[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4058 Introduced in House (IH)]
<DOC>
116th CONGRESS
1st Session
H. R. 4058
To amend the Internal Revenue Code of 1986 to impose a tax on
greenhouse gas emissions, accordingly reduce tax rates on payroll, and
for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 25, 2019
Mr. Rooney of Florida (for himself and Mr. Lipinski) introduced the
following bill; which was referred to the Committee on Ways and Means,
and in addition to the Committees on Energy and Commerce, and Science,
Space, and Technology, 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 impose a tax on
greenhouse gas emissions, accordingly reduce tax rates on payroll, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Stemming Warming
and Augmenting Pay Act of 2019'' or the ``SWAP Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
TITLE I--GREENHOUSE GAS EMISSIONS
Sec. 101. Treatment of greenhouse gas emissions.
TITLE II--CARBON REDUCED PAYROLL TAX
Sec. 201. Carbon reduced payroll tax.
TITLE III--DISTRIBUTION OF REVENUES FROM TAXATION OF GREENHOUSE GAS
EMISSIONS
Sec. 301. Establishment of the Carbon Trust Fund.
Sec. 302. Appropriations from the Carbon Trust Fund.
TITLE IV--AMENDMENTS TO FEDERAL ENVIRONMENTAL STATUTES
Sec. 401. Amendments to the Clean Air Act.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Climate change threatens global stability and our
national economy.
(2) Carbon emissions are a significant contributor to these
threats and must be addressed.
(3) The United States private sector can face these
challenges and be a global leader in technology, innovation,
and efficiency.
(4) A price on carbon levels the economic playing field and
spurs adoption of less carbon-intensive practices and
technologies.
(5) Recycling revenues back to employers and employees will
neutralize the potential impacts of a tax.
TITLE I--GREENHOUSE GAS EMISSIONS
SEC. 101. TREATMENT OF GREENHOUSE GAS EMISSIONS.
(a) In General.--The Internal Revenue Code of 1986 is amended by
adding at the end the following:
``Subtitle L--Greenhouse Gas Emissions
``Part 1. Taxation of Greenhouse Gas Emissions
``Part 2. Tax Adjustments for Imports and Exports of Greenhouse Gas
Intensive Products
``PART 1--TAXATION OF GREENHOUSE GAS EMISSIONS
``Sec. 9901. Imposition of tax on combusted fossil fuel greenhouse gas
emissions.
``Sec. 9902. Imposition of tax on greenhouse gas emissions from certain
industrial processes.
``Sec. 9903. Imposition of tax on greenhouse gas emissions from certain
product uses.
``Sec. 9904. Calculation of taxable emissions.
``Sec. 9905. Credit for State payments.
``Sec. 9906. Penalties for nonpayment.
``Sec. 9907. Definitions.
``SEC. 9901. IMPOSITION OF TAX ON COMBUSTED FOSSIL FUEL GREENHOUSE GAS
EMISSIONS.
``(a) In General.--There is hereby imposed a tax on fossil fuels
produced within, or imported into, the United States.
``(b) Rate of Tax.--
``(1) Greenhouse gases that would be released if the fossil
fuel were combusted.--The tax imposed by subsection (a) shall
be the applicable amount per ton of carbon dioxide equivalent
of all greenhouse gases that would be released if the fossil
fuel were combusted.
``(2) Applicable amount of carbon dioxide equivalent
emissions.--For purposes of paragraph (1)--
``(A) For calendar year 2021, the term `applicable
amount' means $30 per metric ton of carbon dioxide
equivalent emissions.
``(B) For each calendar year after 2021, the term
`applicable amount' means the sum of--
``(i) the applicable amount for the
previous calendar,
``(ii) the sum of--
``(I) 5 percentage points, plus
``(II) a percentage increase in the
previous year's tax rate equal to the
increase in the Consumer Price Index
for the previous calendar year, plus
``(iii) the increase, if any, required by
paragraph (3).
``(C) Consumer price index for any calendar year.--
For purposes of subparagraph (B), the Consumer Price
Index for the previous calendar year is the average of
the Consumer Price Index for all-urban consumers
published by the Department of Labor as of the close of
the 12-month period ending on August 31 of such
calendar year. For purposes of the preceding sentence,
the revision of the Consumer Price Index which is most
consistent with the Consumer Price Index for calendar
year 1986 shall be used.
``(3) Adjustment based on emission levels.--
``(A) In general.--If, for calendar year 2023 and
every second calendar year thereafter through calendar
year 2031, the cumulative amount of emissions with
respect to the calendar year reported under
subparagraph (B) exceeds the cumulative amount of
emissions specified for such calendar year in
subparagraph (C), then the increase required by this
paragraph for the calendar year beginning on the next
January 1 following the determination in subparagraph
(B) shall be $3 per metric ton.
``(B) Annual report.--Not later than March 30,
2021, and annually thereafter, the Secretary and the
Administrator shall jointly determine and report the
emissions during the calendar year ending on the
preceding December 31 from sources subject to taxation
under this part. The report shall specify whether the
cumulative amount of annual emissions reported for the
period beginning in calendar year 2021 and ending at
the end of the preceding calendar year exceeds the
emission levels specified in subparagraph (C).
``(C) Emission schedule.--The emission schedule
specified in this subparagraph is as follows:
``(i) The total emissions through calendar
year 2021 are 5,000 million metric tons of
carbon dioxide equivalent.
``(ii) The total emissions through calendar
year 2022 are 9,800 million metric tons of
carbon dioxide equivalent.
``(iii) The total emissions through
calendar year 2023 are 14,600 million metric
tons of carbon dioxide equivalent.
``(iv) The total emissions through calendar
year 2024 are 19,200 million metric tons of
carbon dioxide equivalent.
``(v) The total emissions through calendar
year 2025 are 23,800 million metric tons of
carbon dioxide equivalent.
``(vi) The total emissions through calendar
year 2026 are 28,300 million metric tons of
carbon dioxide equivalent.
``(vii) The total emissions through
calendar year 2027 are 32,700 million metric
tons of carbon dioxide equivalent.
