[Congressional Record Volume 150, Number 91 (Tuesday, July 6, 2004)]
[Senate]
[Pages S7583-S7590]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           TEXT OF AMENDMENTS

  SA 3546. Mr. McCAIN (for himself and Mr. Lieberman) submitted an 
amendment intended to be proposed by him to the bill S. 2062, to amend 
the procedures that apply to consideration of interstate class actions 
to assure fairer outcomes for class members and defendants, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of the bill, add the following:

                       DIVISION B--CLIMATE CHANGE

     SECTION 1. SHORT TITLE.

       This division may be cited as the ``Climate Stewardship Act 
     of 2004''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Definitions.

    Title I--Federal Climate Change Research and Related Activities

Sec. 101. National Science Foundation fellowships.
Sec. 102. Commerce Department study of technology transfer barriers.
Sec. 103. Report on United States impact of Kyoto protocol.
Sec. 104. Research grants.
Sec. 105. Abrupt climate change research.
Sec. 106. NIST greenhouse gas functions.
Sec. 107. Development of new measurement technologies.
Sec. 108. Enhanced environmental measurements and standards.
Sec. 109. Technology development and diffusion.
Sec. 110. Agricultural outreach program.

               Title II--National Greenhouse Gas Database

Sec. 201. National greenhouse gas database and registry established.
Sec. 202. Inventory of greenhouse gas emissions for covered entities.
Sec. 203. Greenhouse gas reduction reporting.
Sec. 204. Measurement and verification.

           Title III--Market-driven Greenhouse Gas Reductions

     Subtitle A--Emission Reduction Requirements; Use of Tradeable 
                               Allowances

Sec. 301. Covered entities must submit allowances for emissions.
Sec. 302. Compliance.
Sec. 303. Borrowing against future reductions.
Sec. 304. Other uses of tradeable allowances.
Sec. 305. Exemption of source categories.

    Subtitle B--Establishment and Allocation of Tradeable Allowances

Sec. 331. Establishment of tradeable allowances.
Sec. 332. Determination of tradeable allowance allocations.
Sec. 333. Allocation or tradeable allowances.
Sec. 334. Ensuring target adequacy.
Sec. 335. Initial allocations for early participation and accelerated 
              participation.
Sec. 336. Bonus for accelerated participation.

             Subtitle C--Climate Change Credit Corporation

Sec. 351. Establishment.
Sec. 352. Purposes and functions.

            Subtitle D--Sequestration Accounting; Penalties

Sec. 371. Sequestration accounting.
Sec. 372. Penalties.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Administrator.--The term ``Administrator'' means the 
     Administrator of the Environmental Protection Agency.

[[Page S7584]]

       (2) Baseline.--The term ``baseline'' means the historic 
     greenhouse gas emission levels of an entity, as adjusted 
     upward by the Administrator to reflect actual reductions that 
     are verified in accordance with--
       (A) regulations promulgated under section 201(c)(1); and
       (B) relevant standards and methods developed under this 
     title.
       (3) Carbon dioxide equivalents.--The term ``carbon dioxide 
     equivalents'' means, for each greenhouse gas, the amount of 
     each such greenhouse gas that makes the same contribution to 
     global warming as one metric ton of carbon dioxide, as 
     determined by the Administrator.
       (4) Covered sectors.--The term ``covered sectors'' means 
     the electricity, transportation, industry, and commercial 
     sectors, as such terms are used in the Inventory.
       (5) Covered entity.--The term ``covered entity'' means an 
     entity (including a branch, department, agency, or 
     instrumentality of Federal, State, or local government) 
     that--
       (A) owns or controls a source of greenhouse gas emissions 
     in the electric power, industrial, or commercial sectors of 
     the United States economy (as defined in the Inventory), 
     refines or imports petroleum products for use in 
     transportation, or produces or imports hydrofluorocarbons, 
     perfluorocarbons, or sulfur hexafluoride; and
       (B) emits, from any single facility owned by the entity, 
     over 10,000 metric tons of greenhouse gas per year, measured 
     in units of carbon dioxide equivalents, or produces or 
     imports--
       (i) petroleum products that, when combusted, will emit,
       (ii) hydrofluorocarbons, perfluorocarbons, or sulfur 
     hexafluoride that, when used, will emit, or
       (iii) other greenhouse gases that, when used, will emit,

     over 10,000 metric tons of greenhouse gas per year, measured 
     in units of carbon dioxide equivalents.
       (6) Database.--The term ``database'' means the national 
     greenhouse gas database established under section 201.
       (7) Direct emissions.--The term ``direct emissions'' means 
     greenhouse gas emissions by an entity from a facility that is 
     owned or controlled by that entity.
       (8) Facility.--The term ``facility'' means a building, 
     structure, or installation located on any 1 or more 
     contiguous or adjacent properties of an entity in the United 
     States.
       (9) Greenhouse gas.--The term ``greenhouse gas'' means--
       (A) carbon dioxide;
       (B) methane;
       (C) nitrous oxide;
       (D) hydrofluorocarbons;
       (E) perfluorocarbons; and
       (F) sulfur hexafluoride.
       (10) Indirect emissions.--The term ``indirect emissions'' 
     means greenhouse gas emissions that are--
       (A) a result of the activities of an entity; but
       (B) emitted from a facility owned or controlled by another 
     entity.
       (11) Inventory.--The term ``Inventory'' means the Inventory 
     of U.S. Greenhouse Gas Emissions and Sinks, prepared in 
     compliance with the United Nations Framework Convention on 
     Climate Change Decision 3/CP.5).
       (12) Leakage.--The term ``leakage'' means--
       (A) an increase in greenhouse gas emissions by one facility 
     or entity caused by a reduction in greenhouse gas emissions 
     by another facility or entity; or
       (B) a decrease in sequestration that is caused by an 
     increase in sequestration at another location.
       (13) Permanence.--The term ``permanence'' means the extent 
     to which greenhouse gases that are sequestered will not later 
     be returned to the atmosphere.
       (14) Registry.--The term ``registry'' means the registry of 
     greenhouse gas emission reductions established under section 
     201(b)(2).
       (15) Secretary.--The term ``Secretary'' means the Secretary 
     of Commerce.
       (16) Sequestration.--
       (A) In general.--The term ``sequestration'' means the 
     capture, long-term separation, isolation, or removal of 
     greenhouse gases from the atmosphere.
       (B) Inclusions.--The term ``sequestration'' includes--
       (i) agricultural and conservation practices;
       (ii) reforestation;
       (iii) forest preservation; and
       (iv) any other appropriate method of capture, long-term 
     separation, isolation, or removal of greenhouse gases from 
     the atmosphere, as determined by the Administrator.
       (C) Exclusions.--The term ``sequestration'' does not 
     include--
       (i) any conversion of, or negative impact on, a native 
     ecosystem; or
       (ii) any introduction of non-native species.
       (17) Source category.--The term ``source category'' means a 
     process or activity that leads to direct emissions of 
     greenhouse gases, as listed in the Inventory.
       (18) Stationary source.--The term ``stationary source'' 
     means generally any source of greenhouse gases except those 
     emissions resulting directly from an engine for 
     transportation purposes.

    TITLE I--FEDERAL CLIMATE CHANGE RESEARCH AND RELATED ACTIVITIES.

     SEC. 101. NATIONAL SCIENCE FOUNDATION FELLOWSHIPS.

