[Congressional Record Volume 153, Number 9 (Wednesday, January 17, 2007)]
[Senate]
[Pages S681-S691]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. FEINSTEIN (for herself and Mr. Carper):
  S. 317. A bill to amend the Clean Air Act to establish a program to 
regulate the emission of greenhouse gases from electric utilities; to 
the Committee on Environment and Public Works.
  Mrs. FEINSTEIN. Mr. President, I am pleased to join with Senator 
Carper to introduce the Electric Utility Cap and Trade Act.
  Today, we are introducing the first of five bills to address the 
number one environmental issue facing this planet--global warming.
  This bill establishes a national cap and trade system over the 
electricity sector. It will reduce emissions from this sector by 25 
percent by 2020.
  What distinguishes this bill is that it has the support of 6 major 
energy companies.
  Together, these companies operate in 42 States and produce 
approximately 150,000 megawatts of energy. This is greater than 15 
percent of the U.S. electricity market.
  These companies include, first, Pacific Gas & Electric (PG&E) 
Corporation, which is the parent of Pacific Gas and Electric Company. 
PG&E is California's largest utility and serves approximately 1 in 
every 20 Americans. PG&E Corporation currently owns approximately 6,500 
megawatts of generation.
  Second, Calpine, which operates in 20 States and Canada, generating 
26,000 megawatts of energy.
  Third, Florida Power & Light, which operates in 26 States, generating 
more than 30,000 megawatts.
  Fourth, Entergy, which operates in Arkansas, Louisiana, Mississippi, 
and Texas, generating approximately 30,000 megawatts.
  Fifth, Exelon, which operates in Illinois and Pennsylvania, 
generating 38,000 megawatts of energy.
  Sixth, Public Service Enterprise Group, which is the largest provider 
of energy in New Jersey, generating approximately 15,000 megawatts.
  These companies' support is greatly appreciated, and I think it 
signals a new willingness in the energy industry to seriously tackle 
global warming.
  This bill is just the beginning of a major program. Over the next 
weeks and months, we will also be introducing a cap and trade bill for 
the industrial sector; a bill that increases fuel economy standards by 
ten miles per gallon over the next ten years; a bill to promote bio-
diesel and E-85; and other low carbon fuels and an energy efficiency 
bill modeled after California's program.
  This is an ambitious agenda, but I believe it is the right way to go 
if we are to slow global warming.
  A great debate has raged in the halls of Congress, in academia, and 
in the field over the past two decades.
  At issue were three fundamental questions: First, is the earth 
warming? Second, if so, is the warming caused by human activity? And 
third, can it be stopped?
  Over the past few years, a consensus has been forged. An overwhelming 
body of evidence has been gathered. And, an inescapable conclusion has 
been reached: The earth is warming. The warming is caused by human 
activity, namely the combustion of fossil fuels.
  It cannot be stopped, because carbon dioxide does not dissipate. It 
stays in the atmosphere for 30, 40, or 50 years or more.
  When we pick up the newspaper each day we see the results. We read 
about ice sheets the size of small nations breaking off the ice shelves 
in the Arctic and Antarctic. We read about polar bears committing acts 
of cannibalism, something unknown in recent memory. We read about 
species disappearing, seas rising, coral reefs dying, and glaciers 
melting.
  But, all this dire news does not mean we should throw up our hands 
and do nothing. If we act now, and if we act with purpose, the most 
serious consequences can be averted. Global warming can be contained to 
1-2 degrees Fahrenheit.
  But if we do not act, and temperatures spike by 5 degrees or more, 
the world around us will change forever. There's no going back.
  The question becomes what can we do? I've spent the last year trying 
to answer this question. And the conclusion I've reached is that there 
is no single answer, no silver bullet, no one thing to turn the tide. 
But rather, we need many answers in many different areas.
  And more importantly, we need people of common purpose, working 
together, to find innovative solutions. And that's why we're here 
today.
  As I was searching for answers, I picked up the phone and called PG&E 
Corporation's CEO, Peter Darbee. I said, ``Peter, would you help me out 
on Global Warming legislation?''
  To his immense credit, Peter went back, studied the issue, and said 
``You're right. Something must be done.'' And he's been terrific. He's 
helped at every step of the way.
  It means so much to me that PG&E, Calpine, Florida Power and Light, 
and all the companies that comprise the Clean Energy Group's Clean Air 
Policy Initiative have endorsed the legislation we are introducing 
today.
  This is the most aggressive global warming bill that industry has 
supported to date. And I want to thank the CEOs of these companies 
today for their courage and leadership in taking this step.
  Here's what the bill would do. The bill would establish a cap and 
trade program for the electricity sector, which is the single largest 
piece of the global warming puzzle, accounting for 33 percent of all 
U.S. emissions.
  First, the bill would a cap at 2006 levels in 2011--a 6 percent 
reduction from anticipated levels of greenhouse gases from the electric 
sector.
  In 2015, it would ratchet the cap down to 2001 levels--a 16 percent 
reduction from anticipated levels.
  In 2016, the bill would reduce the cap further to 1 percent below 
2001 levels. And, from 2017 to 2019 it would require additional annual 
1 percent reductions.
  By 2020, emissions would be reduced 25 percent below anticipated 
levels.
  And after that, emissions will be reduced even further--by an 
additional 1.5 percent a year and potentially more, if the EPA, based 
on scientific evidence, believes that more needs to be done to avert 
the most dire consequences of global warming.
  That's the cap.
  The trade part of the bill gives companies flexibility to embrace new 
technologies, encourage innovation, and promote green practices--not 
just in this area, but across the economy.
  As I said, this bill is only one part of the answer. One piece of the 
puzzle.
  Congress has a window of opportunity to act. If we act boldly and 
quickly, then perhaps we can make a difference.
  But if we resort to the feuding which has characterized past 
Congresses, our world will be the poorer for it. I think there is but 
one choice.
  I urge my colleagues to join me in supporting this legislation and I 
ask unanimous consent that the text of the legislation be printed in 
the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

[[Page S682]]

                                 S. 317

       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 ``Electric 
     Utility Cap and Trade Act of 2007''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                     TITLE I--GLOBAL CLIMATE CHANGE

Sec. 101. Global climate change.

                   ``TITLE VII--GLOBAL CLIMATE CHANGE

``Sec. 701. Definitions.

     ``Subtitle A--Stopping and Reversing Greenhouse Gas Emissions

``Sec. 711. Regulations; greenhouse gas tonnage limitation.
``Sec. 712. Scientific review of the safe climate level.
``Sec. 713. Required review of emission reductions needed to maintain 
              the safe climate level.
``Sec. 714. Distribution of allowances between auctions and 
              allocations; nature of allowances.
``Sec. 715. Auction of allowances.
``Sec. 716. Allocation of allowances.
``Sec. 717. Climate Action Trust Fund.
``Sec. 718. Early reduction credits.
``Sec. 719. Recognition and use of international credits.
``Sec. 720. Avoiding significant economic harm.
``Sec. 721. Use and transfer of credits.
``Sec. 722. Compliance and enforcement.

                      ``Subtitle B--Offset Credits

``Sec. 731. Outreach initiative on revenue enhancement for agricultural 
              producers.
``Sec. 732. Offset measurement for agricultural, forestry, wetlands, 
              and other land use-related sequestration projects.
``Sec. 733. Categories of agricultural offset practices.
``Sec. 734. Offset credits from forest management, grazing management, 
              and wetlands management.
``Sec. 735. Offset credits from the avoided conversion of forested land 
              or wetland.
``Sec. 736. Offset credits from greenhouse gas emissions reduction 
              projects.
``Sec. 737. Borrowing at program start-up based on contracts to 
              purchase offset credits.
``Sec. 738. Review and correction of accounting for offset credits.

              ``Subtitle C--National Registry for Credits

``Sec. 741. Establishment and operation of national registry.
``Sec. 742. Monitoring and reporting.

             TITLE II--CLIMATE CHANGE RESEARCH INITIATIVES

Sec. 201. Research grants through National Science Foundation.
Sec. 202. Abrupt climate change research.
Sec. 203. Development of new measurement technologies.
Sec. 204. Technology development and diffusion.
Sec. 205. Public land.
Sec. 206. Sea level rise from polar ice sheet melting.

                     TITLE I--GLOBAL CLIMATE CHANGE

     SEC. 101. GLOBAL CLIMATE CHANGE.

       (a) In General.--The Clean Air Act (42 U.S.C. 7401 et seq.) 
     is amended by adding at the end the following:

                   ``TITLE VII--GLOBAL CLIMATE CHANGE

     ``SEC. 701. DEFINITIONS.

       ``In this title:
       ``(1) Affected unit.--
       ``(A) In general.--The term `affected unit' means an 
     electric generating facility that--
       ``(i) has a nameplate capacity greater than 25 megawatts;
       ``(ii) combusts greenhouse gas-emitting fuels; and
       ``(iii) generates electricity for sale.
       ``(B) Inclusions.--The term `affected unit' includes--
       ``(i) a cogeneration facility; and
       ``(ii) a facility owned or operated by any instrumentality 
     of--

       ``(I) the Federal Government; or
       ``(II) any State, local, or tribal government.

       ``(2) Afforestation.--The term `afforestation' means the 
     conversion to a forested condition of land that has been in a 
     nonforested condition for at least 15 years.
       ``(3) Allocation.--The term `allocation', with respect to 
     an allowance, means the issuance of an allowance directly to 
     covered units, at no cost, under this title.
       ``(4) Allowance.--The term `allowance' means an 
     authorization under this title to emit 1 metric ton of carbon 
     dioxide (or a carbon dioxide equivalent), as allocated to a 
     covered unit pursuant to section 716.
       ``(5) Carbon dioxide equivalent.--The term `carbon dioxide 
     equivalent' means, with respect to a greenhouse gas, the 
     quantity of the greenhouse gas that makes the same 
     contribution to global warming as 1 metric ton of carbon 
     dioxide, as determined by the Administrator.
       ``(6) Cogeneration facility.--The term `cogeneration 
     facility' means a facility that--
       ``(A) cogenerates steam and electricity; and
       ``(B) supplies, on a net annual basis, to the electric 
     power grid--
       ``(i) more than \1/3\ of the potential electric output 
     capacity of the facility; and
       ``(ii) more than 25 megawatts of electrical output from the 
     facility.
       ``(7) Covered unit.--The term `covered unit' means--
       ``(A) an affected unit;
       ``(B) a nuclear generating unit (including a facility owned 
     or operated by any instrumentality of the Federal Government 
     or of any State, local, or tribal government), but only to 
     the extent of incremental nuclear generation of the unit; and
       ``(C) a renewable energy unit (including a facility owned 
     or operated by any instrumentality of the Federal Government 
     or of any State, local, or tribal government).
       ``(8) Credit.--
       ``(A) In general.--The term `credit' means an authorization 
     under this title to emit greenhouse gases equivalent to 1 
     metric ton of carbon dioxide.
       ``(B) Inclusions.--The term `credit' includes--
       ``(i) an allowance;
       ``(ii) an offset credit;
       ``(iii) an early reduction credit; or
       ``(iv) an international credit.
       ``(9) Early reduction credit.--The term `early reduction 
     credit' means a credit issued under section 718 for a 
     reduction in the quantity of emissions or an increase in 
     sequestration equivalent to 1 metric ton of carbon dioxide.
       ``(10) Fund.--The term `Fund' means the Climate Action 
     Trust Fund established by section 717(a)(1).
       ``(11) Greenhouse gas.--The term `greenhouse gas' means--
       ``(A) carbon dioxide;
       ``(B) methane;
       ``(C) nitrous oxide;
       ``(D) hydrofluorocarbons;
       ``(E) perfluorocarbons; and
       ``(F) sulfur hexafluoride.
       ``(12) Greenhouse gas authorized account representative.--
     The term `greenhouse gas authorized account representative' 
     means, for a covered unit, an individual who is authorized by 
     the owner and operator of the covered unit to represent and 
     legally bind the owner and operator in matters pertaining to 
     this title.
       ``(13) Greenhouse gas-emitting fuel.--
       ``(A) In general.--The term `greenhouse gas-emitting fuel' 
     means any fuel that produces a greenhouse gas as a combustion 
     product.
       ``(B) Inclusions.--The term `greenhouse gas-emitting fuel' 
     includes--
       ``(i) fossil fuels;
       ``(ii) municipal waste;
       ``(iii) industrial waste;
       ``(iv) agricultural waste; and
       ``(v) biomass that is not grown using sustainable 
     techniques.
       ``(C) Exclusion.--The term `greenhouse gas-emitting fuel' 
     does not include biomass that is grown using sustainable 
     techniques.
       ``(14) Incremental nuclear generation.--The term 
     `incremental nuclear generation' means, as determined by the 
     Administrator and measured in megawatt hours, the difference 
     between--
       ``(A) the quantity of electricity generated by a nuclear 
     generating unit in a calendar year; and
       ``(B) the quantity of electricity generated by the nuclear 
     generating unit in calendar year 1990.
       ``(15) Industry sector.--The term `industry sector' means 
     any sector of the economy of a country (including, where 
     applicable, the forestry sector) that is responsible for 
     significant quantities of greenhouse gas emissions.
       ``(16) International credit.--The term `international 
     credit' means a credit recognized for a reduction in the 
     quantity of emissions or an increase in sequestration 
     equivalent to 1 metric ton of carbon dioxide that--
       ``(A) arises from activities outside the United States; and
       ``(B) is authorized for use under section 719.
       ``(17) Invasive species.--The term `invasive species' means 
     a species (including pathogens, seeds, spores, or any other 
     biological material relating to a species) the introduction 
     of which causes or is likely to cause economic or 
     environmental harm or harm to human health.
       ``(18) Land-grant colleges and universities.--The term 
     `land-grant colleges and universities' has the meaning given 
     the term in section 1404 of the National Agricultural 
     Research, Extension, and Teaching Policy Act of 1977 (7 
     U.S.C. 3103).
       ``(19) Leakage.--The term `leakage' means an increase in 
     greenhouse gas emissions or a decrease in sequestration of 
     greenhouse gases that is--
       ``(A) outside the area of a project; and
       ``(B) attributable to the project.
       ``(20) Native plant.--The term `native plant' means an 
     indigenous, terrestrial, or aquatic plant species that 
     evolved naturally in an ecosystem.
       ``(21) New affected unit.--The term `new affected unit' 
     means an affected unit that has operated for not more than 3 
     years.
       ``(22) New covered unit.--The term `new covered unit' means 
     a covered unit that has operated for not more than 3 years.
       ``(23) Noxious weed.--The term `noxious weed' means a plant 
     species that is--
       ``(A) characterized by being--
       ``(i) aggressive and difficult to manage;

