[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 972 Introduced in House (IH)]

114th CONGRESS
  1st Session
                                H. R. 972

  To amend the Internal Revenue Code of 1986 to reduce greenhouse gas 
emissions by requiring a Federal emission permit for the sale or use of 
     covered substances and to return funds to the American people.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 13, 2015

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

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to reduce greenhouse gas 
emissions by requiring a Federal emission permit for the sale or use of 
     covered substances and to return funds to the American people.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Managed Carbon Price Act of 2015''.

SEC. 2. GREENHOUSE GAS EMISSION SUBSTANCES.

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

            ``Subtitle L--Greenhouse Gas Emission Substances

``Sec. 9901. Condition precedent to sale or use of greenhouse gas 
                            emission substance.
``Sec. 9902. Federal emission permit.
``Sec. 9903. Definitions.
``Sec. 9904. Information reporting requirements.
``Sec. 9905. Regulations.

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

    ``(a) In General.--No covered person may sell any greenhouse gas 
emission substance except pursuant to a Federal emission permit for 
each carbon dioxide equivalent that the Administrator of the 
Environmental Protection Agency determines would be emitted from the 
combustion or other greenhouse gas emitting use of such substance.
    ``(b) Covered Person.--For purposes of this subtitle, the term 
`covered person' means--
            ``(1) in the case of coal (including lignite and peat) 
        produced from a mine in the United States, the producer of such 
        coal,
            ``(2) in the case of crude oil or petroleum products 
        received at a United States refinery, the operator of the 
        United States refinery,
            ``(3) in the case of natural gas, the first seller of such 
        natural gas,
            ``(4) in the case of any greenhouse gas emission substance 
        not described in paragraph (1), (2), or (3) produced in the 
        United States, the producer of such substance, and
            ``(5) in the case of any greenhouse gas emission substance 
        entered into the United States for consumption, use, or 
        warehousing, the person entering such substance for 
        consumption, use, or warehousing.
    ``(c) Use Treated as Sale.--
            ``(1) In general.--If any person uses a greenhouse gas 
        emission substance before the first retail sale of such 
        substance, then such person shall be liable for the purchase of 
        a Federal emission permit under section 9902 in the same manner 
        as if such substance were sold at retail on the date of such 
        use by such person pursuant to a Federal emission permit.
            ``(2) Exemption for use in further manufacture.--Paragraph 
        (1) shall not apply to use of a greenhouse gas emission 
        substance as material in the manufacture or production of, or 
        as a component part of, another article to be manufactured or 
        produced by such person.
    ``(d) Exceptions.--Subsection (a) shall not apply to--
            ``(1) a greenhouse gas emission substance to be used for 
        noncombustion agricultural purposes, or
            ``(2) a greenhouse gas emission substance with respect to 
        which a Federal emission permit has previously been purchased.
    ``(e) Importation of Carbon Intensive Goods.--
            ``(1) Greenhouse gas emission permit equivalency fees.--The 
        Secretary shall impose a greenhouse gas emission permit 
        equivalency fee on imports of carbon intensive goods that shall 
        be equivalent to the cost that domestic producers of comparable 
        carbon intensive goods incur as a result of--
                    ``(A) permit fees paid by covered persons for 
                greenhouse gas emission substances under this section, 
                and
                    ``(B) greenhouse gas emission permit equivalency 
                fees paid by importers of carbon intensive goods used 
                in the production of the comparable carbon intensive 
                goods in question.
            ``(2) Expiration.--Paragraph (1) and section 6433(b) shall 
        cease to have effect at such time as and to the extent that--
                    ``(A) an international agreement requiring 
                countries that emit greenhouse gases and produce carbon 
                intensive goods for international markets to adopt 
                equivalent measures comes into effect, and
                    ``(B) the country of export has implemented 
                equivalent measures, and the actions provided for by 
                paragraph (1) and section 6433(b) are no longer 
                appropriate.

``SEC. 9902. FEDERAL EMISSION PERMIT.