       The Director of the National Science Foundation shall 
     establish a fellowship program for students pursuing graduate 
     studies in global climate change, including capability in 
     observation, analysis, modeling, paleoclimatology, 
     consequences, and adaptation.

     SEC. 102. COMMERCE DEPARTMENT STUDY OF TECHNOLOGY TRANSFER 
                   BARRIERS.

       (a) Study.--The Assistant Secretary of Technology Policy at 
     Department of Commerce shall conduct a study of technology 
     transfer barriers, best practices, and out comes of 
     technology transfer activities at Federal laboratories 
     related to the licensing and commercialization of energy 
     efficient technologies, and other technologies that, compared 
     to similar technology in commercial use, result in reduced 
     emissions of greenhouse gases or increased sequestration of 
     greenhouse gases. The study shall be submitted to the Senate 
     Committee on Commerce, Science, and Transportation and the 
     House of Representatives Committee on Science within 6 months 
     after the date of enactment of this Act. The Assistant 
     Secretary shall work with the existing interagency working 
     group to address identified barriers.
       (b) Agency Report To Include Information on Technology 
     Transfer Income and Royalties.--Paragraph (2)(B) of section 
     11(f) of the Stevenson-Wydler Technology Innovation Act of 
     1980 (15 U.S.C. 3710(f)) is amended--
       (1) by striking ``and'' after the semicolon in clause (vi);
       (2) by redesignating clause (vii) as clause (ix); and
       (3) by inserting after clause (vi) the following:
       ``(vii) the number of fully-executed licenses which 
     received royalty income in the preceding fiscal year for 
     climate-change or energy-efficient technology;
       ``(viii) the total earned royalty income for climate-change 
     or energy-efficient technology; and''.
       (c) Increased Incentives for Development of Climate-Change 
     or Energy-Efficient Technology.--Section 14(a) of the 
     Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C. 
     3710c(a)) is amended--
       (1) by striking ``15 percent,'' in paragraph (1)(A) and 
     inserting ``15 percent (25 percent for climate change-related 
     technologies),''; and
       (2) by inserting ``($250,000 for climate change-related 
     technologies)'' after ``$150,000'' each place it appears in 
     paragraph (3).

     SEC. 103. REPORT ON UNITED STATES IMPACT OF KYOTO PROTOCOL.

       Within 6 months after the date of enactment of this Act, 
     the Secretary shall execute a contract with the National 
     Academy of Science for a report to the Senate Committee on 
     Commerce, Science, and Transportation and the House of 
     Representatives Committee on Science on the effects that the 
     entry into force of the Kyoto Protocol without United States 
     participation will have on--
       (1) United States industry and its ability to compete 
     globally;
       (2) international cooperation on scientific research and 
     development; and
       (3) United States participation in international 
     environmental climate change mitigation efforts and 
     technology deployment.

     SEC. 104. RESEARCH GRANTS.

       Section 105 of the Global Change Research Act of 1990 (15 
     U.S.C. 2935) is amended--
       (1) by redesignating subsection (e) as subsection (d); and
       (2) by inserting after subsection (b) the following:
       ``(c) Research Grants.--
       ``(1) Committee to develop list of priority research 
     areas.--The Committee shall develop a list of priority areas 
     for research and development on climate change that are not 
     being addressed by Federal agencies.
       ``(2) Director of ostp to transmit list to nsf.--The 
     Director of the Office of Science and Technology Policy shall 
     transmit the list to the National Science Foundation.
       ``(3) Funding through nsf.--
       ``(A) Budget request.--The National Science Foundation 
     shall include, as part of the annual request for 
     appropriations for the Science and Technology Policy 
     Institute, a request for appropriations to fund research in 
     the priority areas on the list developed under paragraph (1).
       ``(B) Authorization.--For fiscal year 2005 and each fiscal 
     year thereafter, there are authorized to be appropriated to 
     the National Science Foundation not less than $25,000,000, to 
     be made available through the Science and Technology Policy 
     Institute, for research in those priority areas.''.

     SEC. 105. ABRUPT CLIMATE CHANGE RESEARCH.

       (a) In General.--The Secretary, through the National 
     Oceanic and Atmospheric Administration, shall carry out a 
     program of scientific research on potential abrupt climate 
     change designed--
       (1) to develop a global array of terrestrial and 
     oceanographic indicators of paleoclimate in order 
     sufficiently to identify and describe past instances of 
     abrupt climate change;
       (2) to improve understanding of thresholds and 
     nonlinearities in geophysical systems related to the 
     mechanisms of abrupt climate change;
       (3) to incorporate these mechanisms into advanced 
     geophysical models of climate change; and
       (4) to test the output of these models against an improved 
     global array of records of past abrupt climate changes.
       (b) Abrupt Climate Change Defined.--In this section, the 
     term ``abrupt climate

[[Page S7585]]

     change'' means a change in climate that occurs so rapidly or 
     unexpectedly that human or natural systems may have 
     difficulty adapting to it.
       (c) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary for fiscal year 2005 
     $60,000,000 to carry out this section, such sum to remain 
     available until expended.

     SEC. 106. NIST GREENHOUSE GAS FUNCTIONS.

       Section 2(c) of the National Institute of Standards and 
     Technology Act (15 U.S.C. 272(c)) is amended--
       (1) by striking ``and'' after the semicolon in paragraph 
     (21);
       (2) by redesignating paragraph (22) as paragraph (23); and
       (3) by inserting after paragraph (21) the following:
       ``(22) perform research to develop enhanced measurements, 
     calibrations, standards, and technologies which will 
     facilitate activities that reduce emissions of greenhouse 
     gases or increase sequestration of greenhouse gases, 
     including carbon dioxide, methane, nitrous oxide, ozone, 
     perfluorocarbons, hydrofluorocarbons, and sulfur 
     hexafluoride; and''.

     SEC. 107. DEVELOPMENT OF NEW MEASUREMENT TECHNOLOGIES.

       To facilitate implementation of section 204, the Secretary 
     shall initiate a program to develop, with technical 
     assistance from appropriate Federal agencies, innovative 
     standards and measurement technologies to calculate 
     greenhouse gas emissions or reductions for which no accurate 
     or reliable measurement technology exists. The program shall 
     include--
       (1) technologies (including remote sensing technologies) to 
     measure carbon and other greenhouse gas emissions and 
     reductions from agriculture, forestry, and other land use 
     practices; and
       (2) technologies to calculate non-carbon dioxide greenhouse 
     gas emissions from transportation.

     SEC. 108. ENHANCED ENVIRONMENTAL MEASUREMENTS AND STANDARDS.

       The National Institute of Standards and Technology Act (15 
     U.S.C. 271 et seq.) is amended--
       (1) by redesignating sections 17 through 32 as sections 18 
     through 33, respectively; and
       (2) by inserting after section 16 the following:

     SEC. 17. CLIMATE CHANGE STANDARDS AND PROCESSES.