[[Page S683]]

       ``(ii) poisonous, toxic, parasitic, or a carrier or host of 
     insects or disease representing a serious threat to native 
     species or crops; or
       ``(iii) nonnative to, new to, or not common to, the United 
     States (or a region of the United States); or
       ``(B) otherwise designated as a noxious weed by the 
     Secretary of Agriculture or an appropriate State official.
       ``(24) Nuclear generating unit.--The term `nuclear 
     generating unit' means an electric generating facility that 
     uses nuclear energy to generate electricity for sale.
       ``(25) Offset credit.--The term `offset credit' means a 
     credit issued for an offset project pursuant to subtitle B 
     certifying a reduction in the quantity of emissions or an 
     increase in sequestration equivalent to 1 metric ton of 
     carbon dioxide.
       ``(26) Offset practice.--The term `offset practice' means a 
     practice that--
       ``(A) reduces greenhouse gas emissions or increases 
     sequestration other than by reducing the combustion of 
     greenhouse gas-emitting fuel at an affected unit; and
       ``(B) may be eligible to create an offset credit under this 
     title.
       ``(27) Offset project.--The term `offset project' means a 
     project that reduces greenhouse gas emissions or increases 
     sequestration of carbon dioxide or a carbon dioxide 
     equivalent by a method other than reduction of combustion of 
     greenhouse gas-emitting fuel at an affected unit.
       ``(28) Panel.--The term `Panel' means the Climate Science 
     Advisory Panel established by section 712(b)(1).
       ``(29) Plant material.--The term `plant material' means--
       ``(A) a seed;
       ``(B) a part of a plant; or
       ``(C) a whole plant.
       ``(30) Renewable energy.--The term `renewable energy' means 
     electricity generated from--
       ``(A) wind;
       ``(B) organic waste (excluding incinerated municipal solid 
     waste);
       ``(C) biomass (including anaerobic digestion from farm 
     systems and landfill gas recovery); or
       ``(D) a hydroelectric, geothermal, solar thermal, 
     photovoltaic, tidal, wave, or other nonfossil fuel, 
     nonnuclear source.
       ``(31) Renewable energy unit.--The term `renewable energy 
     unit' means an electric generating unit that exclusively uses 
     renewable energy to generate electricity for sale.
       ``(32) Restoration.--
       ``(A) In general.--The term `restoration' means assisting 
     the recovery of an ecosystem that has been degraded, damaged, 
     or destroyed.
       ``(B) Inclusion.--The term `restoration' includes the 
     reestablishment in an ecosystem of preexisting biotic 
     integrity with respect to species composition and community 
     structure.
       ``(33) Sequestration.--The term `sequestration' means the 
     separation, isolation, or removal of greenhouse gases from 
     the atmosphere.
       ``(34) Sequestration flow.--The term `sequestration flow' 
     means the uptake of greenhouse gases each year from 
     sequestration practices, as calculated under section 732.
       ``(35) Sustainable technique.--The term `sustainable 
     technique' means an agricultural, forestry, or animal 
     husbandry technique that does not result in--
       ``(A) a long-term net depletion of natural resources; or
       ``(B) a net emission of greenhouse gas during the lifecycle 
     of biomass production, harvest, processing, and consumption.
       ``(36) UNFCCC.--The term `UNFCCC' means the United Nations 
     Framework Convention on Climate Change, done at New York on 
     May 9, 1992.

     ``Subtitle A--Stopping and Reversing Greenhouse Gas Emissions

     ``SEC. 711. REGULATIONS; GREENHOUSE GAS TONNAGE LIMITATION.

       ``(a) Regulations.--Not later than 18 months after the date 
     of enactment of this title, the Administrator shall 
     promulgate regulations to establish an allowance trading 
     program to address emissions of greenhouse gases from 
     affected units in the United States.
       ``(b) Greenhouse Gas Tonnage Limitation.--Beginning in 
     calendar year 2011, the annual tonnage limitation for the 
     aggregate quantity of emissions of greenhouse gases from 
     affected units in the United States shall be equal to--
       ``(1) for each of calendar years 2011 through 2014, the 
     aggregate quantity of emissions emitted from affected units 
     in calendar year 2006, as determined by the Administrator 
     based on certified and quality-assured continuous emissions 
     monitoring data for greenhouse gases, or data that the 
     Administrator determines to be of similar reliability for 
     affected units without continuous monitoring systems, 
     reported to the Administrator by affected units in accordance 
     with this subtitle;
       ``(2) for calendar year 2015, the aggregate quantity of 
     emissions emitted from affected units in calendar year 2001, 
     as determined by the Administrator based on certified and 
     quality-assured continuous emissions monitoring data for 
     greenhouse gases, or data that the Administrator determines 
     to be of similar reliability for affected units without 
     continuous monitoring systems, reported to the Administrator 
     by affected units in accordance with this subtitle;
       ``(3) for each of calendar years 2016 through 2019, the 
     aggregate quantity of emissions emitted from affected units 
     during the calendar year that is 1 percent less than the 
     aggregate quantity of emissions from affected units allowed 
     pursuant to this section during the preceding calendar year; 
     and
       ``(4) for calendar year 2020 and each calendar year 
     thereafter, the aggregate quantity of emissions emitted 
     during the calendar year that is 1.5 percent less than the 
     aggregate quantity of emissions from affected units allowed 
     pursuant to this section during the preceding calendar year, 
     except as modified by the Administrator pursuant to section 
     713.

     ``SEC. 712. SCIENTIFIC REVIEW OF THE SAFE CLIMATE LEVEL.

       ``(a) Definition and Objective of Maintaining the Safe 
     Climate Level.--
       ``(1) Finding.--Congress finds that ratification by the 
     Senate in 1992 of the UNFCCC, commitments which were affirmed 
     by the President in 2002, established for the United States 
     an objective of `stabilization of greenhouse gas 
     concentrations in the atmosphere at a level that would 
     prevent dangerous anthropogenic interference with the climate 
     system'.
       ``(2) Definition of safe climate level.--In this section, 
     the term `safe climate level' means the climate level 
     referred to in paragraph (1).
       ``(b) Climate Science Advisory Panel.--
       ``(1) Establishment.--Not later than 270 days after the 
     date of enactment of this title, the Administrator shall 
     establish an advisory panel, to be known as the `Climate 
     Science Advisory Panel'.
       ``(2) Duties.--The Panel shall--
       ``(A) inform Congress and the Administrator of the state of 
     climate science;
       ``(B) not later than December 31, 2011, and not less 
     frequently than every 4 years thereafter, issue a report that 
     is endorsed by at least 7 members of the Panel that describes 
     recommendations for the Administrator, based on the best 
     available information in the fields of climate science, 
     including reports from the Intergovernmental Panel on Climate 
     Change, relating to--
       ``(i) the specific concentration, in parts per million, of 
     all greenhouse gases in carbon dioxide equivalents at or 
     below which constitutes the safe climate level; and
       ``(ii) the projected timeframe for achieving the safe 
     climate level.
       ``(3) Composition.--
       ``(A) In general.--The Panel shall be composed of 8 climate 
     scientists and 3 former Federal officials, as described in 
     subparagraphs (B) through (D).
       ``(B) Climate scientists.--Not later than 270 days after 
     the date of enactment of this title, the President of the 
     National Academy of Sciences shall appoint to serve on the 
     Panel 8 climate scientists from among individuals who--
       ``(i) have earned doctorate degrees;
       ``(ii) have performed research in physical, biological, or 
     social sciences, mathematics, economics, or related fields, 
     with a particular focus on or link to 1 or more aspects of 
     climate science;
       ``(iii) have records of peer-reviewed publications that 
     include--

       ``(I) publications in main-stream, high-quality scientific 
     journals (such as journals associated with respected 
     scientific societies or those with a high impact factor, as 
     determined by the Institute for Scientific Information);
       ``(II) recent publications relating to earth systems, and 
     particularly relating to the climate system; and
       ``(III) a high publication rate, typically at least 2 or 3 
     papers per year; and

       ``(iv) have participated in high-level committees, such as 
     those formed by the National Academy of Sciences or by 
     leading scientific societies.
       ``(C) Restriction.--A majority of climate scientists 
     appointed to the Panel under subparagraph (B) shall be 
     participating, as of the date of appointment to the Panel, in 
     active research in the physical or biological sciences, with 
     a particular focus on or link to 1 or more aspects of climate 
     science.
       ``(D) Federal officials.--
       ``(i) In general.--Subject to clause (ii), the 
     Administrator shall appoint as members of the Panel, the 
     longest-serving former Administrators of the Environmental 
     Protection Agency for each of the 3 most recent former 
     Presidents.
       ``(ii) Timing.--The 3 most recent former Presidents 
     described in clause (i) shall be identified as of the 
     deadline for appointments to the Panel under subparagraph (B) 
     or (E)(ii), whichever is applicable.
       ``(iii) Substitutes.--If a former Administrator described 
     in clause (i) declines appointment, or is unable to serve, as 
     a member of the Panel, the Administrator shall appoint in 
     place of the former Administrator--

       ``(I) the longest-serving former Administrator for the 
     applicable President who agrees to serve; or
       ``(II) if no individual described in subclause (I) accepts 
     appointment as a member of the Panel, the longest-serving 
     Assistant Administrator for Air and Radiation for the 
     applicable President who agrees to serve.