    ``(a) In General.--The Secretary shall, subject to subsection (d), 
issue Federal emission permits, as provided for in this subtitle. A 
Federal emission permit may only be obtained upon making payment to the 
Secretary.
    ``(b) Rules Relating to Permits.--For purposes of this subtitle--
            ``(1) Each Federal emission permit shall be denominated in 
        one-quarter carbon dioxide equivalents.
            ``(2) A Federal emission permit may only be purchased 
        within fourteen calendar days before or after a greenhouse gas 
        emission substance is produced or entered into the United 
        States, as the case may be.
            ``(3) Except as provided in subsection (a), a Federal 
        emission permit may not be sold, exchanged, or otherwise 
        transferred.
    ``(c) Permit Price.--
            ``(1) Initial price.--The price for obtaining a Federal 
        emission permit for emissions in 2016 is $12.50.
            ``(2) Subsequent prices.--The Secretary, after consultation 
        with the Administrator of the Environmental Protection Agency 
        and the Secretary of Energy, shall establish the price of 
        obtaining a Federal emission permit for a calendar year based 
        on a determination of the dollar amount necessary to meet the 
        emissions reductions targets specified in subsection (d).
            ``(3) 5-year price schedule.--
                    ``(A) In general.--Not later than January 1, 2016, 
                the Secretary shall publish a schedule of the prices 
                determined under paragraph (2) for obtaining a Federal 
                emission permit during each of the five years from 2017 
                to 2021. The Secretary shall publish the price for 
                obtaining a Federal emission permit in each year after 
                2020 no later than five years before January 1 of the 
                applicable year.
                    ``(B) Reduction in price if target reductions being 
                exceeded.--If the Secretary determines--
                            ``(i) that greenhouse gas emissions are 
                        being reduced at a rate that exceeds the 
                        reduction expected in national greenhouse gas 
                        emissions for the year, and
                            ``(ii) that the Federal permit price can be 
                        reduced while still attaining the national 
                        greenhouse gas emission target reductions 
                        specified in subsection (d) for the year,
                the Secretary may, at any time before the beginning of 
                the year, reduce the Federal permit price for that 
                year.
            ``(4) Increase in price if target reductions not being 
        met.--If the Secretary determines that the reduction of 
        greenhouse gas emissions is failing to meet the target 
        reductions specified in subsection (d) for a year in such 
        period, the Secretary may increase the Federal permit price for 
        permits no earlier than 2 years after the year for which the 
        determination is made.
            ``(5) Maximum and minimum price.--
                    ``(A) In general.--Not later than January 1, 2023, 
                and every 10 years thereafter, the Secretary, after 
                consultation with the Administrator of the 
                Environmental Protection Agency and the Secretary of 
                Energy, shall publish a 10-year schedule of the minimum 
                and maximum prices for Federal emissions permits.
                    ``(B) Prices specified.--For years prior to 2026, 
                the maximum and minimum price for a Federal emission 
                permit issued by the Secretary in a year may not be 
                below the minimum price or the maximum price for the 
                corresponding year specified in the following table:


----------------------------------------------------------------------------------------------------------------
                              ``Year:                                  Minimum Price is:     Maximum Price is:
----------------------------------------------------------------------------------------------------------------
2017...............................................................                $18.75                $31.25
2018...............................................................                $31.25                $43.75
2019...............................................................                $43.75                $56.25
2020...............................................................                $56.25                $68.75
2021...............................................................                $68.75                $82.25
2022...............................................................                $81.25                $93.75
2023...............................................................                $93.75               $106.25
2024...............................................................               $106.25               $118.75
2025...............................................................               $118.75              $131.25.
----------------------------------------------------------------------------------------------------------------

                    ``(C) Adjustment for inflation.--In the case of any 
                calendar year beginning after 2016, each dollar amount 
                contained in the table in subparagraph (B) shall be 
                increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost of living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year, determined by substituting 
                        `calendar year 2015' for `calendar year 1992' 
                        in subparagraph (B) thereof.
    ``(d) National Limitation.--
            ``(1) Targets.--For purposes of this section--
                    ``(A) 2016 through 2020.--The average emissions for 
                the period 2016 through 2020 shall be no more than 90 
                percent of the carbon dioxide equivalents emitted in 
                the United States in 2005.
                    ``(B) 2026 through 2030.--The average emissions for 
                the period 2026 through 2030 shall be no more than 70 
                percent of the carbon dioxide equivalents emitted in 
                the United States in 2005.
                    ``(C) 2036 through 2040.--The average emissions for 
                the period 2036 through 2040 shall be no more than 50 
                percent of the carbon dioxide equivalents emitted in 
                the United States in 2005.
                    ``(D) 2046 through 2050.--The average emissions for 
                the period 2046 through 2050 shall be no more than 30 
                percent of the carbon dioxide equivalents emitted in 
                the United States in 2005.
                    ``(E) 2056 through 2060.--The average emissions for 
                the period 2056 through 2060 shall be no more than 20 
                percent of the carbon dioxide equivalents emitted in 
                the United States in 2005.
            ``(2) Determination of 2005 levels.--For purposes of 
        subparagraph (A), the number of metric tons of carbon dioxide 
        equivalents emitted in the United States in 2005 shall be the 
        number determined under section 1605(a) of the Energy Policy 
        Act of 1992 and published by the Energy Information 
        Administration.
    ``(e) Report.--
            ``(1) In general.--Not later than the second March 1 after 
        the date of the enactment of the Managed Carbon Price Act of 
        2015, and annually thereafter, the Secretary shall publish a 
        report describing--
                    ``(A) the extent to which the United States 
                greenhouse gas emission limitations specified under 
                subsection (d) are being achieved,
                    ``(B) the United States greenhouse gas emission 
                permits sold during the previous calendar year and the 
                impact of the number of such permits on greenhouse gas 
                emissions in the United States, and
                    ``(C) the total greenhouse gas emissions worldwide 
                for the previous calendar year in relation to such 
                emissions for 2005.
            ``(2) Report details.--Such report shall include--
                    ``(A) an explanation of the methodology and 
                assumptions the Secretary has used in establishing 
                prices under this section, and
                    ``(B) an estimation, or range of estimations, of 
                the price of permits for the 10-year period following 
                the current prices published under subsection (c).