       ``(a) In General.--The Director shall establish within the 
     Institute a program to perform and support research on global 
     climate change standards and processes, with the goal of 
     providing scientific and technical knowledge applicable to 
     the reduction of greenhouse gases (as defined in section 3(8) 
     of the Climate Stewardship Act of 2004) and of facilitating 
     implementation of section 204 of that Act.
       ``(b) Research Program.--
       ``(1) In General.--The Director is authorized to conduct, 
     directly or through contracts or grants, a global climate 
     change standards and processes research program.
       ``(2) Research projects.--The specific contents and 
     priorities of the research program shall be determined in 
     consultation with appropriate Federal agencies, including the 
     Environmental Protection Agency, the National Oceanic and 
     Atmospheric Administration, and the National Aeronautics and 
     Space Administration. The program generally shall include 
     basic and applied research--
       ``(A) to develop and provide the enhanced measurements, 
     calibrations, data, models, and reference material standards 
     which will enable the monitoring of greenhouse gases;
       ``(B) to assist in establishing a baseline reference point 
     for future trading in greenhouse gases and the measurement of 
     progress in emissions reduction;
       ``(C) that will be exchanged internationally as scientific 
     or technical information which has the stated purpose of 
     developing mutually recognized measurements, standards, and 
     procedures for reducing greenhouse gases; and
       ``(D) to assist in developing improved industrial processes 
     designed to reduce or eliminate greenhouse gases.
       ``(c) National Measurement Laboratories.--
       ``(1) In general.--In carrying out this section, the 
     Director shall utilize the collective skills of the National 
     Measurement Laboratories of the National Institute of 
     Standards and Technology to improve the accuracy of 
     measurements that will permit better understanding and 
     control of these industrial chemical processes and result in 
     the reduction or elimination of greenhouse gases.
       (2) Material, process, and building research.--The National 
     Measurement Laboratories shall conduct research under this 
     subsection that includes--
       ``(A) developing material and manufacturing processes which 
     are designed for energy efficiency and reduced greenhouse gas 
     emissions into the environment;
       ``(B) developing chemical processes to be used by industry 
     that, compared to similar processes in commercial use, result 
     in reduced emissions of greenhouse gases or increased 
     sequestration of greenhouse gases; and
       ``(C) enhancing building performance with a focus in 
     developing standards or tools which will help incorporate 
     low- or no-emission technologies into building designs.
       ``(3) Standards and tools.--The National Measurement 
     Laboratories shall develop standards and tools under this 
     subsection that include software to assist designers in 
     selecting alternate building materials, performance data on 
     materials, artificial intelligence-aided design procedures 
     for building subsystems and `smart buildings', and improved 
     test methods and rating procedures for evaluating the energy 
     performance of residential and commercial appliances and 
     products.
       ``(d) National Voluntary Laboratory Accreditation 
     Program.--The Director shall utilize the National Voluntary 
     Laboratory Accreditation Program under this section to 
     establish a program to include specific calibration or test 
     standards and related methods and protocols assembled to 
     satisfy the unique needs for accreditation in measuring the 
     production of greenhouse gases. In carrying out this 
     subsection the Director may cooperate with other departments 
     and agencies of the Federal Government, State and local 
     governments, and private organizations.''.

     SEC. 109. TECHNOLOGY DEVELOPMENT AND DIFFUSION.

       The Director of the National Institute of Standards and 
     Technology, through the Manufacturing Extension Partnership 
     Program, may develop a program to promote the use, by the 
     more than 380,000 small manufacturers, of technologies and 
     techniques that result in reduced emissions of greenhouse 
     gases or increased sequestration of greenhouse gases.

     SEC. 110. AGRICULTURAL OUTREACH PROGRAM.

       (a) In General.--The Secretary of Agriculture, acting 
     through the Global Change Program Office and in consultation 
     with the heads of other appropriate departments and agencies, 
     shall establish the Climate Change Education and Outreach 
     Initiative Program to educate, and reach out to, agricultural 
     organizations and individual farmers on global climate 
     change.
       (b) Program Components.--The program--
       (1) shall be designed to ensure that agricultural 
     organizations and individual farmers receive detailed 
     information about--
       (A) the potential impact of climate change on their 
     operations and well-being;
       (B) market-driven economic opportunities that may come from 
     storing carbon in soils and vegetation, including emerging 
     private sector markets for carbon storage; and
       (C) techniques for measuring, monitoring, verifying, and 
     inventorying such carbon capture efforts;
       (2) may incorporate existing efforts in any area of 
     activity referenced in paragraph (1) or in related areas of 
     activity;
       (3) shall provide--
       (A) outreach materials to interested parties;
       (B) workshops; and
       (C) technical assistance; and
       (4) may include the creation and development of regional 
     centers on climate change or coordination with existing 
     centers (including such centers within NRCS and the 
     Cooperative State Research Education and Extension Service).

               TITLE II--NATIONAL GREENHOUSE GAS DATABASE

     SEC. 201. NATIONAL GREENHOUSE GAS DATABASE AND REGISTRY 
                   ESTABLISHED.

       (a) Establishment.--As soon as practicable after the (late 
     of enactment of this Act, the Administrator, in coordination 
     with the Secretary, the Secretary of Energy, the Secretary of 
     Agriculture, and private sector and nongovernmental 
     organizations, shall establish, operate, and maintain a 
     database, to be known as the ``National Greenhouse Gas 
     Database'', to collect, verify, and analyze information on 
     greenhouse gas emissions by entities.
       (b) National Greenhouse Gas Database Components.--The 
     database shall consist of--
       (1) an inventory of greenhouse gas emissions; and
       (2) a registry of greenhouse gas emission reductions and 
     increases in greenhouse gas sequestrations.
       (c) Comprehensive System.--
       (1) In general.--Not later than 2 years after the date of 
     enactment of this Act, the Administrator shall promulgate 
     regulations to implement a comprehensive system for 
     greenhouse gas emissions reporting, inventorying, and 
     reductions registration.
       (2) Requirements.--The Administrator shall ensure, to the 
     maximum extent practicable, that--
       (A) the comprehensive system described in paragraph (1) is 
     designed to--
       (i) maximize completeness, transparency, and accuracy of 
     information reported; and
       (ii) minimize costs incurred by entities in measuring and 
     reporting greenhouse gas emissions; and
       (B) the regulations promulgated under paragraph (1) 
     establish procedures and protocols necessary--
       (i) to prevent the double-counting of greenhouse gas 
     emissions or emission reductions reported by more than 1 
     reporting entity;
       (ii) to provide for corrections to errors in data submitted 
     to the database;
       (iii) to provide for adjustment to data by reporting 
     entities that have had a significant organizational change 
     (including mergers, acquisitions, and divestiture), in order 
     to maintain comparability among data in the database over 
     time;
       (iv) to provide for adjustments to reflect, new 
     technologies or methods for measuring or calculating 
     greenhouse gas emissions;
       (v) to account for changes in registration of ownership of 
     emission reductions resulting from a voluntary private 
     transaction between reporting entities; and

[[Page S7586]]

       (vi) to clarify the responsibility for reporting in the 
     case of any facility owned or controlled by more than 1 
     entity.
       (3) Serial numbers.--Through regulations promulgated under 
     paragraph (1), the Administrator shall develop and implement 
     a system that provides--
       (A) for the verification of submitted emissions reductions 
     registered under section 204;
       (B) for the provision of unique serial numbers to identify 
     the registered emission reductions made by an entity relative 
     to the baseline of the entity;
       (C) for the tracking of the registered reductions 
     associated with the serial numbers and
       (D) for such action as may be necessary to prevent 
     counterfeiting of the registered reductions.

     SEC. 202. INVENTORY OF GREENHOUSE GAS EMISSIONS FOR COVERED 
                   ENTITIES.