       ``(E) Terms of service and vacancies.--
       ``(i) Terms.--The initial term of a member of the Panel 
     shall be--

       ``(I) to the maximum extent practicable, the period covered 
     by, and extending through the date of issuance of, each 
     report under paragraph (2)(B); but
       ``(II) not longer than 4 years.

[[Page S684]]

       ``(ii) Subsequent panels and reports.--On the issuance of 
     each report under paragraph (2)(B)--

       ``(I) the Panel that submitted the report shall terminate; 
     and
       ``(II)(aa) pursuant to subparagraphs (B) and (C), the 
     President of the National Academy of Sciences shall appoint 
     climate scientists (including at least 3 climate scientists 
     who served as members of the preceding Panel) to serve as 
     members of a new Panel by not later than 15 months after the 
     deadline for issuance of the report under paragraph (2)(B); 
     and
       ``(bb) pursuant to subparagraph (D), the Administrator 
     shall appoint 3 Federal officials as members of the new Panel 
     by the deadline described in item (aa).

       ``(iii) Vacancies.--Vacancies in the membership of the 
     Panel--

       ``(I) shall not affect the power of the remaining members 
     to execute the functions of the Panel; and
       ``(II) shall be filled in the same manner in which the 
     original appointment was made.

       ``(F) Chairperson and vice chairperson.--The Panel shall 
     elect a Chairperson and Vice Chairperson as soon as 
     practicable.
       ``(G) Compensation of members.--A member of the Panel shall 
     be compensated at a rate equal to the daily equivalent of the 
     annual rate of basic pay prescribed for level IV of the 
     Executive Schedule under section 5315 of title 5, United 
     States Code, for each day (including travel time) during 
     which the member is engaged in the performance of the duties 
     of the Panel.
       ``(H) Travel expenses.--A member of the Panel shall be 
     allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for an employee of an agency 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from the home or regular place of business 
     of the member in the performance of the duties of the Panel.
       ``(4) Staff.--
       ``(A) In general.--The Chairperson of the Panel may, 
     without regard to the civil service laws (including 
     regulations), appoint and terminate an executive director and 
     such other additional personnel as are necessary to enable 
     the Panel to perform the duties of the Panel.
       ``(B) Confirmation of executive director.--The employment 
     of an executive director shall be subject to confirmation by 
     the Panel.
       ``(C) Compensation.--
       ``(i) In general.--Except as provided in clause (ii), the 
     Chairperson of the Panel may fix the compensation of the 
     executive director and other personnel without regard to the 
     provisions of chapter 51 and subchapter III of chapter 53 of 
     title 5, United States Code, relating to classification of 
     positions and General Schedule pay rates.
       ``(ii) Exception.--The rate of pay for the executive 
     director and other personnel shall not exceed the rate 
     payable for level V of the Executive Schedule under section 
     5316 of title 5, United States Code.
       ``(D) Detail of federal government employees.--
       ``(i) In general.--An employee of the Federal Government 
     may be detailed to the staff of the Panel without 
     reimbursement.
       ``(ii) Treatment of detailees.--The detail of the employee 
     shall be without interruption or loss of civil service status 
     or privilege.
       ``(E) Procurement of temporary and intermittent services.--
     The Chairperson or executive director of the Panel may 
     procure temporary and intermittent services in accordance 
     with section 3109(b) of title 5, United States Code, at rates 
     for individuals that do not exceed the daily equivalent of 
     the annual rate of basic pay prescribed for level V of the 
     Executive Schedule under section 5316 of that title.
       ``(5) Hearings.--The Panel may hold such hearings, meet and 
     act at such times and places, take such testimony, and 
     receive such evidence as the Panel considers advisable to 
     carry out this section.
       ``(6) Information from federal agencies.--
       ``(A) In general.--The Panel may secure directly from a 
     Federal agency such information as the Panel considers 
     necessary to carry out this section.
       ``(B) Provision of information.--On request of the 
     Chairperson of the Panel, the head of the agency shall 
     provide the information to the Panel.
       ``(7) Postal services.--The Panel may use the United States 
     mail in the same manner and under the same conditions as 
     other agencies of the Federal Government.

     ``SEC. 713. REQUIRED REVIEW OF EMISSION REDUCTIONS NEEDED TO 
                   MAINTAIN THE SAFE CLIMATE LEVEL.

       ``(a) Review and Determination Regarding Reduction Rate.--
     Not later than December 31, 2015, the Administrator, after 
     providing public notice and opportunity to comment, shall 
     promulgate a final rule pursuant to which the Administrator 
     shall review the reduction rate for greenhouse gas emissions 
     required under section 711(b)(4) and determine--
       ``(1) whether to--
       ``(A) accept the recommendations of the Panel under section 
     712(b)(2)(B) regarding the safe climate level and the 
     timeframe for achieving the safe climate level; or
       ``(B) establish a different safe climate level or 
     timeframe, together with a detailed explanation of the 
     justification of the Administrator for rejection of the 
     recommendations of the Panel; and
       ``(2) whether, in order to achieve the safe climate level 
     within the timeframe described in paragraph (1), the 
     reduction rate under section 711(b)(4) is most accurately 
     characterized as requiring--
       ``(A) the appropriate level of emission reductions;
       ``(B) lesser emission reductions than are necessary; or
       ``(C) greater emission reductions than are necessary.
       ``(b) Modification of Reduction Rate.--
       ``(1) In general.--If the Administrator makes a 
     determination described in subparagraph (B) or (C) of 
     subsection (a)(2), the final rule promulgated pursuant to 
     subsection (a) shall establish a required level of emissions 
     reductions for each calendar year, beginning with calendar 
     year 2020, based on the considerations described in paragraph 
     (2).
       ``(2) Considerations.--
       ``(A) Primary consideration.--In establishing the required 
     level of emission reductions pursuant to paragraph (1), the 
     Administrator shall take into consideration primarily the 
     emission reductions necessary to stabilize atmospheric 
     greenhouse gas concentrations at the safe climate level 
     within the timeframe specified under section 712(b)(2)(B).
       ``(B) Secondary considerations.--In establishing the 
     required level of emission reductions pursuant to paragraph 
     (1), in addition to the primary consideration described in 
     paragraph (1), the Administrator shall take into 
     consideration--
       ``(i) technological capability to reduce greenhouse gas 
     emissions;
       ``(ii) the progress that foreign countries have made toward 
     reducing their greenhouse gas emissions;
       ``(iii) the economic impacts within the United States of 
     implementing this subtitle, including impacts on the major 
     emitting sectors; and
       ``(iv) the economic impacts within the United States of 
     inadequate action.
       ``(c) Enforcement Provision.--
       ``(1) In general.--If the Administrator fails to meet a 
     deadline for promulgation of any regulation under subsection 
     (a), the Administrator shall withhold from allocation to 
     covered units that would otherwise be entitled to an 
     allocation of allowances under this subtitle a total of 10 
     percent of the allowances for each covered unit for each year 
     after the deadline until the Administrator promulgates the 
     applicable regulation.
       ``(2) Return of allowances.--On promulgation of a delayed 
     regulation described in paragraph (1), the Administrator 
     shall distribute any allowances withheld under that 
     paragraph--
       ``(A) among the covered units from which the allowances 
     were withheld; and
       ``(B) in accordance with the applicable formula under 
     section 716.
       ``(d) Subsequent Rulemakings.--
       ``(1) In general.--Not later than December 31, 2019, and 
     every 4 years thereafter, the Administrator shall promulgate 
     a new final rule described in subsection (a) in accordance 
     with this section.
       ``(2) Effective date.--If a new final rule promulgated 
     pursuant to paragraph (1) changes a level of emission 
     reductions required under the preceding final rule, the 
     effective date of the new final rule shall be January 1 of 
     the calendar year that is 5 years after the deadline for 
     promulgation of the new final rule under paragraph (1).

     ``SEC. 714. DISTRIBUTION OF ALLOWANCES BETWEEN AUCTIONS AND 
                   ALLOCATIONS; NATURE OF ALLOWANCES.

       ``(a) Distribution of Allowances Between Auctions and 
     Allocations.--
       ``(1) In general.--For each calendar year, the total 
     quantity of allowances to be auctioned and allocated under 
     this subtitle shall be equal to the annual tonnage limitation 
     for emissions of greenhouse gases from affected units 
     specified in section 711 for the calendar year.
       ``(2) Distribution.--The proportion of allowances to be 
     auctioned pursuant to section 715 and allocated pursuant to 
     section 716 for each calendar year beginning in calendar year 
     2011 shall be as follows:


        ``Percentages of Allowances to be Auctioned and Allocated
------------------------------------------------------------------------
                                     Percentage to be   Percentage to be
           Calendar Year                Auctioned          Allocated
------------------------------------------------------------------------
2011..............................                 15                 85
2012..............................                 18                 82
2013..............................                 21                 79
2014..............................                 24                 76
2015..............................                 27                 73
2016..............................                 30                 70
2017..............................                 33                 67

[[Page S685]]

 
2018..............................                 36                 64
2019..............................                 39                 61
2020..............................                 42                 58
2021..............................                 45                 55
2022..............................                 48                 52
2023..............................                 51                 49
2024..............................                 54                 46
2025..............................                 57                 43
2026..............................                 60                 40
2027..............................                 63                 37
2028..............................                 66                 34
2029..............................                 69                 41
2030..............................                 72                 28
2031..............................                 75                 25
2032..............................                 80                 20
2033..............................                 85                 15
2034..............................                 90                 10
2035..............................                 95                  5
2036 and thereafter...............                100                  0
------------------------------------------------------------------------

       ``(b) Nature of Allowances.--An allowance--
       ``(1) shall not be considered to be a property right; and
       ``(2) may be terminated or limited by the Administrator.
       ``(c) No Judicial Review.--An auction or allocation of an 
     allowance by the Administrator shall not be subject to 
     judicial review.

     ``SEC. 715. AUCTION OF ALLOWANCES.

       ``(a) In General.--Not later than 2 years after the date of 
     enactment of this title, the Administrator shall promulgate 
     regulations establishing a procedure for the auction of the 
     quantity of allowances specified in section 714(a) for each 
     calendar year.
       ``(b) Deposit of Proceeds.--The Administrator shall deposit 
     all proceeds from auctions conducted under this section in 
     the Fund for use in accordance with section 717.

     ``SEC. 716. ALLOCATION OF ALLOWANCES.

