the cost of purchased electricity and fuel costs of the sector by the value of the shipments of the sector, based on data described in subparagraph (D); or (II)a greenhouse gas intensity of at least 5 percent, calculated by dividing— (aa)the number 20 multiplied by the number of tons of carbon dioxide equivalent greenhouse gas emissions (including direct emissions from fuel combustion, process emissions, and indirect emissions from the generation of electricity used to produce the output of the sector) of the sector based on data described in subparagraph (D); by (bb)the value of the shipments of the sector, based on data described in subparagraph (D). (iii)

Trade intensity

As determined by the Administrator, the industrial sector had a trade intensity of at least 15 percent, calculated by dividing the value of the total imports and exports of such sector by the value of the shipments plus the value of imports of such sector, based on data described in subparagraph (D). (iv)

Very high energy or greenhouse gas intensity

As determined by the Administrator, the industrial sector had an energy or greenhouse gas intensity, as calculated under clause (ii)(I) or (II), of at least 20 percent. (B)

Metal and phosphate production classified under more than one naics code

For purposes of this section, the Administrator shall— (i)aggregate data for the beneficiation or other processing (including agglomeration) of metal ores, including iron and copper ores, soda ash, or phosphate with subsequent steps in the process of metal and phosphate manufacturing, regardless of the NAICS code under which such activity is classified; and (ii)aggregate data for the manufacturing of steel with the manufacturing of steel pipe and tube made from purchased steel in a nonintegrated process. (C)

Exclusion

The petroleum refining sector shall not be an eligible industrial sector. (D)

Data sources

(i)

Electricity and fuel costs, value of shipments

The Administrator shall determine electricity and fuel costs and the value of shipments under this subsection from data from the United States Census Annual Survey of Manufacturers. The Administrator shall take the average of data from as many of the years of 2004, 2005, and 2006 for which such data are available. If such data are unavailable, the Administrator shall make a determination based upon 2002 or 2006 data from the most detailed industrial classification level of Energy Information Agency’s Manufacturing Energy Consumption Survey (using 2006 data if it is available) and the 2002 or 2007 Economic Census of the United States (using 2007 data if it is available). If data from the Manufacturing Energy Consumption Survey or Economic Census are unavailable for any sector at the six-digit classification level in the NAICS, then the Administrator may extrapolate the information necessary to determine the eligibility of a sector under this paragraph from available Manufacturing Energy Consumption Survey or Economic Census data pertaining to a broader industrial category classified in the NAICS. If data relating to the beneficiation or other processing (including agglomeration) of metal ores, including iron and copper ores, soda ash, or phosphate are not available from the specified data sources, the Administrator shall use the best available Federal or State government data and may use, to the extent necessary, representative data submitted by entities that perform such beneficiation or other processing (including agglomeration), in making a determination. Fuel cost data shall not include the cost of fuel used as feedstock by an industrial sector. (ii)

Imports and exports

The Administrator shall base the value of imports and exports under this subsection on United States International Trade Commission data. The Administrator shall take the average of data from as many of the years of 2004, 2005, and 2006 for which such data are available. If data from the United States International Trade Commission are unavailable for any sector at the six-digit classification level in the NAICS, then the Administrator may extrapolate the information necessary to determine the eligibility of a sector under this paragraph from available United States International Trade Commission data pertaining to a broader industrial category classified in the NAICS. (iii)

Percentages

The Administrator shall round the energy intensity, greenhouse gas intensity, and trade intensity percentages under subparagraph (A) to the nearest whole number. (iv)

Greenhouse gas emission calculations

When calculating the tons of carbon dioxide equivalent greenhouse gas emissions for each sector under subparagraph (A)(ii)(II)(aa), the Administrator— (I)shall use the best available data from as many of the years 2004, 2005, and 2006 for which such data is available; and (II)may, to the extent necessary with respect to a sector, use economic and engineering models and the best available information on technology performance levels for such sector. (3)