``SEC. 9903. DEFINITIONS.

    ``(a) In General.--For purposes of this subtitle--
            ``(1) Administrator.--The term `Administrator' means the 
        Administrator of the Environmental Protection Agency.
            ``(2) Carbon dioxide equivalent.--The term `carbon dioxide 
        equivalent' means, for each greenhouse gas emission substance, 
        the quantity of the greenhouse gas emission substance that the 
        Administrator determines makes the same contribution to global 
        warming as 1 metric ton of carbon dioxide.
            ``(3) Greenhouse gas emission substance.--The term 
        `greenhouse gas emission substance' means--
                    ``(A) coal (including lignite, peat, and 
                derivatives of coal), to be used as a combustion fuel,
                    ``(B) petroleum and any petroleum product, to be 
                used as a combustion fuel,
                    ``(C) natural gas (including the gasses released as 
                a result of flaring or venting such natural gas),
                    ``(D) methane,
                    ``(E) nitrous oxide,
                    ``(F) sulfur hexafluoride,
                    ``(G) a perfluorocarbon,
                    ``(H) a hydrofluorocarbon, and
                    ``(I) any other substance that is determined by the 
                Administrator to contribute to global warming to a 
                nonnegligible degree.
            ``(4) Federal emission permit.--The term `Federal emission 
        permit' means a permit required under section 9901.
            ``(5) Carbon intensive good.--The term `carbon intensive 
        good' means--
                    ``(A)(i) iron, steel, any steel mill product 
                (including pipe and tube), aluminum, cement, glass 
                (including flat, container, and specialty glass and 
                fiberglass), pulp, paper, chemicals, and industrial 
                ceramics, and
                    ``(ii) any other manufactured product that the 
                Secretary determines--
                            ``(I) is sold for purposes of further 
                        manufacture, and
                            ``(II) generates, in the course of the 
                        manufacture of the product, direct and indirect 
                        greenhouse gas emissions that are comparable 
                        (on an emissions per dollar of output basis) to 
                        emissions generated in the manufacture or 
                        production of a good identified in clause (i), 
                        and
                    ``(B) a manufactured item in which one or more 
                goods identified under subparagraph (A) are inputs and 
                the cost of production of which in the United States 
                the Secretary determines is significantly increased by 
                this subtitle.
            ``(6) Petroleum product.--The term `petroleum product' has 
        the meaning given such term in section 4612(a)(3).
    ``(b) Identification of Carbon Intensive Goods.--The determinations 
by the Secretary required by subsection (a)(5) shall be by rule.
    ``(c) Publication of Schedule.--Not later than one year after the 
date of the enactment of the Managed Carbon Price Act of 2015, the 
Administrator, in consultation with the Secretary and the Secretary of 
Energy, shall publish a schedule listing each greenhouse gas emission 
substance and the quantity of each substance required to make 1 metric 
ton of carbon dioxide. The Administrator, in consultation with the 
Secretary and the Secretary of Energy, may update such schedule from 
time to time.

``SEC. 9904. INFORMATION REPORTING REQUIREMENTS.

    ``Secretary may solicit information from covered persons regarding 
estimated future use of greenhouse gas emissions substances.

``SEC. 9905. REGULATIONS.

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

``SEC. 6433. REFUNDS OF FEDERAL EMISSION PERMIT FEE FOR CERTAIN USES.

    ``(a) In General.--If a Federal emission permit has been acquired 
with respect to a greenhouse gas emission substance pursuant to section 
9902 and the acquirer of such permit uses such substance in a manner 
that will make a negligible or no contribution to global warming, as 
determined by the Secretary in consultation with the Administrator of 
the Environmental Protection Agency, the Secretary shall pay (without 
interest) to the acquirer of such substance pursuant to such permit an 
amount equal to the amount paid for the applicable Federal emission 
permit.
    ``(b) Payments to Exporters.--The Secretary shall pay (without 
interest) to the exporter of a carbon intensive good (as defined in 
section 9903(5)) produced in the United States an amount equal to the 
cost that domestic producers of such carbon intensive goods incur as a 
result of--
            ``(1) the dollar amount paid by covered persons for Federal 
        emission permits for greenhouse gas emission substances under 
        this section 9902, and
            ``(2) greenhouse gas emission permit equivalency fees paid 
        under section 9901(e) by importers of carbon intensive goods 
        used in the production of the comparable carbon intensive goods 
        in question.''.
    (c) Failure To Obtain Permit.--Chapter 38 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new 
subchapter:

           ``Subchapter E--Greenhouse Gas Emission Substances

``Sec. 4691. Greenhouse gas emission substances.