       ``(a) Allocation to New Covered Units.--
       ``(1) Establishment.--For each calendar year, the 
     Administrator, in consultation with the Secretary of Energy, 
     shall, based on projections of electricity output for new 
     covered units, promulgate regulations establishing--
       ``(A) a reserve of allowances to be allocated among new 
     covered units for the calendar year; and
       ``(B) the methodology for allocating those allowances among 
     new covered units.
       ``(2) Limitation.--The number of allowances allocated under 
     paragraph (1) during a calendar year shall be not more than 3 
     percent of the total number of allowances allocated among 
     covered units for the calendar year.
       ``(3) Unused allowances.--For each calendar year, the 
     Administrator shall reallocate to each covered unit any 
     unused allowances from the new unit reserve established under 
     paragraph (1) in the proportion that--
       ``(A) the number of allowances allocated to each covered 
     unit for the calendar year; bears to
       ``(B) the number of allowances allocated to all covered 
     units for the calendar year.
       ``(b) Allocation to Covered Units That Are Not New Covered 
     Units.--
       ``(1) Timing of allocations.--Subject to subsection (c), 
     the Administrator shall allocate allowances among covered 
     units that are not new covered units--
       ``(A) not later than December 31, 2007, for calendar year 
     2011; and
       ``(B) not later than December 31 of calendar year 2008 and 
     of each calendar year thereafter, for each fourth calendar 
     year that begins after that December 31.
       ``(2) Allocations.--
       ``(A) In general.--Subject to subsection (c), the 
     Administrator shall allocate to each covered unit that is not 
     a new covered unit a quantity of allowances that is equal to 
     the product obtained by multiplying--
       ``(i) the quantity of allowances available for allocation 
     under this subsection; and
       ``(ii) the quotient obtained by dividing--

       ``(I) the annual average quantity of electricity generated 
     by the unit (including only incremental nuclear generation 
     for nuclear generating units) during the most recent 3-
     calendar year period for which data is available, updated 
     each calendar year and measured in megawatt hours; by
       ``(II) the difference between--

       ``(aa) the total of the average quantities calculated under 
     subclause (I) for all covered units; and
       ``(bb) the quantity of electricity generated by all 
     affected units and new affected units that, pursuant to 
     subsection (c), do not receive any allowances.
       ``(B) Quantity to be allocated.--For each calendar year, 
     the quantity of allowances allocated under subparagraph (A) 
     to covered units that are not new covered units shall be 
     equal to the difference between--
       ``(i) the annual tonnage limitation for emissions of 
     greenhouse gases from affected units specified in section 711 
     for the calendar year, as modified, if applicable, under 
     section 713; and
       ``(ii) the quantity of allowances reserved under subsection 
     (a) for the calendar year.
       ``(c) Coal-Fired Affected Units and New Affected Units.--
       ``(1) In general.--Notwithstanding any other provision of 
     this subtitle, no allowance shall be allocated under this 
     subtitle to a coal-fired affected unit or a coal-fired new 
     affected unit unless the affected unit or new affected unit--
       ``(A) is powered by qualifying advanced clean coal 
     technology, as defined pursuant to paragraph (2); or
       ``(B) entered operation before January 1, 2007.
       ``(2) Definition of qualifying advanced clean coal 
     technology.--
       ``(A) In general.--Not later than 18 months after the date 
     of enactment of this title, the Administrator, by regulation, 
     shall define the term `qualifying advanced clean coal 
     technology' with respect to electric power generation.
       ``(B) Requirement.--In promulgating a definition pursuant 
     to subparagraph (A), the Administrator shall ensure that the 
     term `qualifying advanced clean coal technology' reflects 
     advances in available technology, taking into consideration--
       ``(i) net thermal efficiency;
       ``(ii) measures to capture and sequester carbon dioxide; 
     and
       ``(iii) output-based emission rates for--

       ``(I) carbon dioxide;
       ``(II) sulfur dioxide;
       ``(III) oxides of nitrogen;
       ``(IV) filterable and condensable particulate matter; and
       ``(V) mercury.

       ``(C) Review and revision.--
       ``(i) In general.--Not later than July 1, 2009, and each 
     July 1 of every second year thereafter, the Administrator 
     shall review and, if appropriate, revise the definition under 
     subparagraph (A) based on technological advances during the 
     preceding 2 calendar years.
       ``(ii) Notice and comment required.--Subject to clause 
     (iii), after the initial definition is established under 
     subparagraph (A), no subsequent review or revision under this 
     subparagraph shall be subject to the notice and comment 
     provisions of section 307 of this Act or of section 553 of 
     title 5, United States Code.
       ``(iii) Effect.--Nothing in clause (ii) precludes the 
     application of the notice and comment provisions of section 
     307 of this Act or of section 553 of title 5, United States 
     Code, as the Administrator determines to be practicable.

     ``SEC. 717. CLIMATE ACTION TRUST FUND.

       ``(a) Establishment and Administration.--
       ``(1) In general.--There is established in the general fund 
     of the Treasury a fund, to be known as the `Climate Action 
     Trust Fund', consisting of--
       ``(A) such amounts as are deposited in the Fund under 
     paragraph (2); and
       ``(B) any interest earned on investment of amounts in the 
     Fund under paragraph (4).
       ``(2) Transfers to fund.--The Secretary of the Treasury 
     shall deposit in the Fund amounts equivalent to the proceeds 
     received by the Administrator as a result of the conduct of 
     auctions of allowances under section 715.
       ``(3) Expenditures from fund.--
       ``(A) In general.--Subject to subparagraphs (B) and (C), 
     the Administrator shall use amounts in the Fund to carry out 
     the programs described in this section.
       ``(B) Administrative expenses.--Of amounts in the Fund, 
     there shall be made available to pay the administrative 
     expenses necessary to carry out this title, as adjusted for 
     changes beginning on January 1, 2007, in accordance with the 
     Consumer Price Index for All-Urban Consumers published by the 
     Department of Labor--
       ``(i) $90,000,000 for each fiscal year, to the 
     Administrator; and
       ``(ii) $30,000,000 for each fiscal year, to the Secretary 
     of Agriculture.
       ``(C) Panel.--Of amounts in the Fund, there shall be made 
     available to pay the expenses of the Panel under section 712 
     $7,000,000 for each fiscal year, as adjusted for changes 
     beginning on January 1, 2007, in accordance with the Consumer 
     Price Index for All-Urban Consumers published by the 
     Department of Labor.
       ``(4) Investment of amounts.--
       ``(A) In general.--The Secretary of Treasury shall invest 
     such portion of the Fund as

[[Page S686]]

     is not, in the judgment of the Administrator, required to 
     meet current withdrawals.
       ``(B) Interest-bearing obligations.--Investments may be 
     made only in interest-bearing obligations of the United 
     States.
       ``(C) Acquisition of obligations.--For the purpose of 
     investments under paragraph (1), obligations may be 
     acquired--
       ``(i) on original issue at the issue price; or
       ``(ii) by purchase of outstanding obligations at the market 
     price.
       ``(D) Sale of obligations.--Any obligation acquired by the 
     Fund may be sold by the Administrator at the market price.
       ``(E) Return of proceeds to fund.--The interest on, and the 
     proceeds from the sale or redemption of, any obligations held 
     in the Fund shall be credited to, and form a part of, the 
     Fund.
       ``(5) Regulations.--Not later than 2 years after the date 
     of enactment of this title, the Administrator, in 
     consultation with the Secretary of Energy, shall promulgate 
     such regulations as are necessary to administer the Fund in 
     accordance with this section.
       ``(b) Uses of Fund.--
       ``(1) No further appropriation.--The Administrator shall 
     distribute amounts in the Fund for use in accordance with 
     this section, without further appropriation.
       ``(2) Regulations.--
       ``(A) In general.--Not later than 3 years after the date of 
     enactment of this title, the Administrator, in consultation 
     with the Secretary of Energy, shall promulgate regulations 
     establishing an innovative low- and zero-emitting carbon 
     technologies program, a clean coal technologies program, and 
     an energy efficiency technology program that include--
       ``(i) the funding mechanisms that will be available to 
     support the development and deployment of the technologies 
     addressed by each program, including low-interest loans, loan 
     guarantees, grants, and financial awards; and
       ``(ii) the criteria for the methods by which proposals will 
     be funded to develop and deploy the technologies.
       ``(B) Revision of criteria.--Not later than January 1, 
     2014, and every 3 years thereafter, the Administrator shall 
     review and, if appropriate, revise, based on technological 
     advances, the criteria referred to in subparagraph (A)(ii).
       ``(C) Adaptation assistance for workers and communities.--
     Not later than 3 years after the date of enactment of this 
     title, the Administrator, in consultation with the Secretary 
     of Energy, shall promulgate regulations governing the 
     distribution of funds pursuant to subsection (g).
       ``(c) Innovative Low- and Zero-Emitting Carbon Electricity 
     Generation Technologies Program.--
       ``(1) In general.--For each calendar year, of amounts 
     remaining in the Fund after making the expenditures described 
     in subparagraphs (B) and (C) of subsection (a)(3), the 
     Administrator shall use not more than 35 percent to support 
     the development and deployment of low- and zero-emitting 
     carbon electricity generation technologies.
       ``(2) Regulations.--The regulations establishing the 
     innovative low- and zero-emitting carbon electricity 
     generation technologies program referred to in subsection 
     (b)(2)(A) shall establish the areas of technology development 
     that will qualify for funding under that program, including 
     technologies for the generation of electricity from renewable 
     energy sources.
       ``(d) Clean Coal Technologies Program.--
       ``(1) In general.--For each calendar year, of amounts 
     remaining in the Fund after making the expenditures described 
     in subparagraphs (B) and (C) of subsection (a)(3), the 
     Administrator shall use not more than 20 percent to support 
     the development and deployment of clean coal technologies.
       ``(2) Regulations.--The regulations establishing the clean 
     coal technologies program referred to in subsection (b)(2)(A) 
     shall establish the criteria for use in defining qualifying 
     clean coal technologies for electric power generation, while 
     ensuring that those technologies represent an advance in 
     available technology, taking into consideration net thermal 
     efficiency and measures to capture and sequester carbon 
     dioxide.
       ``(e) Energy Efficiency Technology Program.--
       ``(1) In general.--For each calendar year, of amounts 
     remaining in the Fund after making the expenditures described 
     in subparagraphs (B) and (C) of subsection (a)(3), the 
     Administrator shall use not more than 15 percent to support 
     the development and deployment of technologies for increasing 
     the efficiency of energy end use in buildings and industry.
       ``(2) Regulations.--The regulations establishing the energy 
     efficiency program referred to in subsection (b)(2)(A) shall 
     establish the areas of technology development that will 
     qualify for funding under the energy efficiency program.
       ``(f) Federal Funding of Research Into and Development of 
     Energy and Efficiency Technologies.--For each calendar year, 
     the Administrator shall use not more than 10 percent of the 
     amounts in the Fund to support research into and development 
     of energy and efficiency technologies.
       ``(g) Adaptation Assistance for Workers and Communities 
     Negatively Affected by Climate Change and Greenhouse Gas 
     Regulation.--For each calendar year, of amounts remaining in 
     the Fund after making the expenditures described in 
     subparagraphs (B) and (C) of subsection (a)(3), the 
     Administrator shall use at least 10 percent to provide 
     adaptation assistance for workers and communities--
       ``(1) to address local or regional impacts of climate 
     change and the impacts, if any, from greenhouse gas 
     regulation, including by providing assistance to displaced 
     workers and disproportionately affected communities; and
       ``(2) to mitigate impacts of climate change and the 
     impacts, in any, from greenhouse gas regulation on low-income 
     energy consumers.
       ``(h) Fish and Wildlife Habitat.--
       ``(1) In general.--For each calendar year, of amounts 
     remaining in the Fund after making the expenditures described 
     in subparagraphs (B) and (C) of subsection (a)(3), the 
     Administrator shall use at least 10 percent to mitigate the 
     impacts of climate change on fish and wildlife habitat in 
     accordance with this subsection.
       ``(2) Wildlife restoration fund.--
       ``(A) In general.--For each calendar year, the 
     Administrator shall transfer not less than 70 percent of the 
     amounts made available under paragraph (1) to the Federal aid 
     to wildlife restoration fund established under section 
     3(a)(1) of the Pittman-Robertson Wildlife Restoration Act (16 
     U.S.C. 669b(a)(1))--
       ``(i) to carry out climate change impact mitigation actions 
     pursuant to comprehensive wildlife conservation strategies; 
     and
       ``(ii) to provide relevant information, training, 
     monitoring, and other assistance to develop climate change 
     impact mitigation and adaptation plans and integrate the 
     plans into State comprehensive wildlife conservation 
     strategies.
       ``(B) Availability.--Amounts transferred to the Federal aid 
     to wildlife restoration fund under this paragraph shall--
       ``(i) be available, without further appropriation, for 
     obligation and expenditure; and
       ``(ii) remain available until expended.
       ``(3) Protection of natural resources.--
       ``(A) In general.--For each calendar year, the 
     Administrator, in consultation with the Secretary of 
     Agriculture, the Secretary of Commerce, the Chief of 
     Engineers, and State and national wildlife conservation 
     organizations, shall transfer not more than 30 percent of the 
     funds made available under paragraph (1) to the Secretary of 
     the Interior for use in carrying out Federal and State 
     programs and projects--
       ``(i) to protect natural communities that are most 
     vulnerable to climate change;
       ``(ii) to restore and protect natural resources that 
     directly guard against damages from climate change events; 
     and
       ``(iii) to restore and protect ecosystem services that are 
     most vulnerable to climate change.
       ``(B) Administration.--Amounts transferred to the Secretary 
     of the Interior under this paragraph shall--
       ``(i) be available, without further appropriation, for 
     obligation and expenditure;
       ``(ii) remain available until expended;
       ``(iii)(I) be obligated not later than 2 years after the 
     date of transfer; or
       ``(II) if the amounts are not obligated in accordance with 
     subclause (I), be transferred to the Federal aid to wildlife 
     restoration fund for use in accordance with paragraph (2); 
     and
       ``(iv) supplement, and not supplant, the amount of Federal, 
     State, and local funds otherwise expended to carry out 
     programs and projects described in subparagraph (A).
       ``(C) Programs and projects.--Programs and projects for 
     which funds may be used under this paragraph include--
       ``(i) Federal programs and projects--