Administrative determination of additional eligible industrial sectors

(A)

Updated trade intensity data

The Administrator shall designate as eligible to receive emission allowance rebates under this part an industrial sector that— (i)met the energy or greenhouse gas intensity criteria in paragraph (2)(A)(ii) as of the date of promulgation of the rule under paragraph (1); and (ii)meets the trade intensity criteria in paragraph (2)(A)(iii), using data from any year after 2006. (B)

Individual showing petition

(i)

Petition

In addition to designation under paragraph (2) or subparagraph (A) of this paragraph, the owner or operator of an entity in an industrial sector may petition the Administrator to designate as eligible industrial sectors under this part an entity or a group of entities that— (I)represent a subsector of a six-digit section of the NAICS code; and (II)meet the eligibility criteria in both clauses (ii) and (iii) of paragraph (2)(A), or the eligibility criteria in clause (iv) of paragraph (2)(A). (ii)

Data

In making a determination under this subparagraph, the Administrator shall consider data submitted by the petitioner that is specific to the entity, data solicited by the Administrator from other entities in the subsector, if such other entities exist, and data specified in paragraph (2)(D). (iii)

Basis of subsector determination

The Administrator shall determine an entity or group of entities to be a subsector of a six-digit section of the NAICS code based only upon the products manufactured and not the industrial process by which the products are manufactured, except that the Administrator may determine an entity or group of entities that manufacture a product from primarily virgin material to be a separate subsector from another entity or group of entities that manufacture the same product primarily from recycled material. (iv)

Use of most recent data

In determining whether to designate a sector or subsector as an eligible industrial sector under this subparagraph, the Administrator shall use the most recent data available from the sources described in paragraph (2)(D), rather than the data from the years specified in paragraph (2)(D), to determine the trade intensity of such sector or subsector, but only for determining such trade intensity. (v)

Final action

The Administrator shall take final action on such petition no later than 6 months after the petition is received by the Administrator.

764.

Distribution of emission allowance rebates

(a)

Distribution schedule

(1)

In general

For each vintage year, the Administrator shall distribute pursuant to this section emission allowances made available under section 771(a)(5), not later than October 31 of the preceding calendar year. The Administrator shall make such annual distributions to the owners and operators of each entity in an eligible industrial sector in the amount of emission allowances calculated under subsection (b), except that— (A)for vintage years 2012 and 2013, the distribution for a covered entity shall be pursuant to the entity’s indirect carbon factor as calculated under subsection (b)(3); (B)for vintage year 2026 and thereafter, the distribution shall be pursuant to the amount calculated under subsection (b) multiplied by, for a sector— (i)90 percent for vintage year 2026; (ii)80 percent for vintage year 2027; (iii)70 percent for vintage year 2028; (iv)60 percent for vintage year 2029; (v)50 percent for vintage year 2030; (vi)40 percent for vintage year 2031; (vii)30 percent for vintage year 2032; (viii)20 percent for vintage year 2033; (ix)10 percent for vintage year 2034; and (x)0 percent for vintage year 2035 and thereafter. (2)

Newly eligible sectors

In addition to receiving a distribution of emission allowances under this section in the first distribution occurring after an industrial sector is designated as eligible under section 763(b)(3), the owner or operator of an entity in that eligible industrial sector may receive a prorated share of any emission allowances made available for distribution under this section that were not distributed for the year in which the petition for eligibility was granted under section 763(b)(3)(A). (3)

Cessation of qualifying activities

If, as determined by the Administrator, a facility is no longer in an eligible industrial sector designated under section 763— (A)the Administrator shall not distribute emission allowances to the owner or operator of such facility under this section; and (B)the owner or operator of such facility shall return to the Administrator all allowances that have been distributed to it for future vintage years and a pro-rated amount of allowances distributed to the facility under this section for the vintage year in which the facility ceases to be in an eligible industrial sector designated under section 763. (b)