``(viii) The total emissions through
calendar year 2028 are 37,000 million metric
tons of carbon dioxide equivalent.
``(ix) The total emissions through calendar
year 2029 are 41,300 million metric tons of
carbon dioxide equivalent.
``(x) The total emissions through calendar
year 2030 are 45,500 million metric tons of
carbon dioxide equivalent.
``(xi) The total emissions through calendar
year 2031 are 49,700 million metric tons of
carbon dioxide equivalent.
``(c) By Whom Paid.--The tax imposed by subsection (a) shall be
paid by the owner of the fossil fuel at the point of taxation.
``(d) Point of Taxation.--
``(1) For fossil fuels produced within the United States,
the point of taxation shall be--
``(A) for coal, the mine mouth or, for washed coal,
the exit from the coal preparation and processing
plant,
``(B) for petroleum products, the exit point from
the refinery, and
``(C) for natural gas, the exit from the gas
processing plant or, for natural gas that is not
treated at a gas processing plant, the point of sale to
the person who combusts the gas or incorporates it into
a product that is not intended for combustion.
``(2) For any fossil fuel imported into the United States,
the point of taxation shall be the point at which it first
enters the United States.
``(e) Exemptions.--
``(1) Exemption for noncombustive uses.--
``(A) Refund for reduction or elimination of
emissions.--Any manufacturer of a product that
incorporates a fossil fuel that has been taxed under
this section who can demonstrate to the Secretary that
the fossil fuel has been transformed via the
manufacture of the product so that the fossil fuel's
emissions will be reduced or eliminated over the
product's lifetime shall be entitled to a refund of the
tax paid under this section on the proportion of the
emissions reduced thereby, as determined by the
Secretary.
``(B) Rule.--The Secretary, in consultation with
the Administrator, shall establish by rule the criteria
and process by which product manufacturers can
demonstrate that the conditions in subparagraph (A)
have been satisfied.
``(C) Publication of regulations.--The Secretary
shall publish the regulations required by this
subsection no later than one year prior to the start of
the calendar year referred to in section 9901(b)(2)(A).
The Secretary may not collect the tax imposed by this
section for any calendar year that begins less than one
year after the regulations are published.
``(2) Exemption for carbon capture and storage.--
``(A) Refund for sequesters.--Any person who
sequesters greenhouse gas emissions resulting from the
combustion of fossil fuel that has passed through a
point of taxation shall be entitled to a refund of the
tax imposed by this section. Emissions that are used
for enhanced oil recovery shall be entitled for such
refund provided that these emissions meet all of the
criteria applicable to other emissions that qualify for
such refund. No refund shall be recognized for any
amount of greenhouse gas which has been credited under
section 45Q.
``(B) Rule.--The Secretary shall establish by rule
the procedures by which to apply for such refunds and
such refunds shall be paid within six months of the
Secretary receiving an approvable application.
``(C) Time of refund.--The Secretary may not refund
any amounts under this paragraph until such time as the
Secretary has published the regulations described in
section 45Q(d)(2).
``(3) Report to congress.--The Secretary shall, by January
1st of each calendar year, report the total amount of refunds
awarded in the previous fiscal year under this subsection and
shall include, as appropriate, the amounts refunded under
paragraphs (1) and (2).
``SEC. 9902. IMPOSITION OF TAX ON GREENHOUSE GAS EMISSIONS FROM CERTAIN
INDUSTRIAL PROCESSES.
``(a) In General.--There is hereby imposed a tax on industrial
process greenhouse gas emissions by certain source categories.
``(b) List of Source Categories.--
``(1) Initial list.--The Congress establishes for purposes
of this section a list of source categories subject to this
section as follows:
``(A) Iron and steel production and metallurgical
coke production.
``(B) Underground coal mining.
``(C) Coal preparation and processing plants.
``(D) Refineries.
``(E) Cement production.
``(F) Petrochemical production.
``(G) Lime production.
``(H) Ammonia production.
``(I) Aluminum production.
``(J) Soda ash production.
``(K) Ferroalloy production.
``(L) Phosphoric acid production.
``(M) Glass production.
``(N) Zinc production.
``(O) Lead production.
``(P) Magnesium production and processing.
``(Q) Nitric acid production.
``(R) Adipic acid production.
``(S) Semiconductor manufacture.
``(T) Electrical transmission and distribution.
``(2) Revision of the list.--The Administrator shall review
the list of source categories established by this subsection
not less than once every five years to determine if they should
continue to be listed and publish the results of that review.
The Administrator may, if appropriate, add any source
categories to this list by rule.
``(3) Removal of a source category from the list.--The
Administrator may remove a source category from this list only
if--
``(A) the total emissions from the entire source
category which are taxable under this section have been
less than 250,000 metric tons of carbon dioxide
equivalent per year for each of three consecutive
years,
``(B) the average emissions from facilities in the
source category which are taxable under this section
have been less than 25,000 metric tons of carbon
dioxide equivalent per year for each of the years
referred in subparagraph (A), and
``(C) the Administrator determines that there is no
reasonable possibility that the total emissions from
the entire source category which are taxable under this
section will exceed 250,000 metric tons per year of
carbon dioxide equivalent within any of the five years
following such determination.
``(4) Addition of a source category to the list.--The
Administrator may add a source category to this list only if
the Administrator determines that--
``(A) the total emissions from the entire source
category which are taxable under this section have been
greater than 250,000 metric tons per year of carbon
dioxide equivalent in any two years out of the
preceding five years,
``(B) the average emissions from facilities in the
source category which are taxable under this section
have been greater than 25,000 metric tons per year of
carbon dioxide equivalent in the years in which
emissions from the entire source category have been
greater than 250,000 tons per year, and
``(C) there is a reasonable possibility that the
total emissions from the entire source category which
are taxable under this section will be greater than
250,000 metric tons per year of carbon dioxide
equivalent in any year within the next five years
following such determination.
``(5) The Administrator may add a source category to the
list that has previously been removed pursuant to paragraph (3)
if the addition of the source category otherwise meets the
requirements per paragraph (4).
``(c) Rate of Tax.--The rate of tax shall be the same as the rate
given in section 9901(b)(2).