       ``(I) to identify Federal land and water at greatest risk 
     of being damaged or depleted by climate change;
       ``(II) to monitor Federal land and water to allow for early 
     detection of impacts;
       ``(III) to develop adaptation strategies to minimize the 
     damage; and
       ``(IV) to restore and protect Federal land and water at the 
     greatest risk of being damaged or depleted by climate change;

       ``(ii) Federal programs and projects to identify climate 
     change risks and develop adaptation strategies for natural 
     grassland, wetlands, migratory corridors, and other habitats 
     vulnerable to climate change on private land enrolled in--

       ``(I) the wetlands reserve program established under 
     subchapter C of chapter 1 of subtitle D of title XII of the 
     Food Security Act of 1985 (16 U.S.C. 3837 et seq.);
       ``(II) the grassland reserve program established under 
     subchapter C of chapter 2 of subtitle D of title XII of that 
     Act (16 U.S.C. 3838n et seq.); and
       ``(III) the wildlife habitat incentive program established 
     under section 1240N of that Act (16 U.S.C. 3839bb-1);

       ``(iii) programs and projects under the North American 
     Wetlands Conservation Act (16 U.S.C. 4401 et seq.), the North 
     American Bird Conservation Initiative, and the Neotropical 
     Migratory Bird Conservation Act (16 U.S.C. 6101 et seq.) to 
     protect habitat for migratory birds that are vulnerable to 
     climate change impacts;
       ``(iv) programs and projects--

       ``(I) to identify coastal and marine resources (such as 
     coastal wetlands, coral reefs, submerged aquatic vegetation, 
     shellfish beds, and other coastal or marine ecosystems) at 
     the greatest risk of being damaged by climate change;
       ``(II) to monitor those resources to allow for early 
     detection of impacts;
       ``(III) to develop adaptation strategies;
       ``(IV) to protect and restore those resources; and

[[Page S687]]

       ``(V) to integrate climate change adaptation requirements 
     into State plans developed under the coastal zone management 
     program established under the Coastal Zone Management Act of 
     1972 (16 U.S.C. 1451 et seq.), the national estuary program 
     established under section 320 of the Federal Water Pollution 
     Control Act (33 U.S.C. 1330), the Coastal and Estuarine Land 
     Conservation Program established under the fourth proviso of 
     the matter under the heading `procurement, acquisition, and 
     construction (including transfers of funds)' of title II of 
     the Departments of Commerce, Justice, and State, the 
     Judiciary, and Related Agencies Appropriations Act, 2002 (16 
     U.S.C. 1456d), or other comparable State programs;

       ``(v) programs and projects to conserve habitat for 
     endangered species and species of conservation concern that 
     are vulnerable to the impact of climate change;
       ``(vi) programs and projects under the Forest Legacy 
     Program established under section 7 of the Cooperative 
     Forestry Assistance Act (16 U.S.C. 2103c), to support State 
     efforts to protect environmentally sensitive forest land 
     through conservation easements to provide refuges for 
     wildlife;
       ``(vii) other Federal or State programs and projects 
     identified by the heads of agencies described in subparagraph 
     (A) as high priorities--

       ``(I) to protect natural communities that are most 
     vulnerable to climate change;
       ``(II) to restore and protect natural resources that 
     directly guard against damages from climate change events; 
     and
       ``(III) to restore and protect ecosystem services that are 
     most vulnerable to climate change;

       ``(viii) to address climate change in Federal land use 
     planning and plan implementation and to integrate climate 
     change adaptation strategies into--

       ``(I) comprehensive conservation plans prepared under 
     section 4(e) of the National Wildlife Refuge System 
     Administration Act of 1966 (16 U.S.C. 668dd(e));
       ``(II) general management plans for units of the National 
     Park System;
       ``(III) resource management plans of the Bureau of Land 
     Management; and
       ``(IV) land and resource management plans under the Forest 
     and Rangeland Renewable Resources Planning Act of 1974 (16 
     U.S.C. 1600 et seq.) and the National Forest Management Act 
     of 1976 (16 U.S.C. 1600 et seq.); and

       ``(ix) projects to promote sharing of information on 
     climate change wildlife impacts and mitigation strategies 
     across agencies, including funding efforts to strengthen and 
     restore habitat that improves the ability of fish and 
     wildlife to adapt successfully to climate change through the 
     Wildlife Conservation and Restoration Account established by 
     section 3(a)(2) of the Pittman-Robertson Wildlife Restoration 
     Act (16 U.S.C. 669b(a)(2)).

     ``SEC. 718. EARLY REDUCTION CREDITS.

       ``(a) Regulations.--Not later than 2 years after the date 
     of enactment of this title, the Administrator shall 
     promulgate regulations that provide for the issuance on a 1-
     time basis, certification, and use of early reduction credits 
     for greenhouse gas reduction or sequestration projects 
     carried out during any of calendar years 2000 through 2010.
       ``(b) Eligible Projects.--A greenhouse gas reduction or 
     sequestration project shall be eligible for early reduction 
     credits if the project--
       ``(1) is carried out in the United States;
       ``(2) meets the standards contained in regulations 
     promulgated by the Administrator under subsection (a) that 
     the Administrator determines to be applicable to the project, 
     including consistency with the requirements of--
       ``(A) paragraphs (2) through (5) of section 736(a), with 
     respect to greenhouse gas reduction projects; and
       ``(B) section 732(a), with respect to sequestration 
     projects; and
       ``(3) was reported--
       ``(A) under section 1605(b) of the Energy Policy Act of 
     1992 (42 U.S.C. 13385(b)); or
       ``(B) to a State or regional greenhouse gas registry.
       ``(c) Limitation.--
       ``(1) In general.--The aggregate quantity of early 
     reduction credits available for greenhouse gas reduction or 
     sequestration projects for the period of calendar years 2000 
     through 2010 shall not exceed 10 percent of the tonnage 
     limitation for calendar year 2011 for emissions of greenhouse 
     gases from affected units under section 711.
       ``(2) No other exceedance of tonnage limitation.--No 
     provision of this subtitle (other than paragraph (1)) or any 
     regulation promulgated under this subtitle authorizes the 
     issuance or use of a quantity of credits greater than the 
     annual tonnage limitation for emissions of greenhouse gases 
     from affected units for a calendar year.

     ``SEC. 719. RECOGNITION AND USE OF INTERNATIONAL CREDITS.

       ``(a) Use of International Credits.--
       ``(1) In general.--Except as provided in this section and 
     section 720, the owner of each affected unit may satisfy the 
     obligation of the affected unit under section 722 to 
     surrender a quantity of credits associated with the 
     greenhouse gas emissions of the affected unit by submitting 
     international credits representing up to 25 percent of the 
     total annual submission requirements of the affected unit.
       ``(2) New affected units.--The owner of a new affected unit 
     may satisfy up to 50 percent of the obligation of the new 
     affected unit under section 722 to surrender a quantity of 
     credits associated with the greenhouse gas emissions of the 
     new affected unit by submitting international credits.
       ``(b) Facility Certification.--The owner of an affected 
     unit who submits an international credit under this section 
     shall certify that the international credit--
       ``(1) has not been retired from use in the registry of the 
     applicable foreign country; and
       ``(2) satisfies the requirements of subsection (c) or (d).
       ``(c) International Credits From Countries With Mandatory 
     Greenhouse Gas Limits.--The owner of an affected unit may 
     submit an international credit under this subsection if--
       ``(1) the international credit is issued by a foreign 
     country pursuant to a governmental program that imposes 
     mandatory absolute tonnage limits on greenhouse gas emissions 
     from the country or 1 or more industry sectors pursuant to 
     protocols adopted through the UNFCCC process; and
       ``(2) the Administrator has promulgated regulations, taking 
     into consideration applicable UNFCCC protocols, approving for 
     use under this subsection international credits from such 
     categories of countries as the regulations establish, and the 
     regulations permit the use of international credits from the 
     foreign country that issued the credit.
       ``(d) International Credits From Countries Without 
     Mandatory Greenhouse Gas Limits.--
       ``(1) In general.--Subject to paragraph (2), the owner of 
     an affected unit may submit an international credit under 
     this subsection if--
       ``(A) the international credit is issued by a foreign 
     country that has not imposed mandatory absolute tonnage 
     limits on greenhouse gas emissions from the country or 1 or 
     more industry sectors pursuant to protocols adopted through 
     the UNFCCC process;
       ``(B) the international credit is issued pursuant to 
     protocols adopted through the UNFCCC process; and
       ``(C) the Administrator has promulgated regulations, taking 
     into consideration applicable UNFCCC protocols, approving for 
     use under this subsection international credits from such 
     categories of countries as the regulations establish, and the 
     regulations permit the use of international credits from the 
     foreign country that issued the credit.
       ``(2) Decision on continued approval.--Not later than 
     December 31, 2015, the Administrator shall determine, 
     pursuant to the regulations promulgated under paragraph 
     (1)(C), whether to continue to approve for use under this 
     subsection international credits from any country that--
       ``(A) has not imposed mandatory absolute tonnage limits on 
     greenhouse gas emissions from the country or 1 or more 
     industry sectors pursuant to protocols adopted through the 
     UNFCCC process; and
       ``(B) generates more than 0.5 percent of global greenhouse 
     gas emissions as of 2010 or as of the most recent year for 
     which data are available.

     ``SEC. 720. AVOIDING SIGNIFICANT ECONOMIC HARM.

       ``(a) In General.--Pursuant to the regulations promulgated 
     under this section, the Administrator may permit affected 
     units--
       ``(1) to use allowances in a calendar year before the 
     calendar year for which the allowances were allocated; and
       ``(2) to increase the use by the affected units of 
     international credits up to 50 percent of the total annual 
     submission requirements of the affected units under section 
     722.
       ``(b) Regulations.--
       ``(1) In general.--Not later than 3 years after the date of 
     enactment of this title, the Administrator, in coordination 
     with the Secretary of the Treasury, shall promulgate 
     regulations requiring the continuous monitoring of the 
     operation of the carbon market and the effect of that market 
     on the economy of the United States.
       ``(2) Requirements.--The regulations shall--
       ``(A) establish the criteria for determining whether 
     allowance prices have reached and sustained a level that is 
     causing or will cause significant harm to the economy of the 
     United States; and
       ``(B) take into consideration--
       ``(i) the obligation of the United States under this 
     subtitle to stabilize greenhouse gas concentrations in the 
     atmosphere at the safe climate level; and
       ``(ii) the costs of the anticipated impacts of climate 
     change in the United States.
       ``(3) Prevention of economic harm.--If the Administrator 
     determines that allowance prices have reached and sustained a 
     level that is causing or will cause significant harm to the 
     economy of the United States, the regulations shall 
     establish--
       ``(A) a program under which an affected unit may use 
     allowances in a calendar year before the calendar year for 
     which the allowances were allocated, including--
       ``(i) a requirement that allowances borrowed from the 
     allocation of a future year reduce the allocation of 
     allowances to the affected unit for the future year on a 1-
     to-1 basis;
       ``(ii) a requirement for payment of interest on borrowed 
     allowances requiring the submission of additional credits 
     upon repayment of the allowances equal to the product 
     obtained by multiplying--

       ``(I) the number of years between the advance use of 
     allowances by an affected unit under clause (i) and the 
     submission of additional credits under this clause; and

[[Page S688]]

       ``(II) the sum obtained by adding--

       ``(aa) the Federal short-term rate, as defined pursuant to 
     section 1274(d)(1)(C)(i) of the Internal Revenue Code of 
     1986; and
       ``(bb) 2 percent; and
       ``(iii) a limitation that in no event may an affected 
     unit--

       ``(I) satisfy more than 10 percent of the obligation of the 
     affected unit under section 722 to surrender allowances by 
     submitting allowances in a calendar year before the calendar 
     year for which the allowances were allocated; and
       ``(II) use allowances in a calendar year that is more than 
     5 years before the calendar year for which the allowances 
     were allocated; and

       ``(B) a program under which the owner of an affected unit 
     may satisfy the obligation of the affected unit under section 
     722 to surrender allowances for the calendar year in which 
     the determination is made by submitting international credits 
     representing up to 50 percent of the total annual submission 
     requirements of the affected unit.