       (a) In General.--Not later than July 1st of each calendar 
     year after 2008, each covered entity shall submit to the 
     Administrator a report that states, for the preceding 
     calendar year, the entity-wide greenhouse gas emissions (as 
     reported at the facility level), including--
       (1) the total quantity of direct greenhouse gas emissions 
     from stationary sources, expressed in units of carbon dioxide 
     equivalents, except those reported under paragraph (3);
       (2) the amount of petroleum products sold or imported by 
     the entity and the amount of greenhouse gases, expressed in 
     units of carbon dioxide equivalents, that would be emitted 
     when these products are used for transportation in the United 
     States, as determined by the Administrator under section 
     301(b),
       (3) the amount of hydrofluorocarbons, perfluorocarbons, or 
     sulfur hexafluoride, expressed in units of carbon dioxide 
     equivalents, that are sold or imported by the entity and will 
     ultimately be emitted in the United States, as determined by 
     the Administrator under section 301(d); and
       (4) such other categories of emissions as the Administrator 
     determines in the regulations promulgated under section 
     201(c)(1) may be practicable and useful for the purposes of 
     this Act, such as--
       (A) indirect emissions from imported electricity, heat, and 
     steam;
       (B) process and fugitive emissions; and
       (C) production or importation of greenhouse gases.
       (b) Collection and Analysis of Data.--The Administrator 
     shall collect and analyze information reported under 
     subsection (a) for use under title III.

     SEC. 203. GREENHOUSE GAS REDUCTION REPORTING.

       (a) In General.--Subject to the requirements described in 
     subsection (b)--
       (1) a covered entity may register greenhouse gas emission 
     reductions achieved after 1990 and before 2010 under this 
     section; and
       (2) an entity that is not a covered entity may register 
     greenhouse gas emission reductions achieved at any time since 
     1990 under this section.
       (b) Requirements.--
       (1) In General.--The requirements referred to in subsection 
     (a) are that an entity (other than an entity described in 
     paragraph (2)) shall--
       (A) establish a baseline; and
       (B) submit the report described in subsection (c)(1).
       (2) Requirements applicable to entities entering into 
     certain agreements.--An entity that enters into an agreement 
     with a participant in the registry for the purpose of a 
     carbon sequestration project shall not be required to comply 
     with the requirements specified in paragraph (1) unless that 
     entity is required to comply with the requirements by reason 
     of an activity other than the agreement.
       (e) Reports.--
       (1) Required report.--Not later than July 1st of the each 
     calendar year beginning more than 2 years after the date of 
     enactment of this Act, but subject to paragraph (3), an 
     entity described in subsection (a) shall submit to the 
     Administrator a report that states, for the preceding 
     calendar year, the entity-wide greenhouse gas emissions (as 
     reported at the facility level), including--
       (A) the total quantity of direct greenhouse gas emissions 
     from stationary sources, expressed in units of carbon dioxide 
     equivalents;
       (B) the amount of petroleum products sold or imported by 
     the entity and the amount of greenhouse gases, expressed in 
     units of carbon dioxide equivalents, that would be emitted 
     when these products are used for transportation in the United 
     States, as determined by the Administrator under section 
     301(b);
       (C) the amount of hydrofluorocarbons, perfluorocarbons, or 
     sulfur hexafluoride, expressed in units of carbon dioxide 
     equivalents, that are sold or imported by the entity and will 
     ultimately be emitted in the United States, as determined by 
     the Administrator under section 301(d); and
       (D) such other categories of emissions as the Administrator 
     determines in the regulations promulgated under section 
     201(c)(1) may be practicable and useful for the purposes of 
     this Act, such as--
       (i) indirect emissions from imported electricity, heat, and 
     steam;
       (ii) process and fugitive emissions; and
       (iii) production or importation of greenhouse gases.
       (2) Voluntary reporting.--An entity described in subsection 
     (a) may (along with establishing a baseline and reporting 
     emissions under this section)--
       (A) submit a report described in paragraph (1) before the 
     date specified in that paragraph for the purposes of 
     achieving and commoditizing greenhouse gas reductions through 
     use of the registry and for other purposes; and
       (B) submit to the Administrator, for inclusion in the 
     registry, information that has been verified in accordance 
     with regulations promulgated under section 201(c)(1) and that 
     relates to--
       (i) any activity that resulted in the net reduction of the 
     greenhouse gas emissions of the entity or a net increase in 
     sequestration by the entity that were carried out during or 
     after 1990 and before the establishment of the database, 
     verified in accordance with regulations promulgated under 
     section 201(c)(1), and submitted to the Administrator before 
     the date that is 4 years after the date of enactment of this 
     Act; and
       (ii) with respect to the calendar year preceding the 
     calendar year in which the information is submitted, any 
     project or activity that resulted in the net reduction of the 
     greenhouse gas emissions of the entity or a net increase in 
     net sequestration by the entity.
       (3) Provision of verification information by reporting 
     entities.--Each entity that submits a report under this 
     subsection shall provide information sufficient for the 
     Administrator to verify, in accordance with measurement and 
     verification methods and standards developed under section 
     204, that the greenhouse gas report of the reporting entity--
       (A) has been accurately reported; and
       (B) in the case of each voluntary report under paragraph 
     (2), represents--
       (i) actual reductions in direct greenhouse gas emissions--
       (I) relative to historic emission levels of the entity; and
       (II) after accounting for any increases in indirect 
     emissions described in paragraph (1)(C)(i); or
       (ii) actual increases in net sequestration.
       (4) Failure to submit report.--An entity that participates 
     or has participated in the registry and that fails to submit 
     a report required under this subsection shall be prohibited 
     from using, or allowing another entity to use, its registered 
     emissions reductions or increases in sequestration to satisfy 
     the requirements of section 301.
       (5) Independent third-party verification.--To meet the 
     requirements of this section and section 203, an entity that 
     is required to submit a report under this section may--
       (A) obtain independent third-party verification; and
       (B) present the results of the third-party verification to 
     the Administrator.
       (6) Availability of data.--
       (A) In general.--The Administrator shall ensure that 
     information in the database is--
       (i) published; and
       (ii) accessible to the public, including in electronic 
     format on the Internet.
       (B) Exception.--Subparagraph (A) shall not apply in any 
     case in which the Administrator determines that publishing or 
     otherwise making available information described in that 
     subparagraph poses a risk to national security or discloses 
     confidential business information that can not be derived 
     from information that is otherwise publicly available and 
     that would cause competitive harm if published.
       (7) Data infrastructure.--The Administrator shall ensure, 
     to the maximum extent practicable, that the database rises, 
     and is integrated with, Federal, State, and regional 
     greenhouse gas data collection and reporting systems in 
     effect as of the date of enactment of this Act.
       (8) Additional issues to be considered.--In promulgating 
     the regulations under section 201(c)(1) and implementing the 
     database, the Administrator shall take into consideration a 
     broad range of issues involved in establishing an effective 
     database, including--
       (A) the data and information systems and measures necessary 
     to identify, track, and verify greenhouse gas emissions in a 
     manner that will encourage private sector trading and 
     exchanges;
       (B) the greenhouse gas reduction and sequestration 
     measurement and estimation methods and standards applied in 
     other countries, as applicable or relevant;
       (C) the extent to which available fossil fuels, greenhouse 
     gas emissions, and greenhouse gas production acid importation 
     data are adequate to implement the database; and
       (D) the differences in, and potential uniqueness of, the 
     facilities, operations, and business and other relevant 
     practices of persons and entities in the private and public 
     sectors that may be expected to participate in the database.
       (d) Annual Report.--The Administrator shall publish an 
     annual report that--
       (1) describes the total greenhouse gas emissions and 
     emission reductions reported to the database during the year 
     covered by the report;
       (2) provides entity-by-entity and sector-by-sector analyses 
     of the emissions and emission reductions reported;
       (3) describes the atmospheric concentrations of greenhouse 
     gases;
       (4) provides a comparison of current and past atmospheric 
     concentrations of greenhouse gases; and
       (5) describes the activity during the year covered by the 
     period in the trading of greenhouse gas emission allowances.