``(d) By Whom Paid.--The tax imposed by subsection (a) shall be
paid by the owner or operator of the point of taxation.
``(e) Point of Taxation.--The point of taxation shall be any
facility in a source category which emits more than 25,000 metric tons
of carbon dioxide equivalent subject to taxation under this section in
any calendar year.
``SEC. 9903. IMPOSITION OF TAX ON GREENHOUSE GAS EMISSIONS FROM CERTAIN
PRODUCT USES.
``(a) In General.--There is hereby imposed a tax on non-fossil-
fuel-greenhouse-gas emissions by certain manufactured products when
used for their intended purposes that are manufactured within or
imported into, the United States.
``(b) List of Products.--
``(1) Initial list.--The Congress establishes for purposes
of this section a list of products subject to this section as
follows:
``(A) Fuel ethanol.
``(B) Industrial carbonates.
``(C) Carbon dioxide urea.
``(D) Soda ash.
``(E) Nitrous oxide.
``(F) Ozone depleting substances, but not if the
United States has ratified the Kigali Amendment to the
Montreal Protocol and is subject to Article 2J,
paragraph 1 of the Amended Montreal Protocol.
``(G) Biodiesel.
``(H) Solid biomass fuels.
``(2) Revision of the list.--The Administrator shall review
the list of products established by this subsection not less
than once every five years to determine if they should continue
to be listed and publish the results of that review. The
Administrator may, if appropriate, add any product to this list
by rule.
``(3) Removal of a product from the list.--The
Administrator may remove a product from this list only if--
``(A) the total emissions from all of the product
used within the United States has been less than
250,000 metric tons per year of carbon dioxide
equivalent for each of three consecutive years, and
``(B) the Administrator determines that there is no
reasonable possibility that the total emissions from
all of the product used in the United States will
exceed 250,000 metric tons per year of carbon dioxide
equivalent within any of the five years following such
determination.
``(4) Addition of a product to the list.--The Administrator
may add a product to this list only if the Administrator
determines that--
``(A) the total emissions from all of the product
used within the United States has been greater than
250,000 metric tons per year of carbon dioxide
equivalent in any two years out of the preceding five
years, and
``(B) there is a reasonable possibility that the
total emissions from all of the product used within the
United States will be greater than 250,000 metric tons
per year of carbon dioxide equivalent in any year
within the next five years following such
determination.
``(5) The Secretary may add a product to the list that has
previously been removed pursuant to paragraph (3) if the
addition of the product otherwise meets the requirements of
paragraph (4).
``(c) Rate of Tax.--The rate of tax shall be the same as the rate
given in section 9901(b)(2).
``(d) By Whom Paid.--The tax imposed by subsection (a) shall be
paid--
``(1) for products manufactured in the United States, by
the owner or operator of the point of taxation, and
``(2) for products imported into the United States, by the
owner of the product when it enters the United States.
``(e) Point of Taxation.--The point of taxation shall be--
``(1) for products manufactured in the United States, the
manufacturing facility,
``(2) for products imported into the United States, the
point at which it first enters the United States, and
``(3) for domestically produced biomass fuel, any facility
that emits from combusted biomass fuel more than 25,000 metric
tons of carbon dioxide equivalent greenhouse gases in a year.
``SEC. 9904. CALCULATION OF TAXABLE EMISSIONS.
``(a) How To Calculate Taxable Emissions.--In consultation with the
Department of Energy, the Administrator shall establish by rule (and
may, from time to time, revise) the method by which taxable emissions
under this part shall be calculated.
``(b) Categories and Subcategories Considered.--For purposes of
calculating emissions taxable under--
``(1) section 9901, the Administrator shall determine by
rule the amount of carbon dioxide equivalent that would be
emitted if each fossil fuel were combusted, and the
Administrator may establish by rule such subcategories of each
fuel and the means by which it is combusted as the
Administrator deems appropriate,
``(2) section 9902, the Administrator may determine by rule
such subcategories of any industrial process category listed in
subsection 9902(b) as the Administrator deems appropriate, and
``(3) section 9903, for fuel ethanol, biodiesel, and solid
biomass fuels the Administrator shall determine by rule the
amount of carbon dioxide equivalent that would be emitted based
on the lifecycle greenhouse gas emissions of the product, and
the Administrator may determine by rule such subcategories of
manufactured products listed in subsection 9903(b) as the
Administrator deems appropriate.
``(c) Methods.--Where greenhouse gas emissions subject to taxation
under any section of this part are combined with greenhouse gas
emissions subject to taxation under any other section of this part, the
Administrator shall ensure, to the greatest degree possible, that the
methods required to determine the emissions taxable under any section
of this part do not include any emissions taxable under any other
section of this part.
``(d) Method Cost Differences.--The Administrator shall not require
the use of any method to calculate taxable emissions whereby the
difference in cost of the method compared to the next cheapest
alternative method is greater than the amount of the tax that would be
paid on the additional emissions determined by the more expensive
method.
``(e) Publication of Regulations.--The Administrator shall publish
the regulations required by this section no later than January 1, 2020.
The Secretary may not collect the tax imposed by any section in this
part for any calendar year that begins less than one year after the
regulations applicable to each such section are published.
``SEC. 9905. CREDIT FOR STATE PAYMENTS.
``(a) Credit for Payments.--The Secretary shall allow any person
who is required to make payment for greenhouse gas emissions under this
part a credit for payments made on those emissions required under any
State law in the following manner:
``(1) For the year given in section 9901(b)(2)(A), a credit
equal to 100 percent of the amount paid pursuant to
requirements of State law.
``(2) For the first year following the year used in
paragraph (1), a credit equal to 80 percent of the amount paid
pursuant to requirements of State law.
``(3) For the second year following the year used in
paragraph (1), a credit equal to 60 percent of the amount paid
pursuant to requirements of State law.
``(4) For the third year following the year used in
paragraph (1), a credit equal to 40 percent of the amount paid
pursuant to requirements of State law.
``(5) For the fourth year following the year used in
paragraph (1), a credit equal to 20 percent of the amount paid
pursuant to requirements of State law.