Calculation of direct and indirect carbon factors

(1)

In general

(A)

Covered entities

Except as provided in subsection (a), for covered entities that are in eligible industrial sectors, the amount of emission allowance rebates shall be based on the sum of the covered entity’s direct and indirect carbon factors. (B)

Other eligible entities

For entities that are in eligible industrial sectors but are not covered entities, the amount of emission allowance rebates shall be based on the entity’s indirect carbon factor. (C)

New entities

Not later than 2 years after the date of enactment of this title, the Administrator shall issue regulations governing the distribution of emission allowance rebates for the first and second years of operation of a new entity in an eligible industrial sector. These regulations shall provide for— (i)the distribution of emission allowance rebates to such entities based on comparable entities in the same sector; and (ii)an adjustment in the third and fourth years of operation to reconcile the total amount of emission allowance rebates received during the first and second years of operation to the amount the entity would have received during the first and second years of operation had the appropriate data been available. (2)

Direct carbon factor

The direct carbon factor for a covered entity for a vintage year is the product of— (A)the average annual output of the covered entity for the 2 years preceding the year of the distribution; and (B)the most recent calculation of the average direct greenhouse gas emissions (expressed in tons of carbon dioxide equivalent) per unit of output for all covered entities in the sector, as determined by the Administrator under paragraph (4). (3)

Indirect carbon factor

(A)

In general

The indirect carbon factor for an entity for a vintage year is the product obtained by multiplying the average annual output of the entity for the 2 years preceding the year of the distribution by both the electricity emissions intensity factor determined pursuant to subparagraph (B) and the electricity efficiency factor determined pursuant to subparagraph (C) for the year concerned. (B)

Electricity emissions intensity factor

(i)

In general

Each person selling electricity to the owner or operator of an entity in any sector designated as an eligible industrial sector under section 763(b) shall provide the owner or operator of the entity and the Administrator, on an annual basis, the electricity emissions intensity factor for the entity. The electricity emissions intensity factor for the entity, expressed in tons of carbon dioxide equivalents per kilowatt hour, is determined by dividing— (I)the annual sum of the hourly product of— (aa)the electricity purchased by the entity from that person in each hour (expressed in kilowatt hours); multiplied by (bb)the marginal or weighted average tons of carbon dioxide equivalent per kilowatt hour that are reflected in the electricity charges to the entity, as determined by the entity’s retail rate arrangements; by (II)the total kilowatt hours of electricity purchased by the entity from that person during that year. (ii)

Use of other data to determine factor

Where it is not possible to determine the precise electricity emissions intensity factor for an entity using the methodology in clause (i), the person selling electricity shall use the monthly average data reported by the Energy Information Administration or collected and reported by the Administrator for the utility serving the entity to determine the electricity emissions intensity factor. (C)

Electricity efficiency factor

The electricity efficiency factor is the average amount of electricity (in kilowatt hours) used per unit of output for all entities in the relevant sector, as determined by the Administrator based on the best available data, including data provided under paragraph (6). (D)

Indirect carbon factor reduction

If an electricity provider received a free allocation of emission allowances pursuant to section 771(a)(1), the Administrator shall adjust the indirect carbon factor to avoid rebates to the eligible entity for costs that the Administrator determines were not incurred by the eligible entity because the allowances were freely allocated to the eligible entity’s electricity provider and used for the benefit of industrial consumers. (4)

Greenhouse gas intensity calculations

The Administrator shall calculate the average direct greenhouse gas emissions (expressed in tons of carbon dioxide equivalent) per unit of output and the electricity efficiency factor for all covered entities in each eligible industrial sector every 4 years, using an average of the 5 most recent years of the best available data, from up to 7 years prior to the year in which such calculations are made. For the purpose of determining sector averages that are representative of typical market conditions during the previous 7 years of operations, such averages shall exclude data from individual years with the highest and the lowest direct greenhouse gas emissions per unit of output and electricity efficiency factors. For purposes of the lists required to be published not later than February 1, 2013, the Administrator shall use the best available data for the maximum number of years, up to 5 years, for which data are available. (5)