     ``SEC. 721. USE AND TRANSFER OF CREDITS.

       ``(a) Use in Other Greenhouse Gas Allowance Trading 
     Programs.--
       ``(1) In general.--A credit obtained under this subtitle 
     may be used in any other greenhouse gas allowance trading 
     program, including a program of 1 or more States or 
     subdivisions of States, that is approved by the Administrator 
     and an authorized official for the other program for use of 
     the allowance.
       ``(2) Reciprocity.--A credit obtained from another 
     greenhouse gas trading program, including a program of 1 or 
     more States or subdivisions of States, that is approved by 
     the Administrator and an authorized official for the other 
     program may be used in the trading program under this title.
       ``(b) Allowance Use Before Applicable Calendar Year.--
     Except as provided in section 720, an allowance auctioned or 
     allocated under this subtitle may not be used before the 
     calendar year for which the allowance was auctioned or 
     allocated.
       ``(c) Transfer.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     transfer of a credit shall not take effect until receipt and 
     recording by the Administrator of a written certification of 
     the transfer that is executed by an authorized official of 
     the person making the transfer.
       ``(2) Special rule for allowances.--Notwithstanding 
     paragraph (1), the transfer of an allowance auctioned or 
     allocated under this subtitle may take effect before the 
     calendar year for which the allowance was auctioned or 
     allocated.
       ``(d) Banking of Credits.--Any affected unit may use a 
     credit obtained under this subtitle in the calendar year for 
     which the credit was auctioned or allocated, or in a 
     subsequent calendar year, to demonstrate compliance with 
     section 722.

     ``SEC. 722. COMPLIANCE AND ENFORCEMENT.

       ``(a) In General.--For calendar year 2011 and each calendar 
     year thereafter, the owner of each affected unit shall 
     surrender to the Administrator a quantity of credits that is 
     equal to the total tons of carbon dioxide or, with respect to 
     other greenhouse gases, tons in carbon dioxide equivalent, 
     associated with the combustion by the affected unit of 
     greenhouse gas-emitting fuels during the calendar year.
       ``(b) Regulations.--Not later than 2 years after the date 
     of enactment of this title, the Administrator shall 
     promulgate regulations establishing the procedures for the 
     surrender of credits.
       ``(c) Penalty.--The owner of an affected unit that emits 
     greenhouse gases associated with the combustion by the 
     affected unit of a greenhouse gas-emitting fuel in excess of 
     the number of credits that the owner of the affected unit 
     holds for use of the affected unit for the calendar year 
     shall--
       ``(1) submit to the Administrator 1.3 credits for each 
     metric ton of excess greenhouse gas emissions of the affected 
     unit; and
       ``(2) pay an excess emissions penalty equal to the product 
     obtained by multiplying--
       ``(A) the number of tons of carbon dioxide, or the carbon 
     dioxide equivalent of other greenhouse gases, emitted in 
     excess of the total quantity of credits held by the affected 
     unit; and
       ``(B)(i) except as provided in clause (ii), $100, as 
     adjusted for changes beginning on January 1, 2007, in 
     accordance with the Consumer Price Index for All-Urban 
     Consumers published by the Department of Labor; or
       ``(ii) if the average market price for a metric ton of 
     carbon dioxide equivalent during a calendar year exceeds $60, 
     $200, as adjusted for changes beginning on January 1, 2007, 
     in accordance with the Consumer Price Index for All-Urban 
     Consumers published by the Department of Labor.

                      ``Subtitle B--Offset Credits

     ``SEC. 731. OUTREACH INITIATIVE ON REVENUE ENHANCEMENT FOR 
                   AGRICULTURAL PRODUCERS.

       ``(a) Purposes.--The purposes of this subtitle are to 
     achieve climate benefits, reduce overall costs to the United 
     States economy, and enhance revenue for domestic agricultural 
     producers, foresters, and other landowners by--
       ``(1) establishing procedures by which domestic 
     agricultural producers, foresters, and other landowners can 
     measure and report reductions in greenhouse gas emissions and 
     increases in sequestration; and
       ``(2) publishing a handbook of guidance for domestic 
     agricultural producers, foresters, and other landowners to 
     market emission reductions to companies.
       ``(b) Establishment.--The Secretary of Agriculture, acting 
     through the Chief of the Natural Resources Conservation 
     Service, the Chief of the Forest Service, the Administrator 
     of the Cooperative State Research, Education, and Extension 
     Service, and land-grant colleges and universities, in 
     consultation with the Administrator and the heads of other 
     appropriate departments and agencies, shall establish an 
     outreach initiative to provide information to agricultural 
     producers, agricultural organizations, foresters, and other 
     landowners about opportunities under this subtitle to earn 
     new revenue.
       ``(c) Components.--The initiative under this section--
       ``(1) shall be designed to ensure that, to the maximum 
     extent practicable, agricultural organizations and individual 
     agricultural producers, foresters, and other landowners 
     receive detailed practical information about--
       ``(A) opportunities to earn new revenue under this 
     subtitle;
       ``(B) measurement protocols, monitoring, verifying, 
     inventorying, registering, insuring, and marketing offsets 
     under this title;
       ``(C) emerging domestic and international markets for 
     energy crops, allowances, and offsets; and
       ``(D) local, regional, and national databases and 
     aggregation networks to facilitate achievement, measurement, 
     registration, and sales of offsets;
       ``(2) shall provide--
       ``(A) outreach materials, including the handbook published 
     under subsection (d)(1), to interested parties;
       ``(B) workshops; and
       ``(C) technical assistance; and
       ``(3) may include the creation and development of regional 
     marketing centers or coordination with existing centers 
     (including centers within the Natural Resources Conservation 
     Service or the Cooperative State Research, Education, and 
     Extension Service or at land-grant colleges and 
     universities).
       ``(d) Handbook.--
       ``(1) In general.--Not later than 2 years after the date of 
     enactment of this title, the Secretary of Agriculture, in 
     consultation with the Administrator and after public input, 
     shall publish a handbook for use by agricultural producers, 
     agricultural cooperatives, foresters, other landowners, 
     offset buyers, and other stakeholders that provides easy-to-
     use guidance on achieving, reporting, registering, and 
     marketing offsets.
       ``(2) Distribution.--The Secretary of Agriculture shall 
     ensure, to the maximum extent practicable, that the handbook 
     is distributed widely through land-grant colleges and 
     universities and other appropriate institutions.

     ``SEC. 732. OFFSET MEASUREMENT FOR AGRICULTURAL, FORESTRY, 
                   WETLANDS, AND OTHER LAND USE-RELATED 
                   SEQUESTRATION PROJECTS.

       ``(a) In General.--Not later than 2 years after the date of 
     enactment of this title, the Secretary of Agriculture, in 
     consultation with the Administrator, shall promulgate 
     regulations establishing the requirements regarding the 
     issuance, certification, and use of offset credits for 
     greenhouse gas reductions from agricultural, forestry, 
     wetlands, and other land use-related sequestration projects, 
     including requirements--
       ``(1) for a region-specific discount factor for business-
     as-usual practices for specific types of sequestration 
     projects, in accordance with subsection (c);
       ``(2) that ensure that the reductions are real, additional, 
     verifiable, and enforceable;
       ``(3) that address leakage;
       ``(4) that the reductions are not otherwise required by any 
     law (including a regulation) or other legally binding 
     requirement;
       ``(5) for the quantification, monitoring, reporting, and 
     verification of the reductions;
       ``(6) that ensure that offset credits are limited in 
     duration to the period of sequestration of greenhouse gases, 
     and rectify any loss of sequestration other than a loss 
     caused by an error in calculation identified under this 
     subtitle, by requiring the submission of additional credits 
     of an equivalent quantity to the lost sequestration; and
       ``(7) that quantify sequestration flow.
       ``(b) Eligibility to Create Offset Credits.--
       ``(1) In general.--A sequestration project that commences 
     operation on or after January 1, 2011, is eligible to create 
     offset credits under this subtitle if the sequestration 
     project satisfies the other applicable requirements of this 
     subtitle.
       ``(2) Exception for agricultural projects.--Notwithstanding 
     paragraph (1), sequestration flow from an agricultural 
     project that occurs on or after January 1, 2011, may provide 
     the basis for offset credits under this subtitle regardless 
     of the date on which the agricultural sequestration project 
     to which the sequestration flow is attributable commenced, if 
     the project satisfies the other applicable requirements of 
     this subtitle.
       ``(c) Discounting for Business-as-Usual Practices.--
       ``(1) In general.--In order to streamline the availability 
     of offset credits for agricultural and other land use-related 
     sequestration projects, the regulations promulgated under 
     subsection (a) shall provide for the calculation and 
     reporting of region-specific discount factors by the 
     Secretary of Agriculture--
       ``(A) to be used by developers of agricultural projects and 
     other land use-related sequestration projects; and

[[Page S689]]

       ``(B) to account for business-as-usual practices for 
     specific types of sequestration projects.
       ``(2) Calculation.--Unless otherwise provided in this 
     subtitle, the region-specific discount factor for business-
     as-usual practices for sequestration projects shall be 
     calculated by dividing--
       ``(A) the difference between--
       ``(i) the quantity of greenhouse gases sequestered in the 
     region as a result of the offset practice under this 
     subtitle; and
       ``(ii) the quantity of greenhouse gases sequestered in the 
     region as a result of the projected business-as-usual 
     implementation of the applicable offset practice; by
       ``(B) the quantity of greenhouse gases sequestered in the 
     region as a result of the offset practice under this 
     subtitle.
       ``(3) Requirements.--
       ``(A) In general.--The regulations promulgated under this 
     section shall, to the maximum extent practicable--
       ``(i) define geographic regions with reference to land that 
     has similar agricultural characteristics; and
       ``(ii) subject to subparagraph (B), define baseline 
     historical reference periods for each category of 
     sequestration practice, using the most recent period of 
     sufficient length for which there are reasonably 
     comprehensive data available.
       ``(B) Exception.--If the Secretary of Agriculture 
     determines that entities have increased implementation of the 
     relevant offset practice during the most recent period in 
     anticipation of legislation granting credit for the offsets, 
     the regulations described in subparagraph (A)(ii) may define 
     baseline historical reference periods for each category of 
     sequestration practice using an earlier period.
       ``(d) Quantifying Sequestration Flow.--The regulations that 
     quantify sequestration flow shall include--
       ``(1) a default rate of sequestration flow, regionally 
     specific to the maximum extent practicable, for each offset 
     practice or combination of offset practices, that is 
     estimated conservatively to allow for site-specific 
     variations and data uncertainties;
       ``(2) a downward adjustment factor for any offset practice 
     or combination of practices for which, in the judgment of the 
     Secretary of Agriculture, there are substantial uncertainties 
     in the sequestration flows estimated in paragraph (1), but 
     still reasonably sufficient data to calculate a default rate 
     of flow; and
       ``(3) offset practice- or project-specific measurement, 
     monitoring, and verification requirements for--
       ``(A) offset practices or projects for which there are 
     insufficiently reliable data to calculate a default rate of 
     sequestration flow; or
       ``(B) projects for which the project proponent chooses to 
     use project-specific requirements.
       ``(e) Use of Native Plant Species in Offset Projects.--
       ``(1) Regulations.--Not later than 18 months after the date 
     of enactment of this title, the Administrator, in 
     consultation with the Secretary of Agriculture, shall 
     promulgate regulations for selection, use, and storage of 
     native and nonnative plant materials in the offset projects 
     described in paragraph (2)--
       ``(A) to ensure native plant materials are given primary 
     consideration, in accordance with applicable Department of 
     Agriculture guidance for use of native plant materials;
       ``(B) to prohibit the use of Federal- or State-designated 
     noxious weeds; and
       ``(C) to prohibit the use of a species listed by a regional 
     or State invasive plant council within the applicable region 
     or State.
       ``(2) Applicability.--The regulations under paragraph (1) 
     shall apply to qualifying offset projects described in 
     sections 733(b)(2), 734(a)(2), and 734(b)(1).