[[Page S7587]]

     SEC. 204. MEASUREMENT AND VERIFICATION.

       (a) Standards.--
       (1) In general.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary shall establish by rule, 
     in coordination with the Administrator, the Secretary of 
     Energy, and the Secretary of Agriculture, comprehensive 
     measurement and verification methods and standards to ensure 
     a consistent and technically accurate record of greenhouse 
     gas emissions, emission reductions, sequestration, and 
     atmospheric concentrations for use in the registry.
       (2) Requirements.--The methods and standards established 
     under paragraph (1) shall include--
       (A) a requirement that a covered entity use a continuous 
     emissions monitoring system, or another system of measuring 
     or estimating emissions that is determined by the Secretary 
     to provide information with precision, reliability, 
     accessibility, and timeliness similar to that provided by a 
     continuous emissions monitoring system where technologically 
     feasible;
       (B) establishment of standardized measurement and 
     verification practices for reports made by all entities 
     participating in the, registry, taking into account--
       (i) protocols and standards in use by entities requiring or 
     desiring to participate in the registry as of the date of 
     development of the methods and standards under paragraph (1);
       (ii) boundary issues, such as leakage;
       (iii) avoidance of double counting of greenhouse gas 
     emissions and emission reductions;
       (iv) protocols to prevent a covered entity from avoiding 
     the requirements of this Act by reorganization into multiple 
     entities that are under common control; and
       (v) such other factors as the Secretary, in consultation 
     with the Administrator, determines to be appropriate;
       (C) establishment of methods of--
       (i) estimating greenhouse gas emissions, for those cases in 
     which the Secretary determines that methods of monitoring, 
     measuring or estimating such emissions with precision, 
     reliability, accessibility, and timeliness similar to that 
     provided by a continuous emissions monitoring system are not 
     technologically feasible at present; and
       (ii) reporting the accuracy of such estimations;
       (D) establishment of measurement and verification standards 
     applicable to actions taken to reduce, avoid, or sequester 
     greenhouse gas emissions;
       (E) in coordination with the Secretary of Agriculture, 
     standards to measure the results of the use of carbon 
     sequestration and carbon recapture technologies, including--
       (i) soil carbon sequestration practices; and
       (ii) forest preservation and reforestation activities that 
     adequately address the issues of permanence, leakage, and 
     verification;
       (E) establishment of such other measurement and 
     verification standards as the Secretary, in consultation with 
     the Secretary of Agriculture, the Administrator, and the 
     Secretary of Energy, determines to be appropriate;
       (F) establishment of standards for obtaining the 
     Secretary's approval of the suitability of geological storage 
     sites that include evaluation of both the geology of the site 
     and the entity's capacity to manage the site; and
       (G) establishment of other features that, as determined by 
     the Secretary, will allow entities to adequately establish a 
     fair and reliable measurement and reporting system.
       (b) Review and Revision.--The Secretary shall periodically 
     review, and revise as necessary, the methods and standards 
     developed under subsection (a).
       (c) Public Participation.--The Secretary shall--
       (1) make available to the public for comment, in draft form 
     and for a period of at least 90 days, the methods and 
     standards developed under subsection (a); and
       (2) after the 90-day period referred to in paragraph (1), 
     in coordination with the Secretary of Energy, the Secretary 
     of Agriculture, and the Administrator, adopt the methods and 
     standards developed under subsection (a) for use in 
     implementing the database.
       (d) Experts and Consultants.--
       (1) In general.--The Secretary may obtain the services of 
     experts and consultants in the private and nonprofit sectors 
     in accordance with section 3109 of title 5, United States 
     Code, in the areas of greenhouse gas measurement, 
     certification, and emission trading.
       (2) Available arrangements.--In obtaining any service 
     described in paragraph (1), the Secretary may use any 
     available grant, contract, cooperative agreement, or other 
     arrangement authorized by law.

           TITLE III--MARKET-DRIVEN GREENHOUSE GAS REDUCTIONS

     Subtitle A--Emission Reduction Requirements; Use of Tradeable 
                               Allowances

     SEC. 301. COVERED ENTITIES MUST SUBMIT ALLOWANCES FOR 
                   EMISSIONS.

       (a) In General.--Beginning with calendar year 2010--
       (1) each covered entity in the electric generation, 
     industrial, and commercial sectors shall submit to the 
     Administrator one tradeable allowance for every metric ton of 
     greenhouse gases, measured in units of carbon dioxide 
     equivalents, that it emits from stationary sources, except 
     those described in paragraph (2);
       (2) each producer or importer of hydrofluorocarbons, 
     perfluorocarbons, or sulfur hexafluoride that is a covered 
     entity shall submit to the Administrator one tradeable 
     allowance for every metric ton of hydrofluorocarbons, 
     perfluorocarbons, or sulfur hexafluoride, measured in units 
     of carbon dioxide equivalents; that it produces or imports 
     and that will ultimately be emitted in the United States, as 
     determined by the Administrator under subsection (d) and
       (3) each petroleum refiner or importer that is a covered 
     entity shall submit one tradeable allowance for every unit of 
     petroleum product it sells that will produce one metric ton 
     of greenhouse gases, measured in units of carbon dioxide 
     equivalents, as determined by the Administrator under 
     subsection (b), when used for transportation.
       (b) Determination of Transportation Sector Amount.--For the 
     transportation sector, the Administrator shall determine the 
     amount of greenhouse gases, measured in units of carbon 
     dioxide equivalents, that will be emitted when petroleum 
     products are used for transportation.
       (c) Exception for Certain Deposited Emissions.--
     Notwithstanding subsection (a), a covered entity is not 
     required to submit a tradeable allowance for any amount of 
     greenhouse gas that would otherwise have been emitted from a 
     facility under the ownership or control of that entity if--
       (1) the emission is deposited in a geological storage 
     facility approved by the Administrator under section 
     204(a)(2)(F); and
       (2) the entity agrees to submit tradeable allowances for 
     any portion of the deposited emission that is subsequently 
     emitted from that facility.
       (d) Determination of Hydroflurocarbon, Perfluorocarbon, and 
     Sulfur Hexafluoride Amount.--The Administrator shall 
     determine the amounts of hydrofluorocarbons, 
     perfluorocarbons, or sulfur hexafluoride, measured in units 
     of carbon dioxide equivalents, that will be deemed to be 
     emitted for purposes of this Act.

     SEC. 302. COMPLIANCE.