``(b) No Credit.--For all years following the year used in
paragraph (5), no credit shall be allowed.
``SEC. 9906. PENALTIES FOR NONPAYMENT.
``Any person who fails to comply with the requirements of section
9901, 9902, or 9903 shall be liable for payment to the Secretary,
without demand, of a penalty in the amount equal to 3 times the
applicable amount specified by those sections for the same tax year as
the year in which the person failed to comply with such requirements.
``SEC. 9907. DEFINITIONS.
``Unless otherwise provided, the definitions provided herein are
applicable to all provisions 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 the number of metric tons of CO2 emissions
with the same global warming potential over a 100-year period
as one metric ton of another greenhouse gas.
``(3) Coal.--The term `coal' means any of the recognized
classifications and ranks of coal, including anthracite,
bituminous, semibituminous, subbituminous, lignite, and peat.
``(4) Coal preparation and processing plant.--The term
`coal preparation and processing plant' means any facility
(excluding underground mining operations) which prepares coal
by one or more of the following processes: breaking, crushing,
screening, wet or dry cleaning, and thermal drying.
``(5) Enhanced oil recovery.--The term `enhanced oil
recovery' has the meaning defined at section 1.193-1(b)(2) of
title 26, Code of Federal Regulations, as of the date of
enactment of this Act.
``(6) Facility.--The term `facility' means any physical
property, plant, building, structure, source, or stationary
equipment located on one or more contiguous or adjacent
properties in actual physical contact or separated solely by a
public roadway or other public right-of-way and under common
ownership or common control, that emits or may emit any
greenhouse gas.
``(7) Fossil fuel.--The term `fossil fuel' means coal,
petroleum products, or natural gas.
``(8) Greenhouse gas.--The term `greenhouse gas' means
carbon dioxide, nitrous oxide, methane, hydrofluorocarbons,
perfluorocarbons, and sulfur hexafluoride.
``(9) Greenhouse gas effects.--The term `greenhouse gas
effects' means the adverse effects of greenhouse gases on
health or welfare caused by the greenhouse gas's heat-trapping
potential or its effect on ocean acidification.
``(10) Lifecycle greenhouse gas emissions.--The term
`lifecycle greenhouse gas emissions' has the meaning given that
term in section 211 of the Clear Air Act (42 U.S.C.
7545(o)(1)(H)).
``(11) Natural gas.--The term `natural gas' means any fuel
consisting in whole or in part of natural gas, including
components of natural gas such as methane and ethane; liquid
petroleum gas; synthetic gas derived from coal, petroleum, or
natural gas liquids; or any mixture of natural gas and
synthetic gas.
``(12) Petroleum products.--The term `petroleum products'
means unfinished oils, liquefied petroleum gases, pentanes
plus, aviation gasoline, motor gasoline, naphtha-type jet fuel,
kerosene-type jet fuel, kerosene, distillate fuel oil, residual
fuel oil, petrochemical feedstocks, special naphthas,
lubricants, waxes, petroleum coke, asphalt, road oil, still
gas, and miscellaneous products obtained from the processing of
crude oil (including lease condensate), natural gas, and other
hydrocarbon compounds. The term does not include natural gas,
liquefied natural gas, biofuels, methanol, and other
nonpetroleum fuels.
``(13) Publish.--The term `publish' means publication in
the Federal Register.
``(14) Refinery.--The term `refinery' means any facility
engaged in producing gasoline, kerosene, distillate fuel oils,
residual fuel oils, lubricants, or other products through
distillation of petroleum or through redistillation, cracking
or reforming of unfinished petroleum derivatives.
``(15) Owner.--The term `owner' with respect to any fossil
fuel means any person who has legal title to the fossil fuel.
``(16) Owner or operator.--The term `owner or operator'
with respect to any fossil fuel means any person who has legal
title to the fossil fuel.
``(17) Sequesters.--The term `sequesters' means the
permanent storage of carbon dioxide or other greenhouse gas
such that it does not escape into the atmosphere, and is in
compliance with the regulations issued pursuant to section
45Q(d)(2).
``(18) Solid biomass.--The term `solid biomass' means
nonfossilized and biodegradable organic material originating
from plants, animals, or microorganisms, including products,
byproducts, residues and waste from agriculture, forestry and
related industries as well as the nonfossilized and
biodegradable organic fractions of industrial and municipal
wastes, but does not include gases and liquids recovered from
the decomposition of nonfossilized and biodegradable organic
material.
``(19) Source category.--The term `source category' means
any category or subcategory regulated under part 60 of title
40, Code of Federal Regulations, or part 90 of title 40, Code
of Federal Regulations.
``PART 2--TAX ADJUSTMENTS FOR IMPORTS AND EXPORTS OF GREENHOUSE GAS
INTENSIVE PRODUCTS
``Sec. 9911. Purposes.
``Sec. 9912. Definitions.
``Sec. 9913. Notification of foreign countries.
``Sec. 9914. Border tax adjustment rate.
``SEC. 9911. PURPOSES.
``(a) Purposes of Part.--The purposes of this part are--
``(1) to promote a strong global effort to significantly
reduce greenhouse gas emissions, and
``(2) to prevent carbon leakage.
``(b) Additional Purposes of Part.--The purposes of this part are
additionally--
``(1) to provide a rebate to exporters in domestic eligible
industrial sectors for the greenhouse gas emission costs of the
owners and operators incurred under this title, but not for
costs associated with other related or unrelated market
dynamics,
``(2) to ensure that imports from other countries, and, in
particular, fast-growing developing countries, do not enjoy
competitive advantages because of the carbon tax liability of
domestic manufacturers, and therefore increase their emissions,
``(3) to encourage foreign countries to take substantial
action with respect to their greenhouse gas emissions, and
``(4) to ensure that the measures described in this subpart
are designed and implemented in a manner consistent with
applicable international agreements to which the United States
is a party.
``SEC. 9912. DEFINITIONS.
``In this part:
``(1) Carbon leakage.--The term `carbon leakage' means any
substantial increase (as determined by the Secretary) in
greenhouse gas emissions by entities located in other countries
caused by a cost of production increase in the United States
resulting from implementation of this title.