Determination of sectors for purposes of sectoral averages

(A)

In general

Notwithstanding the criteria used to determine eligible sectors under paragraphs (2) and (3)(C), not later than June 30, 2011, the Administrator shall, by rule, identify sectors or subsectors for purposes of calculating sector averages under paragraphs (2)(B), (3)(C), and (4), based upon, to the extent practicable in achieving the purposes of this part— (i)product produced; (ii)process employed, including distinctions based upon the extent of integration or exclusion of process steps; and (iii)the extent of use of combined heat and power technologies. (B)

Consideration of criteria

In determining what entities are comparable to a new entity under paragraph (1)(C)(i), the Administrator shall consider, to the extent practicable, the criteria set forth in subparagraph (A). (6)

Ensuring efficiency improvements

When making greenhouse gas calculations, the Administrator shall— (A)limit the average direct greenhouse gas emissions per unit of output, calculated under paragraph (4), for any eligible industrial sector to an amount that is not greater than it was in any previous calculation under this subsection; (B)limit the electricity emissions intensity factor, calculated under paragraph (3)(B) and resulting from a change in electricity supply, for any entity to an amount that is not greater than it was during any previous year; and (C)limit the electricity efficiency factor, calculated under paragraph (3)(C), for any eligible industrial sector to an amount that is not greater than it was in any previous calculation under this subsection. (7)

Data sources

For the purposes of this subsection— (A)the Administrator shall use data from the greenhouse gas registry established under section 713, where that data is available; and (B)each owner or operator of an entity in an eligible industrial sector and each department, agency, and instrumentality of the United States shall provide the Administrator with such information as the Administrator finds necessary to determine the direct carbon factor and the indirect carbon factor for each entity subject to this section. (c)

Total maximum distribution

Notwithstanding subsections (a) and (b), the Administrator shall not distribute more allowances for any vintage year pursuant to this section than are allocated for use under this part pursuant to section 765 for that vintage year. For any vintage year for which the total emission allowance rebates calculated pursuant to this section exceed the number of allowances allocated pursuant to section 765, the Administrator shall reduce each entity’s distribution on a pro rata basis so that the total distribution under this section equals the number of allowances allocated under section 765. (d)

Iron and steel sector

For purposes of this section, the Administrator shall consider as in different industrial sectors— (1)entities using integrated iron and steelmaking technologies (including coke ovens, blast furnaces, and other iron-making technologies); and (2)entities using electric arc furnace technologies. (e)

Metal, soda ash, or phosphate production classified under more than one naics code

For purposes of this section, the Administrator shall not aggregate data for the beneficiation or other processing (including agglomeration) of metal ores, soda ash, or phosphate with subsequent steps in the process of metal, soda ash, or phosphate manufacturing. The Administrator shall consider the beneficiation or other processing (including agglomeration) of metal ores, soda ash, or phosphate to be in separate industrial sectors from the metal, soda ash, or phosphate manufacturing sectors. Industrial sectors that beneficiate or otherwise process (including agglomeration) metal ores, soda ash, or phosphate shall not receive emission allowance rebates under this section related to the activity of extracting metal ores, soda ash, or phosphate. (f)

Combined heat and power

For purposes of this section, and to achieve the purpose set forth in section 761(4),(the Administrator may consider entities to be in different industrial sectors or otherwise take into account the differences among entities in the same industrial sector, based upon the extent to which such entities use combined heat and power technologies.

765.

International trade

It is the sense of the Senate that this Act will contain a trade title that will include a border measure that is consistent with our international obligations and designed to work in conjunction with provisions that allocate allowances to energy-intensive and trade-exposed industries.

.

February 2, 2010 Reported with an amendment