       (a) In General.--
       (1) Source of tradeable allowances used.--A covered entity 
     may use a tradeable allowance to meet the requirements of 
     this section without regard to whether the tradeable 
     allowance was allocated to it under subtitle B or acquired 
     from another entity or the Climate Change Credit Corporation 
     established under section 351.
       (2) Verification by administrator.--At various times during 
     each year, the Administrator shall determine whether each 
     covered entity has met the requirements of this section. In 
     making that determination, the Administrator shall--
       (A) take into account the tradeable allowances submitted by 
     the covered entity to the Administrator; and
       (B) retire the serial number assigned to each such 
     tradeable allowance.
       (b) Alternative Means of Compliance.--For the years 2010 
     and after, a covered entity may satisfy up to 15 percent of 
     its total allowance submission requirement under this section 
     by--
       (1) submitting tradeable allowances from another nation's 
     market in greenhouse gas emissions if--
       (A) the Secretary determines that the other nation's system 
     for trading in greenhouse gas emissions is complete, 
     accurate, and transparent and reviews that determination at 
     least once every 5 years;
       (B) the other nation has adopted enforceable limits on its 
     greenhouse gas emissions which the tradeable allowances were 
     issued to implement; and
       (C) the covered entity certifies that the tradeable 
     allowance has been retired unused in the other nation's 
     market;
       (2) submitting a registered net increase in sequestration, 
     as registered in the database, adjusted, if necessary, to 
     comply with the accounting standards and methods established 
     under section 372;
       (3) submitting a greenhouse gas emissions reduction (other 
     than a registered net increase in sequestration) that was 
     registered in the database by a person that is not a covered 
     entity; or
       (4) submitting credits obtained from the Administrator 
     under section 303.
       (c) Dedicated Program for Sequestration in Agricultural 
     Soils.--If a covered entity chooses to satisfy 15 percent of 
     its total allowance submission requirements under the 
     provisions of subsection (b), it shall satisfy up to 1.5 
     percent of its total allowance submission requirement by 
     submitting registered net increases in sequestration in 
     agricultural soils, as registered in the database, adjusted, 
     if necessary, to comply with the accounting standards and 
     methods established under section 371.

     SEC. 303. BORROWING AGAINST FUTURE REDUCTIONS.

       (a) In General.--The Administrator shall establish a 
     prograrn under which a covered entity may--
       (1) receive a credit in the current calendar year for 
     anticipated reductions in emissions in a future calendar 
     year; and
       (2) use the credit in lieu of a tradeable allowance to meet 
     the requirements of this Act for the current calendar year, 
     subject to the limitation imposed by section 302(b).
       (b) Determination of Tradeable Allowance Credits.--The 
     Administrator may make credits available under subsection (a) 
     only for anticipated reductions in emissions that--
       (1) are attributable to the realization of capital 
     investments in equipment, the construction, reconstruction, 
     or acquisition of facilities, or the deployment of new 
     technologies--

[[Page S7588]]

       (A) for which the covered entity has executed a binding 
     contract and secured, or applied for, all necessary permits 
     and operating or implementation authority;
       (B) that will not become operational within the current 
     calendar year; and
       (C) that will become operational and begin to reduce, 
     emissions from the covered entity within 5 years after the 
     year in which the credit is used; and
       (2) will be realized within 5 years after the year in which 
     the credit is used.
       (c) Carrying Cost.--If a covered entity uses a credit under 
     this section to meet the requirements of this Act for a 
     calendar year (referred to as the use year), the tradeable 
     allowance requirement for the year from which the credit was 
     taken (referred to as the source year) shall be increased by 
     an amount equal to--
       (1) 10 percent for each credit borrowed from the source 
     year, multiplied by
       (2) the number of years beginning after the use year and 
     before the source year.
       (d) Maximum Borrowing Period.--A credit from a year 
     beginning more than 5 years after the current year may not be 
     used to meet the requirements of this Act for the current 
     year.
       (e) Failure To Achieve Reductions Generating Credit.--If a 
     covered entity that uses a credit under this section fails to 
     achieve the anticipated reduction for which the credit was 
     granted for the year from which the credit was taken, then--
       (1) the covered entity's requirements under this Act for 
     that year shall be increased by the amount of the credit, 
     plus the amount determined under subsection (c);
       (2) any tradeable allowances submitted by the covered 
     entity for that year shall be counted first against the 
     increase in those requirements; and
       (3) the covered entity may not use credits under this 
     section to meet the increased requirements.

     SEC. 304. OTHER USES OF TRADEABLE ALLOWANCES.

       (a) In General.--Tradeable allowances may be sold, 
     exchanged, purchased, retired, or used as provided in this 
     section.
       (b) Intersector Trading.--Covered entities may purchase or 
     otherwise acquire tradeable allowances from other covered 
     sectors to satisfy the requirements of section 301.
       (c) Climate Change Credit Organization.--The Climate Change 
     Credit Corporation established under section 351 may sell 
     tradeable allowances allocated to it under section 332(a)(2) 
     to any covered entity or to any investor, broker, or dealer 
     in such tradeable allowances. The Climate Change Credit 
     Corporation shall use all proceeds from such sales in 
     accordance with the provisions of section 352.
       (d) Banking of Tradeable Allowances.--Notwithstanding the 
     requirements of section 301, a covered entity that has more 
     than a sufficient amount of tradeable allowances to satisfy 
     the requirements of section 301, may refrain from submitting 
     a tradeable allowance to satisfy the requirements in order to 
     sell, exchange, or use the tradeable allowance in the future.

     SEC. 305. EXEMPTION OF SOURCE CATEGORIES.

       (a) In General.--The Administrator may grant an exemption 
     from the requirements of this Act to a source category if the 
     Administrator determines, after public notice and comment, 
     that it is not feasible to measure or estimate emissions from 
     that source category, until such time as measurement or 
     estimation becomes feasible.
       (b) Reduction of Limitations.--If the Administrator exempts 
     a source category under subsection (a), the Administrator 
     shall also reduce the total tradeable allowances under 
     section 331(a)(1) by the amount of greenhouse gas emissions 
     that the exempted source category emitted in calendar year 
     2000, as identified in the 2000 Inventory.
       (c) Limitation on Exemption.--The Administrator may not 
     grant, an exemption under subsection (a) to carbon dioxide 
     produced from fossil fuel.

    Subtitle B--Establishment and Allocation of Tradeable Allowances

     SEC. 331. ESTABLISHMENT OF TRADEABLE ALLOWANCES.

       (a) In General.--The Administrator shall promulgate 
     regulations to establish tradeable allowances, denominated in 
     units of carbon dioxide equivalents, for calendar years 
     beginning after 2009, equal to--
       (1) 5896 million metric tons, measured in units of carbon 
     dioxide equivalents, reduced by
       (2) the amount of emissions of greenhouse gases in calendar 
     year 2000 from non-covered entities.
       (b) Serial Numbers.--The Administrator shall assign a 
     unique serial number to each tradeable allowance established 
     under subsection (a), and shall take such action as may be 
     necessary to prevent counterfeiting of tradeable allowances.
       (c) Nature of Tradeable Allowances.--A tradeable allowance 
     is not a property right, and nothing in this title or any 
     other provision of law limits the authority of the United 
     States to terminate or limit a tradeable allowance.
       (d) Non-Covered Entity.--In this section:
       (1) In general.--The term `non-covered entity' means an 
     entity that--
       (A) owns or controls a source of greenhouse gas emissions 
     in the electric power, industrial, or commercial sectors of 
     the United States economy (as defined in the Inventory), 
     refines or imports petroleum products for use in 
     transportation, or produces or imports hydrofluorocarbons, 
     perfluorocarbons, or sulfur hexafluoride; and
       (B) is not a covered entity.
       (2) Exception.--Notwithstanding paragraph (1), an entity 
     that is a covered entity for any calendar year beginning 
     after 2009 shall not be considered to be a non-covered entity 
     for purposes of subsection (a) only because it emitted, or 
     its products would have emitted, 10,000 metric tons or less 
     of greenhouse gas, measured in units of carbon dioxide 
     equivalents, in the year 2000.