     ``SEC. 733. CATEGORIES OF AGRICULTURAL OFFSET PRACTICES.

       ``(a) Regulations.--Not later than 2 years after the date 
     of enactment of this title, the Secretary of Agriculture, in 
     consultation with the Administrator, shall promulgate 
     regulations establishing the categories of offset practices 
     that--
       ``(1) reduce greenhouse gases as a result of agricultural 
     sequestration projects; and
       ``(2) are eligible to receive offset credits under this 
     subtitle.
       ``(b) Offset Practices.--Offset practices described in 
     subsection (a) shall include--
       ``(1) agricultural sequestration practices, including--
       ``(A) no-till agriculture;
       ``(B) conservation tillage (ridge till or minimum till);
       ``(C) winter cover cropping;
       ``(D) switching from a cycle of--
       ``(i) planting wheat or other crops and then fallowing 
     land; to
       ``(ii) continuous cropping;
       ``(E) any other offset practices identified by the 
     Administrator, in consultation with the Secretary of 
     Agriculture; and
       ``(F) combinations of any of the offset practices described 
     in subparagraphs (A) through (E); and
       ``(2) conversion of cropland to rangeland or grassland.

     ``SEC. 734. OFFSET CREDITS FROM FOREST MANAGEMENT, GRAZING 
                   MANAGEMENT, AND WETLANDS MANAGEMENT.

       ``(a) Forest Management Offsets.--
       ``(1) In general.--Not later than 3 years after the date of 
     enactment of this title, the Secretary of Agriculture, in 
     consultation with the Administrator, shall promulgate 
     regulations providing for the issuance of offset credits for 
     forest management projects that provide durable, long-term 
     reductions in greenhouse gases as a result of sequestration.
       ``(2) Forest management offsets.--Forest management offset 
     projects under this section may include activities that 
     reduce greenhouse gases as a result of forest management 
     sequestration projects (including afforestation), other than 
     avoided forest land conversion as described in section 735.
       ``(3) Prohibitions.--
       ``(A) In general.--In accordance with section 732(e), no 
     afforestation project may involve the planting of invasive 
     species or noxious weeds.
       ``(B) Existing native grassland and ecosystems.--No 
     afforestation project may involve planting trees on existing 
     native grassland or other existing native non-forested 
     ecosystems that the Secretary of Agriculture determines 
     should be protected in their existing native condition.
       ``(b) Wetlands Management Offsets.--
       ``(1) In general.--Not later than 3 years after the date of 
     enactment of this title, the Administrator, in consultation 
     with the Chief of Engineers, shall promulgate regulations 
     providing for the issuance of offset credits for wetlands 
     management projects that provide durable, long-term 
     reductions in greenhouse gases as a result of sequestration.
       ``(2) Prohibitions.--
       ``(A) In general.--In accordance with section 732(e), no 
     wetlands restoration project may involve the planting of 
     invasive species or noxious weeds.
       ``(B) No new wetlands.--No wetlands offset project may be 
     carried out in an area in which underlying local hydrologic 
     processes will not support a wetland.
       ``(c) Grazing Management Offsets.--
       ``(1) In general.--Not later than 3 years after the date of 
     enactment of this title, the Secretary of Agriculture, in 
     consultation with the Administrator, shall promulgate 
     regulations providing for the issuance of offset credits for 
     grazing management projects that provide durable, long-term 
     reductions in greenhouse gases as a result of sequestration.
       ``(2) Grazing management offsets.--Grazing management 
     offset projects under this section may include activities 
     that reduce greenhouse gases as a result of grazing 
     management sequestration projects other than conversion of 
     cropland to grassland or rangeland under section 733.
       ``(d) Use of Offsets.--
       ``(1) In general.--For each calendar year, an affected unit 
     may satisfy not more than 5 percent of the total allowance 
     submission requirements of the affected unit under section 
     722 by using forest management offset credits under this 
     section.
       ``(2) Exceptions.--The limitation in paragraph (1) does not 
     apply to grazing management, afforestation, or wetland offset 
     projects.

     ``SEC. 735. OFFSET CREDITS FROM THE AVOIDED CONVERSION OF 
                   FORESTED LAND OR WETLAND.

       ``(a) In General.--Offset credits for avoided conversion of 
     forested land or wetland shall be awarded to any State that 
     reduces the conversion below expected levels for all or a 
     significant portion of the State.
       ``(b) Regulations.--Not later than 3 years after the date 
     of enactment of this title, the Administrator, in conjunction 
     with the Secretary of Agriculture, shall promulgate 
     regulations that address the eligibility of offset practices 
     that avoid the conversion of forested land or wetland to 
     nonforested land uses or drained or converted wetland to 
     receive offset credits under this subtitle, including 
     requirements that address--
       ``(1) the methodology for measuring the avoided conversion 
     of forest land or wetland, including--
       ``(A) measurement of presently on-going rates of forest 
     land conversion or wetland conversion;
       ``(B) calculation of business-as-usual rates of forest land 
     conversion or wetland conversion by reference to the 
     historical rate of conversion of forested land or wetland; 
     and
       ``(C) comparison of the rates in subparagraph (A) and 
     subparagraph (B); and
       ``(2) leakage, including--
       ``(A) adjustments for leakage using standardized regional 
     leakage factors for afforestation and wetland restoration; 
     and
       ``(B) the magnitude of the forested region or wetlands 
     region in a State in which the rate of conversion of forest 
     land or wetland must be reduced to ensure that leakage of 
     forest land or wetlands conversion is minimized.
       ``(c) Precondition.--For an offset to be creditable under 
     this section, the State must certify that the State has 
     reduced its rate of conversion of forest land or wetland over 
     a period of 5 or more consecutive years for the entire State 
     or a significant forested or wetland region in the State.
       ``(d) Award by States of Offset Credits.--States that 
     participate in the program under this section shall establish 
     transparent and equitable rules by which offset credits will 
     be awarded to owners of forested land or wetland.
       ``(e) Authorization of Appropriations.--There is authorized 
     to be appropriated to the Administrator, in consultation with 
     the Secretary of Agriculture, for use in awarding grants to 
     States to carry out this section $5,000,000 for each fiscal 
     year.

[[Page S690]]

     ``SEC. 736. OFFSET CREDITS FROM GREENHOUSE GAS EMISSIONS 
                   REDUCTION PROJECTS.

       ``(a) In General.--Not later than 2 years after the date of 
     enactment of this title, the Administrator shall promulgate 
     regulations establishing the requirements regarding the 
     issuance, certification, and use of offset credits for 
     greenhouse gas emissions reduction offset projects, including 
     requirements--
       ``(1) for performance standards for specific types of 
     offset projects, which represent significant improvements 
     compared to recent practices in the geographic area, to be 
     reviewed, and updated if the Administrator determines 
     updating is appropriate, every 5 years;
       ``(2) that ensure that the reductions are real, additional, 
     verifiable, enforceable, and permanent;
       ``(3) that address leakage;
       ``(4) that the reductions are not otherwise required by any 
     law (including a regulation) or other legally binding 
     requirement;
       ``(5) for the quantification, monitoring, reporting, and 
     verification of the reductions; and
       ``(6) that specify the duration of offset credits for 
     greenhouse gas emissions reduction projects under this 
     section.
       ``(b) Eligibility to Create Offset Credits.--Greenhouse gas 
     emissions reduction offset projects that commence operation 
     on or after January 1, 2007, are eligible to create offset 
     credits under this subtitle if the projects satisfy the other 
     applicable requirements of this subtitle.
       ``(c) Approved Categories of Greenhouse Gas Emissions 
     Reduction Offset Projects.--Greenhouse gas emission 
     reductions from the following types of operations shall be 
     eligible to create offsets for use under this section:
       ``(1) Landfill operations.
       ``(2) Agricultural manure management projects.
       ``(3) Wastewater treatment facilities.
       ``(4) Coal mining operations.
       ``(5) Natural gas transmission and distribution systems.
       ``(6) Electrical transmission and distribution systems.
       ``(7) Elimination or reduction in use of chemicals that 
     substitute for ozone-depleting substances.
       ``(8) Cement manufacturing.
       ``(9) Lime manufacturing.
       ``(10) Iron and steel production.
       ``(11) Aluminum production.
       ``(12) Adipic acid production.
       ``(13) Nitric acid production.
       ``(14) Semiconductor manufacturing.
       ``(15) Magnesium production and processing.
       ``(16) Fossil fuel combustion at commercial and residential 
     buildings.
       ``(d) Creation of Additional Categories of Greenhouse Gas 
     Emissions Reduction Offset Projects.--The Administrator may, 
     by regulation, create additional categories of greenhouse gas 
     emissions reduction offset projects for types of projects for 
     which the Administrator determines that compliance with the 
     regulations promulgated under subsection (a) is feasible.
       ``(e) Prohibition on Use.--Notwithstanding the eligibility 
     of greenhouse gas emission reduction projects to create 
     offset credits in accordance with subsection (c) or (d), 
     greenhouse gas emissions reduction offset projects shall not 
     be eligible to create offset credits for use under this 
     section beginning on the date on which the reductions are 
     required by law (including regulations) or other legally 
     binding requirement.

     ``SEC. 737. BORROWING AT PROGRAM START-UP BASED ON CONTRACTS 
                   TO PURCHASE OFFSET CREDITS.

       ``(a) In General.--During calendar years 2011, 2012, and 
     2013, an affected unit may satisfy not more than 5 percent of 
     the allowance submission requirements of section 722 by 
     submitting to the Administrator contractual commitments to 
     purchase offset credits that will implement an equivalent 
     quantity of emission reductions or sequestration not later 
     than December 31, 2015.
       ``(b) Approval of Qualifying Offset Projects.--Offset 
     projects that may be appropriately carried out under this 
     section shall be approved by the Administrator in accordance 
     with this subtitle.
       ``(c) Repayment by 2015.--
       ``(1) In general.--If an affected unit uses subsection (a) 
     to comply with section 722, not later than the deadline in 
     that section for allowance submissions for calendar year 
     2015, the affected unit shall submit additional credits of a 
     quantity equivalent to the sum obtained by adding--
       ``(A) the value of credits submitted to comply with credit 
     submission requirements described in subsection (a); and
       ``(B) interest calculated in accordance with paragraph (2).
       ``(2) Interest.--Interest referred to in paragraph (1)(B) 
     shall be equal to the product obtained by multiplying--
       ``(A) the number of years between--
       ``(i) the use by an affected unit of the method of 
     compliance described in subsection (a); and
       ``(ii) the submission by the affected unit of additional 
     credits under this subsection; and
       ``(B) the sum obtained by adding--
       ``(i) the Federal short-term rate, as defined pursuant to 
     section 1274(d)(1)(C)(i) of the Internal Revenue Code of 
     1986; and
       ``(ii) 2 percent.