``(2) Border tax adjustment.--The term `border tax
adjustment' means the levying of a tax on imported covered
goods equivalent to the amount of tax paid pursuant to part 1
of this subtitle in the manufacture of comparable domestic
manufactured goods, and the rebating of the tax paid pursuant
to part 1 of this subtitle that has been paid on covered goods
exported from the United States.
``(3) Border tax adjustment rate.--The term `border tax
adjustment rate' means the amount of tax that would be paid on
a covered good produced in the United States in the current
year.
``(4) Commissioner.--The term `Commissioner' means the
Commissioner of United States Customs and Border Protection.
``(5) Covered good.--The term `covered good' means a good
that is--
``(A) entered under a heading or subheading of the
Harmonized Tariff Schedule of the United States that
corresponds to the NAICS code for an eligible
industrial sector, as established in the concordance
between NAICS codes and the Harmonized Tariff Schedule
of the United States prepared by the United States
Census Bureau, or
``(B) a manufactured item for consumption.
``(6) Eligible industrial sector.--The term `eligible
industrial sector' means an industrial sector determined by the
Secretary under section 9913.
``(7) Industrial sector.--The term `industrial sector'
means any sector that--
``(A) is in the manufacturing sector (as defined in
NAICS codes 31, 32, and 33), or
``(B) is part of, or an entire sector that
beneficiates or otherwise processes (including
agglomeration) metal ores, including iron and copper
ores, soda ash, and phosphate. The term `industrial
sector' does not include any part of a sector that
extracts fossil fuels, metal ores, soda ash, or
phosphate.
``(8) Manufactured item for consumption.--The term
`manufactured item for consumption' means any good--
``(A) that includes in substantial quantities one
or more goods like the goods produced by an eligible
industrial sector, and
``(B) for which the Secretary has determined, with
the concurrence of the Commissioner, that the
application of the border tax adjustment program
pursuant to this part is technically and
administratively feasible and appropriate to achieve
the purposes of this part, taking into account the
greenhouse gas intensity, and where appropriate the
trade intensity, of the industrial sector that produces
the good, as measured consistent with section 9913 and
the ability of the producers to recover cost increases
in the marketplace and other appropriate factors.
``(9) NAICS.--The term `NAICS' means the North American
Industrial Classification System of 2002.
``(10) Output.--The term `output' means the total tonnage
or other standard unit of production (as determined by the
Secretary) produced by an entity in an industrial sector.
``SEC. 9913. NOTIFICATION OF FOREIGN COUNTRIES.
``(a) In General.--As soon as practicable after the date of the
enactment of the Stemming Warming and Augmenting Pay Act of 2019, the
President shall notify each foreign country--
``(1) requesting the foreign country to take appropriate
measures to limit the greenhouse gas emissions of the foreign
country, and
``(2) indicating that a border tax adjustment may apply to
covered goods imported into and exported from the United
States.
``(b) Lists.--
``(1) In general.--Not later than 1 year after the date of
the enactment of the Stemming Warming and Augmenting Pay Act of
2019, the Secretary shall promulgate a rule designating, based
on the criteria under subsection (c)(2), industrial sectors
where covered products are liable for the border tax
adjustment.
``(2) Content.--The list shall include the amount of the
border tax adjustment rate for each covered good in the
following calendar year pursuant to section 9914.
``(3) Subsequent lists.--Not later than January 31 of each
calendar year after the calendar year in which the Stemming
Warming and Augmenting Pay Act of 2019 is enacted, the
Secretary shall publish in the Federal Register an updated
version of the list published under paragraph (1).
``(c) Eligible Industrial Sectors.--
``(1) Presumptively eligible industrial sectors.--
``(A) Eligibility criteria.--
``(i) In general.--
``(I) Imported covered goods are
liable under this part if they are
produced in the United States in an
industrial sector that is included in a
6-digit classification of the NAICS
that meets the criteria in both clauses
(ii) and (iii).
``(II) Exported covered goods are
eligible under this part if they are
produced in the United States in an
industrial sector that is included in a
6-digit classification of the NAICS
that meets the criteria in clause (ii).
``(ii) Greenhouse gas intensity.--As
determined by the Secretary, an industrial
sector meets the criteria of this clause if the
United States industrial sector has a
greenhouse gas intensity of at least 5 percent,
calculated by dividing--
``(I) the number of metric 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 (C), multiplied by the
applicable rate in section 9901(b)(2),
by
``(II) the value of the shipments
of the sector, based on data described
in subparagraph (C).
``(iii) Trade intensity.--As determined by
the Secretary, an industrial sector meets the
criteria of this clause if the industrial
sector has a trade intensity of at least 15
percent, calculated by dividing--
``(I) the value of the total
imports and exports of the sector, by
``(II) the value of the shipments
plus the value of imports of the
sector, based on data described in
subparagraph (C).
``(B) Metal and phosphate production classified
under more than one naics code.--For purposes of this
section, the Secretary 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 the 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) Data sources.--
``(i) Value of shipments.--
``(I) In general.--The Secretary
shall determine the value of shipments
under this subsection from data from
the United States Census Annual Survey
of Manufacturers.
``(II) Average data available.--The
Secretary shall use the average of data
from the most recent 3 years for which
the data are available.
``(III) Average data not
available.--If data described in
subclause (II) are unavailable, the
Secretary shall make a determination
based on--
``(aa) data from the most
detailed industrial
classification level of the
Manufacturing Energy
Consumption Survey of the
Energy Information
Administration, and
``(bb) data from the most
recent Economic Census of the
United States.
``(IV) Data not available for
sector.--If data from the Manufacturing
Energy Consumption Survey or Economic
Census are unavailable for any sector
at the 6-digit classification level in
the NAICS, the Secretary may use
available Manufacturing Energy
Consumption Survey or Economic Census
data pertaining to a broader industrial
category classified in the NAICS.
``(V) Data not available for
processing.--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
Secretary--
``(aa) shall use the best
available Federal or State
government data, and
``(bb) may use, to the
extent necessary,
representative data submitted
by entities that perform the
beneficiation or other
processing (including
agglomeration), in making a
determination.