     SEC. 332. DETERMINATION OF TRADEABLE ALLOWANCE ALLOCATIONS.

       (a) In General.--The Secretary shall determine--
       (1) the amount of tradeable allowances to be allocated to 
     each covered sector of that sector's allotments; and
       (2) the amount of tradeable allowances to be allocated to 
     the Climate Change Credit Corporation established under 
     section 351.
       (b) Allocation Factors.--In making the determination 
     required by subsection (a), the Secretary shall consider--
       (1) the distributive effect of the allocations on household 
     income and net worth of individuals;
       (2) the impact of the allocations on corporate income, 
     taxes, and asset value;
       (3) the impact of the allocations on income levels of 
     consumers and on their energy consumption;
       (4) the effects of the allocations in terms of economic 
     efficiency;
       (5) the ability of covered entities to pass through 
     compliance costs to their customers;
       (6) the degree to which the amount of allocations to the 
     covered sectors should decrease over time; and
       (7) the need to maintain the international competitiveness 
     of United States manufacturing and avoid the additional loss 
     of United States manufacturing jobs.
       (c) Allocation Recommendations and Implementation.--Before 
     allocating or providing tradeable allowances under subsection 
     (a) and within 24 months after the date of enactment of this 
     Act, the Secretary shall submit the determinations under 
     subsection (a) to the Senate Committee on Commerce, Science, 
     and Transportation, the Senate Committee on Environment and 
     Public Works, the House of Representatives Committee on 
     Science, and the House of Representatives Committee on Energy 
     and Commerce. The Secretary's determinations under paragraph 
     (1), including the allocations and provision of tradeable 
     allowances pursuant to that determination, are deemed to be a 
     major rule (as defined in section 804(2) of title 5, United 
     States Code), and subject to the provisions of chapter 8 of 
     that title.

     SEC. 333. ALLOCATION OF TRADEABLE ALLOWANCES.

       (a) In General.--Beginning with calendar year 2010 and 
     after taking into account any initial allocations under 
     section 334, the Administrator shall--
       (1) allocate to each covered sector that sector's 
     allotments determined by the Administrator under section 332 
     (adjusted for any such initial allocations and the allocation 
     to the Climate Change Credit Corporation established under 
     section 351); and
       (2) allocate to the Climate Change Credit Corporation 
     established under section 351 the tradeable allowances 
     allocable to that Corporation.
       (b) Intrasectorial Allotments.--The Administrator shall, by 
     regulation, establish a process for the allocation of 
     tradeable allowances under this section, without cost to 
     covered entities, that will--
       (1) encourage investments that increase the efficiency of 
     the processes that produce greenhouse gas emissions;
       (2) minimize the costs to the government of allocating the 
     tradeable allowances;
       (3) not penalize a covered entity for emissions reductions 
     made before 2010 and registered with the database; and
       (4) provide sufficient allocation for new entrants into the 
     sector.
       (c) Point Source Allocation.--The Administrator shall 
     allocate the tradeable allowances for the electricity 
     generation, industrial, and commercial sectors to the 
     entities owning or controlling the point sources of 
     greenhouse gas emissions within that sector.
       (d) Hydrofluorocarbons, Perfluorocarbons, and Sulfur 
     Hexafluoride.--The Administrator shall allocate the tradeable 
     allowances for producers or importers of hydrofluorocarbons, 
     perfluorocarbons, or sulfur hexafluoride to such producers or 
     importers,
       (e) Special Rule for Allocation Within the Transportation 
     Sector.--The Administrator shall allocate the tradeable 
     allowances for the transportation sector to petroleum 
     refiners or importers that produce or import petroleum 
     products that will be used as fuel for transportation.
       (f) Allocations to Rural Electric Cooperatives.--For each 
     electric generating unit that is owned or operated by a rural 
     electric cooperative, the Administrator shall allocate each 
     year, at no cost, allowances in an amount equal to the 
     greenhouse gas emissions of cash such unit in 2000, plus an 
     amount equal to the average emissions growth expected for all 
     such units. The allocations shall be offset from the 
     allowances allocated to the Climate Change Credit 
     Corporation.

[[Page S7589]]

     SEC. 334. ENSURING TARGET ADEQUACY.

       (a) In General.--Beginning 2 years after the date of 
     enactment of this Act, the Under Secretary of Commerce for 
     Oceans and Atmosphere shall review the allowances established 
     by section 331 no less frequently than biennially--
       (1) to re-evaluate the levels established by that 
     subsection, after taking into account the best available 
     science and the most currently available data, and
       (2) to re-evaluate the environmental and public health 
     impacts of specific concentration levels of greenhouse gases,

     to determine whether the allowances established by subsection 
     (a) continue to be consistent with the objective of the 
     United Nations' Framework Convention on Climate Change of 
     stabilizing levels of greenhouse gas emissions at a level 
     that will prevent dangerous anthropogenic interference with 
     the climate system.
       (b) Review of 2010 Levels.--The Under Secretary shall 
     specifically review in 2008 the level established under 
     section 331(a)(1), and transmit, a report on his reviews, 
     together with any recommendations, including legislative 
     recommendations, for modification of the levels, to the 
     Senate Committee on Commerce, Science, and Transportation, 
     the Senate Committee on Environment and Public Works, the 
     House of Representatives Committee on Science, and the House 
     of Representatives Committee on Energy and Commerce.

     SEC. 335. INITIAL ALLOCATIONS FOR EARLY PARTICIPATION AND 
                   ACCELERATED PARTICIPATION.

       Before making any allocations under section 333, the 
     Administrator shall allocate--
       (1) to any covered entity an amount, of tradeable 
     allowances equivalent to the amount, of greenhouse gas 
     emissions reductions registered by that covered entity in the 
     national greenhouse gas database if--
       (A) the covered entity has registered to use the registered 
     reduction in the year of allocation;
       (B) the reduction was registered prior to 2010; and
       (C) the Administrator retires the unique serial number 
     assigned to the reduction under section 201(c)(3); and
       (2) to any covered entity that has entered into an 
     accelerated participation agreement under section 336, such 
     tradeable allowances as the Administrator has determined to 
     be appropriate under that section.

     SEC. 336. BONUS FOR ACCELERATED PARTICIPATION.

       (a) In General.--If a covered entity executes an agreement 
     with the Administrator under which it agrees to reduce its 
     level of greenhouse gas emissions to a level no greater than 
     the level of its greenhouse gas emissions for calendar year 
     1990 by the year 2010, then, for the 6-year period beginning 
     with calendar year 2010, the Administrator shall--
       (1) provide additional tradeable allowances to that entity 
     when allocating allowances under section 334 in order to 
     recognize the additional emissions reductions that will be 
     required of the covered entity;
       (2) allow that entity to satisfy 20 percent of its 
     requirements under section 301 by--
       (A) submitting tradeable allowances from another nation's 
     market in greenhouse gas emissions under the conditions 
     described in section 312(b)(1);
       (B) submitting a registered net increase in sequestration, 
     as registered in the National Greenhouse Gas Database 
     established under section 201, and as adjusted by the 
     appropriate sequestration discount rate established under 
     section 371; or
       (C) submitting a greenhouse gas emission reduction (other 
     than a registered net increase in sequestration) that was 
     registered in the National Greenhouse Gas Database by a 
     person that is not a covered entity.
       (b) Termination.--An entity that executes an agreement 
     described in subsection (a) may terminate the agreement at 
     any time.
       (c) Failure To Meet Commitment.--If an entity that executes 
     an agreement described in subsection (a) fails to achieve the 
     level of emissions to which it committed by calendar year 
     2010--
       (1) its requirements under section 301 shall be increased 
     by the amount of any tradeable allowances provided to it 
     under subsection (a)(1); and
       (2) any tradeable allowances submitted thereafter shall be 
     counted first against the increase in those requirements.