``SEC. 4691. GREENHOUSE GAS EMISSION SUBSTANCES.

    ``(a) Imposition of Tax.--There is hereby imposed on any covered 
person who fails to obtain a Federal emission permit pursuant to 
subtitle L a tax equal to 100 percent of the dollar amount of the fee 
that would have been charged for such permit but for such failure.
    ``(b) Covered Person.--The term `covered person' has the meaning 
given such term by section 9901(b).
    ``(c) Federal Emission Permit.--The term `Federal emission permit' 
means a permit required under section 9901.
    ``(d) Coordination.--The tax imposed under this section is in 
addition to the fee imposed under subtitle L.''.
    (d) Establishment of Energy and Economic Security Trust Fund.--
            (1) Finding.--The Congress finds that revenue generated 
        from the sale of Federal emission permits must be recycled into 
        the American economy--
                    (A) to facilitate economic growth and clean energy 
                production, and
                    (B) to protect the economic security of American 
                families and communities.
            (2) Establishment of trust fund.--Subchapter A of chapter 
        98 of such Code (relating to trust fund code) is amended by 
        adding at the end the following:

``SEC. 9512. ENERGY AND ECONOMIC SECURITY TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Energy and 
Economic Security Trust Fund' (referred to in this section as the 
`Trust Fund'), consisting of such amounts as may be appropriated or 
credited to the Trust Fund as provided in this section or section 
9602(b).
    ``(b) Transfers to Trust Fund.--There is hereby appropriated to the 
Trust Fund an amount equivalent to the amounts received in the Treasury 
pursuant to subtitle L.
    ``(c) Expenditures From Trust Fund.--
            ``(1) In general.--The Secretary shall pay monthly from the 
        Trust Fund the dividend amount to each taxpayer.
            ``(2) Dividend amount.--For purposes of paragraph (1), the 
        term `dividend amount' means the sum of--
                    ``(A)(i) in the case of the taxpayer filing a joint 
                return, the individual share for the husband and the 
                individual share for the wife, and
                    ``(ii) in the case of a taxpayer other than a 
                taxpayer described in subparagraph (A), the individual 
                share, and
                    ``(B) in the case of an individual who is a 
                dependent (as defined in section 152) of the taxpayer, 
                \1/2\ of the individual share.
        For purposes of subparagraph (B), not more than 2 dependents 
        may be taken into account for each taxpayer.
            ``(3) Individual share.--For purposes of this subsection, 
        the term `individual share' means the amount determined by the 
        Secretary by dividing the total amount deposited in the Trust 
        Fund for the month by the total number of individual shares 
        payable at the end of such month.
            ``(4) Limitation.--For purposes of this subsection--
                    ``(A) In general.--No amount is payable under this 
                subsection with respect to an individual unless the 
                individual is a qualified individual.
                    ``(B) Qualified individual.--The term `qualified 
                individual' means an individual who is a lawful 
                resident of the United States on the date of such 
                payment. For purposes of ensuring that payments are 
                made under this subsection to all qualified 
                individuals, the Secretary shall consult with such 
                other Federal and State officials as the Secretary 
                determines necessary or appropriate.
                    ``(C) United states.--For purposes of subparagraph 
                (B), the United States includes the District of 
                Columbia, the Commonwealth of Puerto Rico, the Virgin 
                Islands, Guam, American Samoa, and the Commonwealth of 
                the Northern Mariana Islands.''.
    (e) Conforming and Clerical Amendments.--
            (1) The table of subchapters for chapter 38 of such Code is 
        amended by adding at the end the following new item:

         ``subchapter e. greenhouse gas emission substances''.

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

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

            (3) The table of sections for subchapter B of chapter 65 of 
        such Code is amended by adding at the end the following new 
        item:

``Sec. 6433. Refunds of Federal emission permit fee for certain 
                            uses.''.
            (4) The table of sections for subchapter A of chapter 98 of 
        such Code is amended by adding at the end the following:

``Sec. 9512. Energy and Economic Security Trust Fund.''.
    (f) Effective Date.--The amendments made by this section shall 
apply with respect to the sale of any greenhouse gas emission substance 
after December 31, 2014.
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