``(ii) Imports and exports.--
``(I) In general.--The Secretary
shall base the value of imports and
exports under this subsection on United
States International Trade Commission
data.
``(II) Average data available.--The
Secretary shall use the average of data
from the three most recent years for
which the data are available.
``(III) Average data not
available.--If data from the United
States International Trade Commission
are unavailable for any sector at the
6-digit classification level in the
NAICS, the Secretary may use United
States International Trade Commission
data pertaining to a broader industrial
category classified in the NAICS.
``(iii) Percentages.--The Secretary shall
round the greenhouse gas intensity and trade
intensity percentages under subparagraph (A) to
the nearest whole number.
``(iv) Greenhouse gas emission
calculations.--When calculating the metric tons
of carbon dioxide equivalent greenhouse gas
emissions for each sector under subparagraph
(A)(ii)(I), the Secretary--
``(I) shall use the best available
data from the three most recent years
for which the data are 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 the sector.
``(2) Administrative determination of additional eligible
industrial sectors.--
``(A) Updated trade intensity data.--The Secretary
shall designate as liable for border tax adjustment
rate on imported products under this part an industrial
sector that--
``(i) met the greenhouse gas intensity
criteria in paragraph (1)(A)(ii) as of the date
of promulgation of the rule under paragraph
(1), and
``(ii) meets the trade intensity criteria
established under paragraph (1)(A)(iii), using
data sources described in paragraph (1)(C) from
any year after the passage of this Act.
``(B) Individual showing petition.--
``(i) Petition.--In addition to designation
under subparagraph (A), the owner or operator
of an entity or a group of entities that
collectively produce not less than 80 percent
of the average annual value of shipments from
within the sector of the group consistent with
subclause (I), that manufacture similar
products in an industrial sector may petition
the Secretary to designate as eligible
industrial sectors under this part an entity or
a group of entities that--
``(I) represent a sector using a
standard product classification, and
``(II) meet the respective import
and/or export eligibility criteria in
paragraph (1)(A)(i).
``(ii) Data.--In making a determination
under this subparagraph, the Secretary shall
consider--
``(I) data submitted by the
petitioner,
``(II) data solicited by the
Secretary from other entities in the
sector, and
``(III) data specified in paragraph
(1)(C).
``(iii) Basis of subsector determination.--
``(I) In general.--Except as
provided in subclause (II), the
Secretary shall determine an entity or
group of entities to be a subsector of
a 6-digit section of the NAICS code
based only on the products manufactured
and not the industrial process by which
the products are manufactured.
``(II) Type of material.--The
Secretary 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 Secretary shall
use the most recent data available from the
sources described in paragraph (1)(C), rather
than the data from the years specified in
paragraph (1)(C), to determine the trade
intensity of the sector or subsector, but only
for determining the trade intensity.
``(v) Final action.--The Secretary shall
take final action on a petition described in
this subparagraph not later than 180 days after
the date the completed petition is received by
the Secretary.
``(3) Cessation of qualifying activities.--If, as
determined by the Secretary, an industrial sector or a covered
good within the sector is no longer liable to be designated
under this section, the Commissioner shall cease to apply the
border tax adjustment on the relevant covered goods with effect
from January 1 of the following year.
``SEC. 9914. BORDER TAX ADJUSTMENT RATE.
``(a) Establishment.--Not later than January 1, 2020, the
Secretary, with the concurrence of the Commissioner, shall promulgate
regulations--
``(1) establishing the products which are liable for, and
requiring payment of, the border tax adjustment rate,
``(2) establishing a general methodology for calculating
the level of the border tax adjustment rate that a domestic
importer of any covered good must submit and the rebate that an
exporter will receive,
``(3) establishing an administrative process whereby any
determination by the Secretary under this subsection may be
appealed,
``(4) exempting from this section products that originate
from--
``(A) any country that the United Nations has
identified as among the least developed of developing
countries, or
``(B) any country that the President has determined
to be responsible for less than 0.5 percent of total
global greenhouse gas emissions and less than 5 percent
of global production in the eligible industrial sector,
``(5) specifying the procedures that the Commissioner will
apply for the declaration and entry of covered goods with
respect to the eligible industrial sector into the customs
territory of the United States, and
``(6) establishing procedures that prevent circumvention of
the carbon tax liability for covered goods that are
manufactured or processed in more than one foreign country.
``(b) Presidential Discretion.--The President may elect not to levy
the border tax adjustment for an eligible industrial sector or for
specific products within that sector if the President determines and
certifies to Congress that the program would not be in the national
interest, economic interest or environmental interest of the United
States.
``(c) Limitation on Imposition of Tax.--A border tax adjustment
pursuant to this subpart may not be imposed with respect to any
calendar year that begins less than one year after regulations are
published under subsection (a).''.
(b) Clerical Amendment.--The table of subtitles for the Internal
Revenue Code of 1986 is amended by adding at the end the following new
item:
``Subtitle L. Greenhouse Gas Emissions''.
(c) Effective Date.--The amendments made by this section shall
apply to emissions after December 31, 2019.
TITLE II--CARBON REDUCED PAYROLL TAX
SEC. 201. CARBON REDUCED PAYROLL TAX.
(a) In General.--Notwithstanding any other provision of law--
(1) with respect to any taxable year which begins after
December 31, 2020, the rate of tax under section 1401(a) of the
Internal Revenue Code of 1986 shall be 12.4 percent minus the
reduced carbon rate, and
(2) with respect to remuneration received after December
31, 2020--
(A) the rate of tax under 3101(a) of such Code
shall be 6.2 percent minus one-half of the reduced
carbon rate (including for purposes of determining the
applicable percentage under sections 3201(a) and
3211(a)(1) of such Code), and
(B) the rate of tax under subsection (a) of section
3111 of such Code shall be 6.2 percent minus one-half
of the reduced carbon rate (including for purposes of
subsections (e) and (f) of such section and determining
the applicable percentage under section 3221(a) of such
Code).
(b) Coordination With Deductions for Employment Taxes.--
(1) Deduction in computing net earnings from self-
employment.--For purposes of applying section 1402(a)(12) of
the Internal Revenue Code of 1986, the rate of tax imposed by
subsection 1401(a) of such Code shall be determined without
regard to the reduction in such rate under this section.