             Subtitle C--Climate Change Credit Corporation

     SEC. 351. ESTABLISHMENT.

       (a) In General.--The Climate Change Credit Corporation is 
     established as a nonprofit corporation without stock. The 
     Corporation shall not be considered to be an agency or 
     establishment of the United States Government.
       (b) Applicable Laws.--The Corporation shall be subject to 
     the provisions of this title and, to the extent consistent 
     with this title, to the District of Columbia Business 
     Corporation Act.
       (c) Board of Directors.--The Corporation shall have a board 
     of directors of 5 individuals who are citizens of the United 
     States, of whom 1 shall be elected annually by the board to 
     serve as chairman. No more than 3 members of the board 
     serving at any time may be affiliated with the same political 
     party. The members of the board shall be appointed by the 
     President of the United States, by and with the advice and 
     consent of the Senate and shall serve for terms of 5 years.

     SEC. 352. PURPOSES AND FUNCTIONS.

       (a) Trading.--The Corporation--
       (1) shall receive and manage tradeable allowances allocated 
     to it under section 333(a)(2); and
       (2) shall buy and sell tradeable allowances, whether 
     allocated to it under that section or obtained by purchase, 
     trade, or donation from other entities; but
       (3) may not retire tradeable allowances unused.
       (b) Use of Tradeable Allowances and Proceeds.--
       (1) In general.--The Corporation shall use the tradeable 
     allowances, and proceeds derived from its trading activities 
     in tradeable allowances, to reduce costs borne by consumers 
     as a result of the greenhouse gas reduction requirements of 
     this Act. The reductions--
       (A) may be obtained by buy-down, subsidy, negotiation of 
     discounts, consumer rebates, or otherwise;
       (B) shall be, as nearly as possible, equitably distributed 
     across all regions of the United States; and
       (C) may include arrangements for preferential treatment to 
     consumers who can least afford any such increased costs.
       (2) Transition assistance to dislocated workers and 
     communities.--The Corporation shall allocate a percentage of 
     the proceeds derived from its trading activities in tradeable 
     allowances to provide transition assistance to dislocated 
     workers and communities. Transition assistance may take the 
     form of--
       (A) grants to employers, employer associations, and 
     representatives of employees--
       (i) to provide training, adjustment assistance, and 
     employment services to dislocated workers; and
       (ii) to make income-maintenance and needs-related payments 
     to dislocated workers; and
       (B) grants to State and local governments to assist 
     communities in attracting new employers or providing 
     essential local government services.
       (3) Phase-out of transition assistance.--The percentage 
     allocated by the Corporation under paragraph (2)--
       (A) shall be 20 percent for 2010;
       (B) shall be reduced by 2 percentage points each year 
     thereafter; and
       (C) may not be reduced below zero.
       (4) Technology deployment programs.--The Corporation shall 
     establish and carry out a program, through direct grants, 
     revolving loan programs, or other financial measures, to 
     provide support for the deployment of technology to assist in 
     compliance with this Act by distributing the proceeds from no 
     less than 10 percent of the total allowances allocated to it. 
     The support shall include the following:
       (A) Coal gasification combined-cycle and geological carbon 
     storage program.--The Corporation shall establish and carry 
     out a program, through direct grants, to provide incentives 
     for the repowering of existing facilities or construction of 
     new facilities producing electricity or other products from 
     coal gasification combined-cycle plants that capture and 
     geologically store at least 90 percent of the carbon dioxide 
     produced at the facility in accordance with requirements 
     established by the Administrator to ensure the permanence of 
     the storage and that such storage will not cause or 
     contribute to significant adverse effects on public health or 
     the environment. The Corporation shall ensure that no less 
     than 20 percent of the funding under this program is 
     distributed to rural electric cooperatives.
       (B) Agricultural programs.--The Corporation shall establish 
     and carry out a program, through direct grants, revolving 
     loan programs, or other financial measures, to provide 
     incentives for greenhouse gas emissions reductions or net 
     increases in greenhouse gas sequestration on agricultural 
     lands. The program shall include incentives for--
       (i) production of wind energy on agricultural lands;
       (ii) agricultural management practices that achieve 
     verified, incremental increases in net carbon sequestration, 
     in accordance with the requirements established by the 
     Administrator under section 371; and
       (iii) production of renewable fuels that, after 
     consideration of the energy needed to produce such fuels, 
     result in a net reduction in greenhouse gas emissions.

            Subtitle D--Sequestration Accounting; Penalties

     SEC. 371. SEQUESTRATION ACCOUNTING.

       (a) Sequestration Accounting.--If a covered entity uses a 
     registered net increase in sequestration to satisfy the 
     requirements of section 301 for any year, that covered entity 
     shall submit information to the Administrator every 5 years 
     thereafter sufficient to allow the Administrator to 
     determine, using the methods and standards created under 
     section 204, whether that net increase in sequestration still 
     exists. Unless the Administrator determines that the net 
     increase in sequestration continues to exist, the covered 
     entity shall offset any loss of sequestration by submitting 
     additional tradeable allowances of equivalent amount in the 
     calendar year following that determination.
       (b) Regulations Required.--The Secretary, acting through 
     the Under Secretary of Commerce for Science and Technology, 
     in coordination with the Secretary of Agriculture, the 
     Secretary of Energy, and the Administrator, shall issue 
     regulations establishing the sequestration accounting rules 
     for all classes of sequestration projects.

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       (c) Criteria for Regulations.--In issuing regulations under 
     this section, the Secretary shall use the following criteria:
       (1) If the range of possible amounts of net increase in 
     sequestration for a particular class of sequestration project 
     is not more than 10 percent of the median of that range, the 
     amount of sequestration awarded shall be equal to the median 
     value of that range.
       (2) If the range of possible amounts of net increase in 
     sequestration for a particular class of sequestration project 
     is more than 10 percent of the median of that range, the 
     amount of sequestration awarded shall be equal to the fifth 
     percentile of that range.
       (3) The regulations shall include procedures for accounting 
     for potential leakage from sequestration projects and for 
     ensuring that any registered increase in sequestration is in 
     addition to that which would have occurred if this Act had 
     not been enacted.
       (d) Updates.--The Secretary shall update the sequestration 
     accounting rules for every class of sequestration project at 
     least once every 5 years.

     SEC. 372. PENALTIES.

       Any covered entity that fails to meet the requirements of 
     section 301 for a year shall be liable for a civil penalty, 
     payable to the Administrator, equal to thrice the market 
     value (determined as of the last day of the year at issue) of 
     the tradeable allowances that would be necessary for that 
     covered entity to meet those requirements on the date of the 
     emission that resulted in the violation.

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