     ``SEC. 738. REVIEW AND CORRECTION OF ACCOUNTING FOR OFFSET 
                   CREDITS.

       ``(a) Duty to Monitor.--The Secretary of Agriculture and 
     the Administrator shall monitor regularly whether offset 
     credits under the respective jurisdiction of each agency head 
     under this subtitle are being awarded only for real and 
     additional sequestration of greenhouse gases and reductions 
     in greenhouse gas emissions, including--
       ``(1) the accuracy of default calculations of sequestration 
     flow and greenhouse gas emission reductions achieved by the 
     use of offset practices;
       ``(2) the calculation of region-specific discount factors; 
     and
       ``(3) the accuracy of leakage calculations.
       ``(b) Periodic Review.--Not later than December 31, 2013, 
     and every 5 years thereafter, the Secretary of Agriculture 
     and the Administrator shall review the issuance of offset 
     credits under the respective jurisdiction of each agency head 
     under this subtitle to determine--
       ``(1) whether offset credits are being awarded only for 
     real and additional sequestration of greenhouse gases or 
     reductions in greenhouse gas emissions, as described in 
     subsection (a);
       ``(2) the amount of excessive award of any offset credits;
       ``(3) the volume of offset credits that have been or are 
     expected to be approved;
       ``(4) the impact of the offset credits on market prices; 
     and
       ``(5) the impact of the offset credits on the trajectory of 
     emissions from affected units.
       ``(c) Duty to Correct.--If the Secretary of Agriculture or 
     the Administrator determines that offset credits under the 
     respective jurisdictions of the agency head have been awarded 
     under this subtitle in excess of real and additional 
     sequestration of greenhouse gases or reductions in emissions 
     of greenhouse gases, the Secretary of Agriculture or the 
     Administrator shall--
       ``(1) promptly correct on a prospective basis the sources 
     of the errors, including correcting leakage factors, region-
     specific discount factors, default rates of sequestration 
     flow, and other relevant information for the offset practices 
     involved; and
       ``(2) quantify and publicly disclose the quantity of offset 
     credits that have been awarded in excess of real and 
     additional sequestration or emissions reductions.

              ``Subtitle C--National Registry for Credits

     ``SEC. 741. ESTABLISHMENT AND OPERATION OF NATIONAL REGISTRY.

       ``(a) In General.--Except as provided in subsection (b), 
     not later than July 1 of the year immediately prior to the 
     first calendar year in which an annual tonnage limitation on 
     the emission of greenhouse gases applies under section 
     711(b), the Administrator shall promulgate regulations to 
     establish, operate, and maintain a national registry through 
     which the Administrator shall--
       ``(1) record allocations of allowances, the issuance of 
     offset credits or early reduction credits, and the 
     recognition of international credits;
       ``(2) track transfers of credits;
       ``(3) retire all credits used for compliance;
       ``(4) subject to subsection (b), maintain transparent 
     availability of registry information to the public, including 
     the quarterly reports submitted under section 742(a);
       ``(5) prepare an annual assessment of the emission data in 
     the quarterly reports submitted under section 742(a); and
       ``(6) take such action as is necessary to maintain the 
     integrity of the registry, including adjustments to correct 
     for--
       ``(A) errors or omissions in the reporting of data; and
       ``(B) the prevention of counterfeiting, double-counting, 
     multiple registrations, multiple sales, and multiple 
     retirements of credits.
       ``(b) Exception to Public Availability of Data.--
       ``(1) In general.--Subsection (a)(4) shall not apply in any 
     case in which the Administrator, in consultation with the 
     Secretary of Defense, determines that publishing or otherwise 
     making available information in accordance with that 
     paragraph poses a risk to national security.
       ``(2) Statement of reasons.--In a case described in 
     paragraph (1), the Administrator shall publish a description 
     of the determination and the reasons for the determination.

     ``SEC. 742. MONITORING AND REPORTING.

       ``(a) Requirements.--Each owner or operator of an affected 
     unit, or to the extent applicable, the greenhouse gas 
     authorized account representative for the affected unit, 
     shall--
       ``(1) comply with the monitoring, recordkeeping, and 
     reporting requirements of part 75 of title 40, Code of 
     Federal Regulations (or successor regulations); and
       ``(2) submit to the Administrator electronic quarterly 
     reports that describe the greenhouse gas mass emission data, 
     fuel input data, and electricity output data for the affected 
     unit.
       ``(b) Biomass Cofiring.--Not later than 18 months after the 
     date of enactment of this title, the Administrator shall 
     promulgate regulations that provide monitoring, 
     recordkeeping, and reporting requirements for biomass 
     cofiring at affected units.''.
       (b) Conforming Amendments.--
       (1) Federal enforcement.--Section 113 of the Clean Air Act 
     (42 U.S.C. 7413) is amended--
       (A) in subsection (a)(3), by striking ``or title VI,'' and 
     inserting ``title VI, or title VII,'';

[[Page S691]]

       (B) in subsection (b)--
       (i) by redesignating paragraphs (1) through (3) as 
     subparagraphs (A) through (C), respectively, and indenting 
     the subparagraphs appropriately;
       (ii) by striking ``The Administrator shall'' and inserting 
     the following:
       ``(1) In general.--The Administrator shall'';
       (iii) in paragraph (1) (as designated by clause (ii)), in 
     the matter preceding subparagraph (A) (as redesignated by 
     clause (i)), by striking ``or a major stationary source'' and 
     inserting ``a major stationary source, or an affected unit 
     under title VII''; and
       (iv) in subparagraph (B) (as redesignated by clause (i)), 
     by striking ``or title VI'' and inserting ``title VI, or 
     title VII'';
       (v) in the matter following subparagraph (C) of paragraph 
     (1) (as designated by clauses (i) and (ii))--

       (I) by striking ``Any action'' and inserting the following:

       ``(2) Judicial enforcement.--
       ``(A) In general.--Any action'';

       (II) by striking ``Notice'' and inserting the following:

       ``(B) Notice.--Notice''; and

       (III) by striking ``In the case'' and inserting the 
     following:

       ``(C) Actions brought by administrator.--In the case'';
       (C) in subsection (c)--
       (i) in the first sentence of paragraph (1), by striking 
     ``or title VI (relating to stratospheric ozone control),'' 
     and inserting ``title VI (relating to stratospheric ozone 
     control), or title VII (relating to global warming pollution 
     emission reductions),''; and
       (ii) in the first sentence of paragraph (3), by striking 
     ``or VI'' and inserting ``VI, or VII'';
       (D) in subsection (d)(1)(B), by striking ``or VI'' and 
     inserting ``VI, or VII''; and
       (E) in subsection (f), in the first sentence, by striking 
     ``or VI'' and inserting ``VI, or VII''.
       (2) Inspections, monitoring, and entry.--Section 114(a) of 
     the Clean Air Act (42 U.S.C. 7414(a)) is amended by striking 
     ``section 112,'' and all that follows through ``(ii)'' and 
     inserting the following: ``section 112, any regulation of 
     solid waste combustion under section 129, or any regulation 
     of greenhouse gas emissions under title VII, (ii)''.
       (3) Administrative proceedings and judicial review.--
     Section 307 of the Clean Air Act (42 U.S.C. 7607) is 
     amended--
       (A) in subsection (a), by striking ``, or section 306'' and 
     inserting ``section 306, or title VII'';
       (B) in subsection (b)(1)--
       (i) by striking ``section 111,,'' and inserting ``section 
     111,'';
       (ii) by striking ``section 120,'' each place it appears and 
     inserting ``section 120, any action under title VII,''; and
       (iii) by striking ``112,,'' and inserting ``112,''; and
       (C) in subsection (d)(1)--
       (i) by striking subparagraph (S);
       (ii) by redesignating the second subparagraph (N) and 
     subparagraphs (O) through (R) as subparagraphs (O), (P), (Q), 
     (R), and (S), respectively;
       (iii) by redesignating subparagraphs (T) and (U) as 
     subparagraphs (U) and (V), respectively; and
       (iv) by inserting after subparagraph (S) (as redesignated 
     by clause (ii)) the following:
       ``(T) the promulgation or revision of any regulation under 
     title VII,''.
       (4) Unavailability of emissions data.--Section 412(d) of 
     the Clean Air Act (42 U.S.C. 7651k(d)) is amended in the 
     first sentence--
       (A) by inserting ``or title VII'' after ``under subsection 
     (a)''; and
       (B) by inserting ``or title VII'' after ``this title''.

             TITLE II--CLIMATE CHANGE RESEARCH INITIATIVES

     SEC. 201. RESEARCH GRANTS THROUGH NATIONAL SCIENCE 
                   FOUNDATION.

       Section 105 of the Global Change Research Act of 1990 (15 
     U.S.C. 2935) is amended--
       (1) by redesignating subsection (c) as subsection (d); and
       (2) by inserting after subsection (b) the following:
       ``(c) Research Grants.--
       ``(1) 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 adequately addressed by 
     Federal agencies.
       ``(2) Transmission of list.--The Director of the Office of 
     Science and Technology Policy shall submit the list developed 
     under paragraph (1) to the National Science Foundation.
       ``(3) Authorization of appropriations.--There are 
     authorized to be appropriated to the National Science 
     Foundation such sums as are necessary to carry out this 
     subsection, to be made available through the Science and 
     Technology Policy Institute, for research in the priority 
     areas.''.

     SEC. 202. ABRUPT CLIMATE CHANGE RESEARCH.

       (a) In General.--The Secretary of Commerce, acting through 
     the National Oceanic and Atmospheric Administration, shall 
     carry out a program of scientific research on abrupt climate 
     change designed to provide timely warnings of the potential 
     likelihood, magnitude, and consequences of, and measures to 
     avoid, abrupt human-induced climate change.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Commerce such sums as 
     are necessary to carry out this section.

     SEC. 203. DEVELOPMENT OF NEW MEASUREMENT TECHNOLOGIES.

       (a) In General.--The Administrator of the Environmental 
     Protection Agency shall carry out 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, reliable, low-cost measurement technology exists.
       (b) Administration.--The program shall include technologies 
     (including remote sensing technologies) to measure carbon 
     changes and other greenhouse gas emissions and reductions 
     from agriculture, forestry, wetlands, and other land use 
     practices.
       (c) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Administrator such sums as are 
     necessary to carry out this section.

     SEC. 204. TECHNOLOGY DEVELOPMENT AND DIFFUSION.

       (a) In General.--The Director of the National Institute of 
     Standards and Technology, acting through the Manufacturing 
     Extension Partnership program, may develop a program to 
     promote the use, by small manufacturers, of technologies and 
     techniques that result in reduced emissions of greenhouse 
     gases or increased sequestration of greenhouse gases.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Director of the National Institute 
     of Standards and Technology such sums as are necessary to 
     carry out this section.

     SEC. 205. PUBLIC LAND.

       (a) In General.--Not later than 3 years after the date of 
     enactment of this Act, the Secretary of Agriculture and the 
     Secretary of the Interior shall prepare a joint assessment or 
     separate assessments setting forth recommendations for 
     increased sequestration of greenhouse gases and reduction of 
     greenhouse gas emissions on public land that is--
       (1) managed forestland;
       (2) managed rangeland or grassland; or
       (3) protected land, including national parks and designated 
     wilderness areas.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Agriculture and the 
     Secretary of the Interior such sums as are necessary to carry 
     out this section.

     SEC. 206. SEA LEVEL RISE FROM POLAR ICE SHEET MELTING.

       (a) In General.--The Secretary of Commerce, acting through 
     the National Oceanic and Atmospheric Administration and in 
     cooperation with the Administrator of the National 
     Aeronautics and Space Administration, shall carry out a 
     program of scientific research to support modeling and 
     observations into the potential role of the Greenland, west 
     Antarctic, and east Antarctic ice sheets in any future 
     increase in sea levels.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Commerce and the 
     Administrator of the National Aeronautics and Space 
     Administration such sums as are necessary to carry out this 
     section.
                                 ______