(2) Individual deduction.--In the case of the taxes imposed
by section 1401 of such Code for any taxable year which begins
in the payroll tax carbon period, the deduction under section
164(f) with respect to such taxes shall be equal to the sum
of--
(A) one-half of the portion of such taxes
attributable to the tax imposed by section 1401(a)
(determined after the application of this section),
plus
(B) one-half of the portion of such taxes
attributable to the tax imposed by section 1401(b).
(c) Reduced Carbon Rate.--For purposes of this section--
(1) In general.--The term ``reduced carbon rate'' means the
number of percentage points determined by the Secretary to be--
(A) 1 percentage point in the case of any taxable
year which begins during calendar year 2021, and
(B) in the case of any taxable year beginning in a
calendar year beginning after calendar year 2021, the
number of percentage points determined by the Secretary
to be, for the calendar year the product of--
(i) 12.4, and
(ii) 52.5 percent of amounts of estimated
taxes received in the Treasury under subtitle L
of the Internal Revenue Code of 1986 (relating
to greenhouse gas emissions), divided by
estimated taxes that would have been received
in the Treasury with respect to a calendar year
under sections 1401(a), 3101(a), 3111(a), and
the applicable percentage of such taxes under
3201(a), 3211(a)(1), and 3221(a), were this
section not in effect.
(2) Estimates.--For purposes of paragraph (1), the
determination of amounts received in the Treasury shall be made
on the basis of estimates by the Secretary of the Treasury (or
the Secretary's delegate), and proper adjustments shall be made
in the amounts subsequently estimated to the extent prior
estimates were in excess of or less than actual receipts.
(3) Publication of reduced carbon rate.--Not later than
October 31 of each calendar year, the Secretary shall publish
the reduced carbon rate determined under this subsection for
the succeeding calendar year.
(d) Employer Notification.--The Secretary of the Treasury shall
notify employers of the payroll tax holiday period in any manner the
Secretary deems appropriate.
(e) Transfers of Funds.--
(1) Transfers to federal old-age and survivors insurance
trust fund.--There are hereby appropriated to the Federal Old-
Age and Survivors Trust Fund and the Federal Disability
Insurance Trust Fund established under section 201 of the
Social Security Act (42 U.S.C. 401) amounts equal to the
reduction in revenues to the Treasury by reason of the
application of subsection (a). Amounts appropriated by the
preceding sentence shall be transferred from the general fund
at such times and in such manner as to replicate to the extent
possible the transfers which would have occurred to such Trust
Fund had such amendments not been enacted.
(2) Transfers to social security equivalent benefit
account.--There are hereby appropriated to the Social Security
Equivalent Benefit Account established under section 15A(a) of
the Railroad Retirement Act of 1974 (45 U.S.C. 231n-1(a))
amounts equal to the reduction in revenues to the Treasury by
reason of the application of subsection (a)(2). Amounts
appropriated by the preceding sentence shall be transferred
from the general fund at such times and in such manner as to
replicate to the extent possible the transfers which would have
occurred to such Account had such amendments not been enacted.
(3) Coordination with other federal laws.--For purposes of
applying any provision of Federal law other than the provisions
of the Internal Revenue Code of 1986, the rate of tax in effect
under section 3101(a) of such Code shall be determined without
regard to the reduction in such rate under this section.
(f) Special Rule.--Not later than October 1 of each fiscal year
beginning after fiscal year 2021 (January 1, 2021 in the case of fiscal
year 2021), from amounts in the general fund of the Treasury not
otherwise appropriated, the Commissioner of Social Security shall pay
an amount, equal to 7.5 percent of amounts of taxes received in the
Treasury under subtitle L of the Internal Revenue Code of 1986
(relating greenhouse gas emissions), to be distributed equally among
each individual entitled to monthly insurance benefits under title II
of the Social Security Act, or to an annuity under section 2 of the
Railroad Retirement Act of 1974 for the first month of each year.
TITLE III--DISTRIBUTION OF REVENUES FROM TAXATION OF GREENHOUSE GAS
EMISSIONS
SEC. 301. ESTABLISHMENT OF THE CARBON TRUST FUND.
(a) Creation of Trust Fund.--There is hereby created in the
Treasury of the United States a trust fund to be known as the ``CARBON
Trust Fund''.
(b) Transfers to Trust Fund.--There are hereby appropriated to the
CARBON Trust Fund amounts equivalent to 15 percent of the taxes
received in the Treasury under subtitle L of the Internal Revenue Code
of 1986 (as added by title I of this Act).
SEC. 302. APPROPRIATIONS FROM THE CARBON TRUST FUND.
Amounts in the CARBON Trust Fund for a fiscal year shall be
available, as provided by appropriation Acts, as follows:
(1) Fifty percent of such amounts shall be available for
State block grants to be used to offset higher energy costs for
low-income households.
(2) Fifty percent of such amounts shall be available for
climate adaptation, carbon sequestration, energy efficiency,
and advanced R&D programs.
TITLE IV--AMENDMENTS TO FEDERAL ENVIRONMENTAL STATUTES
SEC. 401. AMENDMENTS TO THE CLEAN AIR ACT.
(a) In General.--Title III of the Clean Air Act (42 U.S.C. 7601) is
amended by adding at the end the following:
``SEC. 330. MORATORIUM AGAINST CERTAIN REGULATIONS BASED ON GREENHOUSE
GAS EFFECTS.
``(a) Fuels.--Unless specifically authorized in section 202, 211,
213, 231, or this section, after a fossil fuel has passed through a
point of taxation as provided in section 9901(d) of the Internal
Revenue Code of 1986, subject to subsection (g), the Administrator
shall not publish or enforce any rule limiting the emission of
greenhouse gases from the combustion of that fuel under this Act (or
impose any requirement on any State to limit such emission) on the
basis of the emission's greenhouse gas effects.
``(b) Emissions.--Unless specifically authorized in section 202,
211, 213, 231, or this section, if emission of any greenhouse gas is
subject to taxation pursuant to any of sections 9902 through 9903 of
the Internal Revenue Code of 1986, the Administrator shall not publish
or enforce any rule limiting such emission under this Act (or impose
any requirement on any State to limit such emission) on the basis of
the emission's greenhouse gas effects.
``(c) Authorized Regulation.--Notwithstanding subsections (a) and
(b), nothing in this section limits the Administrator's authority
pursuant to any other provision of this Act--
``(1) to limit the emission of any greenhouse gas because
of any adverse impact on health or welfare other than its
greenhouse gas effects;
``(2) in limiting emissions as described in paragraph (1),
to consider the collateral benefits of limiting the emissions
because of greenhouse gas effects;
``(3) to limit the emission of any other pollutant that is
not a greenhouse gas that the Administrator determines by rule
has heat-trapping properties; or
``(4) to take any action with respect to any greenhouse gas
other than limiting its emission, including--
``(A) monitoring, reporting, and record-keeping
requirements;
``(B) conducting or supporting investigations; and
``(C) information collection.
``(d) Exception for Certain Greenhouse Gas Emissions.--
Notwithstanding subsections (a) and (b), nothing in this section limits
the Administrator's authority to regulate greenhouse gas emissions
from--
``(1) facilities that are subject to--
``(A) subparts OOOO or OOOOa of part 60 of title
40, Code of Federal Regulations, as in effect on
January 1, 2018, or
``(B) would be subject to either subpart OOOO or
subpart OOOOa if those subparts applied to such
facilities regardless of the date on which
construction, modification, or reconstruction
commenced, and
``(2) POTW Treatment Plants (as defined in section 403.3(r)
of title 40, Code of Federal Regulations).
``(e) Definitions.--In this section, the terms `greenhouse gas' and
`greenhouse gas effects' have the meanings given to those terms in
section 9907 of the Internal Revenue Code of 1986.
``(f) Moratorium Expiration.--The moratoria on the Administrator
publishing or enforcing rules limiting the emission of greenhouse gases
in subsections (a) and (b) and section 211(c)(5) of this Act shall
expire on January 1, 2034.
``(g) Exceptions.--
``(1) 2024.--Notwithstanding subsections (a) and (b) and
section 211(c)(5) of this Act, if the Administrator determines
by March 30, 2026, pursuant to the report required by section
9901(b)(3)(B) of the Internal Revenue Code of 1986, that total
greenhouse gas emissions subject to taxation under sections
9901 through 9903 of such Code during the period 2021 through
2025 exceed the emission level specified in section
9901(b)(3)(C) of such Code for calendar year 2025, then
beginning on October 1, 2026, the prohibition in subsections
(a) and (b) and section 211(c)(5) of this Act on publishing or
enforcing rules limiting the emission of greenhouse gases (and
imposing any requirement on any State to limit such emission)
shall not apply.
``(2) 2028.--Notwithstanding subsections (a) and (b) and
section 211(c)(5) of this Act, if the Administrator determines
by March 30, 2030, pursuant to the report required by section
9901(b)(3)(B) of the Internal Revenue Code of 1986, that total
greenhouse gas emissions subject to taxation under sections
9901 through 9903 of such Code during the period 2021 through
2029 exceed the emission level specified in section
9901(b)(3)(C) of such Code for calendar year 2029, then
beginning on October 1, 2030, the prohibition in subsections
(a) and (b) and section 211(c)(5) of this Act on publishing or
enforcing rules limiting the emission of greenhouse gases (and
imposing any requirement on any State to limit such emission)
shall not apply.''.
(b) New Motor Vehicles and New Motor Vehicle Engines.--Section
202(b) of the Clean Air Act (42 U.S.C. 7521(b)) is amended--
(1) by redesignating the second paragraph (3) (as
redesignated by section 230(4)(C) of Public Law 101-549 (104
Stat. 2529)) as paragraph (4); and
(2) by adding at the end the following:
``(5) Notwithstanding section 330(a), the Administrator
may--
``(A) limit the emission of any greenhouse gas (as
defined in section 9907 of the Internal Revenue Code of
1986) on the basis of the emission's greenhouse gas
effects (as defined in section 9907 of the Internal
Revenue Code of 1986) from any class or classes of new
motor vehicles or new motor vehicle engines subject to
regulation under subsection (a)(1); and
``(B) grant a waiver under section 209(b)(1) for
standards for the control of greenhouse gas
emissions.''.
(c) Fuels.--Section 211(c) of the Clean Air Act (42 U.S.C. 7545(c))
is amended by adding at the end the following new paragraph:
``(5) Except as required in section 211(o), the Administrator shall
not, pursuant to this subsection, impose on any manufacturer,
processor, or distributor of fuel any requirement for the purpose of
reducing the emission of any greenhouse gas (as defined in section 9907
of the Internal Revenue Code of 1986) produced by combustion of the
fuel on the basis of the emission's greenhouse gas effects (as defined
in section 9907 of the Internal Revenue Code of 1986).''.
(d) Nonroad Engines and Vehicles Emissions Standards.--Section 213
of the Clean Air Act (42 U.S.C. 7547) is amended by adding at the end
the following:
``(e) Greenhouse Gas Emissions.--Notwithstanding subsections (a)
and (b) of section 330, the Administrator may limit the emission of any
greenhouse gas (as defined in section 9907 of the Internal Revenue Code
of 1986) on the basis of the emission's greenhouse gas effects (as
defined in section 9907 of the Internal Revenue Code of 1986) from any
nonroad engines and nonroad vehicles subject to regulation under this
section.''.
(e) Aircraft Emission Standards.--Section 231 of the Clean Air Act
(42 U.S.C. 757) is amended by adding at the end the following new
subsection:
``(d) Notwithstanding subsections (a) and (b) of section 330, the
Administrator may limit the emission of any greenhouse gas (as defined
in section 9907 of the Internal Revenue Code of 1986) on the basis of
the emission's greenhouse gas effects (as defined in section 9907 of
the Internal Revenue Code of 1986) from any class or classes of
aircraft engines, so long as any such limitation is not more stringent
than the standards adopted by the International Civil Aviation
Organization.''.
<all>